flowchart TB
C[Competition Act 2002] --> A[§3 Anti-competitive Agreements<br/>Horizontal · Vertical]
C --> D[§4 Abuse of Dominance]
C --> M[§§5-6 Combinations<br/>Thresholds · Deal-value 2023]
C --> Co[Competition Advocacy §49]
C --> CCI[CCI<br/>Penalty 10 % TO / 3× profit · Leniency §46]
classDef default fill:#003366,color:#ffffff,stroke:#ffcc00,stroke-width:3px,rx:10px,ry:10px;
85 The Competition Act, 2002: Objectives and main provisions
85.1 Background and Purpose
The Competition Act, 2002 replaced the Monopolies and Restrictive Trade Practices (MRTP) Act, 1969 and shifted India’s competition policy from a regulation-of-monopoly model to a promotion-of-competition model. Enacted on the recommendation of the Raghavan Committee (2000). It came into force in phases between 2003 and 2009. The Act establishes the Competition Commission of India (CCI) and was significantly amended by the Competition (Amendment) Act 2007 (creating CCI in its present form + appellate tribunal) and the Competition (Amendment) Act 2023 (Settlement & Commitment, deal-value threshold, leniency-plus, etc.).
85.2 Objectives (Preamble)
TipObjectives of the Competition Act
- Prevent practices having adverse effect on competition (AAEC).
- Promote and sustain competition in markets.
- Protect consumer interest.
- Ensure freedom of trade for participants.
85.3 Architecture of the Act
TipFour Substantive Pillars
| Pillar | Sections |
|---|---|
| Anti-competitive agreements | § 3 |
| Abuse of dominant position | § 4 |
| Regulation of combinations (M&A) | §§ 5-6, 20-31 |
| Competition advocacy | § 49 |
85.4 Anti-Competitive Agreements (§ 3)
Agreements that cause or are likely to cause AAEC are void (§ 3(2)). Two main types:
85.4.1 Horizontal Agreements (§ 3(3)) — Per Se presumption
TipPer Se Cartel Conduct (§3(3))
- Price-fixing — direct or indirect.
- Output / production / supply restriction.
- Market sharing / allocation (geography, customers, products).
- Bid rigging / collusive bidding.
85.4.2 Vertical Agreements (§ 3(4)) — Rule of Reason
Agreements between enterprises at different stages — judged by AAEC factors.
TipVertical Agreements (§3(4))
- Tie-in arrangement.
- Exclusive supply / distribution agreement.
- Refusal to deal.
- Resale price maintenance (RPM).
85.4.3 Factors for AAEC (§ 19(3))
Creation of entry barriers; foreclosing competition; accrual of benefits to consumers; improvement in production / distribution; promotion of technical / scientific / economic development.
85.5 Abuse of Dominant Position (§ 4)
Mere dominance is not an offence — only its abuse is.
85.5.1 Dominant Position (§ 4 Explanation)
A position of strength in the relevant market that enables an enterprise to operate independently of competitive forces or affect competitors or consumers in its favour.
85.5.2 Forms of Abuse
TipAbuses (§ 4(2))
- Imposing unfair or discriminatory conditions / prices.
- Predatory pricing (sale below cost to eliminate competitors).
- Limiting production / market / technical development.
- Denial of market access.
- Tying arrangements and leveraging from one market to another.
- Using dominance in one market to enter / protect another.
85.5.3 Relevant Market (§§ 2(r), 2(s), 2(t))
= Relevant product market (substitutability — § 19(7)) + Relevant geographic market (§ 19(6)).
85.6 Combinations / M&A (§§ 5, 6)
85.6.1 Combination Defined (§ 5)
Acquisition, merger or amalgamation of enterprises that crosses asset / turnover thresholds. Combinations meeting thresholds require mandatory pre-merger notification to CCI.
Asset / Turnover Thresholds (Latest)
TipIndicative Thresholds
- Enterprise level (in India): assets ≥ ₹2,500 cr or turnover ≥ ₹7,500 cr (as revised).
- Group level (in India): assets ≥ ₹10,000 cr or turnover ≥ ₹30,000 cr.
- Worldwide: assets ≥ USD 1.25 bn or turnover ≥ USD 3.75 bn (with India component).
- Deal-value threshold (2023 Amendment): transactions with deal value > ₹2,000 crore + substantial India business need notification.
- De-minimis exemption: smaller target — exempted (notification).
85.6.2 Regulation of Combinations (§§ 20-31)
CCI examines within statutory timeline (150 days for fast-track; 210 / 270 days otherwise). Approves, modifies, or prohibits.
85.7 Competition Commission of India (CCI)
Established in 2003; functional from 20 May 2009. Chairperson + 2 to 6 Members appointed by Government. Headquarters: New Delhi.
TipCCI Functions
- Investigate & inquire into anti-competitive agreements / abuse / combinations.
- Approve / disapprove combinations.
- Impose penalties (up to 10 % of relevant turnover or 3× profit).
- Issue cease & desist orders.
- Competition advocacy (§ 49).
- Director General (DG) — investigation arm.
- Lesser penalty (leniency) regime (§ 46) — cartel whistle-blower discounts (up to 100 %).
85.8 NCLAT — Appellate Body
Earlier appeals went to the Competition Appellate Tribunal (COMPAT); since 2017, NCLAT hears appeals (further appeal to Supreme Court).
85.9 Penalties and Remedies
TipPenalties
- For agreements / abuse: up to 10 % of average turnover of last 3 FY, or for cartels — 3× profit OR 10 % of turnover, whichever higher.
- For gun-jumping (§ 43A): up to 1 % of total turnover / assets.
- For false statement: up to ₹1 cr.
- Daily penalty: up to ₹1 lakh per day; max ₹10 cr.
- 2023 Amendment: settlement & commitment mechanism; deal-value threshold; leniency-plus (extra discount for revealing additional cartels).
85.10 Recent Landmark Cases
TipNotable CCI Orders
- DLF (2011) — abuse of dominance in real estate; fine ₹630 cr.
- Cement cartel (2012; 2016 reaffirmed) — ₹6,300 cr.
- Google Android (2022) — ₹1,337 cr.
- Google Play (2022) — ₹936 cr.
- MakeMyTrip-Goibibo & OYO (2022) — predatory pricing / discrimination.
- WhatsApp privacy policy (2021) — abuse inquiry.
- Auto-aftermarket (2014) — exclusive supply.
NoteDistractor warning
PYQ trap: MRTP 1969 → Competition Act 2002 (Raghavan Committee 2000). Horizontal — per se (§3(3)); Vertical — rule of reason (§3(4)). Mere dominance not illegal, only abuse (§4). Appeals — NCLAT since 2017.
85.11 Practice Questions
Q 01ActEasy
Competition Act 2002 replaced:
View solution
Correct Option: A
**MRTP 1969 → Competition Act 2002**.
Q 02RaghavanMedium
Competition Act 2002 was based on:
View solution
Correct Option: A
**S.V.S. Raghavan Committee 2000**.
Q 03§3Easy
Anti-competitive agreements are in:
View solution
Correct Option: A
**§ 3**.
Q 04AbuseEasy
Abuse of dominant position is in:
View solution
Correct Option: B
**§ 4**.
Q 05Bid riggingMedium
Bid rigging falls under:
View solution
Correct Option: A
**Horizontal — per se**.
Q 06RPMMedium
Resale Price Maintenance (RPM) is:
View solution
Correct Option: B
**Vertical — rule of reason**.
Q 07CCIMedium
CCI became fully functional from:
View solution
Correct Option: B
**20 May 2009**.
Q 08PenaltyMedium
Maximum penalty on cartels (whichever higher):
View solution
Correct Option: B
**10 % of turnover OR 3× profit**, higher (cartels).
Q 09LeniencyHard
Lesser-penalty programme is in:
View solution
Correct Option: C
**§ 46** — leniency for cartel whistle-blowers.
Q 10AdvocacyMedium
Competition advocacy is provided in:
View solution
Correct Option: D
**§ 49**.
Q 112023Hard
Deal-value threshold introduced by Competition (Amendment) Act 2023:
View solution
Correct Option: C
**₹2,000 crore** + substantial India business.
Q 12AppellateMedium
Appeals against CCI orders now lie with:
View solution
Correct Option: B
**NCLAT** since 2017 (replacing COMPAT).
Q 13DGHard
DG in CCI is the:
View solution
Correct Option: A
**DG** — investigative wing of CCI.
Q 14CombinationMedium
Combinations are governed under:
View solution
Correct Option: A
**§§ 5 & 6** — combinations.
Q 15PredatoryMedium
Predatory pricing falls under:
View solution
Correct Option: B
**§ 4** — abuse of dominance.
Q 16GoalEasy
The Act aims to prevent practices causing:
View solution
Correct Option: A
**Appreciable Adverse Effect on Competition** (AAEC).
Q 17GoogleHard
CCI's 2022 order against Google Android imposed a fine of:
View solution
Correct Option: B
**₹1,337 cr** on Google Android.
Q 18CementHard
CCI imposed cartel penalty of about ₹6,300 cr on:
View solution
Correct Option: B
**Cement cartel** — 2012 (reaffirmed 2016).
Q 19Relevant marketHard
"Relevant market" consists of:
View solution
Correct Option: A
**Relevant product market + relevant geographic market**.
Q 20MatchMedium
Match section with subject:
| Section | Subject | ||
| (i) | § 3 | (a) | Combinations |
| (ii) | § 4 | (b) | Anti-comp agreements |
| (iii) | §§ 5-6 | (c) | Abuse of dominance |
| (iv) | § 49 | (d) | Advocacy |
View solution
Correct Option: A
3-Agreements, 4-Abuse, 5-6-Combinations, 49-Advocacy.
85.12 Quick Recall
ImportantQuick recall
- Replaced MRTP 1969; based on Raghavan Committee 2000.
- 4 pillars: §3 agreements; §4 abuse; §§5-6 combinations; §49 advocacy.
- §3(3) horizontal: per se illegal — price-fix, output limit, market share, bid rig.
- §3(4) vertical: rule of reason — tie-in, exclusive, refusal, RPM.
- §4 abuse: unfair price, predatory pricing, denial of access, tying, leverage.
- CCI — fully functional 20 May 2009; HQ New Delhi; DG investigator; penalty up to 10 % TO or 3× profit; §46 leniency.
- Combinations — pre-notification with thresholds; 2023 Amendment — deal value > ₹2,000 cr; settlement/commitment; leniency-plus.
- Appeals → NCLAT (since 2017) → Supreme Court.