Need for Competition Act when world at large is a single platform for carrying out trade and commerce
What is Competition?
Competition is “a situation in a market in which firms or sellers independently strives for the buyers’ patronage in order to achieve a particular business objective for example, profits, sales or market share” (World Bank, 1999).
“Competition” is an age-old phenomenon.
Benefits of Competition:
· Companies: Efficiency, cost-saving operations, better utilization of resources, etc.
· The Consumer: Wider choice of goods at competitive prices
· The Government: Generates revenue.
But all these benefits are lost if Competition is UNFAIR or NON-EXISTANT
· Choice of CARS in the olden days
· Airlines: Indian Airlines, Jet, etc
· Indian Railways
The Competition Act, 2002 was enacted by the Parliament of India and governs Indian competition law. It replaced the Monopoly and Restrictive Trade Practices Act, 1969. Under this legislation, the Competition Commission of India was established to prevent activities that have an adverse effect on competition in India.
An Act to provide, keeping in view of the economic development of the country, for the establishment of a Commission to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets, in India, and for matters connected therewith or incidental thereto.
Competition Commission of India is a body of the Government of India responsible for enforcing The Competition Act, 2002 throughout India and to prevent activities that have an adverse effect on competition in India. It was established on 14 October 2003. It became fully functional in May 2009.
The Act prohibits anti-competitive agreements, abuse of dominant position by enterprises and regulates combinations (acquisition, acquiring of control and Merger and acquisition), which causes or likely to cause an appreciable adverse effect on competition within India.
Preambles stated objectives are to establish the commission which has the duty to:
· Eliminate practices having adverse effect on competition.
· Promote and sustain competition.
· Protect consumers’ interests.
· Ensure freedom of trade carried on by other participants in markets, in India.
To achieve its objectives, the Competition Commission of India endeavors to do the following:
· Make the markets work for the benefit and welfare of consumers.
· Ensure fair and healthy competition in economic activities in the country for faster and inclusive growth and development of economy.
· Implement competition policies with an aim to effectuate the most efficient utilization of economic resources.
· Develop and nurture effective relations and interactions with sectoral regulators to ensure smooth alignment of sectoral regulatory laws in tandem with the competition law.
· Effectively carry out competition advocacy and spread the information on benefits of competition among all stakeholders to establish and nurture competition culture in Indian economy.
Monopolistic and Restrictive Trade Practice under MRTP Act, 1969
The Monopolistic and Restrictive Trade Practices Act, 1969, was enacted:
· To ensure that the operation of the economic system does not result in the concentration of economic power in hands of few,
· To provide for the control of monopolies, and
· To prohibit monopolistic and restrictive trade practices.
Competition Act covers the following aspects:
· Anti - Competitive Agreements. Example, cartels.
· Abuse of Dominant Position by enterprises. Example, Predatory pricing, barriers to entry.
· Regulation of Mergers and Acquisitions (M&As).