Questions on Competition Act 2002

Q1. Say a company sells a shampoo for Rs.100 and conditioner for Rs.70 but now it has strategically decided to sell the shampoo only with the conditioner for a subsidized rate of Rs.150. Is it valid? Answer. No, it is not valid as the consumer is entitled to purchase only the shampoo instead of purchasing both. By combining the two and selling it together only, the company is breaching the competition act by showing abuse of dominance and under section 4 of the act it is not valid. Q2. An agreement containing a clause that there will be a discontinuation in the supply of goods if the dealer is also dealing in products of suppliers competitors. Is it valid? Answer. It is not valid under section 3 of anti-competitive agreement of the competition act. Q3. A company engaged in the business of manufacture of cold drinks stipulates in the francise agreement with its bottler that the later will not bottle up the products of the other cold drink manufacturers in the same premises as it may cause mixing with company products. Is it valid? Answer. As per Section 36(a) of MRTP act unfair trade practice means the trade practice which for the purpose of promoting sale, use or supply of any goods or for the promotion of any services adopts any unfair methods or deceptive practice falsely making statements or permitting anything which is not that thing and so on. Restricted trade practice: as per section 2(o) od MRTP act it states that the trade practice which has or may have the effect of preventing, distorting or restricting competitors in any manner. This section is covered under section 66 of competition act. Hence from the above we can say that the case is of restrictive trade practice and not unfair trade practice. Hence it is legal. Q4. An advertisement in a leading newspaper stated that TV sets are being manufactured by the company in collaboration with a foreign company even though the government had not permitted any collaboration for TV manufacturing. Answer. Under section 3(a) of Competition Act it is unfair trade practice. Hence it is not legal and void. Example: Kingston electronics pvt ltd. Q5. A company engaged in the business of manufacturing of lather items enters into an agreement with small scale manufacturers for purchase of lather items to be sold by it under its own brand name. the agreement prohibits the small scale manufacturer from purchasing raw material and components from parties other than those approved by the company on the grounds of quality control. Answer. It is a restrictive trade practice and not unfair trade practice so it is valid under Competition Act.

Q6. If Coca-cola and Pepsi think of merging together for their India operations. Is it valid under Competition act? Answer. Yes the merger is valid under the act as the act does not prohibit or restrict enterprises from coming into dominance. There is no control whatsoever to prevent enterprises from coming into or acquiring position of dominance. All that the Act prohibits is the abuse of that dominant position. The Act therefore targets the abuse of dominance and not dominance per se. section 4 of the act says that No enterprise shall abuse its dominant position. The situation of monopoly per se is not against public policy but, rather, the use of the monopoly status. Dominant position is abused when an enterprise imposes unfair or discriminatory conditions in purchase or sale of goods or services or in the price in purchase or sale of goods or services. So the merger is valid and does not violate the Competition Act.