ENFORCEMENT UNDER THE COMPETITION ACT, 2002
6.1 AUTHORITIES ENFORCING THE COMPETITION ACT 2002
The Competition Commission was established for the Act called the Competition Commission of India; a director–general is appointed to assist the Competition Commission in conducting an inquiry into contravention of any of the provisions of the Act and for performing such other functions as may be provided by the Act. The Competition Appellate Tribunal exercises
appellate powers as specified in the act.
Section 8 provides for the composition of the commission
Before the 2007 Amendment, the section stood like this:
S8. (1) The Commission shall consist of a Chairperson and not less than two and not more than ten other members to be appointed by the Central Government, Provided that the Central Government shall appoint the Chairperson and a Member during the first year of the establishment of the Commission.
(2) 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.
(3) The Chairperson and other Members shall be whole-time Members.
The appointment of a civil servant as the chairperson led to the pursuit of a judicial pronouncement, in Brahm Dutt v. Union of India, on the validity of the basis of the constitution of the Commission under the provisions of the Act before the amendment. As submitted to the Supreme Court in this case, under the amended Act, the Competition Commission would be a market regulator, an expert body performing advisory and regulatory functions. The new section 8 reflects this in the description of the composition of the Competition Commission. The new section 8 is as follows:
S8. (1) The Commission shall consist of a Chairperson and at least two or more than six other Members to be appointed by the Central Government.
(2) The Chairperson and every other Member shall be a person of ability, integrity and standing and who has special knowledge of, and such professional experience of not less than fifteen years in, international trade, economics, business, commerce, law, finance, accountancy, management, industry, public affairs or competition matters, including competition law and policy, which in the opinion of the Central Government, may be useful to the Commission.
(3) The Chairperson and other Members shall be whole-time Members.
It may be noted that the new section 8 is different in two important elements. The first relates to the composition. The qualification that for one to be a member of the Commission he or she should have been or is qualified to be a judge of a high court has been omitted. The obvious reason is that it is intended that the Commission would be an expert body and act as a market regulator. Establishing the Competition Appellate Tribunal acting as an adjudicatory body is another reason for designing the composition of the Commission. The other material change in section 8 is that one of the conditions for eligibility for appointment as a member of the Commission, which includes the chairperson, is that the person to be considered for appointment should have special knowledge and professional experience in competition matters, including competition law and policy.
Section 9 of the pre-amendment Act could have been more satisfactory. The section stated that the chairperson and other members shall be selected in the manner as may be prescribed. Rule 3 of the Competition Commission of India (Selection of Chairperson and Other Members of the Commission) Rules, 2003, enacted under section 9, was attacked in Brahm Dutt v. Union of India on the ground that the right to appoint the judicial members of the Commission should rest with the Chief Justice of India or his nominee. That Rule 3 did not provide. Section 9 has been substituted by a new section, which is as follows:
S 9. Selection Committee for Chairperson and Members of Commission.
(1) The Central Government shall appoint the Chairperson and other Members of the Commission from a panel of names recommended by a Selection Committee consisting of-
(a) the Chief Justice of India or his nominee… Chairperson;
(b) the Secretary in the Ministry of Corporate Affairs… Member;
(c) the Secretary in the Ministry of Law and Justice… Member;
(d) two experts of repute with special knowledge of and professional experience in international trade, economics, business, commerce, law, finance, accountancy, management, industry, public affairs or competition matters, including competition law and policy… Members.
(2) The term of the Selection Committee and the manner of selection of panel of names shall be such as may be prescribed
Section 10, as it originally stood, provided that the chairperson and every other Member shall hold office as such for three years from the date he entered upon his office and shall be eligible for reappointment. The 2007 amendment has introduced a proviso to section 10(1) that the upper age limit for a chairperson and a member shall be sixty-five years.
6.2 DUTIES AND FUNCTIONS OF THE CCI
Chapter IV of the Competition Act 2002 deals with the duties, powers, and functions of the Competition Commission of India.
The Act says that the commission has to perform these main duties:
1. Eliminate practices having adverse effects on competition: The commission must be a watchdog for prohibiting any practice relating to abuse of competition in markets. 2. Promote and sustain competition: The main purpose of the Commission is to promote competition in markets in India and try to carry on competitiveness in markets in India. 3. Protect the interests of consumers: The ultimate aim of the competition law and the competition commission is to protect consumers from the abuse of competition in markets. All the anti-competitive activities are prohibited to help consumers ultimately. 4. Ensure freedom of trade carried on by other participants in markets in India: To protect the competition in markets, the commission has a duty not to hinder the freedom of trade in markets in India.
The powers and functions of the CCI are as follows:
1. Commission’s Power of Enquiry Into Certain Agreements and Dominant Position of Enterprise (Section 19): Under Section 19, the Commission is empowered to Inquire into certain agreements and the dominant position of enterprise. The Commission may inquire into any alleged contravention of the provisions contained in subsection (1) of section 3 or sub-section (1) of section 4
• either on its motion or
• on receipt of any information, in such manner and accompanied by such fee as may be determined by regulations, from any person, consumer or their association or trade association; or
• the Central Government, a State Government, or a statutory authority referred to it.
2. Commission’s Power of Enquiry Into Combination (Section 20): The Commission may, upon its knowledge or information relating to acquisition referred to in clause (a) of section 5 or acquiring of control referred to in clause (b) of section 5 or merger or amalgamation referred to in clause (c) of that section, inquire into whether such a combination has caused or is likely to cause an appreciable adverse effect on competition in India It provided that the Commission shall not initiate any inquiry under this subsection after the expiry of one year from the date such combination has taken effect.
3. Power To Give Opinion On Reference By Authority (Section 21): Where in the course of a proceeding before any statutory authority, an issue is raised by any party that any decision which such statutory authority has taken or proposes to take is or would be, contrary to any of the provisions of this Act, then such statutory authority may refer in respect of such issue to the Commission.
4. Power of Commission To make Reference to Statutory Authority (Section 21A): Where in the course of a proceeding before the Commission, an issue is raised by any party that any decision which the Commission has taken during such proceeding or proposes to take is or would be contrary to any provision of this Act whose implementation is entrusted to a statutory authority, then the Commission may refer in respect of such issue to the statutory authority.
The Commission may, suo motu, make such a reference to the statutory authority. 5. Meetings of the Commission (Section 22): The Commission shall meet at such times and places and shall observe such rules and procedures regarding the transaction of business at its meetings as may be provided by regulations.
6. Power of Commission to Conduct Enquiry under Section 19 (Section 26): On receipt of a reference from the Central Government or a State Government or a statutory authority or on its knowledge or information received under section 19, if the Commission thinks that there exists a prima facie case, it shall direct the Director General to cause an investigation to be made into the matter:
Provided that if the subject matter of information received is, in the opinion of the Commission, substantially the same as or has been covered by any previous information received, then the new information may be clubbed with the previous information.
7. Power of Commission to Issue Orders After Inquiry Into Agreements Or Abuse Of Dominant Position (Section 27): Where after inquiry, the Commission finds that any agreement referred to in section 3 or action of an enterprise in a dominant position is in contravention of section 3 or section 4, as the case may be, it may pass all or any of the following orders, namely:—
• to discontinue and not to re-enter such agreement or discontinue such abuse of dominant position,
• Impose such penalty, as it may deem fit, which shall be not more than ten per cent of the average of the turnover for the last three preceding financial years, upon each of such person or enterprises which are parties to such agreements or abuse
• In case a cartel has entered into any agreement referred to in section 3, the Commission may impose upon each producer, seller, distributor, trader or service provider included in that cartel a penalty of up to three times its profit for each year of the continuance of such agreement or ten per cent. Of its turnover for each year of the continuance of such agreement, whichever is higher.
• Direct that the agreements shall stand modified to the extent and in the manner as may be specified in the order by the Commission;
• Direct the enterprises concerned to abide by such other orders as the Commission may pass.
8. Power of Commission to Divide the enterprise enjoying dominant position (Section 28): The Commission may, by order in writing, direct the division of an enterprise enjoying a dominant position to ensure that such enterprise does not abuse its dominant position.
9. Power of Commission to investigate combinations (Section 29): Where the Commission is of the prima facie opinion that a combination is likely to cause, or has caused an appreciable adverse effect on competition within the relevant market in India, it shall issue a notice to show cause to the parties to combination calling upon them to respond within thirty days of the receipt of the notice, as to why investigation in respect of such combination should not be conducted.
10. Power of Commission to issue Orders on certain combinations (Section31): Where the Commission thinks that any combination does not, or is not likely to, have an appreciable adverse effect on competition, it shall, by order, approve that combination, including the combination in respect of which a notice has been given under sub-section (2) of section 6. 11. Extra-Territorial Power of Commission (Section32): have power to inquire by the provisions contained in sections 19, 20, 26, 29 and 30 of the Act into such agreement or abuse of dominant position or combination if such agreement or dominant position or combination has, or is likely to have, an appreciable adverse effect on competition in the relevant market in India and pass such orders as it may deem fit by the provisions of the Act, when such is done outside the territorial jurisdiction of the commission.
12. Power of Commission to Issue Interim Orders (Section33): Where during an inquiry, the Commission is satisfied that an act in contravention of subsection (1) of section 3 or sub section (1) of section 4 or section 6 has been committed and continues to be committed or that such act is about to be committed, the Commission may, by order, temporarily restrain any party from carrying on such action until the conclusion of such inquiry or until further orders, without giving notice to such party, where it deems it necessary.
13. Appearance before Commission (Section 35): A person or an enterprise or the Director General may either appear in person or authorise one or more chartered accountants or company secretaries or cost accountants or legal practitioners or any of his or its officers to present his or its case before the Commission.
14. Power of Commission to regulate its procedure [Section36(1)]: In the discharge of its functions, the Commission shall be guided by the principles of natural justice and, subject to the other provisions of the Act and any rules made by the Central Government, the Commission shall have the powers to regulate its procedure.
15. Power of Civil Court [Section 36(2)]: The Commission shall have, to discharge its functions under this Act, the same powers as are vested in a Civil Court under the Code of Civil Procedure, 1908, while trying a suit, in respect of the following matters, namely:- (a) summoning and enforcing the attendance of any person and examining him on oath; (b) requiring the discovery and production of documents; (c) receiving evidence on affidavit; (d) issuing commissions for the examination of witnesses or documents; (e) requisitioning, subject to the provisions of sections 123 and 124 of the Indian Evidence Act, 1872 any public record or document or copy of such record or document from any office.
16. Power to call experts: [Section 36(3)]: The Commission may call upon such experts from the fields of economics, commerce, accountancy, international trade or from any other discipline as it deems necessary to assist the Commission in the conduct of any inquiry by it.
17. Power to call for documents/Information: [Section 36(4)]: The Commission may direct any person: (a) to produce before the Director General or the Secretary or an officer authorised by it such books or other documents in custody or under the control of such person so directed as may be specified or described in the direction, being documents relating to any trade, the examination of which may be required for this Act; (b) to furnish to the Director General or the Secretary or any other officer authorised by it, as respects the trade or such other information as may be in his possession about the trade carried on by such person, as may be required for this Act.
18. Power to Rectify orders (Section 38): To rectify any mistake apparent from the record. The Commission may amend any order passed by it under the provisions of this Act. 19. Execution of Commission orders imposing monetary penalty (Section 39): If a person fails to pay any financial penalty imposed on him under the Act, the Commission shall proceed to recover such penalty as may be specified by the regulations.
