What Is Competition Act 2002 And Why Is It Made?


Competition is a procedure of monetary contention between advertise players to draw in clients. Competition additionally alludes to a circumstance in a business situation where organizations freely make progress toward the support of clients so as to accomplish their business objective. Free and reasonable competition is one of the mainstays of a proficient business condition. In light of a legitimate concern for customers, and the economy as an entire, it is important to advance a situation that encourages reasonable competition results in the market, restrain anti-competitive behaviour, and discourage market players from adopting unfair trade practices. Accordingly, the competition has become a main driving force in the worldwide economy.


The Competition Act, 2002 was commenced on 31st March, 2003. It was introduced by Arun Jaitley. The Act extends to the whole of India. It was provisioned to provide a healthy economic development environment in the Indian Market. The Competition Act, 2002 was amended by the Competition Act, 2007 and again by the Competition Act, 2009. The Act secures free and reasonable competition which ensures the opportunity of exchange, which in turn ensures the enthusiasm of the consumer. The Act tries to prevent monopolies and furthermore to prevent unnecessary intervention by the administration. This act was created to ensure freedom of trade carried on by other participants in the market of India.


There are some important aspects of the Competition Act, 2002:


Anti-competitive agreements are those understandings that confine competition. Section 3 of the Competition Act, 2002 denies any agreement with respect to production, supply, distribution, storage, and acquisition or control of merchandise or services which causes or is likely to cause an appreciable adverse effect on competition in India.

Agreement between rivals or competitors is termed as horizontal agreements. The most malicious form of an anti-competitive agreement is cartelization. When rivals or competitors agree to fix prices or share consumer or do both, the agreement termed as cartel. Besides horizontal agreements, there can be anti-competitive agreements between producers and suppliers or between producers and distributors. These are referred to as vertical agreements. Vertical agreements too can undermine competition in the market.

Further the Competition Act, 2002 doesn’t confine any individual’s entitlement to send out from India merchandise under an understanding that expects him to exclusively supply, distribute or control goods or provisions of services for fulfilling export contracts.

Consequently, any understanding to limit the encroachment of such Intellectual Property Rights or for forcing sensible conditions for ensuring such rights will not be dependent upon the preclusion against anti-competitive agreements.


Section 4 of the Competition Act, 2002 explicitly prohibits any enterprise or group from abusing its dominant position. The term ‘Dominant Position’ incorporates a place of strength, enjoyed by an enterprise or group, in the applicable market, in India. The term ‘Dominance’ is likewise alluded to as market power which is characterized as the capacity of the firm to raise costs or decrease yield or does both autonomously of its opponents and customers.

The prevailing position is mishandled when an enterprise force unfair or oppressive conditions in the purchase or sale of goods or services or in the price in the purchase or sale of goods or services. There is no control at all to keep endeavours from coming into or getting a place of strength. All that the Act denies is the maltreatment of that prevailing position. The Act, in this way, focuses on the abuse of dominance and not dominance per se.


The Competition Act, 2002 utilizations the word combinations to cover the procurement of control, shares, voting rights and assets, and mergers and amalgamations. The term Merger has been utilized extensively in the competition act to incorporate amalgamation and securing shares and control over the assets and the voting rights of an enterprise. The merger is a sort of occasion which gets enormous change the administration of the undertakings of one endeavour by another venture.

However, there are certain mergers that are viewed as negative and antagonistically influence the opposition. The most negative effect of the merger is that it prompts the reduction of competition in the market by reducing the number of entities in the market. The merger between entities likewise prompts the expansion in the cost of the merchandise and ventures which preferentially influences the enthusiasm of customers the merged enterprises exercises full control over the market and restrain the entry of new players in the market which confers on them the advantage of limiting the output and restricting market access.


The Competition Act additionally is intended to direct the activity and exercises of combinations, a term, which examines acquisitions, mergers or amalgamations. In this manner, the activity of the Competition Act isn’t confined to exchanges carefully to the limits of India but also such transactions involving entities existing and/or established overseas.

The Act has made the pre-notice of combinations deliberate for the parties concerned. Nonetheless, if the parties to the combination decide not to tell the CCI, as it isn’t required to inform, they risk a post-mix activity by the CCI, on the off chance that it is found along these lines, that the mix has an apparent unfavourable impact on competition. There is a rider that the CCI will not start an investigation into a combination after the expiry of one year from the date on which the combination has produced results.


In accordance with the High-Level Committee’s suggestion, the Act broadens the order of the Competition Commission of India past only authorizing the law (High-Level Committee, 2000). Rivalry promotion makes a culture of rivalry. There are numerous conceivable significant jobs for competition backing, depending upon a nation’s legitimate and financial conditions.

The Regulatory Authority under the Act, to be specific, Competition Commission of India (CCI), as far as the backing arrangements in the Act, is empowered to take an interest in the detailing of the nation’s monetary strategies and to take an interest in the assessing of laws identified with competition at the case of the Central Government. The Central Government can make a reference to the CCI  its opinion on the possible effect of a policy under formulation or of an existing law related to competition. The Commission will, in this way, be accepting the job of competition advocate, acting ace effectively to achieve Government arrangements that lower obstructions to the passage, that advance deregulation and trade liberalization and that promote competition in the market place.


The message is loud yet certain that a very much arranged comprehensive competition compliance program can be of incredible advantage to all endeavors regardless of their size, the zone of activity, jurisdiction involved, nature of items provided or benefits rendered and the equivalent is basic for organizations, its chiefs, and the representative key corporate officials to maintain a strategic distance from unconquerable difficulties of financial fines, common detainment, other than the loss of hard-earned notoriety when the Competition Authorities, the media, and others uncover the wrongdoings out in the open.

In the changed situation, India needs a new law for competition and a new administrative position, which under this strategy is the ‘Competition Commission of India’. The law will serve the purpose only if it is made independently, runs independently, and is less expensive.

This Article is Authored by Shivam Gupta, 1st Year BBA.LLB Student at Symbiosis Law School, Noida.

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