Group No.

Need for Competition Act in an era of free competition where world at large has become a single platform for trade and commerce.

Competition is the battle between businesses to win consumer acceptance and loyalty. ASPECTS OF COMPETITION ASPECTS OF COMPETITION

Productive efficiency

Allocative efficiency

Dynamic efficiency

Secure the interest of the Consumer Reduction of cost and improving quality. Best allocation of resources. It accelerates growth and development Preserves economic and political democracy.

IN THE MARKET Promotes efficiency Leads to higher productivity

FOR CONSUMERS Lower prices Improved quality Better services

FOR BUSINESS Availability of inputs at competitive price, Level playing field, Redressal against denial of

Punishes the laggards Wider choices

Enhances choice,
improves quality Reduces costs

market access and other

anticompetitive agreements.

Facilitates better
governance

Characteristics

Perfect Competition

Monopolistic Competition

Oligopoly

Monopoly

Number of competitors

Many

Few to Many

Very Few

No direct competition

Ease of entry or exit Easy from industry

Somewhat difficult

Difficult

Regulated government

by

U.S.

Similarity of goods/services

Same

Seemingly but may

different Similar or different be quite

No directly competing products

offered by competing
firms Individual firm's control over price None market) (set by

similar

the Some

Some

Considerable (in true monopoly) Little (in

regulated one)

Examples

Farmer

Fast-food restaurant

Automotive manufacturer

Railways

Areas focused under the MRTP Act

Prohibition of restrictive trade practices (RTP) Prohibition of unfair trade practices (UTP) Prohibition of monopolistic trade practices (MTP)

Refusal to deal Tie-up sales i.e. Full line forcing; Exclusive dealings Concert or collusion-cartel Price discrimination Re-sale price maintenance

Misleading advertisement and false representation Bargain sale, bait and switch selling; Offering of gifts or prizes with the intention of not providing them and conducting promotional contests False representation of the products safety standards Hoarding or destruction of goods

Monopolistic Trade Practices (MTPs)

It indicates misuse of ones power to abuse the market in terms of production and sales of goods and services, try to eliminate competition from the market and charge unreasonably high prices. Example: THE MICROSOFT CASE

Merger and amalgamation the Act frowned upon expansion of giant undertakings so as not to permit the giant companies to acquire power. the Act was restructured and prior approval of the Government for amalgamation, merger or take-over were removed. Power to conduct inquiry was vested with the MRTP commission.
Example : HLL-TOMCO CASE

European Union
European Community competition law regulates the exercise of market power by large companies, governments or other economic entities.

Four main policy areas include

Cartels, or control of collusion and other anti-competitive practices which has an effect on the EU. Monopolies or preventing the abuse of firms' dominant market positions. Control of mergers, propose having defined amount of turnover in the EU. State aid, control of direct and indirect aid given by Member States of the European Union to companies.

Need for Introduction of Competition Act

World turning into single integrated global market Globalization. Need to design open competition in strategic structures. Competition a driving force in the economic and commercial activities of the world. Competition is the engine of market economy - Professor Wolfgang Karts, the Chairman of the German Federal Cartel Office. Economic Reforms of early 1990 - Command-and-Control reforms, had become obsolete against International Economic Developments. Command-and-Control -Government intervention on all areas of economic activity and neither an easy entry nor an easy exit for enterprises. India - underwent the process of transition into a market economy through measures set by the broad frame work of LPG. Required strategies to protect, promote and to sustain competition.

COMPETITION ACT - 2002

Published in the Gazette of India on January 14, 2003 Critical areas of competition namely:

Anti competitive agreements among enterprises

Abuse of dominant position in the market Combinations / mergers between enterprises

Prohibition of AntiCompetitive Agreements

Horizontal Agreements 1. Price fixing 2. Limited production and supply 3. Bid rigging / collusive bidding 4.Market Sharing

Vertical Agreements 1. Tie-in-arrangement 2.Exclusive distribution agreement 3. Refusal to deal 4. Resale price maintenance

ABUSE OF DOMINANT POSITION

Abuse of dominant position refers to the market power of an enterprise to exercise leverage through exploitative and protective business practices. Example: Penalty of Rs 47 lakh on All India Organisation of Chemists and Druggists (AIOCD) for misusing its dominant position.
Relevant Markets

Geographical Market Product Market 1. Physical characteristics or end-use of goods; 2. Price of goods or service; 3. Consumer preferences; 4. Exclusion of in-house production; 1 Regulatory trade barriers; 2. Local specification requirements; 3. National procurement policies; 4. Adequate distribution facilities;

5. Transport costs;
6. Language; 7. Consumer preferences; 8. Need for secure or regular supplies or rapid after-sales services.

5. Existence of specialised producers;

6. Classification of industrial products.

Regulation of combinations
A combination is required to be notified to the Competition Commission of India for its approval. Threshold limits prescribed in the Act.

Nature of Combination
(a) Acquisition by enterprises (b)Acquisition by individuals (c)Mergers/ amalgamation

Criterion
Assets In India World over In India World over In India World Over In India World over

Value
>Rs. 1,000 Cr. >US$500 Million >Rs. 3,000 Cr. >US$1500 Million >Rs. 4,000 Cr. >US $ 2 Billion >Rs. 12,000 Cr. >US$ 6 Billion

Turn over

Assets Turn over

APPRECIABLE ADVERSE EFFECT

Some factors whether a combination would have an Appreciable adverse effect on Competition in relevant markets: Driving existing market outside the market. level of combination in the market. nature and extent of innovation. removal of a vigorous and effective competitor or competitors in the market Fore-closure of competition by hindering entry into market Prominent examples of Appreciable Adverse Effect could be the formation of Cartels. Cartels: An association of producers, sellers, distributors, traders or service providers who by agreement among themselves limit, control or attempt to control production, distribution sale or price of trade in goods or provision of services. Case Study: Cement Cartel case

COMPETITION ADVOCACY
Competition Advocacy is defined as the ability of the competition office to provide advice, influence and participate in government economic and regulatory policies in order to promote more competitive industry structure, firm behavior and market performance. (World Bank)

Section 49 - Competition Act, 2002, empowers the Competition Commission of India (CCI) to undertake competition advocacy
Role of Competition Commission Responsibility to prevent practices having adverse effect on competition To promote and sustain competition in markets, To protect interests of consumers and to ensure freedom of trade Enforcing authority Aim to create and strengthen awareness of the role of competition among market players and stakeholders Encourage compliance and reduce the need for enforcement action

Comparison between the MRTP Act and Competition Act

S. No. 1. MRTP Act Competition Act Registration of agreements was There is no requirement for compulsory. registration of agreements under the Competition Act. 2. There was no regulation of Combinations are regulated beyond a

combinations under the MRTP Act. threshold limit under the Competition Act. 3. No competition advocacy role for Competition Commission has been entrusted with the MRTP Commission. the function of Competition advocacy.

4.

Unfair trade practices werecovered Unfair trade practices are not covered under the under the MRTP Act. Competition Act. Henceforth it will be covered under the Consumer Protection Act, 1986.

Survey results

Percentage Wise
13% Competition Act MRTP Act 75%

Case Study: Competition Commission imposes heavy penalties for abuse of dominance DLF CASE (w.r.t. Abuse of dominant position) DLF Ltd was a dominant enterprise and violated the provisions of the Competition Act by entering into an agreement with apartment allottees that was one sided, abusive and unfair to the allottees. Terms of the Apartment Buyers Agreement have been modified in a manner which it considers fair and reasonable and takes into account the interest of both parties. Group housing projects must be constructed in line with the layout plans, floor plans and specifications. Builder will no longer have sole ownership of open spaces within the residential project area not sold to the allottee and has suggested a joint ownership mechanism among the owners.

Conclusion:

Government has a major role to play in providing the right market framework and regulatory environment to provide invaluable impetus to the industrial competitiveness Sole Objective - free market economy through increased production; cost reduction and improvements in quality through better allocation of resources. Competition law and policy contribute to better balance between the rights of producers and protection for consumers and other members of society. A well-administered competition law will have positive spillover effects on the economy at large, not just the particular firms or groups that bring complaints.

PRERESENTED BY: MET MFM 2011-2014

Sr. No 1 Name of Student Machhi Deepak Sadashiv Roll No 83

2
3 4

Mardhani Rahim Rajabali

Mevada Punit Manubhai Pansare Manali Gopinath

85
87 91

5
6 7

Parekh Sagar Shirish

Pednekar Shyamsundar Pinto Densil Louis

93
95 97

8
9

Putta Aditya
Renake Vikas Uday

99
101

THANK YOU !!