Competition Act 2002 :

 

Competition Act 2002 : all you need to know
 

Introduction

Competition Act 2002, was enacted with the purpose of preventing adverse competitive practices prevailing in the market which have appreciable adverse effect on competition, to promote and sustain fair competition in the market and to protect the interest of the consumers and to ensure freedom of trade.

It is the successor of MRTP (Monopolies and restrictive trade practices) Act, 1969, which was more conservative and less liberal, and was framed as per then scenario of Indian economy.

chess representing Caption

Evolution of competition law

The first competition law in India was the MRTP ( monopolies and restrictive trade practises) Act 1969, the act was rigid in nature and made as per then scenario in India

And

Also the directive principles of the state policy says that the state shall take the appropriate measures, to promote the welfare of the people and to provide justice economically , socially, and politically.

And

MRTP was not only the act which was dealing with the competition, There was other laws also dealing and providing regulations for the competition in the market indirectly, these Acts includes Consumer Protection Act,1986 , Patent Act,1970 , etc..

And

As the India became liberalised after 1991, new economic policy, a need was felt to get better and relevant competition law and hence Competition Act 2002 was enacted to promote free and fair competition in the market, to promote and sustain competition and to protect the consumer.

 

Objectives

• 1.     To prevent practices having adverse effect on competition
• 2.     To promote and sustain competition in the market
• 3.     To protect the interest of the consumer
• 4.     To ensure freedom of trade carried on by other participants in the market and for matters connected there with or incidental to it.

Competition

Competition word is not defined under competition act 2002, Competition is a complex and a technical subject, it’s an economic rivalry between market players to attract customers for to gain market share and the profit in the market, buyers buys the product at the price that maximize his/her benefit and seller prefer to sell the product at a price that maximize his/her profit.

 

Important definitions

 

Cartel

Cartel includes the association of the producer, seller, distributors, traders, or service providers, who by agreement among themselves control , limit or attempt to  limit or control the production , distribution , sale , trade or price of the goods or services.

The competition act prohibits the formation of the certain cartel.

Consumers

Consumer of goods means any person who buys goods for consideration(money), which has been paid or promised or partly paid, or partly promised , or under any system of deferred payment and includes any person who use those goods with the approval of the buyer of those goods, whether such purchase of goods is for resale or for any commercial purpose or for personal use.

Consumer of services, hire or avail of any service for consideration which has been paid or promised or partly paid or partly promised or under any system of deferred payment and includes those person who is the beneficiary of that service with the approval of hirer or availor of those services , whether such hiring or availing is for commercial purpose or for personal purpose.

 

Services

Service means service of any description which is made available to potential users and includes the provision of services in connection with business of any industrial or commercial matters such as banking , communication, education, financing, insurance, etc.

 

Relevant market

Relevant market can be further divided into two categories Relevant Product Market and Relevant Geographic Market.

Relevant product market, is such a market where product is homogenous but not restricted to only single market, or the market comprising such products which can be easily substitutable or interchangeable by the consumer , by reason of characteristic or product or services, their prices and intended use.

Relevant geographic market, is such market where market conditions of competition for supply of goods or services or demand of goods or services are homogeneous, and can be distinguish from conditions prevailing in neighbouring geographic market.

 

Anti-Competitive Agreements

Any agreement for goods or services, which has appreciable adverse effect on competition in india is prohibited. These agreements are known as anti- competitive agreement

 

Here are following types of anti- competitive agreements

 

·       Tie-in arrangement : An arrangement where a product is being sold on a condition of buying another product , such arrangement is knowns Tie-in arrangement.

 

·       Exclusive supply agreement : an agreement restricting the buyer or seller to deal in any other goods or services other than his. (goods restriction).

  

·       Exclusive Distribution agreement : an agreement to limit, restrict, or withhold the output or supply of any goods or allocate any area or market for disposal or sale of goods.

 

·       Refusal to Deal : an agreement which restrict or likely to restrict by any way or method the person or classes of persons to whom goods are sold and to whom goods are  brought.

 

·       Resale price maintenance : the agreement to sale is done on the such condition where price charged by the resales shall be stipulated by the seller himself.