Competition Act, 2002

Background and evolution

After Independence, India's economic policy relied on licensing and public sector dominance. The Monopolies and Restrictive Trade Practices Act of 1969 aimed to prevent concentration of economic power, focusing on firm size. With liberalisation in 1991, the focus shifted from controlling size to promoting competition. The Raghavan Committee (2000) recommended a modern competition law, and Parliament passed the Competition Act in 2002 (assented in January 2003).

A legal challenge in Brahm Dutt v. Union of India (2005) over whether a body with judicial functions could be headed by a non-judicial member led to amendments in 2007. The provisions on anti-competitive agreements and abuse of dominance came into force in 2009, and merger control in 2011. The Competition Appellate Tribunal was merged into the NCLAT in 2017.

Key features and provisions

• Anti-competitive agreements (Section 3): prohibits agreements causing an appreciable adverse effect on competition in India, including cartels on prices, output, market sharing and bid rigging (horizontal), and vertical agreements such as exclusive supply and resale price maintenance.
• Abuse of dominance (Section 4): prohibits a dominant enterprise from imposing unfair prices or conditions, limiting production, denying market access, or using dominance in one market to enter another.
• Combinations (Sections 5 and 6): mergers and acquisitions above thresholds of assets or turnover, and since 2023 above a deal value of ₹2,000 crore with substantial business in India, must be notified to the CCI.
• CCI composition: a chairperson and two to six members.
• Penalties: up to 10% of average turnover, and for cartels up to three times profit or 10% of turnover; the 2023 amendment allows penalties on global turnover.
• Leniency: reduced penalties for cartel members who disclose information, with "leniency plus" added in 2023.
• Settlements and commitments (2023): in abuse of dominance and vertical cases, parties may offer settlements or commitments to close cases faster.
• Competition advocacy (Section 49): CCI promotes awareness and advises governments.