Competition Law

COMPETITION LAW

- SAKET DEKATE – 07- MEENAKSHI MATELE – 88- TEJASHREE MOHITE – 29- PRIYA SATAPATHI – 46- LIZA MOHPATRA – 06 [PG]

• An economic rivalry amongst enterprises to control greater market power.

• Offers wider choice to consumers at lower prices.

• Leads to optimal allocation of resources.

• Hence, competition has become a driving force in the global economy.

Where two enterprises adopt fair Where two enterprises adopt fair means such as production of fair means such as production of fair goods/services, investment in goods/services, investment in R&D etc.R&D etc.

Competition is fairCompetition is fair

Where an enterprise adopts Restrictive Where an enterprise adopts Restrictive Trade Practices (RTPs) such as predatory Trade Practices (RTPs) such as predatory pricing, exclusive dealing, resale-price pricing, exclusive dealing, resale-price maintenance and forming a cartel, it has maintenance and forming a cartel, it has appreciable adverse effect.appreciable adverse effect.

Competition is unfairCompetition is unfair

• The first competition law was enacted in 1969 i.e. Monopolies and Restrictive Trade Practices Act, 1969 ['MRTP Act, 1969'].

• The enactment of MRTP Act, 1969 was based on the socio – economic philosophy.

• The MRTP Act, 1969 underwent amendments in the 1974, 1980, 1982, 1984, 1986, 1988 and 1991.

• The Monopolies and Restrictive Trade Practices Act, 1969 [MRTP Act] repealed and was replaced by the Competition Act, 2002.

To prevent practices having adverse effect on competition, and to promote and sustain competition in the business environment .

To protect the interest of consumers and also to ensure freedom of trade carried on by other participants in markets .

The Competition Act, 2002 is not intended to prohibit competition in the market.

This legislation prohibits anti-competitive agreements, abuse of dominant position and regulates mergers, amalgamations and acquisitions.

The Act was subsequently amended by the Competition (Amendment) Act, 2007 and Competition (Amendment) Act, 2009.

Three major elements of a competition law are :

i)Anti – competitive agreements

ii)Abuse of dominance

iii)Merger, amalgamations and acquisitions control.

The following are the remedies under Competition Act, 2002 :

•Jurisdiction

•Competition Advocacy

•Confidentiality

•Penalties

• HCCBPL has been supplying 500 ml water bottles and 400 ml orange pulp soft drinks at a M.R.P. of Rs.20/- and Rs.40/- respectively to M/s INOX Leisure Private Limited (ILL) , though these products are available in any prevailing market at Rs.10/- and 25/- respectively.

• HCCBPL printed these MRPs on these products in order to deceive and induce the consumers to believe that the products are being sold at the M.R.P. fixed by the manufacturer.

• The trade practices adopted by HCCBPL result in the manipulation, distortion of the terms and conditions pertaining to the supply of its products in order to impose unjustified, unwarranted, unpalatable costs on the consumers.

• Hindustan Coca Cola Beverages Pvt. Ltd. has entered into an agreement with M/s INOX Leisure Private Limited (ILL) which operates multiplexes and screens in various cities.

• In pursuance of the agreement, HCCBPL has been supplying beverages at an inflated and exorbitant price in comparison to the price of these products in the ordinary market.

• Therefore, HCCBPL is enforcing two different prices for the identical products. Such an agreement between HCCBPL and ILL is anti-competitive as ILL is selling products of HCCBPL only no choice to the consumer is available inside the multiplex and theatres.

CASE STUDY : 2Consumer Online Foundation vs Tata Sky Ltd. & Ors.

• The complainant has alleged that Dish TV India Limited, Reliance Big TV Ltd., Sun Direct TV Pvt Ltd and Tata Sky Limited Direct to Home (DTH) service providers are limiting competition among themselves, forcing the consumers to buy bundled hardware and creating entry barrier for new hardware manufacturers. These practices are anti competitive and violate Sec 3 & 4 of Competition Act, 2002.

• To avail DTH service, a customer requires 4 instruments beside the television : 1) A small dish antenna to gather DTH signal, 2) a small radio-size device to read the DTH signal, 3) a control instrument called conditional access module CAM which ensures that the consumer avails only what he has paid for, and last 4) a smart card to identify the user.

• Ideally the antenna and the STB should be available in the open market and DTH service provider should provide only the CAM + smart card. So that whenever a consumer wishes he can buy another CAM + card from another DTH service. This way the DTH operators would compete on service, quality and price.


• The DTH operators in the Country are selling CAM + card + STB + antenna bundled together and charging the consumer for all these products. Most popular schemes of the operators state that the consumer gets hardware 'FREE' with 6 month subscription (nearly Rs. 1800). The amount actually includes the cost of hardware, but the operator denies its ownership to the customer and tells him that the hardware is owned by the DTH operator. Moreover, they have manipulated the STB so that it cannot work for any other DTH operator.

• This way they are able to withhold their customer who is loath to buy the entire hardware again if he wishes to change the DTH operator. The DTH company understands that the customer is stuck and thereafter regularly overcharges him by small amounts in the monthly recharge.


Allegations :

•DTH service providers limiting competition among them by putting restrictive conditions in the subscription agreement which discourages migration of the consumer.•DTH service providers are forcing the consumers to buy / take on rent the STBs along with the DTH service (tie-in or bundling).•Exclusive dealing agreements between the DTH service providers and Set top Box manufacturers is suspected

• The Indian Competition Act, 2002 is very much comprehensive and enacted to meet the requirements of the economic growth and international economic developments relating to competition laws.

• The legislation is in synchronization with other policies such as trade policy, FDI norms, FEMA etc, which would ensure uniformity in overall competition policy.