Imagine you went to a shopping mall filled with stores, all trying to sell you stuff. But instead of giving you good deals, these stores gang up to make things more expensive. That's where the Competition Commission of India (CCI) steps in, like a mall guardian. Its job is to make sure these stores play fair and don't team up to hike prices. Why? Because for an economy to grow, trade needs to be easy and free. Businesses should compete without any unfair tricks, and CCI ensures this happens.
CCI is created by the Government of India to keep competition healthy and prices fair. Also, this topic is important for competitive exams like CLAT, LSAT, SLAT, and AILET. So, let's dive in and learn more!
What is Competition Commission of India?
India's economy opened up in 1991 due to liberalization in Indian economy, like a door to competition and private businesses. To keep things fair, the government created the Competition Commission of India (CCI) under the Competition Act 2002. CCI aimed to prevent sneaky anti-competitive practices (discussed later in this blog), to stop big players from dominating, and watching over mergers to ensure they don't harm competition.
Did you know? The idea for CCI came from the Vajpayee Government, introducing the Competition Act in 2002, which replaced the old Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act).
Formation of CCI
- In the year 2002, the Competition Act was enacted, gaining the President's approval in January 2003. Later, in 2007, a game-changing amendment arrived, bringing forth the Competition Commission of India and the Competition Appellate Tribunal.
- These bodies were brought to ensure fairness in the marketplace. The Competition Appellate Tribunal (COMPAT) initially dealt with appeals against the Competition Commission's decisions but got replaced by the National Company Law Appellate Tribunal (NCLAT) in 2017.
Composition of Competition Commission of India
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The Commission consists of one Chairperson and six Members who shall be appointed by the Central Government.
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The Commission is a quasi-judicial body that gives opinions to statutory authorities and also deals with other cases. The Chairperson and other Members shall be whole-time Members.
Eligibility criteria of members of CCI
- The Chairperson and every other Member shall be a person of ability, integrity and standing.
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Chairperson:
a. Should be a person who is or has been a Judge of the Supreme Court; or
b. Should be a person who is or has been a Chief Justice of a High Court.
- One can become a member if the person 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.
Tenure of Member of CCI
The tenure is 5 years or till the age of 65 years, whichever is earlier.
What are the Functions and Role of CCI?
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To investigate and take action against practices that restrict competition, abuse of dominant market positions, and anti-competitive agreements among businesses. This includes actions such as price-fixing, bid-rigging, abuse of market power, and unfair trade practices.
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To review mergers, acquisitions, and combinations to ensure they do not result in a substantial lessening of competition in the relevant market. Parties to such transactions must seek the CCI's approval before proceeding in certain cases.
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To undertake competition advocacy, create public awareness and impart training on competition issues.
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Consumer Welfare: To ensure that markets operate in a manner that benefits and protects consumers.
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Ensure fair and healthy competition in economic activities in the country for faster and inclusive growth and development of the economy.
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Implement competition policies with an objective to effectuate the most efficient utilization of economic resources.
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Effectively carry out competition advocacy & spread the information on competition benefits among all stakeholders to establish & nurture competition culture in the Indian economy.
Powers of the Competition Commission of India (CCI)
To protect the competition in Indian markets, the CCI has certain powers, making it the chief regulator of competition in India.
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Dominance Check: CCI watches over agreements by businesses to ensure they don't misuse their power.
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Open-Eyed: CCI can investigate on its own or when anyone reports a concern.
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Punitive Powers: CCI can slap penalties on firms breaking competition rules or the 2002 Competition Act.
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Rule-Maker: CCI can create its own rules as authorized by the Competition Act, 2002.
Achievements of CCI till now (Till 2022)
The Competition Commission of India had tackled over 1,200 antitrust cases, solving a whopping 89% of them. Plus, they've reviews through 900+ mergers and acquisitions, giving the green light in just 30 days on average. And if that's not impressive enough, they've also introduced many innovations like the 'Green Channel' for speedy automated approvals, waving through over 50 transactions.
What is the Competition Act, 2002?
The Competition Act, 2002 was enacted by the Parliament of India and governs the Indian competition law. The Act received the presidential assent in 2003. The Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act) was repealed and replaced by the Competition Act, 2002. This was done based on the recommendations of the Raghavan Committee.
Features of the 2002 Act:
- Prohibits anti-competitive agreements.
- Prohibits abuse of dominant position by enterprises and;
- Regulates combinations (acquisition, acquiring of control, and M&A), which can cause or is likely to cause an appreciable adverse effect on the competition within India.
- The Act follows the philosophy of modern competition laws. It was subsequently amended by the Competition (Amendment) Act, 2007.
Features of the recent Competition (Amendment) Act, 2023
The Competition (Amendment) Act, 2023 has also been published in the Gazette of India on 11th April, 2023. It's features are as follows:
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New Threshold: Deals over INR 2,000 Cr involving entities with substantial operations in India will now need CCI approval, broadening CCI's review scope.
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Material Influence: The definition of "control" now includes "material influence," making it clearer when one entity influences another's decisions.
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Shorter Timelines: The amendment reduces the deal completion timeline from 210 to 150 days, with CCI forming an initial opinion in 30 days.
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Flexible Open Offers: Open market share acquisitions can happen before CCI approval, but control rights can't be exercised until clearance.
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Time Limit: There's a three-year limit for filing complaints about violations under the Act, preventing cases from reopening long after the fact.
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Settlement Mechanism: Enterprises under inquiry for dominance abuse or anti-competitive agreements can resolve issues through mutually agreed remedies, saving time and resources.
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Hope for Startups: The changes benefit startups by speeding up the process for mergers and acquisitions, making it easier to collaborate with others in the industry.
Conclusion
Hence, the Competition Commission of India (CCI) is like the guardian of fair competition in India. It was set up in 2009 under the Competition Act, 2002, and it's part of the Ministry of Corporate Affairs. CCI's job is to make sure everyone in the market plays fair and square, promoting healthy competition in the country.