CCI slaps record Rs 6,300 cr penalty on cement majors - Indian Express
Why do we need competition in the market ?
Competition makes enterprises more efficient and offers wider choice to consumers at lower prices. This ensures optimum utilization of available resources. It also enhances consumer welfare since consumers can buy more of better quality products at lower prices.
Fair competition is beneficial for the consumers, producers / sellers and finally for the whole society since it induces economic growth.
What is meant by unfair competition?
Unfair competition means adoption of practices such as collusive price fixing, deliberate reduction in output in order to increase prices, creation of barriers to entry, allocation of markets, tie-up sale , predatory pricing and discriminatory pricing.
What constitutes competition policy?
• Competition policy is defined as those Government measures that affect the behaviour of enterprises and structure of the industry with the view to promote efficiency and maximize welfare.
• There are two elements of competition policy:-
Ø First, a set of policies, such as liberalized trade policy, relaxed FDI policy, de-regulation, etc., that enhance competition in the markets.
Ø Second, legislation to prevent anti-competitive practices with minimal government intervention.
When was the competition law enacted in India?
• The Monopolies & Restrictive Trade Practices Act, 1969 is the first enactment to deal with competition issues and came into effect on 1st June 1970.
• The Government appointed a committee in October 1999 to examine the existing MRTP Act for shifting the focus of the law from curbing monopolies to promoting competition and to suggest a modern competition law. Pursuant to the recommendations of this committee, the Competition Act, 2002, was enacted on 13th January 2003.
• It provides for different notifications for making different provisions of the Act effective including repeal of MRTP Act and dissolution of the MRTP Commission.
The objectives of the Competition Act are to prevent anti-competitive practices, promote and sustain competition, protect the interests of the consumers and ensure freedom of trade.
Whether provision relating to repeal of MRTP Act has been notified?
• Not as yet.
What are the functions of CCI?
• CCI shall prohibit anti-competitive agreements and abuse of dominance, and regulate combinations (merger or amalgamation or acquisition) through a process of enquiry.
• It shall give opinion on competition issues on a reference received from an authority established under any law (statutory authority)/Central Government.
• CCI is also mandated to undertake competition advocacy, create public awareness and impart training on competition issues.
What is an anti-competitive agreement?
- An anti-competitive agreement is an agreement having appreciable adverse effect on competition. Anti-competitive agreements include:-
• agreement to limit production & supply
• agreement to allocate markets
• agreement to fix price
• bid rigging or collusive bidding
• conditional purchase/sale (tie-in arrangement)
• exclusive supply/distribution arrangement
• resale price maintenance
• refusal to deal
What orders the Commission can pass in case of anti-competitive agreements and abuse of dominance?
During the course of enquiry, the Commission can grant interim relief restraining a party from continuing with anti competitive agreement or abuse of dominant position
To impose a penalty of not more than 10% of turn-over of the enterprises and in case of cartel - 3 times of the amount of profit made out of cartel or 10% of turnover of all the enterprises whichever is higher
• After the enquiry, the Commission may direct a delinquent enterprise to discontinue and not to re-enter anti-competitive agreement or abuse the dominant position
• To award compensation
• To modify agreement
• To recommend to the Central Govt. for division of enterprise in case it enjoys dominant position.
The Commission comprises a Chairperson and six members. Ashok Chawla is the current Chairperson of the CCI
Why do we need competition in the market ?
Competition makes enterprises more efficient and offers wider choice to consumers at lower prices. This ensures optimum utilization of available resources. It also enhances consumer welfare since consumers can buy more of better quality products at lower prices.
Fair competition is beneficial for the consumers, producers / sellers and finally for the whole society since it induces economic growth.
What is meant by unfair competition?
Unfair competition means adoption of practices such as collusive price fixing, deliberate reduction in output in order to increase prices, creation of barriers to entry, allocation of markets, tie-up sale , predatory pricing and discriminatory pricing.
What constitutes competition policy?
• Competition policy is defined as those Government measures that affect the behaviour of enterprises and structure of the industry with the view to promote efficiency and maximize welfare.
• There are two elements of competition policy:-
Ø First, a set of policies, such as liberalized trade policy, relaxed FDI policy, de-regulation, etc., that enhance competition in the markets.
Ø Second, legislation to prevent anti-competitive practices with minimal government intervention.
When was the competition law enacted in India?
• The Monopolies & Restrictive Trade Practices Act, 1969 is the first enactment to deal with competition issues and came into effect on 1st June 1970.
• The Government appointed a committee in October 1999 to examine the existing MRTP Act for shifting the focus of the law from curbing monopolies to promoting competition and to suggest a modern competition law. Pursuant to the recommendations of this committee, the Competition Act, 2002, was enacted on 13th January 2003.
• It provides for different notifications for making different provisions of the Act effective including repeal of MRTP Act and dissolution of the MRTP Commission.
The objectives of the Competition Act are to prevent anti-competitive practices, promote and sustain competition, protect the interests of the consumers and ensure freedom of trade.
Whether provision relating to repeal of MRTP Act has been notified?
• Not as yet.
What are the functions of CCI?
• CCI shall prohibit anti-competitive agreements and abuse of dominance, and regulate combinations (merger or amalgamation or acquisition) through a process of enquiry.
• It shall give opinion on competition issues on a reference received from an authority established under any law (statutory authority)/Central Government.
• CCI is also mandated to undertake competition advocacy, create public awareness and impart training on competition issues.
What is an anti-competitive agreement?
- An anti-competitive agreement is an agreement having appreciable adverse effect on competition. Anti-competitive agreements include:-
• agreement to limit production & supply
• agreement to allocate markets
• agreement to fix price
• bid rigging or collusive bidding
• conditional purchase/sale (tie-in arrangement)
• exclusive supply/distribution arrangement
• resale price maintenance
• refusal to deal
What orders the Commission can pass in case of anti-competitive agreements and abuse of dominance?
During the course of enquiry, the Commission can grant interim relief restraining a party from continuing with anti competitive agreement or abuse of dominant position
To impose a penalty of not more than 10% of turn-over of the enterprises and in case of cartel - 3 times of the amount of profit made out of cartel or 10% of turnover of all the enterprises whichever is higher
• After the enquiry, the Commission may direct a delinquent enterprise to discontinue and not to re-enter anti-competitive agreement or abuse the dominant position
• To award compensation
• To modify agreement
• To recommend to the Central Govt. for division of enterprise in case it enjoys dominant position.
The Commission comprises a Chairperson and six members. Ashok Chawla is the current Chairperson of the CCI
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