Introduction
With the Liberation, Privatization, and Globalisation policy being introduced in India in the early 1990s, there was an immediate requirement of new competition law in the country to prevent cartels around the world from practicing restrictive trade practices.[1]The Competition Commission of India was formed in the year 2003, through the Competition Act, 2002.[2] Section 7(1) of Chapter III of the act finds mention of the establishment of the Commission. It reads-
“S.7(1) With effect from such date as the Central Government may, by notification, appoint, there shall be established, for the purposes of this Act, a Commission to be called the “Competition Commission of India”.”[3]
The Competition Act, 2002 replaced the old statute formed to maintain a healthy competition in the market, called The Monopolies and Restrictive Trade Practices Act, 1969.[4] It was further amended in the year 2007 and 2009[5]and has a wider jurisdiction than the old act as it also includes extra-territorial jurisdiction within its ambit. It means that any contract or agreement formed within or outside India, which has adverse effects on the Indian competitive market is within the jurisdiction of the Competition Commission of India.[6]
The aim of the article is to understand and elaborate on the framework of the Competition Commission of India and its various powers and functions.
Composition of the Commission
The commission comprises seven members including a Chairperson.[7] Its composition was a controversial matter as it was a Quasi-Judicial body but the procedure to appoint its members was entirely in the hand of the government. It contradicted the doctrine of Separation of Power essential to the constitution.[8] In the renowned case of Brahma Dutt v. Union of India,[9] this contention was brought before the Supreme Court. To counter these arguments the Union of India argued that CCI being a regulatory body, its chairperson needs to be a person with experience in the field and not judges. But before any judgment could be given by the bench, the Act was amended in 2007, acknowledging the biased selection procedure. Though the appointment procedure is not yet independent of the executive control, the Chief Justice of India is now to be consulted before the selection of the Chairperson and members. Section 8(2) of the act mentions the appointment of other members-
“The Chairperson and every other Member shall be a person of ability, integrity and standing and who has been, or is qualified to be a judge of a High Court, or, has special knowledge of, and professional experience of not less than fifteen years in international trade, economics, business, commerce, law, finance, accountancy, management, industry, public affairs, administration or in any other matter which, in the opinion of the Central Government may be useful to the Commission”[10]
Powers and Duties of The Competition Commission of India
In the highly technical and competitive world where developed and industrialized countries often try to control markets of the developing countries, the formation of the Competition Commission of India was imperative to prevent such trade. In the most simplistic way, the primary role of the Competition Commission is to enforce the Competition Act, 2002. Chapter IV from Section 18 to Section 40 of the Competition Act, 2002 deals in detail with all these aspects of the Commission.
The Competition Commission has the power to probe into matters relating to Anti- Competitive Agreements and Abuse of Dominant power in the Indian Markets. Section 19 and Section 26 to 28 deal with these issues in the Competition Act. Anti- Competitive agreement include an agreement to fix prices, stabilize supply, collusive bidding, etc. On the other hand, abuse of dominance could be done by predatory pricing, absurd terms and conditions, entry barriers which have adverse impact on the consumers as well as small producers trying to enter the new business.
A case relating to the matter could be filed by any party or by the information from the State and Central Government.[11] Though taking up suo motu cognizance is within the limits of power of the CCI. Section 26 mentions the procedure of investigation by the CCI.[12]According to it, if the Commission makes out a prima facie case, the matter is further sent to the Director General for probe. He/she then prepares a report in consultation with the complainant and the matter is then further taken by the commission and decided accordingly. According to Section 33, it could also issue interim order to restrain the party from carrying out such act. The DLF case[13] is one of the most renowned cases of CCI. The commission imposed a fine against DLF for abusing its dominance and using unfair trade practices.
The Competition Commission has dealt with some important high-profile cases over the years. In the year 2018, The CCI imposed a fine of Rs135.86 crore on Google. It claimed that Google has been using its dominant position as a search engine and misusing its powers to create a search bias. The European Union also slammed 2.9 Billion dollars fine on Alphabet, the parent company of Google for abusing its dominance.[14] In another important and controversial case, the CCI ordered probe into telecom giants of the country- Idea, Vodafone and Airtel. Reliance Jio owner Mukesh Ambani filed a complaint against the three for forming a cartel and denying Jio the POI required for network connection, causing multiple call failures. The Cellular Operator Association of India (COAI) was also under probe for encouraging and collaborating in creation of this cartel.[15]
At multiple times, A certain merger and acquisition or combination could be instituted with an intent to undermine the competition. The Competition Commission looks into such allegations and decides the matter. Though sometimes, they have to strike a balance between the harm to competition and the economic growth due to the merger and decide accordingly.[16]
Moreover, in case the decision of any statutory authority is contradicting the Competition Act, it must make reference to the Commission.[17]As per Section 32 of the Act, in case any agreement even though being made outside the territory of the country, it has effects on India, the Commission will have the right to probe into the matter.[18]
The Government could also take suggestions from the commission. It helps the government understand the consequences of its various policies on the competition in the market, though these suggestions are not binding on the implementation of policies.[19]
Conclusion
Healthy competition in the market is essential for innovation and growth of the economy. Even though the Indian Economy has moved forward from the protective stance it had over domestic industries, yet harmful trade practices like creation of cartels and monopolies go against public policy. It not only harms the small manufacturers but also the general public as now they have to agree to the absurd terms and conditions imposed by the huge players in the market. The rich get richer at the expense of the poor, which goes against the goal of equity of the economy. A body like the Competition Commission of India is essential to check such practices.
[1]ShajiVikraman, How India learnt to promote and regulate, competition, The Indian Express, April 5, 2017.
[2]Competition Commission of India, available at: http://www.cci.gov.in/about-cci (Last Accessed June 24, 2020).
[3] Competition Act, 2002, § 7(1).
[4] Monopolies and Restrictive Trade Practices Act, 1969
[5]Supra Note 1.
[6] B.S. Chauhan, Indian Competition Law: Global Context, Journal of Indian Law Institute, Vol 54, pf 315-323, 2012.
[7]Supra Note 3, § 8(1).
[8] VK Aggarwal, ‘Let there be a Judicial body Initially’, The Economic Times, September 13, 2007.
[9] Brahma Dutt v. Union of India,AIR 2005 SC 730.
[10]Supra Note 3, § 8(2).
[11]SouvikChatterji, Duties, Powers and Functions of Competition Authorities in India, DG, CCI and COMPAT, Pathshala, MHRD.
[12]Supra Note 3, § 26.
[13] Belaire Owner’s Association v. DLF Limited, Case No. 19 of 2010
[14]Mail Today Bureau, CCI slaps Rs 135.86 crore fine on Google for search Bias, Business Today, February 9, 2018.
[15]GulveenAulakh, Devina Sengupta, CCI to probe Idea, Vodafone, Airtel on Jio’s complaint alleging cartelisation, The Economic Times, May 12, 2017.
[16] Seema Dalal, Competition commission: Power, duty and functions, International Journal of Law, Vol 3, July 2017.
[17]Supra Note 3, § 21.
[18]Supra Note 16.
[19]Supra Note 3, § 49.
This article is authored by Suhani Agarwal, First-Year, B.A. LL.B student at NALSAR University of Law, Hyderabad
Also Read – Laws Relating To Unfair Trade Practices In India
