An Analysis of the effectiveness of India's competition laws in promoting fair competition in the Marketplace.
Mr. Paramjeet Sangwan

An Analysis of the effectiveness of India's competition laws in promoting fair competition in the Marketplace.

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For 40 years, India has had its own version of competition law, enacted in an act called the Monopoly and Restrictive Trade Practices Act of 1969 (MRTP Act). This legislation, based on the principles of command-and-control economics, aimed to introduce a regulatory system in the country that would not allow the concentration of economic power in a few hands to the detriment of the public interest, and therefore prohibited any form of monopoly and restrictive trade practices. 

 After the economic liberalization of 1991, it became necessary to introduce a competition law system that better reflects the economic realities of the country and is in line with international practice. Therefore, in 2002, the Indian Parliament passed comprehensive competition laws – the Competition Act 2002 (Competition Act) to regulate business practices in India to prevent practices that are detrimental to competition (AAEC) in India. 

The Competition Act of mainly aims to regulate three types of behavior: anti-competitive agreements, abuse of a dominant position, and combinations (e.g., mergers, acquisitions, and mergers). The Competition Law, as amended by the Competition Law (Amendment) 2007, subsequently came into force on  May 20, 2009, when the Government of Indonesia notified the Anti-Competitive Agreements and Abuse of Dominant Position Provisions of the Competition Law. Another three years passed before the provisions of the Competition Protection Act came into force in June 2011.


In 1997, the Government of India (Union Ministry of Commerce) established an Expert Panel to study the impact of anti-competitive practices and the impact of mergers and acquisitions on the competition. Against this background, the panel proposed to enact a competition law to harmonize competition rules, competition policy, and competition law enforcement efforts. 

Subsequently, in his 1999 Budget Speech, the Minister of Finance stated that the Monopolies and Restrictive Practices Act (MRTP Act) had become obsolete in light of international economic developments and it was, therefore, necessary to shift the emphasis from the limitation of monopolies to funding competitions. 

In relation to the above, the Competition Act 2002 was approved by the Sejm in 2002, approved by the President in January 2003 and the International Criminal Court was established in October 2003. However, the law came into force in 2007 as a result of the Competition Act 2007 (as amended).


The main objectives of the Act: 

  1. Combating anti-competitive practices  
  2. Promoting and maintaining competition in the markets 
  3. Protecting consumer interests  
  4. Ensuring free trade

The key provisions include:

Section 3: dealing with anti-competitive agreements

Section 4: Prohibition of abuse of dominant position.

Section 5 and 6: Deals with combination of enterprises. The combination maybe an acquisition or a merger.

Section 21 and 21A: Dealing with advisory.

Section 49: Deals with advocacy


The Competition Commission of India

The Act establishes a Commission which is duty bound to protect the interests of free and fair competition (including the process of competition), and as a consequence, protect the interests of consumers. Broadly, the commission's duty is: -

  • Prohibit any agreement or practice that has or may have a significant adverse impact on competition in the Indian market (horizontal and vertical agreements/agreements); 
  • Prohibit abuse of a dominant position; 
  • Prohibition of acquisitions, amalgamations, mergers, etc. between companies that have or may have a material adverse effect on competition in the market or markets in India.

In addition to this, the Competition Act envisages its enforcement with the aid of mutual international support and enforcement network across the world.

Case Study:

Shamsher Kataria vs. Honda Siel Cars ltd. (Case No.03/2011). In the first major injunction under Section 3(4) of the Competition Act 2002, the CCI fined 14 major automakers in excess of Rs 2,500 crore for violating the law. It has been recognized that not all major automakers allow their replacement parts and diagnostic tools to be sold in the open automotive market and require consumers to purchase them from authorized dealers. 

CCI relied on various decisions to issue the specific order. Some automakers have appealed to various higher courts to drop their cases before the Commission and the DG, but to no avail. The Appellate Tribunal upheld the CCI's decision on the matter. The case is now pending before the Supreme Court.


The basic idea of ​​the collective domain is absent from competition law, despite its vital importance in a developing economy like India's. The omission of the concept of “collective dominance” in  Indian competition law has often prevented the ICC from taking appropriate corrective action where necessary. Collective dominance refers to a situation in which two or more separate companies, linked by a business relationship, collectively hold a superior position over other traders. The collective dominance of is evident in both vertical and horizontal markets. Therefore, the dominant parties must not participate in an anti-competitive agreement or cartel.

Furthermore, some argue that due to the complexity of analyzing competition law and the lack of organizational resources in most emerging markets, the introduction of a competition law system can do more harm than good, as the risk of drawing wrong conclusions is quite high.

The government has the right to overturn the CCI. These limitations have important implications for the autonomy and effectiveness of the CCI. In fact, consultation between the state and the CCI in relation to the development of competition policy must be mandatory and not optional as required by law. In addition, the law does not cover violations of intellectual property rights, which are temporary monopoly rights.


The Competition Law 2002 is therefore considered historic law. This law does not encourage abuse of a dominant position. This law mainly aims to promote competition in the market and also helps to distribute profits to companies of all sizes to increase the business potential of the community. While the full law has yet to be passed, its passage would certainly increase competition in both domestic and international markets.

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