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Posted by on Apr 18, 2014 in Competition Act 2002 |

Competition Act 2002 – Restricted Practices

The Competition Act was a historical step in Legislation of India to sustain competition in markets of India by control on monopoly practices. The fair competition is a necessary element of market to protect interests of consumers, to promote freedom of trade, to maximize efficiency and for better economic development of the country. It was enacted in 2002 and again amended in 2007.

Prohibition of Certain Agreements (Section 3)

  • No enterprise or persons or association of persons or enterprises shall enter into an agreement related to production, supply, distribution or control of goods or provision of services which causes adverse affect on competition within India. Any such agreement shall be treated as void.
  • Any agreement which –
    • Limit or control supply, technical development, markets etc;
    • Determines sale or purchase prices directly or indirectly;
    • Effect process of competitive bidding;

Shall be presumed in contravention of above provision except if such agreement increases efficiency in production, supply, distribution etc.

  • No provision of this act shall restrict any rights of person conferred to him under different acts such as Copyright, Patent, Trade Marks, Designs or Semi-conductor Layout Designs Act etc. Also no rights relate to export of goods shall be affected due to provision under this section.

Prohibition of Abuse of Dominant Position (Section 4)

  • An Enterprise shall not use its dominant position (i.e. abuse of dominant position is prohibited) –
    • To limit or control price, production, supply, distribution & technical development of goods or services.
    • To prevail in relevant market or to affect competitors or consumers in its favour.

Regulation of Combinations (Section 5-6)

  • The Combination basically means any acquisition of one or more enterprises by persons or enterprises or merger or amalgamation of enterprises where value of assets >1000cr or 500million USD.
  • Provided that group which lead to acquisition have value of assets > 4000cr or 2billion USD either in India or outside India. 
  • No person or enterprise shall enter into any combination which likely to cause adverse impacts on competition in relevant market of India.
  • Any person or enterprise who proposes to enter into a combination shall notify to CCI within 7days of approval of proposal of combination.

Competition Commission of India (CCI) (Section 7-17)

  • The Central Govt shall establish a commission called CCI for purpose of this act, it means to promote competition in the markets of India.
  • The CCI shall consist of a Chairperson and number of member’s b/w 2-6 to be appointed by Central Govt. The Chairperson and all other members shall be qualified to be a judge of High Court or has special knowledge & experience of min 15 yrs in field of International trade, economics, management, public affairs etc.
  • The term of office is five years and eligible for reappointment.
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