INTRODUCTION
The Competition Commission of India was established under the Competition Act, 2002, with the aim of curbing anti-competitive market practices as well as ensuring healthy competition in the marketplace. The objectives laid down under the Competition Act, 2002, are sought to be achieved under the aegis of Competition Commission of India, established by the Central Government. The Commission has been in effect functioning from 14th October 2003. It involves a broad range of duties, such as protection of consumer interests, freedom of trade, eliminate unfair trade practices, etc.
In this article, Team YLCC brings you the role of CCI as a regulator in the corporate world. Read on!
STRUCTURE OF CCI
The Competition Commission of India, under Section 8 of the Competition Act, 2002, entitled ‘Composition of Commission’, states that the Commission consists of a Chairperson, and 6 Members, appointed by the Central Government. The members are appointed by the Central Government. The Government has currently appointed Dr. Sangeeta Verma as acting chairperson of the Competition Commission of India.
Stipulating the requirements of the appointees, as member(s) and chairman, Section 8 of the Competition Act, 2002, under Sub-Clause (2) states that every member appointed as well as chairman must have the abilities, integrity and standing, coupled with professional experience which should not be less than 15 years in the fields specified under the act. Further, Sub-Clause (3) states that the member and chairman must be whole-time members.
POWERS OF CCI
The Competition Commission of India has been vested with several powers of vital significance under the Competition Act, 2002-
Section 19 of the Competition Act, 2002, entitled, “Inquiry into certain agreements and dominant position of enterprise”, states that the Competition Commission of India has wide ranging powers with respect to inquiry pertaining to alleged contraventions, and that action/motion can be taken up by the Competition Commission of India either on the receipt of a complaint or suo-moto respectively. Section 19 also gives the Competition Commission of India the power of determination to assess whether a company enjoys dominant position in the market, unfair trade practices, deciding whether a market is a relevant market, etc.
FUNCTIONS OF CCI
The Competition Act’s preamble emphasizes the need of preventing unfair business practices and fostering healthy competition for the growth of the nation’s economy.
The CCI’s duties include-
- Ensuring the maintenance of the customer’s welfare and benefit in the Indian market.
- Encouraging fair and healthy competition in the country’s economic activities, to achieve an economic growth that is both fast and inclusive.
- Implementing competitive policies to ensure the effective use of the country’s resources.
- The Commission also engages in advocating for competitiveness.
- The Commission serves as the small business antitrust ombudsman as well.
- Any foreign firm that joins the Indian market through a merger or purchase will also be closely examined by the commission to make sure it complies with the Competition Act, 2002, which governs competition in India.
- Additionally, The Commission ensures communication and collaboration with the other economic regulatory bodies. This will guarantee that the sector based regulatory legislation and the laws governing competition are compatible.
- It also serves as a business facilitator by preventing market dominance by a limited number of companies and fostering harmonious coexistence between big and small businesses.
- Protection from market distortions: Mitigating the risk that different parties may use market distortions and abuse their dominant positions to engage in anti-competitive behaviour, competition rules are necessary to guarantee that the market is protected from the various distortions.
- The Competition Commission may act on a complaint filed by an informant pertaining to an anti-trust activity or may take action suo-moto. CCI may ask its Director General to conduct an investigation to probe the alleged activity and hold a hearing on the findings of the probe report thereafter.
- The Competition Law also requires for M&As between entities to obtain regulatory approval from CCI, provided such combinations satisfy the monetary threshold mentioned in the law.
- The Commission is also mandated to opine on Competition Law issued, with reference received from a statutory authority, established under the provisions of any law.
- Further, the Commission is also expected to undertake activities encompassing competition advocacy, impacting knowledge and training, and increasing public awareness with respect to issues in the domain of Competition Law.
Thus, the competition laws have been referred to as the Magna-Carta of free enterprise the competition laws are fundamental in protecting such rights. It can be construed that the Competition Commission has a broad range of functions under its ambit.
PENALTIES
The Competition Act, unlike any of the formal regulations of the country, is cascaded with a set of obligations. The mentioned obligations, must be complied with by businesses of all kinds which fall under the ambit of Competition Commission of India, are intended to ensure fairness in the Indian competitive market. Non-compliance with such provisions would lead to the defaulting businesses facing penal consequences.
In case the Competition Commission of India finds out about the practice of anti-competitive acts, or is in receipt of a complaint or finding of dominant position allegations, it may order any of the following remedies-
- Cease and Desist Order that mandates the parties to completely discontinue the agreement/practice in question.
- Imposition of a Monthly Penalty, which does not exceed more than a tenth of the average turnover of the preceding three financial years.
- Ordering modification of an agreement in order to increase compliance.
- Order invoking its power to direct company to desist from practices that fall under unfair trade practices, or abuse of dominant position.
- Issuance of any other order that falls under the ambit of Competition Commission of India.
In order to recover the financial penalties imposed by the Act, the Competition Commission of India has developed a series of guidelines, some of which include a reference to the Income Tax Authority for the recovery of the penalty as tax owed under the income-tax law.
The Competition Commission of India has the authority to ensure adherence to its directives and powers, including those relating to changes and combinations. For each incidence of non-compliance, the first non-compliance provision includes punishment and a fine of up to Rs. 1,000,000. The maximum penalties which can be imposed is Rs. 100 million.
The Chief Metropolitan Magistrate of Delhi will handle complaints made by the Competition Commission of India over penalties that are not remitted on time. The proceedings may result in imposition of imprisonment of up three years and/or a fine of up to Rs. 250 million.
Recently, The Competition Commission of India imposed a huge penalty of Rs. 936.44 crore on Internet Giant Google for abuse of its dominant position pertaining to the Play Store policies, and also issued a cease-and-desist order on Google to curb its unfair practices. The Commission also directed Google to modify its compliance framework within a defined time frame. This follows a monetary penalty of Rs. 1377 crores over Google’s anti-competitive practices.
The Commission also penalized Rs. 392.3 crore, on OYO, MakeMyTrip, GoIbibo, for anti-competitive practices, and conduct. A major allegation leveled against Make My Trip and GoIbibo, was that it imposed a price parity in agreements with hotel partners. It was further alleged that room booking giant OYO was given preferential treatment by MakeMyTrip on its platform, resulting in blocking of market access to other players. Thus, OYO benefitted from the preferential treatment given to it by MakeMyTrip.
In 2021, the Commission penalized Maruti Suzuki, with a fine of around Rs. 200 crore, for restricting discounts offered by its dealers and directed the country’s largest carmaker to cease and desist from indulging in unfair business practices.
Further, Competition Commission of India has imposed a penalty amounting to Rs 4369.4 crore almost 250 companies over half a decade, for violation of several provisions of the Competition Act, 2002, of which about Rs. 200 crore has been paid by companies so far, the government notified in the parliament in June 2022. Thus, despite the stringent fines imposed by the Commission, compliance in payment remains an issue.
CONCLUSION
The CCI’s enforcement graph has changed significantly in many industries, and in the years to come, it is anticipated that its position will continue to advance, especially in developing industries like the digital markets and e-commerce sector. The CCI is anticipated to take action to develop a framework for proper transparency and set fundamental requirements for the e-commerce sector and digital market platforms. Based on the recommendations of the Competition Law Review Committee, it is also anticipated that significant streamlining of numerous substantive and procedural components of Competition Law will take place in the near future. Competition Commission of India continues to play a pivotal role in the enforcement of Competition Act 2002, and in facilitating fair trade practices, playing a administrative as well as quasi-judicial role for adjudication of disputes, with a widening scope with further developments in the future.
YLCC would like to thank its Content Team for their valuable insights in this article.
