Study Notes: Competition Commission of India

By Shivani Chauhan 11 Minutes Read

WHAT IS COMPETITION COMMISSION OF INDIA?

Competition Commission of India (hereinafter referred to as “CCI“) is a statutory body of Government of India and an apex competition authority having its headquarters in New Delhi and is responsible to implement the Competition Act, 2002. Although it was established by the Central Government in 2003 it became fully functional in 2009.

CCI is a body corporate having perpetual succession; power to acquire, hold and dispose of property; power to enter into contracts; and power to sue or be sued [Section 7(2)].

The previous appellate body where all the appeals against orders of CCI would lie was the Competition Appellate Tribunal (hereinafter referred to as “COMPAT”). However, by an amendment brought about under the provisions of Part XIV of Chapter VI of the Finance Act, 2017, COMPAT has ceased to exist from 26 May 2017 and a new appellate body known as the National Company Law Appellate Tribunal (hereinafter referred to as “NCLAT”) has been formed.

HISTORY

The Competition Act, 2002 repealed and replaced the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act) [the previous Act governing competition law in India] on the recommendations of the High Level Committee on Competition Policy and Competition Law, 1999 (popularly known as, the Raghavan Committee, 1999).

Hence, the statutory competition authority under the MRTP Act, that is, the Monopolies and Restrictive Trade Practices Commission was replaced by the Competition Commission of India by the enactment of the Competition Act, 2002.

COMPOSITION OF CCI

• Composition [Section 8(1)]- CCI comprises of one Chairperson and other Members [a minimum of two Members and a maximum of six Members] to be appointed by the Central Government.
• Eligibility [Section 8(2)]- The Chairperson and Members of CCI shall be persons of ability, integrity and standing. They shall have special knowledge and professional experience of not less than 15 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.
• Selection Committee for the Chairperson and Members of CCI [Section 9]- The Chairperson and Members of CCI are appointed by the Central Government from a panel recommended by the Selection Committee. The Selection Committee consists of:

Chief Justice of India [Chairperson] + Secretary in the Ministry of Corporate Affairs [Member] + Secretary in the Ministry of Law and Justice [Member] + 2 experts of repute having special knowledge 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].

• Term of Office [Section 10]- The term of office for the Chairperson and Members is 5 years from the date of entering the office and are eligible for re-appointment. The maximum age limit to hold the office is 65 years.
• Resignation, Removal and Suspension [Section 11]-
• Resignation– In order to resign the Chairperson or the Member has to give a notice in writing to the Central Government.
• Removal– The Central Government can remove the Chairperson or any Member on any of the following grounds:
• Insolvency
• Engagement in paid employment during the term of office
• Conviction in offences involving moral turpitude
• Acquiring of any financial or other interest that can affect prejudicially the function as Member
• Abuse of position prejudicial to public interest
• Physically or mentally incapability of acting as Member.

DUTIES, POWERS AND FUNCTIONS OF CCI

• General Duties [Section 18]- CCI has duty to:
• eliminate practices having adverse effect on competition in the market
• promote and sustain competition in the market
• protect the interests of consumers
• ensure freedom of trade carried on by other participants in the market.
• Inquiry into certain agreements and dominant position of enterprise [Section 19]- The CCI inquires into contravention of provisions enshrined under Ss. 3(1) or 4(1), that is to say, agreements having appreciable adverse effect on competition; or abuse of dominant position by any enterprise.
• Inquiry into Combination [Section 20]- It is the duty of CCI to inquire into merits or impacts of combinations (merger, acquisition, amalgamation etc. between enterprises) and inquires whether such combination has caused or is likely to cause an appreciable adverse effect on competition.
• Reference of an issue by a statutory authority to the CCI [Section 21]- In the course of a proceeding if any issue is raised that any decision of a statutory authority will be in conflict with the provisions of the Competition Act, 2002, the statutory authority shall make a reference in this regard to the CCI. It is the duty of CCI to give its opinion on that issue to the authority within 60 days of receipt of such reference after hearing the parties to the proceedings.
• Reference by Commission [Section 21A]– If in the course of proceeding an issue is raised by any party that any decision taken by the CCI is in contravention of the provisions of Competition Act, whose authority is entrusted to a statutory authority then the CCI may make a reference in respect of the issue to the statutory authority.
• Power to pass orders after and during inquiry into agreements or abuse of dominant position [Sections 27, 33]– If after the inquiry the CCI finds any enterprise  violating the provisions of Ss. 3 or 4, then it may pass any of the following order against that enterprise:
• Direct the enterprise to discontinue and not to re-enter such agreement having appreciable adverse effect on competition or discontinue such abuse of dominant position
• Impose penalty (not to be more than 10% of the average of the turnover for the last 3 preceding financial years) on the enterprise
• Direct the agreement to be modified or amended
• Direct the enterprise to abide by the orders and directions passed or issued by CCI
• Pass any order or issue any direction as CCI deems fit
• Pass interim orders during an inquiry to temporarily restrain any party from carrying out any act [Section 33]
• Power to pass orders for division of enterprise enjoying dominant position to prevent any abuse [Section 28]- In order to prevent any abuse of dominant position the CCI may direct division of any enterprise enjoying dominant position via transferring of property; adjusting contracts by discharging or reducing any liability or obligation; allotting, creating, surrendering or cancelling any shares, stocks or securities; winding up the enterprise or amending Memorandum of Association or Article of Association or; by any other means.
• Power to give orders relating to approval, rejection and modification of combinations [Section 31]- CCI passes orders of approval of the combinations if in its opinion it does not have any appreciable adverse effect on the competition and vice versa, that is to say, it rejects those combinations which as per the opinion of CCI have or are likely to have appreciable adverse effect on the competition. However, if such adverse effect can be eliminated in any combination via any suitable modification, then CCI may propose appropriate modification for the same and approve the combination when such modification is complied to.
• Power to pass orders relating to acts taking place outside India but having an effect on competition in India [Section 32]- CCI has power to inquire and pass any order against any agreement or combination or abuse of dominant position by any enterprise that has taken place outside India but has or is likely to have appreciable adverse effect on competition in India.
• Power to regulate its own procedure [Section 36(1)]- As per the provisions of Section 36 the CCI has power to regulate its own procedure subject to the principle of natural justice; provisions of Competition Act, 2002 and any other rules made by the Central Government.
• Power equivalent to a Civil Court [Section 36(2)]- The CCI has power equivalent to a civil court while discharging its functions in matters such as summoning, producing evidences,  examining witnesses, requisitioning any public record etc.
• Competition Advocacy [Section 49]– The Central or the State Government may while formulating any policy on Competition or any other matter may make reference to the Commission for its opinion on possible effect of such policy on Competition. However, the opinion given by the Commission is not binding on the Central Government.

Shivani Chauhan

Shivani is a Contributing Editor @LegalWires. She has done B.A.LL.B.(Hons.) from Dr. RMLNLU and has completed her LL.M. in Business law. Her areas of interest are Competition Law, IPR and Sports Law.