PARLIAMENT OF INDIA

RAJYA SABHA

 

 

 

DEPARTMENT-RELATED PARLIAMENTARY STANDING COMMITTEE ON HOME AFFAIRS

 

 

NINETY-THIRD REPORT

 

ON

 

THE COMPETITION BILL, 2001

 

 

(PRESENTED TO HON’BLE CHAIRMAN, RAJYA SABHA ON  23RD   AUGUST, 2002)

 (FORWARDED TO HON’BLE SPEAKER ON  23RD   AUGUST, 2002)

 

(PRESENTED TO RAJYA SABHA ON 21ST NOVEMBER, 2002)

(LAID ON THE TABLE OF LOK SABHA ON  21ST NOVEMBER, 2002)

 

 

RAJYA SABHA SECRETARIAT

NEW DELHI

           AUGUST 2002/SRAVANA, 1924(SAKA)


C O N T E N T S

Composition of the Committee                                                                                              

 

INTRODUCTION                                                                                                                

                                                                                                                                                     

Report                                                                                                                                                                                                                                                                                            


OBSERVATIONS/RECOMMENDATIONS AT A GLANCE                                                                                          

  
   RELEVANT MINUTES OF THE MEETINGS OF THE COMMITTEE                                                                   

 

Annexures        


                                                              COMPOSITION OF THE COMMITTEE  (2001)

 

 

1.         Shri Pranab Mukherjee- Chairman

 

            RAJYA SABHA

2.         Shri Hansraj Bhardwaj

3.         Shri Hiphei

4.         Shri Surendra Kumar Singh

5.         Shri Sangh Priya Gautam

6.         Dr. L.M. Singhvi

7.         Shri S. Ramachandran Pillai

8.         Shri K.M. Saifullah

9.         Shri C.M. Ibrahim

f 10.    Shri Raj Mohinder Singh

11.       Shri C.P. Thirunavukkarasu

12.       Shri Drupad Borgohain

13.       Shri Kuldip Nayyar

14.       Dr.(Smt.) Joyasree Goswami Mahanta

15.       Shri Jayanta Bhattacharya

 

            LOK SABHA

16.       Shrimati Jayashree Banerjee

17.       Shri S.K. Bwiswmuthiary

ª18.   Shrimati  Nisha Chaudhary

19.       Shri Samar Chaudhary

20.       Shri M.O.H. Farook

₤ 21.    Shri Vijay Goel

22.       Shri Rajen Gohain

23.       Shri  Suresh Ramrao Jadhav

24.       Shri Vinay Katiyar

25.       Shri Arun Kumar

26.       Shri Ram Nagina Mishra

27.       Shri P.H. Pandian

28.       Shri Dayabhai Vallabhai Patel

29.       Shri Shriniwas Patil

* 30.    Shri Jitendra Prasada

31.       Shri Subodh Ray

32.       Shri N. Janardhana Reddy

33.       Dr. Jayanta Rongpi

34.       Shri Anadi  Charan Sahu

35.       Shri Iqbal Ahmed Saradgi

36.       Shri Manabendra Shah

____________________________________________________________________

f   Ceased  to be Member   w.e.f. 1 March, 2001.

ª  Expired on 30 January,2001.

₤   Ceased  to be Member w.e.f. 1 September 2001on being appointed as Minister of State in the Union Council of Ministers.

*   Expired on 16 January, 2001.

 

37.       Shri Raghuraj Singh Shakya

 #38.    Shri Vishnu Datta Sharma

39.       Dr. Raghuvansh Prasad Singh

40.       Shri Lal Bihari Tiwari

41.       Shri Prakash Mani Tripathi

f 42.   Dr. S. Venugopal

43.       Shri Beni Prasad Verma

44.       Shri Raj Kumar Wangcha

¨45.    Shri  Harin Pathak

©46.    Shri E. Ponnuswamy

_______________________________________________________________________

#   Expired on 27 November, 2001.

f   Ceased to be Member w.e.f. 19 March, 2001 on being nominated to Committee on  Human Resource Development.

¨  Nominated w.e.f. 20 February, 2001.

©  Nominated w.e.f. 8 March, 2001.

 

COMPOSITION OF THE COMMITTEE  (2002)

 

 1.        Shri Pranab Mukherjee-   Chairman

            RAJYA SABHA

 * 2.     Smt. Basanti Sarma

 3.        Shri Kapil Sibal

4.                Shri Hansraj Bhardwaj

5.                Shri Sangh Priya Gautam

6.                Shri Kalraj Mishra

7.                Dr. L.M. Singhvi

8.                Shri S. Ramachandran Pillai

  *9.     Shri K.M. Saifullah

            10.       Shri C.P. Thirunavukkarasu

11.         Shri Janeshwar Mishra

12.       Shri Drupad Borgohain

    *      13.       Shri C.M. Ibrahim

   14.    Shri Swaraj Kaushal

15.       Shri Ram Jethmalani

§16.    Shri Lalu Prasad

§17.        Shri Motilal Vora

J 18.    Smt. Ambika Soni

LOK SABHA

19.      Shri Rajen Gohain

20.      Shri Lal Bihari Tiwari

21.      Shri Jaisingrao Gaikwad Patil

22.      Shri Anadi Sahu

23.      Shri Prakash Mani Tripathi

24.      Shri Ram Nagina Mishra

25.      Shri Vinay Katiyar

26.      Shri Manabendra Shah

27.      Sardar Buta Singh

28.      Shri Raj Kumar Wangcha

29.      Shri Iqbal Ahmed Saradgi

30.      Shri C.K. Jaffer Sharief

31.      Shri K. Karunakaran

32.      Begum Noor Bano

33.      Shri M.O.H. Farooq

34.      Shri Swadesh Chakraborty

35.      Shri Subodh Ray

36.      Shri B.V.N. Reddy

37.      Shri Ramji Lal Suman

38.      Shri Rammurti Singh Verma

Æ 39.      Shri Anandrao Vithoba Adsul

_________________________________________________________________________

* Ceased to be member w.e.f. 9 April 2002 on expiry of term as Member of Rajya  Sabha.

§Nominated w.e.f. 22 April 2002.

J Nominated w.e.f. 20 July 2002.

ÆCeased to be member w.e.f. 18 July 2002.

 

40.     Shri Brahma Nand Mandal

41.     Shri Adhi Sankar

42.     Shri P.H. Pandian

43.     Dr. Bikram Sarkar

44.     Shri Holkhomang Haokip

45.     Sardar Simranjit Singh Mann

46.     Dr. Jayanta Rongpi

a   47.     Shri Kishan Singh Sangwan

b   48.     Shri E. Ponnuswamy

¥  49.   Shri Suresh Chandel

 

SECRETARIAT

Shri Satish Kumar, Additional Secretary

Shri Tapan Chatterjee, Director

Shri A.K. Singh, Deputy Secretary

Shri N.S. Walia, Under Secretary

Shri Narendra Kumar, Research Officer

Shri Ashok Kumar Sahoo, Committee Officer


INTRODUCTION

 

I, the Chairman of the Department-related Parliamentary Standing Committee on Home Affairs having been authorized by the Committee to present the Report on its behalf, do hereby present this Ninety-third   Report on the  Competition Bill, 2001·

 

2.         In pursuance of the rules relating to the Department-related Parliamentary Standing Committees, the Chairman, Rajya Sabha in consultation with the Speaker, Lok Sabha  referred¨¨ the Competition  Bill, 2001, as introduced in the Lok Sabha on 6 August, 2001 and pending therein, to the Committee on 21  August  2001 for examination and report.

 

3.0.            The Committee considered the Bill in twelve sittings held on 27 August, 14 September, 5 and 18 October, 5 and  6 November, 2001 and  24 January, 5  February, 6 June, 17 July, 1 and  12 August 2002. 

 

3.1       The Committee in its sitting held on 27 August 2001  decided to issue a Press Communiqué inviting  suggestions/comments on the Bill from individuals/institutions/ organisations interested in the subject matter of the Bill within 15 days of its publication.  The Press Communique appeared in the leading newspapers on 10 September 2001.

 

3.2       The Committee heard oral evidence of the Secretary, Department of Company Affairs in its sitting held on 14 September 2001.

 

3.3       In its sitting held on 5 October 2001, the Committee heard the views of Secretary, Department of Consumer Affairs on the Bill.

 

3.4       The Committee undertook a study tour on 5 and 6 November 2001, to Mumbai to seek the views of Mumbai based major Chambers of Commerce and Industry and the Captains of Industry on the Bill.

 

3.5       In its sitting held on 24 January 2002, the Committee heard a detailed presentation by Dr. S. Chakravarthy, Consultant in Department of Company Affairs.

 

3.6       The Chairman, along with some members of the Committee had informal interaction with Mr. Evan  R. Cox, Partner Covington & Burling, a leading Washington based Law Firm, on the Bill on 15 February 2002.

 

3.7       The Committee held further deliberations in its sittings held on 5 February and 6 June 2002.

 

3.8       Consequent upon the transfer*** of Department of Company Affairs from the Ministry of Law, Justice and Company Affairs to the Ministry of Finance, the Union Finance Minister wrote a letter dated 9 July 2002 to the Chairman of the Committee, requesting inter alia for the expeditious disposal of the Bill and presentation of Report thereon by this Committee in view of the significant impact of the legislation on the efficiency and productivity of the country’s economy.  The request was considered by the Committee in its sitting held on 17 July 2002 and the same was acceded to.  Besides on a request received from the Secretary, Department of Company Affairs, the Hon’ble Chairman, Rajya Sabha and Hon’ble Speaker, Lok Sabha have in consultation with each other have also  agreed to defer the amendment to the Third Schedule to Rules of Procedure and Conduct of Business in the Council of States so as to enable the Committee to dispose the Bill.

 

3.9       In its sitting held on 1 August  2002, the Committee, accordingly,  took up clause-by-clause consideration of the Bill.

 

3.10     In its sitting held on  12 August 2002, the Committee considered the draft Report on the Bill and adopted the same.

 

3.11     In the sitting held on 12 August 2002, the Committee also decided that the evidence tendered before the Committee may be laid on the Table of both the Houses of  Parliament.

 

4.0       The Committee invited suggestions/views  of the major Chambers of Commerce and Industry, such as Associated Chamber of Commerce and Industry of India (ASSOCHAM), PHD Chamber of Commerce and Industry (PHDCCI), Federation of Indian Chambers of Commerce and Industry (FICCI), Bombay Chamber of Commerce & Industry (BCCI) and Indian Merchant Chamber (IMC); Non-Governmental Organisations like, Consumer Unity and Trust Society (CUTS), Consumer Coordination Council (CCC), Voluntary Organisation in Interest of Consumer Education (VOICE), Professional bodies like; Institute of Chartered Accountants of India (ICAI); Institute of Company Secretaries of India (ICSI)  and Institute of Cost and Works Accountants of India (ICWAI); Financial Institutions such as Industrial Development Bank of India (IDBI) and  Industrial Credit and Investment Corporation of India (ICICI); Securities and Exchange Board of India (SEBI), National Stock Exchange (NSE) and Captains of Industry.

 

4.1.      The Committee heard the views of the following seventeen organisations/associations as per the schedule indicated below:

 

            Organisation/Association                                          Date

 

            FICCI                                                              5 October 2001

            PHD CCI                                                         5 October 2001

            ASSOCHAM                                                  5 October 2001

            ICAI                                                                18 October 2001

            ICWAI                                                                        18 October 2001

            ICSI                                                                 18 October 2001

            CCC                                                                18 October 2001

            CUTS                                                              18 October 2001

            VOICE                                                                        18 October 2001

            Bajaj Auto Ltd.                                                            5 November 2001

            Mahindra & Mahindra Ltd.                               5 November 2001

            ICICI                                                               5 November 2001

            IDBI                                                                5 November 2001

            BCCI                                                               6 November 2001

            IMC                                                                 6 November 2001

            SEBI                                                                6 November 2001

            NSE                                                                 6 November 2001

(vi)

5.0       In the course of its deliberations, the Committee has made use of the background note on the Bill received form the Department of Company Affairs (Ministry of Law, Justice and Company Affairs), replies  of  the  Department  of   Company  Affairs to the queries raised by the

Members in the sittings of the Committee and comments of  Department of Company Affairs on memoranda received from individuals/organisations. The list of individuals/organisations is placed at  Annexure II.

 

5.1       The Committee also relied on the following documents/papers while preparing the report:

 

(i)                  The Monopolies and Restrictive Trade Practices Act, 1969.

(ii)                The Consumer Protection Act, 1986.

(iii)               Report of the High Level Committee on Competition Policy and Law (2002) (Volume I).

(iv)              New Indian Competition Law on the Anvil by Dr S. Chakravarthy, Consultant in DCA.

(v)                Extract from Organisation for Economic Cooperation & Development (OECD) Journal of Competition Law and Policy on Leniency  Programme to Fight Hardcore Cartels.

 

6.         For facility of reference and convenience, observations and recommendations of the Committee have been printed in bold letters in the body of the Report.

 

NEW DELHI;

12 August, 2002

PRANAB MUKHERJEE

                                                Chairman

                                            Committee on Home Affairs

 


REPORT

 

            The Competition Bill, 2001 (See Annexure-I) seeks to ensure fair competition in India by  prohibiting trade practices which cause appreciable adverse effect on competition in markets within India.

 

1.1.0    For that purpose, the Bill seeks to put in place a body corporate called Competition Commission of India  (hereinafter referred to as CCI)  to undertake competition  advocacy  for creating awareness on  competition issues, in addition to its primary job of ensuring fair competition in the country by enforcing competition law.

 

1.1.1    The Bill also creates a fund known as Competition Fund  (hereinafter referred to as  CF) for meeting the costs realised by CCI.

1.1.2    The Bill, accordingly,  proposes to repeal Monopolies and Restrictive Trade Practices Act, 1969 ( hereinafter referred to as MRTP Act)  as well as dissolve  the Monopolies and Restrictive Trade Practices Commission  (MRTPC).

 

2.0       The intent of enacting a new law on competition policy was announced by the Union Finance Minister in his Budget Speech1 (1999-2000) on 27 February, 1999, following which a High Level Committee2 consisting of experts under the Chairmanship of Shri S.V.S. Raghavan was set up to examine the provisions of MRTP Act, 1969, and propose modern competition law in view of liberalisation of Indian economy.

 

2.1       Before the High Level Committee, the Union Ministry of Commerce had set up an Expert Group3 headed by Dr. S. Chakravarthy, former Member, MRTPC, to study the interaction  between trade and competition, which had also suggested enactment of competition law on the basis of its recommendations.

 

2.2       A concept Bill was  drafted by the Department of Company Affairs and was put on the web-site of Department of Company Affairs (www.nic.in/dca) on 13 November 2000  to elicit public opinion thereon.  After inter-ministerial consultations and consultations with Planning Commission and major chambers (ASSOCHAM, CII, FICCI, PHDCII) and a few regulators, the Bill was introduced in the Lok Sabha on 6 August 2001

 

3.0       ‘Competition’ is an evasive term and is understood differently in different context.  Further, the Bill does not contain definition of the term ‘competition’.  However, in the corporate world, the term is generally understood as a process whereby the economic enterprises compete with each other to secure customers for their product.  In the process the enterprises compete to outsmart their competitors , sometimes to eliminate the rivals.

 

3.1       Competition is basically an economic rivalry amongst economic enterprises to control greater market power.  The competition is a situation where the market remains open to potential new enterprises and that enterprises operate under the pressure of competition.  Competition in the sense of economic rivalry is unstable and has a natural tendency to give way to a monopoly. Thus competition kills competition.

 

3.2       Competition amongst enterprises is divided into following two categories: -

 

Ø      Price competition4

Ø      Non-price competition5

 

3.3       The economic enterprises adopt two ways to outcompete other competitors i.e. (i) fair  & (ii) unfair.  The competition is fair where two enterprises  adopt fair means  such as production of fair goods/services, investment in research and development, etc.   The competition is unfair where an enterprise adopt Restrictive Trade Practices (RTPs)6 such as predatory pricing, exclusive dealing, resale-price maintenance and forming a cartel because RTPs have an appreciable adverse effect on competition.

 

4.0 The objective of economic policy is to sustain competition culture in the country for economic efficiency and maximization of public/consumer interest.  Sustenance of competition culture could be ensured by free and fair competition amongst economic enterprises. The bill has provision for ensuring fair competition by regulating/monitoring of behaviour of economic enterprises.

Salient features of the Bill

 

4.1       Broadly the Bill has following main features:

 

Ø      Prohibition of anti-competitive agreements;

Ø      Prohibition of abuse of dominance;

Ø      Regulation of Combinations (acquisitions, mergers and amalgamations of certain size);

Ø      Establishment and composition of Competition Commission of India (CCI);

Ø      Duties, Functions and Powers of CCI; and

Ø      Formation of Competition Fund.

4.2     The Bill has a total of sixty-four clauses divided into seven chapters. Chapter-II of the Bill (clauses 3-6) exclusively deals with the prohibition/regulation of RTPs.

 

4.3.0    The Bill prohibits the following broad RTPs which cause/likely to cause an appreciable adverse effect on competition within India:-

 

Ø      Anti-competitive agreements (clause 3);

Ø      Abuse of Dominance (clause 4); and

Ø      Combinations (clause 5).

 

Anti-competitive  Agreement

 

4.3.1        Anti-competitive agreements amongst enterprises are of two types

 

·        Horizontal7; and

·        Vertical8.

 

4.3.2    The Bill enumerates the following kinds of horizontal agreements which  are presumed to be anti-competitive:-

 

Ø      Agreements regarding prices: agreement that directly/indirectly fix purchase/sale price (Sub-clause (3)(a) of clause 3);

 

Ø      Agreements regarding quantities: agreement aimed at limiting/controlling production, supply, markets, technical development and investment (Sub-clause (3)(b) of clause 3);

 

Ø      Agreements regarding market sharing: agreements for sharing of markets by geographical area, types of goods/services and number of customers (Sub-clause (3)(c) of clause 3); and

 

Ø       Agreements regarding bids (collusive tendering and bid rigging): tenders submitted as a result of joint activity or agreement (Sub-clause (3)(d) of clause 3).

 

4.3.3    Such agreements may lead to cartel9  which is pernicious.    Further the aforesaid agreements are considered to be illegal per se and do not require any test of “rule of reason”10.  Barring these agreements all other would be subject to the ‘rule of reason’ test.  The MRTP Act enlists 14 types of agreements per-se illegal under section 33 as compared to four in the Bill.

 

4.3.4    RTPs in the form of vertical agreements can also have appreciable anti-competitive  effect on competition.  Following are the varieties of vertical agreements enumerated in sub-clause (4) of clause 3:-

Ø      Tie in arrangement11

Ø      Exclusive supply agreement12;

Ø      Exclusive distribution agreement13;

Ø      Refusal  to deal14; and

Ø      Resale price maintenance15

 

4.3.5    These agreements generally are not treated as anti- competitive  per se as in the case of horizontal agreements.  These agreements have to be judged under the rule of reason test  deciding the matter on the basis of law, facts, etc. on the basis of any of six factors enlisted under clause 19(3) of the Bill.  Such agreements often have to perform pro-competitive-function and considered anti-competitive when one or more firm which are party to agreement have market power.

 

4.3.6    The High Level Committee had recommended that the provisions relating to anti-competitive agreements would not apply to Intellectual Property.

 

Abuse of Dominance

 

4.3.7    The Abuse of Dominance has been detailed in clause 4 of the Bill.  It is interesting to note that the definition clause does not have the word ‘dominance’16.  But explanation to clause 4

has defined the ‘dominant position’17 in the subjective term.  It has been done in accordance with the    recommendations     of      High   Level Committee.  The Committee was of the view18 that

specifying a threshold or arithmetical figure  (i.e. market share) for defining dominance may either allow the offenders to escape or result in unnecessary litigation.

 

4.3.8    Dominance can be determined in the context of relevant market19and on the  basis of any of the thirteen factors enlisted under clause 19 (4) of the Bill.  A manual on ‘Abuse of Dominance’ will be prepared which would act as guidelines to the CCI.

 

4.3.9    The Bill does not consider dominance as RTP but its abuse.  But there lies a thin difference between the dominance and its abuse because dominance has the tendency to be abused.  Abuse of dominance occurs when an enterprise:

 

·        Directly or indirectly imposes unfair purchase or selling prices including predatory prices;

·        Limits production, markets or technical development to the prejudice of the consumers;

·        Indulges in action resulting in denial of market access;

·        Makes contracts with obligations which have no connection with the subject of such contracts; and

·        Uses dominance in one market to move into or protect other markets.

 

Combinations

 

4.3.10  The Bill narrates two type of combinations:

 

·        Acquisitions

·        Mergers/Amalgamations

 

Further, the acquisition  can be effected by enterprise or individual.

 

4.3.11  Mergers/Amalgamations 20 are of  three types

 

·        Horizontal

·        Vertical

·        Conglomerate

 

Horizontal and vertical mergers are based on the principles of horizontal and vertical agreements.  But conglomerate merger between enterprises is on/in diversified and unrelated business/market.

 

4.3.11  The Bill has provisions of threshold requirement in terms of assets21/turnover rather than on market share of enterprises.

 

4.3.12  The proposed law is not against every acquisition, merger or amalgamation, but it refers only to those acquisitions, mergers and amalgamations, which are of a certain prescribed size i.e, size in terms of (a) assets or (b) turnover.  Acquisition, merger or amalgamation would become ‘combination’ when it crosses  a certain threshold  limit which is presented in the accompanying table.

 

TABLE-I

 

Nature of Combination

Group Status

Criterion

Value

 

(a) Acquisition by enterprises

(b) Acquisition by individuals

No Group

 

 

Assets

 

Turnover

In India      

World over 

Rs.1,000 cr

US$ 500 million

In India  

World over  

Rs.3,000 cr.

US$1500 million

(c) Mergers/ amalgamation

Group

Assets

 

____________

Turnover

In India       

World over 

 

Rs.4,000 cr.

US$ 2 billion

 

In India       

World over 

Rs.12,000 cr.

$6 billion

 

 

The threshold  limit of asset would be revised every two years on the basis of Wholesale Price Index (WPI).

 

4.3.13  The proposed law narrates the requirement of prior notification22 to the CCI  by the enterprises crossing the laid down threshold limit  for  the combination although it is not mandatory.  The Bill has also prescribed time frame of ninety working days for approval of such combinations by CCI in the case of prior notification.  If the Commission does not take any action thereon it is deemed to be approved by the CCI.

 

4.3.14  The CCI on the basis of any of the thirteen factors enlisted under clause 20(4) will determine whether any combination has appreciable adverse effect on competition, through its Merger Benches.

 

4.3.15  The Bill also lays down a time frame for the CCI to investigate into combinations having adverse effect on competition suo moto or on any complaint. The time frame of ninety working days is counted from the date of publication of such combination under the direction of CCI by the party. 

 

Competition Commission of India (CCI)

 

4.4.0    The Bill provides for setting up of a competition law authority christened  as Competition Commission of India (CCI) for the administration and enforcement of competition law in India.

 

4.4.1    Out of a total of sixty four clauses, fifty-six clauses  (clauses 7 to 52)  deal with the matters relating to composition, duties, powers and functions of the CCI.

 

4.4.2    The CCI will have perpetual succession.  It would    comprise of a whole time Chairperson and not less than two and not more than ten whole time members23.   The qualifications24 for both Chairperson and Members are same [clause 8 (2)] whereas their age, salary and status are different  [clauses 10(1) & 14] in the Bill.  The age of Chairperson is seventy years and the salary of  that of a Judge of the Supreme Court  whereas the age  of the Members of CCI is sixty-five years and salary of  that of  a Judge of a High Court.

 

4.4.3    The Chairman & Members of the  CCI would be selected through a collegium  [clause 9 (1) ]consisting of -

 

(a)                the Chief Justice of India or his nominee;

(b)               the Union Minister in-charge of the Ministry of Finance;

(c)                the Union Minister in-charge of the Ministry or Department dealing with this Act;

(d)               the Governor of the Reserve Bank of India; and

(e)                The Cabinet Secretary.

 

4.4.4    As enumerated in chapter IV  (clauses 18-40) of the Bill, the CCI will have the following powers:

 

·        to issue “Cease and Desist” Orders.

·        to grant such interim relief as would be necessary in each case.

·        to award compensation

·        to impose fines on the guilty

·        to order division of dominant undertaking

·        to order de-merger.

·        to order costs for frivolous complaints

 

In addition to the adjudicatory function, the CCI will have the roles of advocacy, investigation, prosecution and merger control.

 

4.4.5    Unlike the MRTPC, which is a unitary Tribunal, the CCI would have Benches for distribution of its powers amongst those (clause 23).  The Chairperson of the CCI is empowered to constitute Benches (Additional/Merger) consisting of two members of CCI (one of them being judicial member).  Principal Bench & each Additional Bench will deal with the competition matters whereas the Merger Benches will exclusively handle merger/amalgamation cases discussed under clauses 5 and 6 of the Bill.  The Principal Bench will be presided over by the Chairperson of the CCI.  The Additional Benches will have independent character vis-à-vis Principal Bench.  Any person aggrieved by the decision of the Principal Bench as well as Additional Benches can appeal to the Supreme Court.

 

4.4.6    The CCI would be assisted by a Director-General (DG) and host of Additional, Joint, Deputy and Assistant Directors-General in conducting inquiry into any contravention of provisions of the Act, who would be appointed by the Union Government.

 

4.4.7    The DG would not have suo moto power of investigation as in the case of DGIR of MRTPC. The DG in the present scheme would conduct investigation into the cases referred to it by the CCI and would report its findings to the CCI. 

 

4.4.8    The CCI would also be assisted by a Registrar and other officers and staff who would be appointed by the CCI itself.

 

4.4.9    The CCI would conduct inquiry into alleged contravention of Competition Law  on its own or on receipt of complaint from any person/consumer/association or on a reference made by Central/State  Governments or a statutory Authority and adjudicate upon the same through its Benches.  In addition to investigation and adjudicatory functions, the CCI will also have the function of prosecution and competition advocacy.

 

4.4.10  The CCI is required to take suitable measures for the promotion of Competition Advocacy through training and creating awareness under clause 47.   Further, the Union Government while formulating policy may make a reference to the CCI for its opinion on possible effects of the policy on the competition.  The CCI is required to give its opinion thereon within sixty days.

 

4.4.11  The orders of the CCI is appealable to the Supreme Court within 60 days from the date of communication of the decision/order of the CCI. (clause  40)

 

4.4.12  Accounts of the CCI would be audited by the Comptroller and Auditor General and its reports would be laid every year on the Tables of both Houses of Parliament.

 

4.5.0    A Competition Fund would be constituted under clause 49 of the Bill to meet various expenses of CCI including payments of salaries to Chairperson, Members, Director-General, Additional, Joint, Deputy and Assistant Directors-General, Registrar and other staff of the CCI.  The Competition Fund would have two sources i.e. grant of money25from Consolidated Fund of India duly voted by Parliament and costs/fees received from parties.  The idea behind the composition of the Competition Fund is to ensure certain measure of autonomy to the CCI in its functioning.  The flexibility available for receiving costs and fees is another reason for constituting a separate Fund instead of making the expenses directly chargeable on the Consolidated Fund of India.

 

5.0       The history of Competition Law dates back to the 1860’s and 1870’s when American States (USA)  enacted “anti-trust”26 laws.  These culminated in the Sherman Act of 1890.  This was followed by the enactment of the Clayton Act and the Federal Trade Commission Act in 1915.  Subsequent to this, the Robinson Patman Act, 1936 and the Celler Kefauver Act, 1950 were enacted. 

 

5.1       In 1980, less than forty countries had Competition Law, currently one hundred countries have Competition Law.  One of the most recent enactments is the UK law – the Competition Act, 1998 – which came into force on 1 March 2000.  The new Act is more closely in tune with the Competition Law of the European Commission. Nearly all laws deal with horizontal/vertical agreement, monopoly, abuse of dominance and regulated by Competition Authority27.

 

6.0       The Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act) is regarded as the extant Competition Law of India.  It derived its mandate from the Directive Principles of State Policy (Arts.38 and 39) of the Indian Constitution.

 

6.1       The High Level Committee has observed that the MRTP is limited in its sweep and in the present competitive milieu it fails to fulfil the need of competition law.

 

6.2       The major differences  between the MRTP Act, 1969,  and proposed competition law are given in the accompanying Table.

 

TABLE – II

 

MRTP ACT, 1969

NEW DRAFT COMPETITION LAW

1

Based on the pre-reforms scenario

Based on the post-reforms scenario

2

Based on size as a factor

Based on structure as a factor

3

Competition offences implicit or not defined

Competition offences explicit and defined

4

Complex in arrangement and language

Simple in arrangement and language and easily comprehensible

5

14 per se offences negating the principles of natural justice

4 per se offences.  All the rest subjected to rule of reason.

6

Frowns upon dominance

Frowns upon abuse of dominance

7

Registration of agreements compulsory

No requirement of registration of agreements

8

No regulation on combinations

Combinations regulated beyond a high threshold limit.

9

MRTPC appointed by the Government

CCI selected by a Collegium

 

 

MRTP ACT, 1969

NEW DRAFT COMPETITION LAW

10

Very little administrative and financial autonomy for the  MRTPC

Relatively more autonomy for the CCI

11

No competition advocacy role for the  MRTPC

CCI has competition advocacy role

12

No penalties for offences

Penalties for offences

13

Reactive and rigid

Proactive and flexible

14

Unfair trade practices covered

Unfair trade practices omitted (consumer fora will deal with them)

 

6.3       The Ministry has submitted that in view of the policy shift from curbing monopolies to promoting competition, there was a need to repeal the Monopolies and Restrictive Trade Practices Act.  Hence, the present competition law proposed to be brought in, aims at doing away with the rigidly structured MRTP Act and given following reasons for the repeal of MRTP Act.  All pending cases28 relating to Unfair Trade Practices (UTP) would be transferred to National Consumer Forum and cases relating to Restrictive Trade Practices (RTPs) and Monopolistic Trade Practices (MTPs) would be transferred to the CCI.

 

6.4       Pending cases pertaining to Unfair Trade Practices other than those relating to tie-in sales, purchases or cases falling under clause (x) of sub-section (1) of Section 36A, of the Monopolies and Restrictive Trade Practices Act 1969 shall stand transferred to the National Commission constituted under the Consumer Protection Act, 1986.

 

7.0       The Bill describes the CCI as a body corporate {(clause 7(2)}, and a quasi-judicial body (Statement of Objects and Reasons) whereas it has pre-requisites of a full fledged judicial body  {clause 36(2)}.  The Committee wanted to know the exact status of the CCI.

 

7.1       The Ministry in their written submission has clarified that the Bill describes the CCI as a body corporate for certain specific purposes like having perpetual succession, a common seal and power to acquire, hold and dispose of movable and immovable properties, although normally body corporate connotes a company.

 

7.2       As to the status of the CCI being a quasi-judicial or judicial body, the four prerequisites of a judicial body as enumerated in a decision laid down by King’s Bench in Copper vs. Wilson {(1937) 2KB, 309}, were brought to the notice of the Department for their comments.  The Ministry has admitted in their written submission that the Bill (clauses 3629 read with clause 4030) makes it closer to a full-fledged judicial body.  The CCI has specific adjudicatory function in relation to abuse of dominance and anti-competitive agreement and on combinations under clause 27 and 31, respectively.  The decision of CCI has extra-territorial reach under clause 32.  Clause 36(3) says that the proceedings before the CCI would be judicial proceedings.  The CCI can detain a person in civil prison for specific purposes.  Thus the Ministry is of the opinion that it is a judicial body.

 

7.3       In contradistinction to the Statement of Objects and Reasons which describes CCI as a quasi-judicial body, the Department has now submitted that it is a judicial body.  Besides, the Department, having admitted the apparent contradiction, has also submitted that CCI can sue or be sued.    Here, the Committee wishes to point out that a judicial body never needs to sue anybody but it can issue orders for compliance. Suing means filing litigation against an opposite party before another judicial body to ventilate grievances.  CCI admittedly a judicial body shall not require to sue anyone because that is not permissible in law.  Hence, it can also not be sued.

 

7.4       The Committee notes that there is a difference between the Chairperson and Members of the CCI insofar as their status and remuneration are concerned whereas there is no difference between them in relation to their qualifications.  In this context, the Committee wanted to know why the age cap of 70 years and status of a Supreme Court Judge is stipulated for Chairperson in the Bill in the light of the fact that the age of retirement of Supreme Court Judge including the Chief Justice of India is 65 years.

 

7.5       The Ministry has submitted in their written submission that conferment of status of a Supreme Court Judge on the Chairperson is designed to attract eminent persons including from sitting/retired Judges from Supreme Court/High Court.  Further the age cap of 70 years for Chairperson and 65 years for Members is in line with some other extant Tribunals like the National Human Rights Commission (NHRC) and National Consumer Disputes Redressal Commission (NCDRC) although MRTP Act has the age cap of 65 years for the Chairman and Members.  The higher age cap is meant for inviting eminent persons with experience to the CCI.  The Competition Law is a socio-economic legislation and it may not be necessary to have the Chairperson, only from the judiciary.  In U.K. for instance, an industrialist is the Chairperson of the Competition Law Authority.  The higher judiciary, namely, the Supreme Court and the High Courts may be expected to countenance a Chairperson, not from the judiciary, as the Selection Committee for selecting the Chairperson consists of the Chief Justice of the Supreme Court or his/her nominee.

7.6       Having noted the logic submitted for the higher age cap for the Chairperson, the Committee points out that the MRTP Act lays down different qualifications for both the Chairperson as well as Members.  The Chairperson of the MRTPC can be exclusively from the Judiciary whereas its Members can be from any other prescribed fields.  However, in sharp contrast to this, same set of qualifications is proposed to be laid down both for the Chairperson as well as Members of the Competition Commission of India (CCI).  Here, the Committee would like to emphasize that the Chairperson of CCI should be exclusive from its Members not just in respect of age, status and salary but also in that of qualifications.  CCI being a judicial body, should be headed by a Judicial Member.  Insofar as Members are concerned, they may be appointed from amongst persons having special knowledge in the prescribed fields as proposed in the Bill.  Therefore, the Committee is of the considered view that the Chairperson of the CCI should be from amongst the serving or retired Judges of the High Courts.

 

7.7       The Committee wanted to know about the fate of the Chairman and Members, Officers and Staff of the MRTPC.

 

7.8       The Department has stated that Clause 64 extensively deals with the fate of the employees of the MRTPC after the coming into force of the CCI.  The Chairman and Members of the MRTPC shall stand terminated with compensation not exceeding three months’ pay and allowances.  The Director General of Investigation and Registration; Additional, Joint, Deputy or Assistant Directors General of Investigation and Registration or any officer or other employee who has been, immediately before the dissolution of the MRTPC, employed on regular basis by the MRTPC, shall become, on and from such dissolution, the officer and employees, respectively, of the Central Government with the same rights and privileges as to pension, gratuity and other like matters as would have been admissible to him if the rights in relation to such MRTPC had not been transferred to, and vested in, the Central Government and shall continue to do so unless and until his employment in the Central Government is duly terminated or until his remuneration, terms and conditions of employment are duly altered by that Government. The officer on deputation basis should be reverted to his parent cadre.  Deputationists include both the incumbents recruited on the basis of All India level selection by UPSC or otherwise.

 

7.8.1    While taking note of the reply of the Department of Company Affairs regarding the fate of the officers and staff of the MRTPC after its dissolution and the assurance given by the Secretary, Department of Company Affairs vis-a-vis  safeguarding the services of these employees,  the Committee is strongly of the view that interests of  the employees of MRTPC should be fully protected.  Similarly, the Committee is also of the view that deputationists with MRTPC  recruited by the UPSC should be retained in the CCI keeping in view their qualifications, experience and the expertise gained by them over a period of time through their association with MRTPC.  It is  of the opinion that services of these personnel selected by the apex recruitment body of the country may be of immense help to the CCI especially during its infancy.

 

7.9       A view was expressed in the Committee that Competition Law may wait till the pre-requisite in the form of reforms in other areas come in place.

 

7.10     The Department has stated that in the Budget Speech of the Finance Minister in the year 2001, a slew of policy measures relating to some of the areas mentioned above was announced.  Many of them are under process and will take a little more time before they are finalised and implemented.  But the enactment of Competition Law cannot wait till all the reforms are in place.  A regulator is required to deal with anti-competitive practices that often prevail in the market place.  It is, therefore, felt that the wide ranging economic reforms and the enactment of the Competition Law must be in tandem and proceed hand-in-hand.

 

7.11     The Committee wanted to know whether the price preference and purchase preference given to Public Enterprises would be in harmony with the Competition Bill.

 

7.12     The Department has submitted that price preference as practised earlier has been largely given up by the Government.  In so far as purchase preference is concerned, Government gives an opportunity to the public enterprises to match their prices with the lowest private party’s offer.  Strictly speaking, it is an anti-competitive practice to give purchase or price preferences.   But the purchase preference system, presently in vogue is only for a limited period  (two years or so ending in 2003).

 

7.13     The Committee pointed out that clauses 53 & 54 of the Bill gave enormous powers to the Government, in terms of giving directions on policies to the CCI and of superseding the CCI in special circumstances.  The Committee felt that such sweeping powers of the Government would undermine the independence of the CCI.

 

7.14     The Department has replied that the independence of the Commission is not likely to be undermined as the Central Government under section 53 can give directions on the question of policy only, that too, as far as practicable, after giving an opportunity to the Commission to express its views.  The provisions of section 54 are to ensure that the Commission performs the duties imposed on it by or under the provisions of the Act.  The Government may have security concerns or reason of public interest, on account of which intervention/direction becomes necessary.  Similar provisions exists in the following acts:-

 

(i)                 National Highway Authority of India Act, 1988, (Section 33).

(ii)               Telecom Regulatory Authority of India Act, 1997, (Section 25).

(iii)             National Trust for Welfare of Persons with Autism, Cerebral, Palsy, Mental Retardation and Multiple Disabilities Act, 1999, (Section 28).

(iv)             Airports Authority of India Act, 1994 (Section 40).

 

It may be mentioned that Government rarely resorts to such extraordinary powers, and if it does, its decisions are subject to examination in the media, Parliamentary scrutiny and judicial review.

 

7.15     Clause 52 of the Bill provides for the Central Government to exempt a class of enterprises from the application of the Competition Law in public interest.  The Committee regards it to be too wider.

 

7.16     The Department has stated that public interest and consumer interest are not synonymous.  The Competition Bill, in most of its provisions, gives consumer interest primacy and place of pride.  But there could be occasions and circumstances, when public interest may have  a larger relevance than consumer interest.  For instance, global competition may extinguish the domestic industries in a particular sector, for various reasons.  In such a circumstance, in terms of cost benefit analysis, if the damage to public interest, namely, the larger society, is very significant, Government should have the power to exempt that sector  (a class of enterprises) from the operation of Competition Law.  Such protection will normally be for a limited period, to enable the particular sector to accept the challenge of competition, become competitive and compete domestically and globally.    Hence, the expression “public interest” in Clause 52 of the Bill. Clause 52 provides for the Government to exempt any class of enterprises, in public interest, for such period as it may specify.  Small-scale industries can be given protection under this Clause.  The Government will be free to determine the period of exemption as the circumstances warrant.

 

7.17     A view was expressed that extra-territorial jurisdiction of the Competition Law may hinder foreign investment.

 

7.18     The Department has replied that extra-territorial jurisdiction is provided in many competition jurisdictions.  Extra-territorial reach of the Competition Law is essentially to curb foreign companies from indulging in anti-competitive practices, if such practices have an appreciable adverse effect on competition in the relevant market in India.  This provision is not likely to hinder foreign investment.

 

7.19     A view was also expressed that 10 Members for the CCI were too less.  Clause 8 may be amended to provide for a maximum of 30 members. Regional Benches should also be specified in the Bill.

 

7.20     The Department has stated that for the present, as the law is new and some of its features are to be enforced for the first time, it is a learning process.  The cap of 10 members provided in Clause 8 is adequate for the time being.  Depending upon the experience of the CCI, the cap can be increased later.

 

7.21     A Member has pointed out that the present Bill under Clause 64 (4) proposes to transfer cases relating to Unfair Trade Practices pending before the MRTPC to National Commission constituted under the Consumer Protection Act, 1986.  All cases relating to Restrictive Trade Practices and Monopolistic Trade Practices pending before MRTPC will be transferred to the CCI after the commencement of the Competition Act.  The Consumer Protection Act, 1986 as well as Consumer Protection (Amendment) Bill, 2002, presently pending before the Rajya Sabha for approval of the amendment made by the Lok Sabha therein, have the definition of RTP implying thereby that the Consumer Fora will also adjudicate cases relating to RTPs along with UTPs.  After the enactment of the Consumer Protection (Amendment) Bill, 2002 and the Competition Bill, 2001, the RTPs will be decided by two forums i.e. CCI and Consumer Fora which will be an overlapping of jurisdiction.

 

7.22     The Committee desires that the Department of Company Affairs may in consultation with Department of Consumer Affairs bring harmony between Consumer Protection Act, 1986 and the Competition Bill to avoid overlapping of jurisdiction between the CCI & Consumer fora.

 

7.23     Broadly two different views emerged in the Committee on the basic philosophy of the Bill.  A shade of opinion in the Committee contends that by enacting the Bill at this stage, India would lose its bargaining power at the WTO negotiations.  In that context it is suggested that the Bill should not be enacted till 1 January 2005 by which time decisions on issues like competition policy, trade and investment and related matters would be decided.  Another point of view against the Bill was that Indian Industry, both private and public sectors,  need certain  safeguards and protection for a certain period.  The present Bill takes away all such safeguards and protection.  This Bill would allow MNCs  to capture Indian industry and services sector. Therefore, it is suggested that there is no hurry in passing the Bill and that MRTP Act may be suitably amended to meet the requirements of the present time.

 

7.24     The other shade of opinion favours the passage of the Bill.  It is of the view that MRTP Act is based on old economic theory which is no longer efficacious enough to check the onslaught of foreign companies against Indian companies.  Besides, being a signatory to WTO agreements, India has to keep pace with the changing global economic environment.  This apart, public sector and Government Departments engaged in the activities enumerated in Clause 2(g) should be exposed to competition as it will be in the larger interest of the consumers.  Similarly, small-scale sector is also not proving beneficial to the consumers because of high cost of its products which is largely due to poor economy of scale as well as technological obsolescence.  Therefore, small-scale sector, too, should be exposed to competition.  This exposure of Indian industry to competition will herald the transition of an old economy to a new economy based on the new economic doctrine being pursued in the country for over last one decade.  This transition will not only help Indian economy to adapt itself to changing environment but will also produce wealth and employment.

 

8.0       Substantive points from the suggestions· made by the witnesses and organisations/individuals in response to Press Communiqué and while deposing before the Committee, are enlisted as under: -

 

(i)         Major Chambers such as ASSOCHAM, BCCI stressed the need for the cooling period of at least 15 to 18 months after the enactment of new law;            

 

(ii)        FICCI, Bajaj Auto Ltd. and Mahindra & Mahindra Ltd. opposed the enactment of new law and suggested amendments to MRTP Act, 1969;

 

(iii)       Reliance Industries Limited was of the view that a simple Competition Law should be introduced at this stage.  A stricter competition and merger control laws, as proposed, may be adopted much later after the economy and companies have reached a position where it could sustain such restrictions imposed by the Competition Law.  It would be advisable to appropriately time the implementation of provisions relating to regulation of combinations so as to provide adequate time to Indian Companies to grow/develop and to compete with the foreign multinational companies in Indian market as well as in global market.

 

(iv)       BCCI, Tata Sons Ltd., IMC, CCC and CUTS welcomed the introduction of new law;

 

(v)        Tata Sons Ltd. opined that the Government should initiate signing MoUs with WTO member countries to regulate cross border mergers and acquisition and which the Government has agreed to enact in due course;

 

(vi)       Government activities except the sovereign functions of the State would fall under the ambit of the CCI. Sovereign functions of the State in relation to CCI may be properly defined;

 

(vii)      Reference to predatory pricing may be the deleted as it could be the source of confusion when applied by the regulator; 

 

(viii)     Desired modification in the definition of dominant position, abuse of dominance and predatory price;

 

(ix)       Fixing of assets & turnover thresholds for determining combination need relook in view of global competitiveness;

 

(x)        Since Banks & FIs  are regulated, governed and supervised by regulators such as RBI, SEBI & Insurance Regulatory Authority (IRDA), mergers of Banks FIs and mutual funds may not be provided in the  Bill so as to keep the issue of combinations of Banks & FIs with the respective regulators;

 

(xi)       Medical & Legal profession to be covered under the scope of definition of service;

 

(xii)      Acquisitions, mergers, takeovers should be out of the Bill;

 

(xiii)     Unfair pricing concept as discussed in clause 4(2) (a) of the Bill is non-workable and may be deleted as practised by European Commission and the United States of America;

 

(xiv)     The dominant position outside India may deter MNCs to tie with Indian firms and thus the explanation (a) to Clause 4 may be amended;

 

(xv)      Standard of assessing combination is flawed.  Therefore, opposed the concept of combination. Asset tests to determine combination, has no significance for market analysis;

 

(xvi)     In the consideration of group exercising voting right, not less than 50% of the voting should be considered instead of 26% or more;

 

(xvii)    Value of Intellectual Property needs to be excluded from assets as the valuation of these assets is complex;

 

(xviii)   Suggested certificate of valuation of assets by a Chartered Accountant;

 

(xix)     Size of enterprise cannot be sole criterion for determining a combination, other factors such as market share in the relevant product & geographic market are equally relevant;

 

            (xx)      Mandatory pre-notification of merger;

 

(xxi)     Exemption of mergers and amalgamations carried out under sections 391-396 of the Companies Act;

 

(xxii)     Nomination of President of one of the Chambers (FICCI/ICAI/ICSI/ICWAI/ Bar Council of India) as the member of Selection Committee;

 

(xxiii)    Permanent Advisory Council to the Commission;

 

(xxiv)    Establishment of Research Institution to study various aspects of Competition Law;

 

(xxv)    Professionals such as Chartered Accountant, Company Secretary, Advocate to be appointed to the posts of Director General and Additional, Joint, Deputy, Assistant Directors General instead of relying on deputationist from Government Departments

 

(xxvi)    It is practically impossible to unscramble the merger once approved by the High Court as huge stamp duty required to be paid on court orders approving mergers and amalgamation;

 

(xxvii)   The Director-General’s suo moto powers to investigate cases as in MRTPC may be brought back;

 

(xxviii)  Publication of Director-General’s report only when the CCI agrees with the conclusions;

 

(xxix)    Exemption to the nominee director from punitive provisions of the Bill; and

 

(xxx)    Effective check on dumping by the Competition law to protect consumer interest.

 

8.1.0    The Department has responded to all the suggestions listed above. 

 

8.1.1    In response to suggestion listed at (i) the Ministry in their written submission has outlined the phases for the implementation of the said law after enactment which as follows:

First year          -           Competition advocacy and training for officers and    

staff of CCI

 

Second year     -           Provisions relating to anti competitive practice and

abuse of dominance to be brought into force

 

Third year         -           provisions relating to combination to be brought into force.

 

8.1.2    In response to suggestion listed at  (v), the Department has stated that the sovereign function occuring in clauses 2 (g) & 52 generally relate to atomic energy, defence, army etc. Moreover the test for determining sovereign function of Government laid down by the Supreme Court31 is bindings on the CCI.

 

8.1.3    As to the suggestions at (xxii) & (xxiii), the Department has replied that they would examine than in due course.  In response to the suggestions at (xxiv), the Department has agreed to appoint professionals to the post of Director General from the Government Departments on deputation

9.0       The Committee took up clause-by-clause consideration of the Bill in the presence of Secretary, Department of Company Affairs and officers of Legislative Department and Department of Legal Affairs.  The Committee considered amendments proposed by the Department in the clauses in the light of suggestions received from witnesses and others   and accepted those without any modifications.  Further, the Committee also recommended amendments of its own in two clauses.  Those clauses where amendments have been accepted/proposed by the Committee are discussed in the succeeding paragraphs.

Clause 2

 

9.1.0    The clause defines various expressions used in the Bill.

 

9.1.1    A suggestion has been received that the words “is proposed to be, engaged in any activity” in the definition of ‘enterprise’ in sub clause (g) of the clause appears to be confusing and thus may be deleted.  The Department has agreed to delete those words appearing in second line of the sub-clause.

 

9.1.2    Another suggestion received from a witness and agreed to by the Government pertains to sub-clause (t).  In the sub-clause defining service, only one professional service i.e. accounting has been included whereas medical and legal services are excluded.  As per the amendment proposed by the Department of Company Affairs, the expression “accounting” would be deleted.

 

9.1.3    The Committee agrees to the proposed amendments.

 

9.1.4    The clause is adopted as amended.

 

Clause 3

 

9.2.0    The clause, inter alia, provides for prohibition of entering into anti-competitive agreements.  Any enterprise or association of enterprises or person or association of persons to enter into an agreement in respect of production, supply, storage, distribution, acquisition or control of goods or provision of services which causes or is likely to cause an appreciable adverse effect on competition within India, shall be void.  The clause also specifies certain activities which shall be presumed to have an appreciable adverse effect on competition and also specifies certain agreements which shall be in contravention of sub-clause (1) of the said clause if such agreement causes appreciable adverse effect on competition.  The provisions of this clause shall not apply to certain rights specified in sub-clause (5) of this clause.

 

9.2.1    A suggestion has been received that any of the four per se offences may have negative effect on desirable joint venture.  Thus a proviso may be added to exempt such joint ventures from per se offences. 

 

9.2.2    The Department of Company Affairs has agreed to add proviso to sub-clause (3) of the clause to the effect that the genuine joint venture would be exempted from per se offence but would be examined on the basis of rule of reason.

 

9.2.3    Another suggestion has been received to add the words “in India” after the words “adverse effect on competition” in sub clause (4) of the clause.

 

9.2.4    The Department of Company Affairs has agreed to the suggestion and proposed to bring an amendment to that effect.

 

9.2.5    Another suggestion has been received to give blanket exemption to Intellectual Property Rights (IPRs).

 

9.2.6    The Department of Company Affairs after examining the suggestion has felt that clause 4(6) of the Concept Bill which permits the application of competition law to examine any unreasonable conditions that may be imposed by the right holder while exploiting his/her rights, may be incorporated in the present Bill.

 

9.2.7    The Committee agrees to the proposed amendments in the clause.

 

9.2.8    Subject to the amendments proposed, the clause is adopted.

 

Clause 4

 

9.3.0    The clause prohibits abuse of dominant position by any enterprise.   Such abuse of dominant position, inter alia, includes imposition, either directly or indirectly, of unfair or discriminatory purchase or selling prices or conditions, including predatory prices of goods or service, limiting production or restricting of goods or provision of services, indulging in practices resulting in denial of market access, making the conclusion of contracts subject to acceptance by other parties of supplementary obligations and using dominant position in one market to enter into or protect other market.

 

 

9.3.1    Clause 4(2) states that discriminatory pricing shall be an abuse of a dominant position.  The clause introduces the term ‘discrimination’ without any additional guidance.  A suggestion was made to add a proviso to make the expression clear.

 

9.3.2    The Department has agreed to add a proviso to clarify that it shall not be violation of this sub-section if an enterprise applies dissimilar prices or conditions for objectively justifiable reasons unrelated to maintaining or extending a dominant position, but related to meeting competition.

 

9.3.3    Another suggestion has been received for deleting the words “or outside India” in Explanation (a) to clause 4(2) (e) not to discourage an Indian company having a position/strength outside India by the competition law of India.

 

9.3.4    The Department has agreed for the deletion of such words in Explanation (a) to clause 4(2) (e).

 

9.3.5    The Committee agrees to the proposed amendment.

 

9.3.6    Subject to the amendments proposed, the clause is adopted.

 

Clause 8

 

9.4.0    The clause states that the Commission shall consist of the Chairperson and not less than two and not more than ten other Members as may be specified by the Central Government.  The clause also delineates qualifications of Chairperson/Members of the CCI under which a person who is or has been or is qualified to be a Judge of a High Court or is having special knowledge of, and professional experience in, 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, be useful to the Commission, shall be eligible for appointment as the  Chairperson or as a Member.

 

9.4.1    The Committee desires that the Chairperson of the CCI should be a person from Judiciary i.e. a serving/retired Judge of a High Court.  Thus qualifications for the office of Chairperson should be different from Members of the CCI.

 

9.4.2    Subject to the above, the clause is adopted.

 

Clause 9

 

9.5.0    The clause, inter alia, provides that the appointment of the Chairperson and Members of the Commission, shall be made by the Central Government on the recommendation of the Selection Committee consisting of the Chief Justice of India or his nominee, the Union Minister in-charge of the Ministry of Finance, the Union Minister in-charge of the Ministry or Department of the Central Government dealing with the proposed legislation, the Governor of the Reserve Bank of India and the Cabinet Secretary.

 

9.5.1    The Committee is of the view that keeping the Minister-in-charge of Ministries in the Selection Committee may lead to executive interference.

 

9.5.2    The Department has, accordingly, proposed change in the composition of the Selection Committee as below:

 

                                                Provision in the Bill                            Proposed Changes

 

Chairperson      -           Chief Justice of India or his                   CJI or his nominee

                                                nominee

 

Member           -           Union Minister-in-charge of the             Secretary, Ministry of

                                                Ministry of Finance                               Finance

 

Member           -           Union Minister-in-charge of the             Secretary, Department                                                  Ministry/Department dealing with          of Company Affairs

                                                the Act.

 

Member           -           The Governor, Reserve                         Secretary, Ministry of     

Bank of India                                        Labour

 

Member          -           The Cabinet Secretary                                  Secretary, Department                                                                                                                       of Legal Affairs/

Legislative

Department.

 

9.5.3    The Committee approves the suggested changes in the Selection Committee for proposing the names of Chairperson and members of the CCI to Union Government.

 

9.5.4    Subject to the amendments proposed, the clause is adopted.

 

Clause 10

 

9.6.0    This clause, inter alia, provides for the term of office of the Chairperson and other Members.  No Chairperson shall hold office after he attains the age of seventy years and no other Member shall hold office after he attains the age of sixty-five years. 

 

9.6.1    The Department has proposed to lower the age cap of the Chairperson of the CCI from 70 to 67 years as has been done in the case of the proposed National Company Law Tribunal (NCLT) under the Companies (Amendment) Bill, 2001.

 

9.6.2    The Committee notes the proposal of the Department.

 

9.6.3    Subject to the amendment proposed, the clause is adopted.

 

Clause 11

 

9.7.0    The clause, inter alia, contains provisions relating to resignation, removal and suspension of the Chairperson and other Members.  Sub-clause (2) provides that the Chairperson or a Member shall not be removed from his office except by an order made by the Central Government on the ground of proved misbehaviour after an inquiry made by the Supreme Court in accordance with the procedure prescribed in this behalf by it.  Sub-clause (3) confers power upon the Central Government to suspend the Chairperson or a Member in respect of whom a reference has been made to the Supreme Court.  Sub-clause (4) provides for other circumstances under which the Chairperson or any Member can be removed from office by the Central Government.

 

9.7.1    A witness before the Committee has opposed the reference to the Supreme Court as a pre-requisite for removal of Chairperson/Members of the CCI.

 

9.7.2    The Department has responded to the aforesaid suggestion as follows:

Clauses 11(2) & 11 (4) empower the Government to remove a Member on the grounds of proven misbehaviour, insolvency, conviction of an offence involving moral turpitude, physical/mental incapacity, abuse of position, engaging in any paid employment during tenure in the CCI, and acquisition of financial or other interest affecting prejudicially in functioning as Member.  But this power is subject to the Supreme Court holding, after, enquiry, that the Member ought to be removed in respect of grounds of proven misbehaviour, abuse of position or acquisition of financial or other interest likely to affect prejudicially functioning as a Member.  Thus, in respect of serious misconduct or misbehaviour there is a check/balance of the Supreme Court’s concurrence before Government can order removal of a member.  However, a particular aspect merits mention here.  Clause 11(2) of the Bill provides for the removal of a Member by the Government on the ground of proven misbehaviour after enquiry by the Supreme Court and its concurrence.  This appears to be unnecessary, as proven misbehaviour, is a very wide expression and is capable of being abused.  Clause 11(4) in any case provides for removal of the Chairperson or the Member on different grounds.  What is provided therein appears adequate.  Clause 11(2) may be deleted along with Clause 11(3) {being an adjunct of Clause 11(2)}.

 

9.7.3        The Committee approves the amendment proposed by the Department.

 

9.7.4    Subject to above, the clause is adopted.

 

Clause 12

 

9.8.0    The clause provides that the Chairperson or a Member shall not, for a period of six months from the date on which they cease to hold office, accept any employment in or connected with the management or administration of any enterprise which has been a party to a proceeding before the Commission.  However, such a restriction of employment shall not apply in case of any employment under the Central Government or State Government or a local authority or a statutory authority or corporation established by a Central, State or Provincial Act, or in a Government company.

 

9.8.1    One witness suggested that Chairperson/Members of CCI should be debarred for a period of 12 months after retirement from accepting any employment instead of 6 months.

 

9.8.2    The Department has accepted the suggestion and agreed to bring an amendment in the clause to that effect.

 

9.8.3    The Committee notes the proposal of the Department.

 

9.8.4        Subject to the amendment proposed, the clause is adopted.

 

Clause 16

 

9.9.0    The clause provides for the appointment of Director General, Additional, Joint, Deputy and Assistant Directors General for the purpose of assisting the Commission in conducting inquiry into the contravention of the provisions of the proposed legislation, for conduct of cases before the Commission and performing such other functions as are or may be provided by or under the proposed legislation.  It also empowers the Central Government to specify, by rules, their qualifications, the salary and allowances payable to them and the other conditions of their service.

 

9.9.1    With regard to investigation under clause 16(4), a witness has suggested that the experience for the post of Director-General and Additional/Joint/Deputy and Assistant Directors General in the CCI should be in economics, trade or industry, not in CBI or police investigation. 

 

9.9.2    The Department, in its reply to the suggestion, has stated that the suggestion may be accepted and will be provided for in the Rules.  Further, investigation will be defined in the Rules to exclude police investigation.

 

9.9.3    A member was, however, of the view that officers from CBI should not be excluded for the above mentioned posts.

 

9.9.4        The Committee notes the reply of the Government.

 

9.9.5    The clause is adopted without any change.

 

Clause 19

 

9.10.0  The clause empowers the Commission to inquire into violation of provisions of anti- competitive agreement and abuse of dominance either on its own motion or on receipt of a complaint from any person, consumer or their association or trade association or on a reference made to it by the Central Government or a State Government or a statutory authority alleging violation of any of those provisions.  The clause further lays down the factors, which shall be considered by the Commission for the purpose of determining whether an agreement has an appreciable adverse effect on competition, whether an enterprise enjoys the dominant position, or whether a market constitutes a relevant market for the purposes of the proposed legislation.

 

9.10.1  A suggestion has been made that since Clause 19(4)(d) already allows for consideration of “commercial advantages” in determining dominance and since IP rights should be found relevant to dominance only where they give commercial advantage deleting Clause 19(4)(f) would seem prudent to avoid giving undue weight to the mere ownership of IP rights.  Where IP rights do in fact confer commercial advantage in a given relevant market, then they are cognizable under Clause 19(4)(d).

 

9.10.2  The Department has agreed to delete sub-clause 4(f) in consultation with the Ministry of Law as IPRs would not be given blanket power to exert their dominance in relevant markets. 

 

9.10.3  Another suggestion has been placed before the Committee by one of the witnesses is that while considering the relevant market, the CCI should consider both relevant geographic market and relevant product market.

 

9.10.4  The Department accordingly, has proposed amendment in sub-clause (5) to substitute the word ‘or’ between the words “relevant geographic market” and “relevant product market” by ‘and’.

 

9.10.5  The Committee approves both the proposed amendments.

 

9.10.6  Subject to the amendments proposed, the clause is adopted.

 

 

Clause 21

 

9.11.0  The clause contains provisions relating to the circumstances under which a reference can be made to the Commission by statutory authorities.  It provides that if in the course of a proceeding before any statutory authority, entrusted with the responsibility of regulating any goods or service or market therefore, a party has raised an issue that the decision taken by the statutory authority would be contrary to the provisions of the Bill, then, the statutory authority shall be bound to make a reference to the Commission. The Commission, after hearing the parties to the proceedings, shall, give to the statutory authority its opinion and the statutory authority shall thereafter pass its orders.

 

9.11.1  The clause makes it mandatory for the statutory body to make a reference to the CCI when any party to the proceeding raise that the issue is contrary to the competition law.  A witness objected to such mandatory provision in the clause.

 

9.11.2  The Department has proposed to substitute the word ‘shall’ in the last line of sub-clause (1) of the clause with ‘may’.

 

9.11.3  One of the witnesses has suggested that a time frame may be provided in the clause within which the CCI should dispose the reference made to it by statutory body.

 

9.11.4  The Department has proposed a time limit of sixty days for the purpose under sub-clause (2).

 

9.11.5  The Committee approves the proposed amendments.

 

9.11.6    Subject to the amendments proposed, the clause is adopted.

 

Clause 23

 

9.12.0  The clause deals with the distribution of business of the Commission amongst its Benches.  It also empowers the Chairperson to transfer a Member from one Bench to another and also to authorise a Member   of one Bench to discharge the functions as a Member of any other Bench with the prior approval of the Central Government.

 

9.12.1  A suggestion was received from a witness to dispense with the requirement of prior approval of Union Government in case of a transfer of a member by the Chairperson of the CCI.

 

9.12.2  The Department has not agreed to  the suggestion in toto.  The amendment proposed by the Department is to the effect that prior approval of the Central Government is required when there is transfer of a member from one city to another.

 

9.12.3  The Committee notes the proposed amendment.

 

9.12.4  Subject to above, the clause is adopted.

 

Clause 27

 

9.13.0  The clause deals with various orders which the Commission is competent to pass after an inquiry.  If, on inquiry, the Commission finds that the agreements or the actions of an enterprise in a dominant position are in contravention of the provisions of clauses 3 and 4, it may pass any order which may, inter alia, include an order directing any enterprise or association of enterprises or person or association of persons involved in the agreement or abuse of dominant position to discontinue and not to re-enter into any such agreement or abuse, as the case may be, imposing such penalty as the Commission deems fit which shall not be more than ten per cent of  the average of the turnover for the last three years  upon each such person or enterprise which is a party to the agreement or abuse of dominant position, awarding compensation to the parties, directing modification of the  agreement, recommending to the Central Government the division of any such enterprise enjoying dominant position or complying with its directions including a direction to pay costs.

           

9.13.1  One of the witnesses has pointed out typographical error in first line of the clause.

 

9.13.2  The Department has agreed to rectify the expression ‘of an enterprise’ occurring in the first line of the clause by ‘or an enterprise’.

 

9.13.3  The same witness has suggested that it is extremely important to include in the Bill explicit authority for the Commission to provide protection to the whistleblower and to set up a leniency programme. 

 

9.13.4  The Department has agreed to incorporate appropriate leniency/ amnesty provision.

 

9.13.5  The same witness has also suggested that in order to be an effective deterrent for hardcore cartels, fines should be much higher than the gains.  Consideration should be given to increasing the possible fines/damage by a multiple of three times the proved loss or damage. 

 

9.13.6  The Department has agreed to amend sub-clause (b) to the effect that a penalty of three times of the proven gain to the cartel may be levied subject to at least 10% of the average turnover for the last three preceding financial years.

 

9.13.7  The Committee approves the proposed amendments.

 

9.13.8  Subject to the amendments proposed, the clause is adopted.

 

Clause 31

 

9.14.0  The clause empowers the Commission to issue orders on certain combinations.  Sub-clause (1) of the said clause provides that if the Commission is of the opinion that a combination does not or is not likely to have an appreciable adverse effect on competition, it shall, by order, approve the combination including a combination in respect of which a notice has been given under sub-clause (2) of clause 6.  Sub-clause (2) of the said clause empowers the Commission to direct that a combination shall not take effect, if it is of the opinion that the combination has or is likely to have an appreciable adverse effect on competition.  Sub-clause (3) empowers the Commission to propose suitable modifications in the combinations in case the adverse effect could be eliminated.  Sub-clauses  (4) to  (12) contain provisions relating to acceptance of the modifications suggested by the Commission, amendments to such modifications proposed by the parties to the combination, within the time specified in those clauses and effect of acceptance or non-acceptance of such modifications and amendments by the Commission and the parties to the combinations.

 

9.14.1  The said witness has suggested that the CCI should be conferred with powers to cooperate with competition authorities in other countries.

 

9.14.2  The Department has clarified that such power should be with the Government rather than with the CCI.  The Department has agreed to incorporate a provision in the Bill to provide power to Government in this regard.

 

9.14.3  The Committee notes the clarifications and the proposed new provisions in the Bill.

 

9.14.4    Subject to amendment proposed, the clause is adopted.

 

Clause 32

 

9.15.0  The clause empowers the Commission to inquire into an agreement or abuse of dominant position or combination if such agreement or dominant position or combination has, or is likely to have, an appreciable adverse effect on competition in India even if such agreement or abuse of dominant position or combination as specified in sub clauses (a) to (g) of the said clause take place outside India.

 

9.15.1  Deletion of sub-clause (c) has been suggested by the same witness who has suggested deletion of some words ‘or outside India’ in Explanation (a) to clause 4(2)(e).  This is a consequential to amendments to clause 4(2)(e).

 

9.15.2  The Department has accepted the suggestion

 

9.15.3  The Committee approves the proposed deletion.

 

9.15.4    Subject to amendment proposed, the clause is adopted.

 

Clause 38

 

9.16.0  The clause provides for amendment of its orders by the CCI to rectify mistakes apparent from the record.

 

9.16.1  The Committee has pointed out that under sub-clause 2(a) of the Clause, the CCI can amend any order passed by it suo moto.

 

9.16.2  The Committee recommends that the Government should make the clause specific to the extent that the amendment of its own order for rectification of mistakes, by the Commission should not touch the substantive part of its order.

 

9.16.3  Subject to the above, the clause is adopted.

 

Clause 47

 

9.17.0  The clause contains provisions for competition advocacy by the Commission.  In formulating policy, the Central Government may make a reference to the Commission for its opinion on possible effects of such policy on competition.  The Commission is required to give its opinion to the Central Government within sixty days from the date of such reference.  Such opinion shall not be binding upon the Central Government.  The Commission is also required to take suitable measures for the promotion of competition advocacy, creating awareness and imparting training about the competition issues, as may be prescribed.

9.17.1  A witness has suggested that the Commission should be bestowed with the power to recommend to the Central or State Governments after examining from competition angle (competition audit) any existing or proposed law or policy on its own.

 

9.17.2  The Department has communicated to the Committee that this suggestion may be accepted in the context that if there are restraints on competition in any existing law or policy, it could be removed after securing CCI’s views.  As CCI’s views are not binding on the Government in terms of Clause 47(2), the suggestion may be accepted, subject to the requirement that it is the Government, which will make the reference in its discretion. 

 

9.17.3  The Committee notes the views of the Department.

 

9.17.4  Subject to the above, the clause is adopted.

 

Clause 52

 

9.18.0  The clause empowers the Central Government, by notification, to exempt any class of enterprises from all or any of the provisions of the proposed legislation for such period as may be specified in that notification if such exemption is necessary in the interest of security of the State or public interest or any practice or agreement arising out of and in accordance with any obligation assumed by India under any treaty or international agreement or convention.  This exemption may also be given to any enterprise which performs a sovereign function on behalf of the Central or a State Government.

 

9.18.1  A witness has pointed out that an enterprise may be performing sovereign and non-sovereign functions.  Any exemption of the enterprise from the application of competition law would mean exemption relating to non-sovereign function also.  Therefore, the provision under sub-clause (c) of the clause should lay emphasis on function rather than enterprise.  He suggested re wording of the sub-clause.

 

9.18.2  The Department welcomed the suggestion and proposed rewording of the sub-clause as: “any sovereign function including functions incidental thereto performed by an enterprise on behalf of the Central Government or a State Government”.

 

9.18.3  The Committee approved the proposed amendment.

 

9.18.4  Subject to amendment proposed, the clause is adopted.

 

Clause 1, Enacting Formula and the Title

 

9.19     Clause 1, the Enacting Formula and the title are adopted with some changes which are of consequential nature, namely, ‘2001’ and ‘Fifty-second’ to be substituted by ‘2002’ and ‘Fifty-third’, respectively.

 

9.20.0  Out of sixty-four clauses, the Committee recommends amendments in nineteen clauses and adopts the remaining forty-five clauses without any change.

 

10.1     The Committee recommends that the Bill may be passed after incorporating amendments approved by it and giving due consideration to the other observations of the Committee.


OBSERVATIONS/CONCLUSIONS/RECOMMENDATIONS OF THE COMMITTEE

 

 

·        In contradistinction to the Statement of Objects and Reasons which describes CCI as a quasi-judicial body, the Department has now submitted that it is a judicial body.  Besides, the Department, having admitted the apparent contradiction, has also submitted that CCI can sue or be sued.    Here, the Committee wishes to point out that a judicial body never needs to sue anybody but it can issue orders for compliance. Suing means filing litigation against an opposite party before another judicial body to ventilate grievances.  CCI admittedly a judicial body shall not require to sue anyone because that is not permissible in law.  Hence, it can also not be sued.

 

(Para 7.3)

 

·        Having noted the logic submitted for the higher age cap for the Chairperson, the Committee points out that the MRTP Act lays down different qualifications for both the Chairperson as well as Members.  The Chairperson of the MRTPC can be exclusively from the Judiciary whereas its Members can be from any other prescribed fields.  However, in sharp contrast to this, same set of qualifications is proposed to be laid down both for the Chairperson as well as Members of the Competition Commission of India (CCI).  Here, the Committee would like to emphasize that the Chairperson of CCI should be exclusive from its Members not just in respect of age, status and salary but also in that of qualifications.  CCI being a judicial body, should be headed by a Judicial Member.  Insofar as Members are concerned, they may be appointed from amongst persons having special knowledge in the prescribed fields as proposed in the Bill.  Therefore, the Committee is of the considered view that the Chairperson of the CCI should be from amongst the serving or retired Judges of the High Courts.

 

(Para 7.6)

 

·        While taking note of the reply of the Department of Company Affairs regarding the fate of the officers and staff of the MRTPC after its dissolution and the assurance given by the Secretary, Department of Company Affairs vis-a-vis  safeguarding the services of these employees,  the Committee is strongly of the view that interests of  the employees of MRTPC should be fully protected.  Similarly, the Committee is also of the view that deputationists with MRTPC  recruited by the UPSC should be retained in the CCI keeping in view their qualifications, experience and the expertise gained by them over a period of time through their association with MRTPC.  It is  of the opinion that services of these personnel selected by the apex recruitment body of the country may be of immense help to the CCI especially during its infancy.

(Para 7.8.1)

·        The Committee desires that the Department of Company Affairs may in consultation with Department of Consumer Affairs bring harmony between Consumer Protection Act, 1986 and the Competition Bill to avoid overlapping of jurisdiction between the CCI & Consumer fora.

 

·        Broadly two different views emerged in the Committee on the basic philosophy of the Bill.  A shade of opinion in the Committee contends that by enacting the Bill at this stage, India would lose its bargaining power at the WTO negotiations.  In that context it is suggested that the Bill should not be enacted till 1 January 2005 by which time decisions on issues like competition policy, trade and investment and related matters would be decided.  Another point of view against the Bill was that Indian Industry, both private and public sectors,  need certain  safeguards and protection for a certain period.  The present Bill takes away all such safeguards and protection.  This Bill would allow MNCs  to capture Indian industry and services sector. Therefore, it is suggested that there is no hurry in passing the Bill and that MRTP Act may be suitably amended to meet the requirements of the present time.

 

·        The other shade of opinion favours the passage of the Bill.  It is of the view that MRTP Act is based on old economic theory which is no longer efficacious enough to check the onslaught of foreign companies against Indian companies.  Besides, being a signatory to WTO agreements, India has to keep pace with the changing global economic environment.  This apart, public sector and Government Departments engaged in the activities enumerated in Clause 2(g) should be exposed to competition as it will be in the larger interest of the consumers.  Similarly, small-scale sector is also not proving beneficial to the consumers because of high cost of its products which is largely due to poor economy of scale as well as technological obsolescence.  Therefore, small-scale sector, too, should be exposed to competition.  This exposure of Indian industry to competition will herald the transition of an old economy to a new economy based on the new economic doctrine being pursued in the country for over last one decade.  This transition will not only help Indian economy to adapt itself to changing environment but will also produce wealth and employment.

(Paras  7.22, 7.23 and 7.24)

 

·        The Committee considered amendments proposed by the Department in the clauses in the light of suggestions received from witnesses and others   and accepted those without any modifications.  Further, the Committee also recommended amendments of its own in two clauses. 

(Para 9.0)

 

 

(Para 9.4.1)

 

(Para 9.5.1)

 

(Para 9.5.3)

 

 

·        The Committee recommends that the Government should make the clause specific to the extent that the amendment of its own order for rectification of mistakes, by the Commission should not touch the substantive part of its order.

 

(Paras 9.16.1 & 9.16.2)

Clause 1, Enacting Formula and the Title

 

·        Clause 1, the Enacting Formula and the title are adopted with some changes which are of consequential nature, namely, ‘2001’ and ‘Fifty-second’ to be substituted by ‘2002’ and ‘Fifty-third’, respectively.

 

 

 

(Paras 9.19, 9.20.0 & 10.1)

 


MINUTES


 

XXIX

 

TWENTY-NINETH   MEETING

 

The Committee met at 3.00 P.M. on Monday, 27 August 2001 in  Room No. 63,  First Floor, Parliament House, New Delhi.

 

MEMBERS PRESENT

 

1.         Shri Pranab Mukherjee — Chairman

 

RAJYA SABHA

 

2.         Shri  Surendra Kumar Singh

3.         Shri Sangh Priya Gautam

4.         Dr. L.M. Singhvi

5.         Shri Drupad Borgohain

6.         Shri Kuldip Nayyar

 

LOK SABHA

 

7.         Shrimati Jayashree Banerjee

8.         Shri Vijay Goel

9.         Shri Vinay Katiyar

10.       Shri Arun Kumar

11.       Dr. Jayanta Rongpi

12.       Shri Anadi Sahu

13.       Shri Iqbal Ahmed Saradgi

14.       Shri Manabendra Shah

 

SECRETARIAT

           

Shri Satish Kumar, Additional Secretary

Shri Tapan Chatterjee, Director

            Shri A.K. Singh, Under Secretary

            Shri Narendra Kumar, Research Officer

            Shri Ashok Kumar Sahoo, Committee Officer

 

2.0       *                                                          *                                                             *                              

2.1       The Chairman announced the reference of two Bills namely, North-Eastern Council (Amendment) Bill, 1999 and Competition Bill, 2001 to the Committee by Hon’ble Chairman.

 

3.0       *                                                          *                                                          *

_____________________________________________________________________________

*** Relates to other matters.

 

 

3.1       The Committee decided to issue  Press Release on the Competition  Bill, 2001 to invite public opinion thereon.

 

4.         *                                                          *                                                          *

 

5.         The Committee then briefly discussed various general issues and adjourned at 3.30 P.M.

_____________________________________________________________________________

*** Relates to other matters.

 

XXXII

 

THIRTY-SECOND   MEETING

 

The Committee met at 11.00 A.M. on Friday, 14 September, 2001 in Committee Room  ‘A’, Ground Floor, Parliament House Annexe, New Delhi.

 

MEMBERS PRESENT

 

1.         Shri Pranab Mukherjee — Chairman

 

RAJYA SABHA

 

2.         Shri  Hansraj Bhardwaj

3.         Shri Hiphei

4.         Shri Sangh Priya Gautam

5.         Dr. L.M. Singhvi

6.         Shri K.M. Saifullah

7.         Shri C.P. Thirunavukkarasu

8.         Shri Drupad Borgohain

9.         Shri Kuldip Nayyar

 

LOK SABHA

 

10.       Shrimati Jayashree Banerjee

11.       Shri M.O.H. Farook    

12.       Shri Ram Nagina Mishra

13.       Shri Dahyabhai Vallabhbhai Patel

14.       Shri Shriniwas Patil

15.       Shri Subodh Ray

16        Dr. Jayanta Rongpi

17.       Shri Raghuraj Singh Shakya

18.       Dr. Raghuvansh Prasad Singh

19.       Shri Lal Bihari Tiwari

20.       Shri Prakash Mani Tripathi

21.       Shri Beni Prasad Verma

22.       Shri E. Ponnuswamy

 

SECRETARIAT

           

            Shri Satish Kumar, Additional secretary

Shri Tapan Chatterjee, Director

            Shri A.K. Singh, Under Secretary

            Shri Ashok Kumar Sahoo, Committee Officer

 

            Representatives of Department of Company Affairs (Ministry of Law, Justice

& Company Affairs)

 

            Shri V.K. Dhall, Secretary,      

Shri R.D. Joshi, Director-General, Investigation & Registration

Shri R. Vasudevan, Director

Shri K.C. Ganjwal, Secretary, MRTPC

Dr. S. Chakravarthy, Consultant

Shri G.P. Prabhu, Chief Commissioner, Income Tax

                       

2.0       The Chairman welcomed the members and informed them about the revised schedule of next series of meetings for consideration of Bills pending consideration of the Committee.  The Chairman felt that the Committee would be able to complete its work  on Lokpal Bill, Code of Civil Procedure  (Amendment) Bill  and North-Eastern Council (Amendment) Bill by November and thereafter Companies (Amendment) Bill and the Competition Bill could  be taken up.

2.1       *                                                          *                                                          *

 

2.2       *                                                          *                                                          *

 

3.0       The Chairman then  welcomed the representatives of the Department of Company Affairs for  a presentation on the Competition Bill, 2001.    The Chairman then asked the Secretary to apprise  the Committee the background of the Bill; recommendations of the Expert Committee on the subject;  how it was going to help competition  & how it would bring the Indian Companies at par with others.  Besides he also wanted to know the institutional mechanism to check the abuse of dominance.  Thereafter, the Chairman requested the Secretary to make his presentation on the Competition Bill.

 

3.1       The Secretary,  Department of Company Affairs at the outset offered his condolence  for the sad demise of  late Shri Vishnu Dutt Sharma, a Member of the Committee and a Member of Lok Sabha.  He then began his audio-visual presentation on the Bill.  He mentioned the  various elements of competition and how it was influenced by measures undertaken by  the Government, how it was related to  investment

           

3.2       Thereafter he discussed the change in the economic scenario after liberalisation which affected  the competitive environment within the country.  He further elaborated the objective and need for  a new competition law.  He added that earlier the mechanisms adopted by the Government to keep controlled demand & supply had since been dismantled.  Hence   a new competition law was the need of the hour to provide the players a more liberal environment.  He felt that a law substituting the MRTP Act and fulfilling the requirements of the time was a must.

 

3.3       He submitted that these developments led to the setting up of a high level Committee in October 1999 under the Chairmanship of Shri S.V.S. Raghavan.  The report was submitted in May 2001.  It suggested  a new Competition law in place of the MRTP Act.  This report was followed by a series of meetings & consultations with the main Chambers of Commerce and Industries, State Governments, Ministries  of the Central Government  and  representatives of the trade & business, besides Inter-Ministerial meetings on the basis of which a concept Bill was prepared.

_____________________________________________________________________________

*** Relates to other matters.

 

3.4       He dwelt upon  the three important areas which the Bill sought to regulate, as provided in its clause 3.  These areas were prohibition of anti-competitive  agreements of horizontal and vertical types;   prohibition of abuse of dominance ; and thirdly, acquisition, mergers and amalgamation.  He further stated that the Bill provided for establishment of a new Competition Commission of India.

 

3.5       At that point, the Chairman enquired about the tie-in agreements. Replying to that   the    Secretary   explained   the types   of  tie-in agreements - service    arrangements        and exclusive supply agreements.  Thereafter, he touched upon the dominant position and abuse of dominance.  Then he touched upon  regulation of combinations in which  he said that the Act sought to regulate large combination  above the threshold  limit.  The Bill provided for  combination, mergers, acquisition without permission but for the larger combinations voluntary  intimation to the Commission was required and even for such notification a time limit of 90 days existed after which it would be deemed as approved.

 

4.0       Thereafter,  the Secretary dwelt upon of the Competition Commission.  He stated that it would consist of a Chairman & members numbering between two to ten, having specialization in their  respective fields.  He said  that it  would have a number  of principal benches and also other benches along  with a special merger bench located at Headquarters.  Besides it would also have a Director-General and a team of officials.  Thereafter  he explained the various functions  to be performed  by the Commission and the  powers  it would enjoy.  Among others, he said, Director-General  would be responsible for carrying out investigation and prosecution   and advocacy  of competition would be one of the  key roles  of the Commission.  The Secretary then moved on to state that if the Commission was of the opinion that a merger was anti-competitive, then it could issue an order disallowing the merger.

 

4.1       The Secretary offered justifications for replacing MRTP Act by the proposed legislation.  He said that the MRTP Act was designed not to promote competition but to curb monopoly.  In spite of the changes brought about in this Act in 1991 & 1994 it did not fulfill  the need  of the hour.  He then covered the concerns expressed during the proceedings of the high level  Committee and subsequent consultative process and stated that the view which emerged was that the Act should  be introduced gradually i.e. in the first year, advocacy  process should take place so that market players began to understand what was competition, what  was good competitive behaviour.  Then  the  next year anti-competitive  agreements and abuse of autonomy should be introduced.  On the issue of pending cases in the MRTPC he said that as all unfair trade practices really related to consumers, those   would go to the Consumer Courts and the monopolistic  & as restricted trade practices fell  within the mischief  of anti-competition practices, those  would come over to the new Commission.

 

4.2       The Chairman then, invited other witnesses to add to the  Secretary’s presentation.  The other witness inter alia  mentioned about the need of a new competition law when MRTP Act was already there.  He mentioned that MRTP Act did not define certain offences like cartels, predatory-pricing, price rigging etc. at all.  He said that the MRTP Commission wanted to bring the ‘cartel’ to book, hence there was a need for a new law, a specific one.  Here he mentioned about the pre reform and post reform scenario.  Earlier while for Rs.100 crores a new approval was required to be taken whereas in the competition law this requirement has been waived.  Lastly he stated that we all are consumers hence a competition driven   market would help a movement in favour of the consumer.

           

5.0       The Chairman then sought certain clarification from the witnesses.  He wanted to know  the rationale of making the Department of Company Affairs as the nodal Department for piloting the  legislation. Secondly he wanted to know the rationale for keeping the Minister-in-charge  as the member   of  Selection Committee for appointing the Competition Chairperson and members.  Lastly pointing  out  the infirmities in the MRTP Act and the consequent need for a new law to meet the needs of the changing economic scenario,  the Chairman  wanted to know as to how many recommendations of the Expert Committee were  agreed to. 

 

5.1       One member, inter alia, observed that MRTPC was of late dealing with restrictive trade practices instead of monopolistic practices.  He was apprehensive that the competition law may create many problems in a poor country like ours.  He felt that the Indian corporate houses had no strength to compete with the multinationals. In this context, he appreciated a decision by the Department of Company Affairs on the caustic soda case where American was dumping their stuff in India.  He also felt that while complying with the WTO, Indian Parliament would have to safeguard the interests of the  people.  He also expressed reservations  about  the selection process of Chairperson and members of CCI.

 

5.2       One member raised the point whether the dissenting notes of the three members of the high level Committee were taken care of in the Bill.    He desired that all the memoranda/views of persons/organisations, on the Bill sent to the Department of Company Affairs  should be made available to the Committee, along with action taken by Government on each memorandum/suggestion.

 

5.3       One more member touched upon the issue of difference between the existing MRTP Act and the mooted Competition Bill. In that context he felt that there  a law has needed which enlivened the indigenous industries and fulfiled the employment requirements.  He also wanted reservations for public  and small-scale sectors rather than a clear demarcation for these.  He felt a need to take together rule of law and rule of reason to check the foreign companies from acting in a non-competitive manner.  Most of the members felt the need for a law to suit the country’s requirement and not in consonance with the obligations of WTO or in line  with the position in certain  developed countries.

 

6.0       The Chairman directed the witnesses to send their written responses to all the questions and queries and the witness agreed to send it within two weeks.  He then informed the Committee that in due course he would invite other experts and others for evidence. 

 

7.0       A verbatim record of the  proceeding was  kept.

 

8.0       The Committee then adjourned at 1.10 P.M.to meet again at 3.00 P.M. on 3 October 2001.

 

XXXV

 

THIRTY-FIFTH   MEETING

 

The Committee met at 11.30 A.M. on Friday, 5 October, 2001 in Committee Room  ‘A’, Ground Floor, Parliament House Annexe, New Delhi.

 

MEMBERS PRESENT

 

1.         Shri Pranab Mukherjee         — Chairman

 

RAJYA SABHA

 

2.         Shri  Hansraj Bhardwaj

3.         Shri Surendra Kumar Singh

4.         Shri Sangh Priya Gautam

5.         Dr. L.M. Singhvi

6.         Shri S. Ramachandran Pillai

7.         Shri C.M. Ibrahim

8.         Shri Kuldip Nayyar

 

LOK SABHA

 

9.         Shrimati Jayashree Banerjee           

10.       Shri M.O.H. Farook

11.       Shri Suresh Ramrao Jadhav

12.       Shri Vinay Katiyar

13.       Shri Arun Kumar

14.       Shri Ram Nagina Mishra

15.       Shri Subodh Ray

16.       Shri N. Janardhana Reddy

17.       Shri Anadi Sahu

18.       Shri Iqbal Ahmed Saradgi

19.       Shri Manabendra Shah

20.       Shri Raghuraj Singh Shakya

21.       Dr. Raghuvansh Prasad Singh

22.       Shri Lal Bihari Tiwari

23.       Shri Beni Prasad Verma

24..      Shri E. Ponnuswamy

 

SECRETARIAT

           

            Shri Satish Kumar, Additional Secretary

Shri Tapan Chatterjee, Director

            Shri A.K. Singh, Under Secretary

            Shri Narendra Kumar, Research Officer

            Shri Ashok Kumar Sahoo, Committee Officer

 

            WITNESSES

 

            Representatives of Department of Consumer Affairs:

 

1.                  Shri S. Bandopadhyay Secretary

2.                  Shir Santosh Nautiyal, Additional Secretary

3.                  Shri P. Venkatesan, Deputy Secretary

4.                  Shri N.S. Pangtey, Deputy Director

 

Representatives of PHD, Chamber of Commerce and Industry:

 

1.                  Shri Vinod Chandiok, Chairman, Corporate Affairs Committee

2.                  Shri Sri Nath, Senior Member, Managing Committee

3.                  Shri Suman Khaitan, Member, Managing Committee

4.                  Mrs. Shalini Mathur, Deputy Secretary

 

Representatives of Indian Industries (CII) :

 

1.                  Shri Subodh Bhargava, Past President, CII & Adviser, Eicher Group

2.                  Shri Anand Pathak, Partner, Pathak & Associates

3.                  Shri K. Suresh, Solicitor, ITC Ltd.

4.                  Shri S. Sen, Deputy Director General

5.                  Shir Ajay Khanna, Deputy Director General

6.                  Dr. D.C. Ravi, Director

7.                  Shri N.B. Mathur, Advisor

 

Representatives of FICCI :

 

1.                  Shri R.S. Lodha, President-Elect

2.                  Shri M.K. Sharma, Vice Chairman, Hindustan Lever Ltd.

3.                  Dr. S.M. Dugar, Former Member, Company Law Board and Advocate

4.                  Shri Shailender Swarup, Advocate

 

2.         The Chairman informed the members that in course of examination of the Competition Bill, 2001 it would be necessary to hear the views of the Captains of Industry and some other Mumbai based organizations like the Bombay Chamber of Commerce, Indian merchant chamber, ICICI etc. on the various aspects of the Bill and its possible implications on trade and industry in the country. Accordingly, the Committee proposed to visit Mumbai from 4th to 7th November, 2001 for the purpose.

 

2.1       The Committee, accordingly, authorized its Chairman to obtain permission of Hon’ble Chairman to undertake the proposed visit.

 

2.2       At the outset the Chairman welcomed the Secretary, Department of Consumer Affairs to the meeting outlining the import of the Competition Bill, 2001 and invited him to give his views before the Committee.

 

3.         The Secretary, Department of Consumer Affairs, thanked the Chairman for giving him the opportunity to appear before the Committee and said there was no objection to the objectives of the Competition Bill, 2001, and as a matter of fact this law was necessary.  He said that National Consumers Disputes Redressal Commission   (NCDRC) has 10,000 cases pending and unless the infrastructure of the NCRDC is augmented, any additional responsibility will infringe upon the efficiency of the Commission.

           

3.01     The Secretary further said that NCDRC does not have investigative agency like MRTPC.  He informed the Committee that the Consumer Protection Bill has been introduced in the Rajya Sabha with composite amendment proposals after 3-4 years of continuous interactions with States/UTs, NGOs Consumer Form etc.

 

3.02          But the Secretary was apprehensive whether NCDRC with its present composition, its benches would be fully appreciative of the Complicated legal issues, nuances of the transferred cases from MRTPC where each and every member is without judicial knowledge.  He also said that both Bills i.e. Consumer Protection (Amendment) Bill, 2001 and the Competition  Bill, 2001 should be complementary and harmonious and not conflicting.

 

4.         The Chairman wanted to know whether by making adequate provisions in the Competition Commission, will it be able to handle consumer disputes cases, sought to be transferred   to NCDRC.

 

4.1       A member suggested that MRTP cases should not be transferred to already burdened consumer  courts.  Rather a transitory  my provision should be made in the Bill that till all pending cases are cleared,  staff will continue and existing infrastructure can take care of the pending cases of MRTPC.

 

4.2       The Chairman thanked the Secretary and requested him to send the written responses to the queries made by the members to the Secretariat within 10 days.

 

(The Secretary then withdraw)

 

5.0       The Chairman welcomed   the representatives of the PHD Chamber of Commerce and Industry to the meeting and requested them to give their  opinion on the Competition Bill, 2001.

 

6.0       The witness said that various clauses of the Bill may adversely affect Competition and expressed apprehension on the implementation of the provisions of the Bill.  They pointed out that the salary to the staff of the CCI (Cl.49) should be given from the Consolidated Fund of India and not from Competition Fund of India.  It was further suggested that ‘appreciable adverse effect’ of the Bill on trade and industry needs to be looked into.

 

7.         The Chairman asked the witnesses whether they can send an alternative draft of the clauses which they feel, are not properly drafted or have missed out important points.  A member wanted to know what was the witnesses’ proposal for substitute  expression of “appreciable adverse effect”

 

(The representatives of PHD Chamber of Commerce and Industry then withdraw)

 

(The Committee adjourned at 1.35 P.M. for lunch and reassembled after lunch at 3.30 P.M.)

 

 

8.         The Chairman welcomed the representatives of the Confederation of Indian Industries (CII) to the meeting.

 

9.         The witnesses said that the provisions in the Bills are not in-tune with the current thinking or new mindset.  The assurances, given during the preliminary stages of discussion on the proposed Bill, have not been kept, they felt.  They also felt that the Bill was too micro and too detailed.  They suggested that assets and turnovers  in relation to acquisitions and mergers should be deleted.

 

10.       It was further suggested that overreaching powers of proposed Competition Commission of India (CII) would give it the position of a super regulator. Commenting on the composition of the Chairman and Members of the proposed CCI, the witnesses said that it should not become a parking place for old and retired people.  Rather CCI must have experts in economics, corporate finance and accounts, corporate law, professional industry manager, and a consumer representative.  Besides, extensive training and exposure, both abroad and within the country must be given to the CCI staff.

 

11.       The witness pointed out that the Preamble of the Bill should focus only on consumers and consumers’ protection.

 

12.       The witness sought the attention of the Committee to the inclusion of dealing in share markets in the Bill.  They said this was a very novel concept, and no where in the world, do the anti-trust laws regulate the share markets.  A question was posed by them “if tomorrow they enter into a right of first refusal agreement with a company for the purchase of shares, will that be anti-competitive?  Will that be regulated under the anti-trust rules?”

 

13.       The witness pointed out that the Bill basically focuses on three primary areas. The first substantive provision (Clause 3) is the prohibition concerted practices, a prohibition that attacks the cartels, be it horizontal cartels or vertical cartels.  The second substantive provision attacks the abuse of dominant position and the third regulates mergers and combination.

 

14.       The Chairman thanked the representatives of CII and asked them to send alternative suggestions in concrete terms  though in draft form to various  clauses, which the Committee would consider while  taking up the Bill, Clause-by-clause.  The Chairman further asked the witnesses whether there should be some specific time period between the actual passage of the Bill and the implementation of the Act.

 

15.       The Chairman further wanted to know whether there is a need for regulations for combinations and mergers in respect of Indian industries.  Then he asked the witnesses to send their written responses and alternative formulations  to various clauses of the Bill, to the Secretariat.

(The representatives of CII then withdraw.)

 

16.       The Chairman welcomed the representative of FICCI to the meeting and invited their opinion/views on the Bill.

 

17.       The witness thanked  the Chairman and the Committee for the opportunity given to them to express their views on the Bill.  They wondered whether timing was right and              the atmosphere conducive for this kind of legislation.  They opined that we should understand our priorities and what subserved  our national interest the best should be the foremost thing, and we must have a competition law best suited to our needs and ethos.

 

18.       The witness said that consolidation of Indian industries must be allowed to happen and there should be nothing to prevent it.  Size of an industry per se is not the cause of concern and even Supreme Court Judgment (1994) in Tomco Hindustan Liver Merger case has rule that it is the misuse or abuse of that size which has to be monitored.

 

19.       The representatives pointed out that in the new Bill, quantitative criteria is sought to be substituted by qualitative criteria.  They further said that CCI should have an advisory role rather than regulatory role.  They were of the view that time was not ripe for changing the status quo and provisions of MRTP Act are more relevant even today.

 

20.       The Chairman thanked the representatives    of the FICCI and asked them to send their written memoranda to the Secretariat, with alternative suggestions.  He also requested them to suggest in writing as to what amendment are required in MRTP Act, in case the bill is dropped and also let the Committee know whether CCI is a tribunal or a regulatory  body? He again told them to submit a detailed memoranda so that the same can be circulated to members for comprehensive amendments  to MRTP Act.

 

(The  witness then withdrew)

 

21.       The Committee then adjourned at 6.10 P.M.

 

XXXIX

 

THIRTY-NINTH MEETING

 

The Committee met at 11.00 A.M. on  Thursday,  18 October, 2001 in Committee Room  ‘A’, Ground Floor, Parliament House Annexe, New Delhi.

 

MEMBERS PRESENT

 

1.         Shri Pranab Mukherjee         — Chairman

 

RAJYA SABHA

 

2.         Shri  Hansraj Bhardwaj

3.         Shri Hiphei

4.         Shri Sangh Priya Gautam

5.         Dr. L.M. Singhvi

6.         Shri S.Ramachandran Pillai

7.         Shri Drupad Borgohain

8.         Shri Jayanta Bhattacharya

 

LOK SABHA

 

9.         Shrimati Jayashree Banerjee           

10.       Shri Vinay Katiyar

11.       Shri P.H. Pandian

12.       Shri Subodh Ray

13.       Shri Anadi Sahu

14.       Shri  Iqbal Ahmed Saradgi

15.       Dr. Raghuvansh Prasad Singh

16.       Shri Beni Prasad Verma

17.       Shri E. Ponnuswamy

 

SECRETARIAT

           

            Shri Satish Kumar, Additional Secretary

Shri Tapan Chatterjee, Director

            Shri A.K. Singh, Under Secretary

            Shri Ashok Kumar Sahoo, Committee Officer

 

 

            WITNESSES

 

            REPRESENTATIVES OF  NON-GOVERNMENTAL ORGANISATIONS

 

            Consumer Coordination Council (CCC)

 

            Ms Mala Banerjee, Chairperson

            Ms Sunita Roy, Executive Secretary

           

            Voluntary Organisation in Interest of Consumer Education (VOICE)

 

            Dr. Sri Ram Khanna, Managing Trustee

            Shri Bijon Mishra, Advisor

            Dr. Roopa Vajpayee, Editor

            Ms. Zasmin Zafar, Legal Co-ordinator

 

            Consumer Unity Trust & Society (CUTS)

 

            Shri Ujjwal Kumar, Advisor

            Shri Sanjay Verma, Member

 

            REPRESENTATIVES OF PROFESSIONAL ORGANISATIONS

 

            Institute of Chartered Accountants of India (ICAI)

 

            Shri Amarjit Chopra, Chairman, Corporate  Laws Committee

            Shri Sunil Goyal, Central Council  Member

            Shri K.B. Sharma, Central Council Member

 

Institute of Cost and Works Accountants of India (ICWAI)

 

            Shri V.V. Deodhar, President

            Shri H.R. Subramanya, Central Council Member

            Shri D. Chandra, Deputy Director

 

            Institute of Company Secretaries of India (ICSI)

 

            Dr. P.V.S.  Jagan  Mohan  Rao, President

            Shri R. Krishnan, Past President

            Shri Girish Ahuja, Council Member

            Shri G. Gehani, Council Member

            Ms. Pallavi Shroff, Council Member

            Shri Harish K. Vaid, Council Member

            Shri Pawan Kumar Vijay, Council Member

 

2.0       At the outset Chairman welcomed the representatives of NGOs, - Consumer Coordination Council, Voluntary Organisation in Interest of Consumer Education & Consumer Unity Trust and Society.  He shared with them the history of Competition Bill, 2001.    He then invited them to introduce themselves and then to present their views one after another.

 

2.1       The Chairperson of the Consumer Coordination Council initiated the presentation by introducing the Council  and made a mention that  it had received many suggestions regarding the Bill. 

 

2.2       She referred to clause 8 of the Bill and termed it confusing, as it provided for the appointment of Chairman and one member by the Central Government which contradicted the provision that the Competition Commission would comprise of Chairman and not less than two members.  Next, she mentioned that Clause 19 which dealt with filing of complaint by consumer organizations, had not been properly defined.  She wanted the clause to be more elaborately explained so as to do away with the problems already existing in the consumer courts, which applied discretionary powers in accepting complaint from consumer organizations.  Referring to Clause 22  she wanted that the provision for additional member be spelt out properly.  She demanded  clear demarcation of jurisdiction of the benches and additional benches for bulk complaints.  Then about clause 27 she suggested  that to implement   the penalty clause effectively it must be specified in detail.

 

2.3       Among others, she found flaw in Clause 39 too, which dealt with the provision of the execution of orders of the Commission.  She felt that the execution system needed to be amended otherwise the purpose of the Bill would be defeated.  Mentioning Clause 47, she viewed that this clause should not be encouraged.  She said that the Commission should not be required to take up competition advocacy as provided in this Clause which might result in delay in pronouncement of judgement by it.

 

2.4       Dealing with Clause 49 which provided for Competition Fund, she said that the Competition Commission  should be allowed to create an awareness and training by NGOs working in this field.  Lastly,  she suggested  about a time limit to complete the proceedings.

 

 3.0      The Chairman then invited the Members to seek clarifications on the issues arising out of the presentation of CCC.

 

3.1       Another member raised the issue  of the aspects in the MRTP Act which marred  the consumer interests and hindered  competition.  He also pointed out the discrepancy regarding qualification for the Chairpersons of MRTP Commission and CC , as  in the  case of MRTP Act the Chairperson was to be  qualified to be a  Supreme Court Judge whereas for Competition Commission he should be qualified to be only a High Court Judge.  He also enquired if the High Level Committee received any suggestion for amending MRTP Act in place of the proposed legislation.

 

3.2       The Chairman wanted the considered opinion of the witness on Clause 8(2) of the Bill, regarding the qualification for Chairperson and Members of the Commission. He requested the Chairperson of CCC to send the written responses to the queries  to the Secretariat at the earliest.

 

4.0       Thereafter,  the  Managing Trustee of Voluntary Organisation in the Interest of Consumer Education drew the attention of the Committee to the fact that being a part of the consumer movement they were not happy with the Bill.  Further he said that foreign companies Coca-cola, Gillette and Unilever came to India and took over the domestic manufacturer in their respective areas whereas the same could not have occurred in America as the Federal Trade Commission would have disallowed it   He then made certain observations with regard to the composition of the High Level Committee  and also on the working of the MRTP Act.

 

 5.        The Chairman interrupted the witness and requested him to focus  his presentation on the Competition  Bill rather than on other issues.

 

6.0       The witness thereupon suggested  for a strong Competition Commission on the lines of  the Federal Trade Commission of US to provide anti-competitive protection.

 

6.1              Thereafter he pointed out the flaws in the Bill viz. in its adjudication procedure.

 

6.2       The witness then  stated that  the definition of ‘Competition’ was not clearly spelt. He suggested for the retention of the definition of ‘group’ as provided under section 2 (of) of the MRTP Act.  Regarding ‘inter-connected’ enterprises,  he suggested for substitution of Clause 5 (b) by section 2(8) of the MRTP Act.  On the definition of ‘ownership’ too he was in favour of section 2(8) of the MRTP Act or for adoption of the definition from the Consumer Protection Act, vis-à-vis the meaning of the word ‘ consumer association’.  He also suggested that  definitions of ‘retailer’, trade association’ ‘wholesaler’,  should  be adopted from sections 9(b), 2(t)  and 2(x) of the MRTP Act.  Further he wanted clause 3 to be more comprehensive and to include both formal and informal agreements, covering inter-brand competition, competition from paralled imports. He also suggested for inclusion of the concept of relevance of circumstantial evidence in the case of commercial conspiracies, in the Bill.

 

6.3       He also found fault with the provision under clause 4 regarding dominant position. He felt that the only way to make the definition of dominant position more concrete it would be appropriate to define dominance by market share. He appreciated one aspect of the Bill which provided for individual turnover assets of a group.  He further mentioned that the heart of the Bill relates to appointments. He suggested for reversing of the recommendations of the high level committee and for providing the competition authority the power to divide companies. He also suggested for regulation of production, storage, supply, distribution or control of any goods.  On the question of transfer of cases relating to unfair trade practices,  to Consumer Courts he said that they were well equipped to deal with such behaviour. He also felt that in the qualification for the members of CCI, the words consumer affairs should be included and the selection process should also be transparent.  So far as the repealing laws were  concerned he said that there were ambiguities regarding the transfer of cases relating to unfair trade practices which would stand transferred to Consumer Protection Act. 

 

7.0       The representative of the Consumer Unity Trust & Society began by making certain observations on the purpose of the Bill and its preamble.  He suggested for inclusion of temporal and functional dimensions in defining ‘relevant market’.  He also felt that the absence of preventive steps to prevent cartels should be taken care of.   Besides there should be encouragement for those who provide information.  He suggested for criminal penalty for individual Directors involved in the cartel, particularly in price fixing, output restriction etc.  Referring to the intellectual property rights he stated that parallel imports or inter brand competition should be allowed.  He expressed reservation at  the high retirement age  of Chairperson/Members.   He also advocated for the curtailment of the blanket power given to the Government to intervene.  He referred to the ambiguity in the jurisdiction of Competiton Commission  and other statutory authorities.  Referring to competition advocacy, he suggested that it should also refer to past law and policy.  He also stated that the constitution of the Competition Fund should be transparent.

 

7.1       Further with regard to clause 52, i.e. the power to exempt, he suggested for an Advisory Council to suggest  as to what should be exempted.  He also suggested for incorporation of a  clause  in the Bill  empowering the Department of Company Affairs  or others to list out the laws and policies which affect the Competition  Law.

 

8.0       The Chairman thanked the witness for his presentation and asked him to send the written replies to the queries to be raised by members to the  Secretariat.  He invited  members  to seek queries/clarification from the witness.

 

 8.1      One member wanted to know as to how consumer’s interest could be protected  by this Bill?  Another member  referring to sub-clause  (6)  of clause 19 wanted to know whether the witness felt that amendment was required in the clause.  Further regarding clause 22, he asked for a clarification whether each Bench should  have a Judicial Member or not.

 

(The witnesses then withdrew)

 

(The Committee then adjourned at 1.10 P.M. and reassemble  at 3.00 P.M.)

 

9.         The Chairman welcomed the representatives of the ICAI to the meeting.  He apprised them about the history of Competition Bill.

 

10.0     The Chairman of Corporate Laws Committee of ICAI thanked the Chairman & Members for giving him  opportunity to appear before the Committee. He welcomed the Bill terming it to be a watershed and said that the MRTP Act had become obsolete .   He stated that the Bill aimed at providing provisions to see to it that the interests of consumers are paramount.  He suggested for section 108 to be taken back to the Companies Act rather than keeping it in  the Competition Bill.  Referring to the amalgamation and mergers he viewed that these could be taken care of under Companies Act.  He later said that bringing any kind of a limit in respect of turnover was not right.  He wanted  an ascertained limit to the definition of dominant position.  Regarding clause 12, he felt that the Chairperson and other members should be barred for at least a year.  Lastly he suggested that CAs should be considered for the purpose of appointment in the CCI  as well as for investigation  on behalf of the Director-General.

 

10.1     One member  wanted to know whether the threshold limit for dominant position should be included in the clause itself or prescribed  in the rules to be framed later on.

 

(The witnesses then withdrew)

 

11.0     On being invited by the Chairman to present their views on Competition Bill, 2001, the President,  ICWAI gave a brief overview of the Institute.  He welcomed the Bill and said that the definition of competition could have been more clear. Dealing with clause 4, regarding the dominant position he viewed that the ICWAI has a very  significant role to play.  He felt that the definition needed to be a little more elaborate.  He gave his considered opinion that dominant enterprises which were the source of profiteering transactions leads to abuse of dominant position.  He suggested for registration of such enterprises.

 

11.1     The other representatives of the ICWAI added on to the President’s  presentation and expressed his views about the precise definition of “competition”.  However he too felt that this definition should be elaborate.  In the context of  the Indian  Competition  Law,  the International Patent Rights Act should be synergised  with the Bill.  Referring to clause 21(1) of the Bill, he stated that instead of  a reference to the statutory authority, a reference to a responsible office should be made.

 

11.2     The Chairman, enquired whether the enacting formula where  the word ‘Competition’ had been defined was adequate.  Besides, he also wanted to  know whether they felt that comprehensive amendments of the MRTP Act could have achieved the objective  of the Competition Bill?  Lastly he raised the issue of dominance and wanted to know whether provisions in the Bill to prevent the abuse of dominance were adequate.

 

(The witnesses then withdrew)

 

12.0     The  Chairman then welcomed the President and Members of the  ICSI.

 

12.1     The founder President of the Institute made the presentation on behalf of ICSI. He briefly referred to the various provisions of MRTP Act, then welcomed  the Bill.  Thereafter he drew attention of the Committee to clause 3 of the Bill dealing with appreciable adverse effect on Competition.  He suggested that it would be worthwhile to reproduce   in the section 33 together with section 2(o) of the MRTP Act. 

 

12.2     Thereafter the representative of the Institute  referred to clause 4 where he stated that the definition of dominant position was vague and  which should be specific.  He suggested that clause 6(1) should clearly define as to what was going to constitute  appreciable adverse effect on competition on the issue of appointment he suggested that it should be made transparent.   He wanted the  Company Secretaries to  the considered  members of the CCI.  Besides he advocated for a cadre of personnel drawn from different professions for the Competition Commission and wanted the age limit to be aligned with that of High Court Judge.  Regarding the removal of members, he felt that the Supreme Court should not come into picture  and the Government should be at liberty  in case  inefficiency or misbehaviour was  proved.

 

12.3     Regarding the qualification for appointment  of the  Director-General and other officials under clause 16(7) he suggested that it should be specified  as experience in investigation in  economise  trade or industry. He suggested that clause 19 (3) should be read with clause 20(4) and specifically spelt out.  Dealing with clause 23 he suggested that the authority for transfer should be vested in the Chairman.  He suggested minor amendments in clauses 28 & 38.  So far as clause 40 was concerned, he suggested the Committee to reconsider whether the clause was appropriate.   Regarding clause 43 (b) dealing with penalty he mentioned that the imposition thereof should be left to the Commission.  On Clauses 58 & 60 he termed them as contradictory and suggested for their harmonization.  Lastly about clause 64 he was of the view that the technical personnel should be  transferred to the Commission. 

 

12.4     Another representative  of  ICSI made suggestions on  clause 3.  Secondly she said that whereas by virtue of   clauses 48 & 49, certain amount of financial autonomy was proposed to be given to the Competitive Commission, on the other hand clauses 53 & 54 empowered  the Government to give directions on matters of policy in respect of the functioning of the Commission.  She also referred to the issues of conflict between the Convergence Bill and the Competition Bill.  Lastly he suggested for deferment of its implementation.

 

(The witnesses then withdrew.)

 

13.       A  verbatim record of the proceedings was  kept.

 

14.       The Committee then adjourned at 4.24 P.M. to meet again at 11.00 A.M. on 19  October 2001.

 

XXXXV

 

FORTY-FIFTH MEETING

 

 

            The Committee met at 11.00 A.M. on Monday, 5 November 2001 in Regal Room, The Oberoy Towers, Mumbai.

 

1.         Shri Pranab Mukherjee-   Chairman

 

            RAJYA SABHA

 

2.                  Shri Hansraj Bhardwaj

3.         Shri Sangh Priya Gautam

4.         Dr. L.M. Singhvi

5.         Shri C.P. Thirunavukkarasu

6.         Shri Kuldip Nayyar

7          Shri Pritish Nandy

8          Shri B.S. Gnandisekan

 

            LOK SABHA

 

9          Shrimati Jayashree Banerjee

10.       Shri Vinay Katiyar

11.       Shri Arun Kumar

12.       Shri Ram Nagina Mishra

13.       Shri P.H. Pandian

14.       Shri Subodh Ray

15.       Shri Anadi  Sahu

16.       Shri Raghuraj Singh Shakya

17.       Dr. Raghuvansh Prasad Singh

   18.    Shri E. Ponnuswamy

 

SECRETARIAT

 

            Shri Satish Kumar, Additional Secretary           

Shri Tapan  Chatterjee, Director

            Shri A.K. Singh, Under Secretary

            Shri Narendra Kumar, Research Officer

            Shri Ashok Kumar  Sahoo, Committee Officer

 

WITNESSES

 

Shri Rahul Bajaj, CMD,  Bajaj Auto Ltd.

Shri Keshab Mahindra, Chairman,  Mahindra and Mahindra Ltd.

Shri K.V. Kamat, MD & CEO, ICICI Ltd.

Shrimati Kalpana Moraporia, ED

Shri P.P. Vora, CMD, IDBI

 

           

2.         At the outset the Chairman welcomed the members and extended special welcome to a new Member of the Committee.  He then briefly apprised them about the purpose of the visit to Mumbai and about the  schedule of two days.  The Chairman then invited the CMDs of Bajaj Auto Limited and Mahindra & Mahindra Limited and apprised them about the history and necessity of the Competition Bill.  He thanked them for responding to the invitation of the Committee.  He then explained them that the Committee wanted their opinion on the various provisions of the Bill even by way of pointing out the provisions which might prove detrimental to the growth and development of the Indian Industry.  He then mentioned that the Members might seek certain queries arising out of their presentation which could be responded later in writing.

 

3.0       The Chairman, Mahindra & Mahindra Ltd. thanked the Committee for providing them this opportunity and said that he considered the Bill to be of paramount importance as it would affect the shape of economic development in our country in the years  ahead.  He said that the monopolies Act with its draconian laws stifled the economic development of the country for the last 20 years.  Replying to some fundamental questions raised by himself he stated that it was primarily concerned with consumer interests.  However,  he hastened to say that the Consumer Protection Act was more than adequate to protect the consumer’s interests.  He added that he had serious reservations against the Bill and believed in creating an environment which would attract capital and technology.  He felt that the present size of our economy was very small and putting any restriction on the growth of Indian Companies would affect the growth of our economy.  He mentioned some examples of largest companies in their sector which spent a large sum in Research and Development and said that Indian Companies would not be able to compete with the multinational companies.  Pointing out the lapses in the Bill he said that the word ‘dominance’ had not been defined anywhere in the Bill.  he also felt that the Bill must ensure the autonomy of the Independent members in the proposed Commission and there should also be a time bound programme in the Bill.  He also felt strongly against the confusing of asset values and turnovers in the Bill.  he suggested for keeping the monetary limits flexible so as to avoid frequent legislations on the change of circumstances.  His suggestions included a fixed sum of penalty rather than a percentage of the turnover.  Lastly he said that we should not copy laws of the developed world rather aspire to reach their stage.

 

4.0       The CMD, Bajaj Auto Ltd. in his presentation inter alia said that one of the main objectives of the Bill was consumer interest and welfare.  He then mentioned that in every sector there were bad eggs and so was the case with industry where some unscrupulous players did the spoilsport.  He also mentioned that in the world’s population of poor people India contributed 50%.  In  this scenario he felt that there was an urgent need to take care of the needs of all the cross sections of the society.  However, he simultaneously laid emphasis upon the concern for Industrialists.   The Public Sector and the Private Sector industries also needed protection from the MNCs.  he felt that MNCs might be allowed but not at the cost of closing down of all Indian Industries.  He linked the interest of Industrial Sector to that of consumer’s interest.

 

4.1       He agreed with the views of the other speaker and stated that the provisions of the Bill should not come in the way of growth.  About the size criteria in the MRTP Act, he said that it was removed in 1991 but was introduced in the present Bill.  He also suggested for some discretion to the commission, such as, for deciding the limits of dominance, however, too much discretion would lead to red tape and corruption.    He suggested that competition was good as it controlled the bad manufacturer and prevented price fixation but even then a regulator was needed.

           

4.2       Further touching upon the aspect of penal provisions in the Bill he said that no economic legislations had such penal provisions as this law had.  To him these were not necessary and would restrict the production of wealth, hence he suggested for its modification.

 

4.3       His another point was regarding the dual regulators.  He felt that in the sectors like insurance and telecom where IRDA and TRAI were already regulating, the competition commission should not look into it.  Regarding MRTP Act he said that it neither prevented anybody from becoming rich nor helped the consumers.  So he felt that the Bill should protect consumer without hurting Indian Industry.  He was of the view that if Indian Companies would not perform they should be taken over by Indian Companies itself.

 

4.4       Lastly he mentioned about corporate Governance issue which the CII had taken up and came out with a code on that. Its two major ingredients were disclosure and transparency. 

 

5.         The Chairman thanked the witnesses for their observations and for indicating what should be done in respect of having good corporate governance rules and regulations in the country.  He enumerated the three major suggestions made by them viz. the change in purview of the operation of Competition Bill so that CCI could concentrate on companies having larger turnover and larger number of employees.  Secondly, a clear definition of dominance depending upon share in the market of that particular product instead  of depending in size of the company, and lastly that Indian Consumers must be ensured a stake in the foreign companies.  He wanted to know from them as to how it could be done.

 

6.0       A member pointed out to the diverging opinions of the two witnesses on whether MRTP Act was adequate with certain modifications or the new legislation was required.  Nextly he pointed to their view that we were not yet economically ready for such a stage of regulation hence move slowly.  He then stated that as mentioned by witnesses that dominance was not defined in the Bill, he disagreed and said that it was defined, although not with precision  on the basis of the Report of the High Level Committee.  He, then, enquired from the witnesses as to which way they wanted dominance to be defined because if the limit would be increased,  the medium level companies which were less transparent would go scot-free and if it would be on the basis of market share which seemed easy, it would become a lawyer’s paradise.  Regarding combination he also wanted to know from the industry as to how they viewed it.  Lastly on the issue of penalty, the Member felt that the idea of civil prison was not good.  Besides, he wanted them to give concrete measures to bring greater accountability for the multinationals.

 

6.1       Another Member wanted to know whether the Competition Bill in its present form with certain modifications would help healthy competition.  He also enquired whether clauses 47, 52, 53 and 60 would create problem for the industry at later stage and what they felt should have been the threshold limits for assets classification.

 

6.2       A Member specifically asked as to what was the unease in the minds of industry due to the competition Bill.  Another Member enquired whether the multinationals carried out their export obligations at the time of entry and if not what punishment was given to them.  Another Member wanted a collective memorandum as to what harm this Bill would cause to them and how would it benefit the foreign Companies.  A Member suggested that a mechanism might be incorporated to recover the fine.

 

6.3       Another Member felt apprehension about the role of cartels in the Indian Industry.  A Member wanted to know whether it was the ripe time to bring regulatory controls in the economy or we should allow Indian industry to acquire a critical mass.  Another Member suggested absolute removal of penalties of sending people to jails and suggested the alternative of attachment of property.  Another Member wanted to know whether clauses 53, 54, 19(4) regarding Competition Commission and power of the Government to supersede were alright?

 

6.4       A Member expressing his favour for the Bill wondered as to how Indian Companies became pigmies in comparison to their foreign counterparts.  Another member queried as to how the industry would protect workers interest.  Another enquired whether the industry had any collaboration with educational institutions to develop the industrial sector.

 

7.         The Committee adjourned at 1:20 P.M. for lunch to meet at 3:00 P.M.

 

8.         The Chairman welcomed the representatives of ICICI and reminded them of the purpose of the meeting.  He wanted them to express their considered opinion regarding the provisions of the Bill such as amalgamation, merger, combination, etc.  He briefly mentioned the objections of the other representatives to the certain provisions of the Bill.  He apprised them with the rules of the Committee and left the floor for them.

 

9.0       The CMD, ICICI stated that his team would cover as to what were policy objectives, the business environment and the specific issues on the Bill.  On the objective part he too mentioned the same things as ensuring freedom of trade, protection of consumers interests, increasing efficiency and making Indian Industry globally competitive.  Touching upon the aspect of business environment, he said that industry had an opportunity as well as a challenge due to the moving from a protected market to a globalized market.  Referring to the Companies which were under pressure in terms of inability to meet their obligations to lenders and in the market place, he suggested a solution to allow them to effectively merge so as to create companies of scale.  he suggested that any Competition Bill would have to be viewed in the perspective of structural change consequent to globalizations so as to first have a platform of survival and then success.  He then mentioned about the largest Indian Company i.e. the Indian Oil which was about one tenth of the size of the largest global oil company.  Similarly, in terms of asset, ONGC, the largest Indian Company was about one hundredth to General Electric.

 

9.1       On these lines, he suggested that we needed to ensure that our companies got the strength and withstood the pressure of globalization.  For this he felt that a timeframe of atleast five years was required for the industries to achieve the critical mass.

 

9.2       Adding on to his presentations, another witness from the ICICI highlighted the four provisions of the Bill which required relook, according to them.  Firstly he stated that size of assets and turnover might not really create the appropriate environment.  She suggested that the size needed to be would at in the content of enterprises in the global content.  On the issue of predatory pricing she said that it should be left to the Commission to investigate and discover the face market cost of production on a reference basis.  Regarding merger and amalgamation in the financial sector she suggested that there were well regulated and should be left out of the CCI’s jurisdictions.  Further on, she felt that mergers and amalgamations through a Court process should be completely outside the purview of the Commission .  Lastly,  on the penal provisions, she viewed that instead of criminal penalty there should be  very stiff financial penalties.

 

10.       The Chairman thanked the witnesses for their  presentation and wanted clarifications from them that whether the timeframe for education and advocacy as provided in the Bill was not sufficient and whether the present Bill would not help the regulators which were already working in financial sector regulations.

 

11.0     A Member wanted to know some more examples of comparisons between domestic and global players and the monetary limits on combinations, mergers et al. Besides, he wanted to know the functionality in respect of the combinations and a test for combinations.  He enquired as to what could  be done to give more time.

 

11.1     Another Member, referring to clauses 6 and 28 wanted to know as to what would happen when the two authorities, regulating on a matter go in opposite direction.  A member enquired as to how a timeframe of five years would be given for rich to grow richer.  What would happen to the poor and the unemployed in that period.  Another Member enquired about the laws which prevented Indian Industries from becoming internationally competitive.  Few Members asked some general questions like whether any other regulatory Bill and regulatory authority was needed, how consumer interest would be protected, how would the backward areas be developed.

           

12.       The Chairman, then asked the witnesses to send their written responses.

 

(The witnesses  then withdrew)

 

13.       The Chairman welcoming the representatives of the IDBI, mentioned the purpose of the meeting and apprised them with the rules of the Committee.  He then requested them to present their views on the various provisions of the Bill.

 

14.       The CMD, IDBI in his presentation suggested that multiplicity of regulators should be done away with and some specified definition of appreciable adverse effect be provided by rules.  Similarly, on the aspect of dominant position, it needed to be more apparently defined from case to case from time to time and from industry to industry.  Nextly he suggested that assets and turnovers for defining mergers and amalgamations were unrealistic as it presumed anti-competitive agreement as well as the figures were also same for all industries which were again unrealistic.  Investor protection was the main object of SEBI regulations, hence further restrictions in the present Bill might amount to excessive regulation.  He also suggested that in case of any alleged contravention of clauses 3(1) or 4(1) by any Bank or Financial Institution, the complaint should be entertained by the Commission only if it was complied by an RBI recommendations as it was the regulator for such institutions.  it would check frivolous complaints.  Speaking on the penal provisions in the Bill he suggested that at least the nominee directors should be exempted from such penalties because they did not look after the day-to-day management.  Summing up  he viewed that when we go for the anti-competition Bill it might have to be industry specific so that there were enough safeguards.

 

15.       The Chairman thanked the witness for his lucid presentation and wanted a clarification as to how many sick industries were saved by way of mergers from dying.  He  then asked the witnesses to respond in writing to the queries of the Committee.

 

16.       A Member suggested two models of doing away with multiplicity of regulators and wanted to know from the witness which one would be functionally most viable.  He also wanted to know as to which method of defining dominance would be better.  Lastly he wanted them to give concrete and specific suggestions on the issue of guidelines.

 

17.       The Committee adjourned at 5:30 P.M. to meet again at 11.00 A.M. on 6 November 2001.

 

XXXXVI

 

FORTY-SIXTH MEETING

 

 

            The Committee met at 11.00 A.M. on Tuesday, 6 November 2001 in Regal Room, The Oberoi Towers, Mumbai.

 

1.         Shri Pranab Mukherjee-   Chairman

 

            RAJYA SABHA

 

2.         Shri Sangh Priya Gautam

3.         Dr. L.M. Singhvi

4.         Shri C.P. Thirunavukkarasu

5.         Shri Kuldip Nayyar

6.         Shri Pritish Nandy

7.         Shri B.S. Gnandisekan

 

            LOK SABHA

 

8.         Shrimati Jayashree Banerjee

9.         Shri Vinay Katiyar

10.       Shri Arun Kumar

11.       Shri Ram Nagina Mishra

12.       Shri P.H. Pandian

13.       Shri Subodh Ray

14.       Shri Anadi  Sahu

15.       Shri Raghuraj Singh Shakya

16.       Dr. Raghuvansh Prasad Singh

   17.    Shri E. Ponnuswamy

 

SECRETARIAT

 

            Shri Satish Kumar, Additional Secretary           

Shri Tapan  Chatterjee, Director

            Shri Narendra Kumar, Research Officer

            Shri Ashok Kumar  Sahoo, Committee Officer

 

WITNESSES

 

Representatives of Bombay Chamber of Commerce & Industry

 

            Shri K. Ramchandran, Vice President and Vice Chairman & Managing

                                                  Director, Philips India Ltd.

            Shri R. Prasanna, Chairman, Legal Affairs Committee

            Shri S.H. Rajadhyaskha, Co-Chairman, Legal Affairs Committee

            Ms. S.K. Bharucha, Past-Chairman, Legal Affairs Committee

            Shri S.M. Bhandarkar, Past-Chairman, Legal Affairs Committee

            Shri Bharat Vasani            ]

            Smt. Sandhya Kudtarkar,] Member, Legal Affairs Committee

            Shri S. Vutha                    ]

            Shri L.A.D’Souza, Executive Director

            Smt. Manju Sood, Joint Director

 

            Representatives of Indian Merchant Chamber

 

            Shri Arvind Jolly, President

            Shri Tanil Kilachanda, Past President

            Shri S.S. Bhandare, Member, Managing Committee

            Shri Pravin Ghatalia, Member, Managing Committee

            Smt. Kiran Nanda, Chairperson, Economics & Business Reform Committee

            Shri Nanik rupani, Chairperson, Electronic & telecommunication

            Shri Shailesh Vaidya, Co-Chairan, Law & Company Affairs Committee

            Dr. D.R. Pendse, Member, Managing Committee

            Shri Pradip Shah, Member, Managing Committee

            Shri P.N. Mogre, Secretary-General

            Shri Jitendra Sanghvi, Secretary

 

            Representatives of Securities and Exchange Board of India (SEBI)

 

            Shri D.R. Mehta, Chairman

            Shri Ananta Barua, Joint Legal Advisor

 

            Representatives of National Stock Exchange.

 

            Shri  Ravi Narain, Managing Director & CEO

 

2.         The Chairman welcoming the representatives of Bombay Chamber of Commerce and Industry mentioned the purpose of the meeting.  While inviting  their perceptions on the various provisions of the Bill,  he mentioned about the basic  objective of the Bill as facilitating competition and protecting the interests of the consumers.  The Chairman thereafter hinted at attempts of  the Government to bring in a  series of legislations aimed at providing good corporate governance to suit the changed world economic scenario and thus to fulfil the international obligations.  He referred to the  changes already taken place in the Companies Act, 1956 and some of the changes therein on the anvil to bring in  corporate governance.  He then touched upon briefly salient features of  Competition Bill and stated that the Bill aimed at facilitating competition among the various manufacturing and service providers to the best interests of ensuring competition and at the same time to protect the interests of the consumers.  He then traced the history of the  Bill to the Finance Minister’s Budget Speech, and stated that after consultations at various level  the Bill was introduced in  Parliament and thereafter  got  referred to the Committee,  which had  taken up the work of eliciting opinion of the cross sections  of Indian society. He mentioned that  the representations of the various organisation/individuals already received by the Committee and the purpose of Mumbai visit of the Committee is to hear Mumbai based Chambers of Commerce & Industry  and Captains  of Industry.

 

3.0       The Vice-President of the BCCI began the presentations by thanking the Committee for this opportunity.  He then stated that their observations were based on certain fundamental building blocks or the guiding principles such as the commercial enterprises must be made globally competitive, for that purpose the focus should be on productivity and cost competitiveness.  Secondly he stressed upon encouraging commercial enterprises to achieve profitable growth.  The third principle he mentioned was that to achieve these,  the enterprises necessarily required a  business climate that was investment friendly and attractive in terms of knowledge flow.  Thereafter he left the floor to his colleagues for making his observations  illustrative.

 

3.1       The other witness opined that the competition scenario in India was not such that require the proposed legislation at this point of time.  He viewed that the players in the Indian market,  by global benchmarks like global volumes and global markets, were very very small.  He strongly felt that the Bill entailed to establish a Commission rather than a law, though the objects seemed to lay down a policy and a law concerning competition.  In that context, he referred to four clauses i.e. 3,4,5 & 6 which proposed to lay down competition law which re-characterization of the principles laid in MRTP Act and other clauses  talked about the administration of that law by Competition Commission of India.  The Competition policy is not rightly  spelt out in the Bill, which must be evolved first. He felt that at the moment there was no need for such a competition law given the transition which India was going through in view of deregulation, privatization, etc.    Citing the American experiences, he stated that competition law therein i.e., the Anti Trust Law had developed in stages and there were constant stabilization and mid course corrections by judicial pronouncements.  He desired that a cooling  period must be provided in the Bill.  He viewed that the Competition in India has not the  reached the stage where it adversely affect either industry or consumer warranting intervention.  He opined that replication of competition law of other country is incorrect but it should adapt to the Indian condition.

 

3.2       Another witness supplementing the views of expressed by his colleagues by pointing out the fact that clauses 5 & 6 of the Bill are akin to chapter 3 of the MRTP Act, 1969, which was scrapped in July 1991.  He wanted to learn the kind of distortion in Indian Industry/market in the last ten years which led the Government to reintroduce these provisions in different form which would  delay and  hamper the growth of Indian corporate sector.  These provisions would bring significant restrictions on joint venture,  collaboration,  acquisition and mergers. In that context  he  viewed   that Indian Industries were  facing slowdown and finding difficult to adjust to the realities of post WTO regime, there was a need  for bigger scale; hence restriction in combination would hamper the growth.   He cited   the example of the chemical industry which were  larger applicants for anti-dumper petition which were basically due to the fact  that they were not able to match the international prices because of its low size and operation.  He regarded the time as inopportune to introduce any new restrictions to allow industries to restructure itself.  Indian Industry is not capable of  meeting of challenges of globalisation.  The capital intensive sector like power, telecom, petro-chemical have not commanded even   ten percent market share.

                                                             

 3.3      One more witness added that pre notification requirement  for  merger    would delay the whole process and thus deter competition. The aspects of mergers and acquisitions were already looked at under   the Companies Act by the High Courts, which   may lead to a  situation where two  bodies i.e. High Court and  Competition  Commission of India may give different judgement on the same issue.

 

3.4       The Chairman raised a few queries arising  out of  presentations made; viz.  (i)   why the Indian Industries failed to take the advantage of the deletion of chapter 3 of the MRTP Act, 1969 and (ii) what should be the cooling off period after which the country would have the competition Bill.  Thereafter he sought elaborate written responses  thereon.

 

3.5       Another Member wanted an alternative draft of the Bill.  Another Member  protested by saying that invitees amongst captain of industry  did not appear before the Committee.  Another Member wanted to know why the Bombay Chamber is sceptical about the vertical merger.

 

3.6       The Chairman thanking the representatives of BCCI requested  them to send  their written responses to the observations/queries of the Member and himself to the Secretariat of the Committee.

 

(The witnesses  then withdrew)

 

5.         The Chairman welcomed the representatives of Indian Merchant  Chamber and briefly mentioned the purpose of the meeting and the history of the competition Bill.   He thanked them for responding to the invitation.  He also made a brief mention of the points raised by the Industry and requested  the witnesses to give their  considered opinions on those issues.

 

6.0       The President of the Chamber thanking the Committee for giving them an  opportunity to present their views stated that in principle they welcomed the Bill. But, he opined that India was too pygmy an  economy at this point of time to have this Bill.  He said that other countries took 8-10 years to bring about such laws, we too should not hurry as it might stifle the economy.  He advocated for some more time before bringing up the Bill and even for reconsidering of the harsh provisions in the Bill.  He thereafter requested  one of his  teammates to deliberate on legal issues.

 

6.1       Supplementing  the views of the President of the Chamber,  he stated  that consumer interests as an objective was a misfit for this Bill as there was  a separate legislation for it.   He stated that in Indian  economy real competition is absent and pseudo competition exist and in that regard he questioned the necessity of a law to meet with requirement of the WTO regime.  He felt that much more was required to be done in this country to bring about real competition  to promote and sustain real competition.  While  questioned the composition of the selection committee, he desired that representatives of Industry should be in the selection process.

 

6.2       Another witness referring to the aspect  of appreciable adverse effect in the Bill said that it is subjective would enable  the regulatory authority to act in arbitrary manner.  About the definition of dominant position he felt that the market share of the produce should be included as an indicator to determine dominant post as the measure by asset value or  turnover appeared to be  flawed.  He also suggested that the President or Chairperson of the apex Chamber of Commerce and Industry could be nominated by rotation as a member on the Selection Committee and its Director General should be a professional person  a Chartered Accountant & a lawyer  The CCI should not be subjected to take approval of the Central Government to  transfer the case from one bench to  another as stipulated under clause 23 of the Bill.   In the Independant Advisory Committee as laid down under clauses 47, representatives from open industry should be considered. 

 

7.         A Member, thereafter asked the witnesses to spell out how competitions could be promoted by this Bill.  He then wanted them to give a drafted version of  representation of the chambers/industry for advising the government regarding policy framework.  The Chairman requested the representatives  to submit their  written comments to the Secretariat.

 

(The witnesses then withdrew)

 

8.         The Chairman welcoming the representatives of Securities and Exchange Board of  India (SEBI) and National Stock Exchange (NSE), thanked them for their presence, described briefly the history of the Bill and issues relating to the Bill such as  mergers, amalgamation, dominance, cooling off period.

 

9.         The Chairman, SEBI, thanking the Committee for  the invitation,  welcomed the  legislation and  said that this was the right time to adopt it.  He mentioned  that the SEBI was concerned with legislation in limited way i.e. takeovers only.  He further mentioned that takeover is necessary  for a corporate entity to acquire proper size so to remain in the global competition.  He mentioned the provisions of takeovers by which investors interests were also protected.  He suggested that  dominance  should not be characterized the size of the company as stipulated in the Bill  but with the market share in the percentage term. He observed that with the enactment of the proposed legislation, overlapping of functions with regard to take over may occur  thus was of the view that takeovers, along with acquisition, mergers which were being dealt by High Court, may be kept out of Competition Bill.  

 

10.       The MD & CEO, National Stock Exchange then expressing his gratitude to the Committee said that the provisions regarding preventing the practices which had adverse effect on Competition were essential.  He also suggested that the Bill could also deal with the developmental objective of how to foster competition through strengthening the hand of the consumer.  The objective could also be addressed from the consumers point of view rather than from producers and suppliers point of view.  Regulation of competition may lead to conflict between Multiple Regulatory Authorities.  He also gave examples as  to illustrate this point as to how the multiplicity of regulators would hamper  the functioning of the economy and make the task  of the Commission unenviable.

 

11.       The Chairman  raised a query  by saying that what would be the role of SEBI to protect the interest of shareholders when   the Commission  decides to unwind  a combination of industries.

 

12.0     A Member then wanted from the witnesses some specific suggestions to minimize the multiplicity with reference to acquisitions, mergers and amalgamations He also wanted to know the measures for promoting competition  in  great details.   Their specific response on the market share of a industry  to define dominance was also sought by the Member. 

 

12.1     Another Member enquired from the SEBI Chairman as to what would happen to Section 11 (2h) of the SEBI Act, 1992 after the enactment of the Competition Bill.  he also wanted him to send in a tabulated form the instances which were not in consonance with the SEBI Act, 1992.

 

13.       The Committee adjourned at 1:25 P.M. 

 

 

II

 

 SECOND MEETING

 

The Committee met at 3.00 P.M. on Thursday, 24 January 2002 in Committee Room ‘A’, Ground Floor, Parliament House Annexe, New Delhi.

 

MEMBERS PRESENT

 

1.         Shri Pranab Mukherjee— Chairman

 

RAJYA SABHA

 

2.         Smt. Basanti Sarma

3.         Shri Kapil Sibal

4.         Shri Sangh Priya Gautam

5.         Dr. L.M. Singhvi

6.         Shri K.M. Saifullah

7.         Shri C.P. Thirunavukkarasu

8.         Shri Janeshwar Mishra

9.         Shri Drupad Borgohain

10.       Shri Swaraj Kaushal

11.       Shri Ram Jethmalani

 

            LOK SABHA

 

12.       Shri Lal Bihari Tiwari

13.       Shri Anadi Sahu

14.       Shri Prakash Mani Tripathi

15.       Shri Ram Nagina Mishra

16.       Shri Manabendra Shah

17.       Sardar Buta Singh

18.       Shri Iqbal Ahmed Saradgi

19.       Shri M.O.H. Farooq

20.       Shri Subodh Ray

21.       Shri Anandrao Vithoba Adsul

22.       Shri Brahma Nand Mandal

23.       Shri Adhi Sankar

24.       Dr. Bikram Sarkar

25.       Shri Holkhomang Haokip

26.       Dr. Jayanta Rongpi

 

SECRETARIAT

 

            Shri Satish Kumar, Additional Secretary

            Shri Tapan  Chatterjee, Director

            Shri A.K. Singh, Under Secretary

            Shri Narendra Kumar, Research Officer

            Shri Ashok Kumar  Sahoo, Committee Officer

 

            WITNESSES

 

Representatives of  Department of Company Affairs, Ministry of Law, Justice and Company Affairs.

 

1.                  Dr. S. Chakravarthy, Consultant

2.                  Shri Rajiv  Mehrishi, Joint Secretary

 

2.         At the outset the Chairman welcomed all the Members of the Committee and briefed  the new Members about mandate  and functioning of the Committee.  He also informed the Members about the next series of meetings to be held during  4 to 6 February and 18 to 20 February, 2002, to take up  four Bills  pending its consideration viz. the Competition Bill, 2001, the Companies (Amendment) Bill, 2001, the Companies (Second Amendment) Bill, 2001 and the Representation of the People (Amendment) Bill, 2001.

 

3.0       Touching upon the  background of the Competition  Bill, 2001 the Chairman said that the idea was for the first time announced  by  the Finance Minister in his Budget  speech in 1999.  Thereafter,  an  Expert Committee was appointed in October 1999 which submitted its report in May, 2001.  A concept Bill drafted by the Expert Committee  was also put on the website of the Department of Company Affairs.   After inter-ministerial consultations,  it was  introduced in the Lok Sabha and subsequently  referred to this Committee.  Since the last Monsoon Session the Committee had been considering this Bill.

 

3.1       The Chairman then  welcomed Dr. S. Chakravarthy, Consultant in the Department of Company Affairs  alongwith the representative of  the  Department and invited him to make a presentation on the Competition Bill, 2001 and to clarify  the points/issues raised by the Members and witnesses in the meetings of the Committee.

 

4.0       Thereupon, the  Consultant in the Department of Company Affairs  made an exhaustive  power point presentation  on the Competition Bill, 2001.  

 

4.1       While elaborating on the features of the Bill, the witness said that Competition today had to be seen in the context of World Trade Organisation agreements to which India was a signatory.  Then tariffs were to be lower resulting into cheaper imports.  The Government was also obliged not to raise tariff beyond certain limits.  While defining Competition, the witness said, “the Competition is a dynamic concept.  It is a tool to mount market pressure to penalise the laggards and reward the enterprising”. 

 

4.2       Tracing the history of MRTPC, the witness said that other three decades had passed since it came into force in 1970.  Looking at the experience of the MRTP Act, it was  found that there was no clear definition of offences like ‘abuse of dominance’, ‘cartel’, ‘collusion’ and  ‘price fixing’,  ‘Bid-rigging’ ‘Predatory pricing’ etc.   Though in some generic language, they found mention in some of the sections.

 

4.3       The witness quoted from the Finance Minister’s Budget Speech of February 1999 that the MRTP Act had become obsolete in certain areas in the light of the international economic developments relating to competition laws and there was a need to shift a focus from curbing monopolies to promoting competition.  Following this, a High-level Committee was set up on Competition policy which submitted a draft law in June 2001.

4.4       The witness then, explained the four components of  the Competition Bill , viz. (i) the anti-competition agreements; (ii) abuse of dominance; (iii) control of combinations i.e. mergers, amalgamations, acquisitions and takeovers; and (iv) competition advocacy i.e. fostering competition.

 

5.0       A Member of the Committee requested the witness to simplify the presentation in concrete terms so that even a common person could understand it.  He said, as far as he understood, there were three purposes of the Bill.  The first was to benefit the consumers by outlawing a trade practice of coming together to hijack the prices.  Secondly, to improve  the quality of a product or service and thirdly to curb predatory capitalism of microsoft variety.  He again urged the witness to explain the provisions of the Bill in simple terms.

 

6.0       The witness began with defining the cartels with an example of cement cartels and narrated how a horizontal agreement between producers in the manufacturing goods could lead to hijacking of the price and state of that when  it became anti-competitive,  there was a provision in the Bill to outlaw cartels. 

 

6.1       According to the witness the Organisation of Petroleum Exporting Countries (OPEC) was the biggest cartel in the world, which control the price by reducing or increasing the production.  No anti-cartel law applied to them as it was a Government cartel.

 

6.2       Explaining the concept of vertical agreements, the witness said tie-in arrangements were  vertical agreements and those were not as bad as the horizontal agreements.  He gave the example of tie-in arrangements like  gas connection with a compulsory purchase of a hot-plate; refusal to deal and resale price maintenance.

 

6.3       Commenting upon the abuse of dominance,  the witness said dominance per se was not objectionable but abuse of dominance was an offence.  Denial of market access was one of the examples of abuse. Coming to the issues of combinations, mergers or amalgamations, the witness explained that out of existing four manufacturers,  if  three merged  together, then there would  be only two players in the market.  When they merge they acquire enormous economic strength.  This empowers them to discourage new entrants and then they dictate prices ultimately acquiring the dominance.  To control this there was a need of regulation on competition perspective, the witness felt. He stated that the combinations would be subject to the merger regulation and notification of combinations had been made voluntary and not mandatory.  He opined that once the proposed Competition Commission of India was informed of the merger,  it was required by law to decide it within 90 working days or else it would be deemed to have been approved.

 

6.3       Regarding the small-scale sector or any class of enterprises like steel, fertilizer etc. the witness had stated that the Government had the power to exempt those industries from competition law for a particular period of time in the interest of national security or public interest.

 

6.4       Thereafter, the witness referred to composition and selection of proposed Competition Commission of India. 

 

6.5.0    The witness then summarised the following apprehensions about  the present Bill:

 

(i)                  Is the Competition Law required at all?;

(ii)                the new law is draconian;

(iii)               the size in MRTP Act has been brought back through the back door in the new law;

(iv)              the combination of regulations will impede India from becoming globally competitive;

(v)                it would lead to possible injury to domestic industries, particularly to the small scale sector;

(vi)              the CCI will become a super regulator;

(vii)             the ‘group concept’ in combination regulation is regressive; and

(viii)           the new law supersedes all other laws and thus CCI becomes a behemoth.

 

6.5.1    The witness while answering the above points said  that in the light of globalisation,  foreign companies were  arriving in our country and as a consequence anti-competition practices would surface which needed to be regulated.  In order to fulfill WTO obligations,  regulatory advocacy functions needed  to be brought into force and that was why competition law was required. 

 

6.5.2    Reacting to the apprehensions  that this new law was draconian,  the witness said that the number of per se  offences in the MRTP Act were  fourteen whereas in the new law there were only four offences  which were per se.  Apart from these four offences, the remaining ones in the new law were under the rule of reason.  Elaborating on the per se offences in the new law, the witness explained that  cartels, bid-rigging, limiting territory and limiting production were grave  offences.

 

 6.5.3   The witness then stated that for a merger a threshold limit of Rs.1000 crore assets or Rs.3000 crore  turnover was prescribed  only for combinations.  He clarified that this threshold limit was intended only to screen out smaller mergers.  Thus, size was no longer a factor in the new law.

 

6.5.4    Speaking on the need for combination control,  the witness said that  the Competition Law of 72 countries had been studied which included developed, developing and least developed countries.  According to him, out of seventy-two countries fifty-one countries had mandatory pre-merger notification requirement.  Besides, twelve  countries had mandatory notification requirement but at a slightly later stages i.e. post closing stage.  However, the new law prescribes own voluntary notification.  Thus, out of  Seventy-two countries, only nine had  voluntary notification and India was one of them.

 

6.5.5    On the  question  whether the Companies  Act could not take care of mergers on the  same had provisions to that effect,  the witness was of the view that the Companies Act regulated mergers in terms of shareholders’ interests, share values, labour interests etc.  The witness found nothing wrong in the  mergers being  handled under  the Companies Act, except that the High Courts might  take six months or one year or more than that for the purpose whereas the new law had a time limit of 90 working days to dispose of the merger cases.

 

6.5.6    The witness clarified  that it was true that regulations organisations like  the Telecom Regulatory Authority of India  and the Electricity Regulatory Commission could  refer issues within the competition perspective to the CCI for advice.  The CCI would give its advice but that advice would not be binding on TRAI or ERC. Thus the CCI would not become a super regulator.

 

6.5.7    Defending the provision of exemptions under the term ‘public interest’ the witness said that if the law had no exemptions, there existed a possibility of devastating consequences on some sectors.  Thus he justified the provisions.

 

6.5.8    Replying  to the charge  that the Competition Bill was being enacted under pressure from WTO, World Bank, IMF, ADB etc. the witness vehemently denied the same.

 

6.5.9    The witness stated  that concerns were expressed over the provision of penalties especially civil imprisonment.  He  clarified that civil imprisonment was provided for only two offences viz. contravention of the order of the CCI and non-compliance or failure in complying.  This penalty was to provide teeth to the CCI,  lest the CCI should become ineffective like the MRTP Commission.

 

6.5.10  Regarding the interests of the staff of the MRTP Commission, the witness submitted that rights and interests of the staff would be protected.  All deputationists would be reverted back to their parent organisations/Ministries/Departments and regular employees of the MRTP Commission will become officers/employees of the Central Government with all their rights protected.  However, the Chairman and Members of that  Commission would  have to vacate their offices with compensation not exceeding three months’ pay and allowances.

 

6.6       The witness thereafter made a brief comparison between the MRTP Act and the proposed Competition Bill,  as follows:

 

(i)                  the MRTP Act was premised on size and the Competition Bill  was  premised on behaviour/conduct;

(ii)                The MRTP Act was only procedure oriented whereas the proposed Bill was  result oriented;

(iii)               The MRTP Act was only reformatory without  teeth and the Competition Bill was  punitive;

(iv)              In the MRTP Act the offences were defined implicity but in the new one the offence  were defined explicitly;

(v)                The MRTP Act frowned on dominance whereas the new one frowned on abuse of dominance;

(vi)              The MRTP Act had a large number of per se offences whereas in the new law the number was  only four;

(vii)             The MRTP Act covered  unfair trade practices and thereby affected the individual consumer interests whereas in the new Bill the unfair trade practices were  excluded and  proposed to be covered under the Consumer Protection Act;

(viii)           The appointments in the MRTP Commission were  political whereas in the new one it would be a collegium;

(ix)              In the MRTP Act there was no competition advocacy, but  the CCI had competition advocacy role; and

(x)                The MRTP Act was reactive but the CCI  was  proactive.


 

7.0       The Chairman thanked the witness for a comprehensive presentation on the subject and informed him that the Members would seek clarifications on certain points  and told him to note down the points raised by them and send  written responses  to the Secretariat  later.

 

8.0       Members raised/made the following points/ queries/suggestions/ on the Competition Bill.

 

(i)                  Was it not possible to amend  only certain clauses in the MRTPC Act rather than bringing a new  Bill  whereas the purpose was  just to benefit the consumers?

(ii)                Was it not necessary to comply with the W.T.O. objections  relating to the labour laws,  administered  prices etc.  before brining the competition law in the statute book?

(iii)               Regarding the abuse of domination, the price preference and the purchase preference would   remain for the public undertakings.  Although the price preference had been deleted to some extent, purchase preference was still continued.  In view of this, if the law was passed, would  it not create  problem for the PSUs as many of them had not disinvested, and many may not disinvest in the near future?

(iv)              It would be advisable to have a Judge of the Supreme Court, sitting or retired, to be the Chairperson, as the appellate authority   against the judgement of  the CCI was  the Supreme Court.

(v)                Clauses 52 and 53 had given lots of powers to the Central Government which may dilute the independent  character of the CCI.  Clause 47 needed to be suitably amended, keeping in view clause 52.

(vi)              There could be some legal difficulties in transferring over 5000 pending cases under the MRTP Act to the Consumer Courts.  This required rethinking  before this Committee  took a decision  as to whether all cases were  to be sent to consumer Courts  or as a transitional measure, the MRTP Commission could continue and  dispose  of those cases within  a period of three-four years.

(vii)             What were the provisions regarding competition regulation in the USA and the European countries and to what extent this legislation was close to the legislations there?  Was it possible to provide the Committee a chart in order to enable them to analyse it properly?

(viii)           Why can’t the powers of the Commission be given to the District Judges instead of constituting a Competition Commission which will also facilitate enforcement of the decisions?

(ix)              Regarding bringing the small scale sector under the purview of Competition, it was pointed out that the transition period has to be longer than proposed 5-10 years.

                                                                                               

(x)                There was no competition law anywhere in the world which gave powers to the Government to exempt industries from competition.  The power of exemption under Clause 52 of the Bill would destroy  competition within the  regime of the Competition Bill.

(xi)              The exempted categories should be clearly mentioned and the phrase ‘public interest’ may be deleted.

(xii)             The extra-territorial jurisdiction  to regulate mergers and combinations outside the country might discourage the foreign  investment in the country.

(xiii)           In the initial stages, when the economy was liberalised, there would be number of mergers and combinations and the industry should have this freedom in order to be competitive.  This Bill envisaged the investigation after the merger took place.  An apprehension was raised that when two companies merged into one entity, and suddenly the Commission decided to oppose it, there would be a huge financial impact on their business.

(xiv)           Regarding logistics it was observed that in a huge country like India, 10 Members of  the Commission would  not be able to deal with the mergers and combinations and anti-competitive prices.   It was suggested   that the number  of members of the CCI should  be 30 instead of 10.

 

9.         The Chairman thanked the witness and  requested  him to send the written responses of the Department of Company Affairs to the Secretariat  later.

 

(The witnesses then withdrew)

 

14.       A verbatim record of the proceedings was kept.

15.       The Committee then adjourned at 5.05 P.M. to meet at 3.00 P.M. on 4 February 2002.

 

IV

 

FOURTH MEETING

 

The Committee met at 11.00 A.M. on Tuesday, 5 February 2002 in Committee Room ‘A’, Ground Floor, Parliament House Annexe, New Delhi.

 

MEMBERS PRESENT

 

1.         Shri Pranab Mukherjee— Chairman

 

RAJYA SABHA

 

2.         Shri Hansraj Bhardwaj

3.         Dr. L.M. Singhvi

4.         Shri S. Ramachandran Pillai

5.         Shri Swaraj Kaushal

 

            LOK SABHA

 

6.         Shri Lal Bihari Tiwari

10.       Shri Jaisingrao Gaikwad Patil

11.       Shri Anadi Sahu

12.       Shri Ram Nagina Mishra

13.       Shri M.O.H. Farooq

14.       Shri Swadesh Chakraborty

15.       Shri Anandrao Vithoba Adsul

16.       Shri P.H. Pandian

17.       Dr. Bikram Sarkar

18.       Shri Holkhomang Haokip

 

SECRETARIAT

 

            Shri Satish Kumar, Additional Secretary

            Shri Tapan  Chatterjee, Director

            Shri A.K. Singh, Under Secretary

            Shri Narendra Kumar, Research Officer

            Shri Ashok Kumar Sahoo, Committee Officer

 

           

2.         Following the Committee’s decision to discuss the Competition Bill, amongst ourselves’, the Chairman traced the origin of the Bill which can be chronologically presented in the following manner:

 

2.1       First announced in the Budget speech of the Finance Minister on 27 February 1999.  The Finance Minister   said that in the 1999s, the country had undertaken some major economic liberalization programmes resulting into changed world environment rendering MRTP Act obsolete, and it had necessitated a new Competition Bill, instead of the MRTP Act.

 

2.2       In this context, a High Power Committee under Shri Raghavan was appointed, which submitted its Report in May, 2000, followed by consultations at various stages.

 

2.3       The Bill was introduced in Lok Sabha on  6 August 2001 and it was referred to the Committee on Home Affairs for consideration and report thereon.

 

2.4       Representatives of various Chambers of Commerce and Industries, professional bodies like, Institute of Chartered Accountants, Institute of Cost Accountants, Institute of Company Secretaries etc. have already deposed on the Bill.

 

2.5       The Committee visited Mumbai in November 2001 and had  interaction with the captains of Industry, financial institutions and Mumbai based Chambers of Commerce and Industry.

 

3.         The Chairman briefly explained the objectives set out by the Bill, viz: to set up the Competition Commission of India (CCI); CCI to advocate competition; and  to regulate the market and prevent unfair trade practices to facilitate competition;

 

3.1       The Chairman citing the issue of amalgmation and merger said that a large section of the corporate sector felt that India had not reached a stage where there should  be discouragement to amalgmation, merger, acquition etc. because the size of our corporate sector, compared to the multinationals, with whom they were expected to compete was quite inadequate.  Therefore, they felt, that instead of going in for the Competition Bill right now, we should watch the international situation and perhaps the Competition Bill, in its present shape and form, was a bit premature.  He further said that the others felt that there should be a legal framework within which the market forces should be allowed to play its role on a level playing field and also not to the detriment of the interests of the consumer. 

 

4.         A member was of the view that there was no need to pass this piece of legislation in the present time and in its present form.  His argument was that issues like Competition Policy, trade and investment and many related issues were discussed at WTO level and if we passed this legislation covering the whole Competition policy, we would be losing the bargaining power at the WTO.  He suggested that since final decisions on these issues would be taken before 1 January 2005, we should not pass this Bill before that time.  Rather if some changes were required in the MRTP Act, we could move such amendments so as to protect our industries or to facilitate competition.

 

5.         The Chairman said that so far as the negotiation was concerned it had been agreed upon at the Ministerial meeting at Doha.  However, the modality of negotiations had to be decided, which would start after the next round of Ministerial meeting in 2005.

 

5.1       In response to the Member’s points, the Chairman further clarified that so far as the negotiation in the WTO was concerned, it was only among the trading partners.  India would actually benefit in the absence of negotiations.  However, once the negotiations started it would be mainly among the European Union, USA and Japan.  Once these economic powers agreed and made the negotiations, then others did not have the option but follow as they happend to be the trading partners of most of the developing countries.  He was of the opinion that India’s bargaining power would have been much more if the negotiations were not agreed upon.  Nevertheless, the Chairman felt, when the modalities of the negotiations were being discussed, we could wait and we should not show  all our cards to them by saying that these were in our Competition Law.

 

6.         The Member agreeing with the apprehensions raised by the Chairman felt that if the business was opened up fully, then the MNCs with big turnover would come in and capture  the market which would be against the interest of Indian industries.

 

6.1       Referring to the public sector, he said that this Bill would adversely affect their functioning as safeguard provided in Clause 52 was not sufficient.

 

6.2       The member elaborating further on the implications of the Bill, said, the Government would be forced to retreat from most of the economic matters. Rather the Government had to play an important role in  protecting the interest of small scale industries, handicrafts which  influenced  the poorer sections of society.

 

6.3       The member wanted to know the possible effect of the Competition Bill on the trade union rights such as the right to organise and to make collective bargaining.

 

7.         The Chairman acknowledged the relevance of the above point which deserved examination.

 

8.         The member concluded by saying that we should not rush with this piece of legislation and wait for at least up to 2005.  In the meanwhile, he suggested, if some changes were required, the MRTP Act may be suitably amended.

 

9.         Another member raised objection to Clause 52 which dwelt upon the power of the Government to exempt any enterprise in the name of security and public interest.  He was of the view that ‘public interest’ was a matter of big discretion on the part of the government and it could be misused to favour certain interests and the very purpose of having the Competition Act would get defeated.  He suggested that the words ‘Public interest’ should be defined and some guidelines must be laid down for that.

 

10.       A member was of the view that our industry predominated by the Small Scale Industries did not have enough experience to face the onslaught of Competition from abroad especially in terms of size.  The talk of consumer interest should go hand-in-hand with protecting the interests of those who contributed maximum to industrial growth.  He further said that it would be in the fitness of things to amend some provisions of the MRTPC Act and keep this Bill in waiting.

 

11.       Another member suggested that there should not be any hurry in enacting laws like this.  He was of the opinion that the agrarian  sector had been totally neglected because neither it was considered an industry nor was it considered a business proposition.  However, to protect  the interests of the consumers and not to protect the interests of the producers hit directly at the agrasian society that was employing more than 70% of our population.   He pointed out that Section 52 of this Bill provided no protection to that sector.

 

11.1     He further said that big business houses had proposed that they were not yet ready for this Competition Bill in the present economic scenario.

 

11.2     Referring to a specific point the member said that it had been kept open as to who would be heading the Commission.  He suggested that it should specifically be mentioned whether a retired Supreme Court judge or somebody else would head the Commission.

 

12.       A member defending the MRTPC said that it was doing quite a useful job in the area of restrictive trade practices by giving injunction against dumping by MNCs in India.  Though, he agreed that in the present scenario, the law needed some change, but whether we should hurry through this competition law was an important question, he felt.  He said that in Punjab, small sector and medium sector industries had closed in the face of MNCs.  Even the presence of MNCs in India had not benefited the consumers.

 

 

12.1     He was of the firm opinion that the Competition Bill was not going to help our small scale industries or consumers. Thus, he felt, we should wait for a proper climate, study what changes were to be made in the already existing MRTP Act and then replace it with another law.

 

12.2.    He wondered as to why the Government wanted to bring the Competition Bill.  None of the underdeveloped countries had this law.  It was there only in UK and USA.  He suggested that the Government should try to first strengthen our small scale and medium scale sectors and once our corporates were confident enough to take on to the MNCs, we should go for this law.  Till then this Bill could wait.

 

13.       Another member was of the view that unless we had satisfactory answers to some of the thorny issues which had been raised through this piece of legislation, we should not take up clause-by-clause consideration of this Bill.

 

13.1     He further said that it was much more of a policy matter.  According to him, “the law is not what it says, but it is also what is does”, therefore, we must study this particular piece of proposed legislation in terms of what it would do and how it would  do, how it would operate and how it would affect our country.

 

13.2     Speaking on competition, he said, competition itself was neither good nor bad.  When it was a cut throat competition, it could be terrible and when it was for promoting quality, better price, it may be very good.  But competition between unequal was always a matter of worry.

 

14.0     A member was of the view that competition should not be blocked.  Giving specific example of Japanes investments he said, they preferred China to India, which was an insult to India and for this he squarely  blamed  the bureaucrats for putting so many dos and donts.

 

15.0     Another Member began by saying that this Bill, when it became an Act, would not be implementable because many powers had been given to the Competition Commissioner of India, but at the same time, lots of controls were vested in the Government.  This would create a lot of conflicting problems.

 

15.1     Referring to the suggestions of the High Level Committee, the member said, labour laws, administered prices mechanism, disinvestments etc. had to be taken into account first, before we enacted this Competition Bill.  Thus, he said, we were going in a hurry to pass this Bill.  It would not be appropriate now to pass it at this stage.  However, in case this Bill had to be passed, he would suggest that there should be a transitional phase of 4-5 years, before the CCI should takeover the MRTPC.  During this transitional period the CCI should be entrusted with the role of advocacy, only.

 

15.2     He further said that re-reading and re-drafting of the Bill was necessary in order to ensure that we complied with the WTO agreement, but at the same time, we did not put our people to disadvantage like the small scale industries.

 

16.       The Chairman thanked the members for their frank and learned opinion on the Bill.  Giving his remarks on the Bill, he said, there was no tearing hurry to get the Bill passed in its formal shape as it had been presented to us.  He felt that some of the provisions of the Bill were to be looked into in greater details.

 

16.1     The Chairman wanted the Government to clarify whether it was going to affect, in any way, our negotiations with our trading partners within the agreement of the WTO. There was no compulsion or directive from the WTO or from the IMF or from any other international or multinational agencies.  In this case if we found that passage of such legislation was standing in our way of having a better bargain, we should not do it.

 

16.2     The Chairman was of the opinion that two things were emerging very clearly.  If we wanted to maintain a reasonable level of GDP Growth, we could not allow our small scale and medium scale industries to suffer.  we could not have globalisation at the cost of our economy.

 

16.3     Though not directly linked to the subject, he wanted to know as to why the economic growth was slowing down in the last five years.

 

16.4     The Chairman pointed out that in the light of a major amendment to the company law to have the Insolvency Act, the comprehensive company legislations are there to govern the corporate sector. In this backdrop, he wondered, whether there was any need of any separate competition law.

 

16.5     While recalling a suggestion from the Secretary, Department of Company Affairs that instead of calling it a Company Act, we should use the epithet  of corporate governance Act,  the Chairman wanted to solicit opinion from the Committee whether the Competition could be a part of the corporate management instead of many separate legislations.  However, he wanted to ensure that the restrictive trade practices must be prevented with adequate  legal framework because certain other countries would try to dump their goods and predatory price would take place, a China was doing it, though indirectly through Nepal route.

 

16.6     The Chairman pointed out that this was the record consecutive year of the global recession, and unless in the  next  quarter, there was some recovery in certain items, there would be a tendency of the manufacturing countries to dump their goods and services into countries like India where there was reasonably  expanded market.  Thus, he felt, some provision should be there either in the existing MRTP Act by making necessary amendment or in the company law by adding a separate chapter, to prevent the practice of dumping in our country.

 

16.7     Provoking the Members to give their opinion on the mergers, amalgamations and acquisitions, the Chairman cited an example of Bank Managers.   He said, if two-three banks could be merged together, it could be more effective as it would reduce operational cost.  And this was applicable to the public sector as well as the private sector.  He felt that the Committee should find out whether the public sector should  no longer require the statutory protection which it was having earlier.

 

16.8     Speaking on the issue of dominance and abuse of dominance, the Chairman wondered as to who was going to determine the abuse of dominance, and whether there may not be high subjectivity in determining that a particular act amounted to the abuse of dominance or not.  He felt, that while framing this legislation the element of subjectivity should be minimised and for this he called upon the members with  legal background to guide the Committee.

 

16.9     The Chairman informed the Committee about  inviting Mr. Evan Cox for an informed discussion on the  Bill.  He further informed the Committee that Mr. Cox was an expert in International Competition Laws and wanted to meet him on 15 February 2002.  The Chairman invited the Member to join him, if interested in the matter.

 

16.10   Referring to the view expressed by a Member that very few countries had a competition law, the Chairman said that we should not necessarily be the Casablanca to stand on a burning  deck and proclaim over the whole world that we were  the first  to do this, to help  the corporate sector.

 

17.       The Chairman told the Committee that he wanted to dispose off the Companies (Second Amendment) Bill, 2001, soon.  Regarding the Companies (Amendment) Bill, 2001, he said that it would be taken up only after the Demands for Grants business was over.

 

18.       A verbatim record of the proceedings was kept.

 

19.       The Committee adjourned at  12.50 P.M.

 

XXII

 

 TWENTY-SECOND  MEETING

 

The Committee met at 11.00 A.M. on Thursday, 6 June 2002 in  Committee Room ‘A’, Ground Floor, Parliament House Annexe, New Delhi.

 

MEMBERS PRESENT

 

1.         Shri Pranab Mukherjee— Chairman

 

RAJYA SABHA

 

2.         Shri Hansraj Bhardwaj

3.         Shri Sangh Priya Gautam

4.         Dr. L.M. Singhvi

5.         Shri Drupad Borgohain

6.         Shri Ram Jethmalani

7.         Shri Moti Lal Vora

 

            LOK SABHA

 

8.         Shri Lal Bihari Tiwari

9.         Shri Anadi Sahu

10.       Shri Vinay Katiyar

11.       Shri Manabendra Shah

12.       Shri K. Karunakaran

13.       Begum Noor Bano

14.       Shri M.O.H. Farooq

15.       Shri Swadesh Chakraborty

16.       Shri Anandrao Vithoba Adsul

17.       Shri Brahma Nand Mandal

18.       Shri Holkhomang Haokip

19.       Dr. Jayanta Rongpi

20.       Shri Kishan Singh Sangwan

 

SECRETARIAT

 

            Shri Satish Kumar, Additional Secretary           

Shri Tapan  Chatterjee, Director

            Shri A.K. Singh, Under Secretary

            Shri Narendra Kumar, Research Officer

            Shri Ashok Kumar  Sahoo, Committee Officer

 

2.0       At the outset, the Chairman welcomed the Members for the discussion on the Competition Bill 2001 and briefly  evidences recorded in Delhi & Mumbai and in house discussions held  on the Bill. He  also inter alia   touched upon the views expressed by the Members on the basic philosophy of the Bill.  Thereafter, he  recapitulated    briefly the  history of the Bill from its conception upto the current stage and its salient features for the Members who joined the Committee lately. 

2.1       He  mentioned that since the evidence part was over the Committee may hold an indepth discussion before taking up clause-by-clause considerations on the Bill and then invited the Members for an open discussion.

 

3.0       A Member reminded the earlier stand of the Committee and about the change in circumstances leading to the need to pass the Bill.  While referring to the Ministry’s reply which stated that the CCI was just like a judicial forum, he suggested changes in the qualification of its Chairperson so as to attract persons from judiciary inclusively.  He also suggested change in the Composition of the Selection Committee for nominating Chairman & Members of CCI, by excluding the Ministries..

 

3.1       Another Member stated the predatory capitalism is bad and desired the  price hijack to the prejudice of consumers needed to be discouraged and cooperative capitalism rather competitive capitalism needed to be encouraged  which can be achieved by the enactment of this Bill.   He sought more time to express his views on the Bill.

 

3.2       A Member suggested that the need of the time could be fulfilled even by amending the MRTP Act. He wanted to know about the fate of the officials and employees of the MRTP Commission.

 

3.3       Another Member expressing his apprehension about the fallout of consumer’s interests after the enactment of the Bill wanted the Committee to consider the aspect deeply.  He felt that the public sector which was responsible for supplying the essentials as well as Public Distribution System would be affected when they would be transferred to the private sector.  In that context, he desired  enlargement of the  concept of  ‘public interest’ as spelled out in clause 52 of the Bill.

 

3.4       A Member while referring to the provision of the Bill which gives an administrative status to mergers and amalgamations stated that it was overlapping with company law which should be taken care of.  He wanted the CCI to be on the lines of National Company Law Tribunal by bringing in judicial officers as its Chairperson and Members.  He also felt strongly as to how the same body i.e. the CCI would be a body corporate, judicial body and do competition advocacy.

 

3.5       Another member wanted that is tabulated  documentation in respect of  evidence in condensed form may be circulated to the Member before clause-by-clause consideration  on the Bill.

 

4.0       The Chairman expressed that the report might reflect all the modalities of shape and character of the Bill. He further suggested that one of the basic objectives of the Bill being check on predatory capitalism, hence the regulatory authority should have the power accordingly.  He further assured the Members that they could get Government’s views on their queries while taking clause-by-clause consideration.

 

4.1       The Committee then discussed the modalities to reflect the views of Members on the Bill in the Report.  The Committee agreed to take up clause-by-clause consideration  after another round  in  house discussion on the Bill.

 

5.0       The Committee decided the dates of next series of meetings viz. 17, 18, 19 and 20 June 2002.

 

5.1        The Committee adjourned at 12.13 P.M. to meet at 3.00 P.M. on 17 June 2001.

 

XXIX

 

TWENTY-NINTH  MEETING

 

The Committee met at 3.30  P.M. on Wednesday,   17 July  2002 in  Committee Room  ‘A’, Ground Floor, Parliament House Annexe, New Delhi.

 

MEMBERS PRESENT

 

1.         Shri Pranab Mukherjee         — Chairman

 

RAJYA SABHA

 

2.         Shri Hansraj Bhardwaj

3.         Shri Ramachandran Pillai

4.         Shri Janeshwar Mishra

5.         Shri Drupad Borgohain

6.         Shri Ram Jethmalani

7.         Shri Moti Lal Vora

 

            LOK SABHA

 

8.         Shri Lal Bihari Tiwari

9.         Shri Anadi Sahu

10.       Shri Manabendra  Shah

11.       Shri Swadesh Chakraborty

12.       Dr. Bikram Sarkar

13.       Shri Holkhomang Haokip

14.       Sardar Simranjit Singh Mann

15.       Shri E. Ponnuswamy

 

 

SECRETARIAT

 

            Shri Satish Kumar, Additional Secretary

            Shri Tapan Chatterjee, Director

            Shri A.K. Singh, Under Secretary

            Shri Narendra Kumar, Research Officer

            Shri Ashok Kumar  Sahoo, Committee Officer

 

2.         *                                                          *                                                          *

 

3.0       *                                                          *                                                          *

 

3.1       *                                                          *                                                          *

 

________________________________________________________________________

*** Relates to other matters.

 

5.0       The Committee then took up the letter of the Union finance Minister, dated 9 July 2000 addressed to the Chairman of the Committee, requesting for the expeditious disposal of the Competition Bill by the Committee in view of its significant impact on the country’s economy.

 

5.1       The Chairman enumerated the efforts made by the Committee in the process of  examination of the Bill such as taking a number of evidences from different corners of the society, the visit to Mumbai and the number of meetings held for the purpose and requested the Members to express their view on the request of Finance Minister in this regard.

 

5.2       The Committee then considered the request of Finance Minister and acceded to the same and agreed to present the Report on Competition Bill, 2001 in the current session of Parliament.

 

6.         The Committee then decided to meet on 30-31 July, 2002 to discuss further on the Competition Bill and  to take up clause-by-clause consideration.

 

7.         The Committee adjourned at 3.55 P.M.

 

XXXI

 

THIRTY-FIRST   MEETING

 

The Committee met at 3.30  P.M. on Thursday,   1 August  2002 in  Committee Room  ‘D’, Ground Floor, Parliament House Annexe, New Delhi.

 

MEMBERS PRESENT

 

1.         Shri Pranab Mukherjee         — Chairman

 

RAJYA SABHA

 

2.         Shri Kapil Sibal

3.         Shri Hansraj Bhardwaj

4.         Shri Sangh Priya Gautam

5.         Shri Ramachandran Pillai

6.         Shri Ram Jethmalani

7.         Smt.  Ambika Soni

 

            LOK SABHA

 

8.         Shri Lal Bihari Tiwari

9.         Shri C.K. Jaffer Sharief

10.       Shri Swadesh Chakraborty

11.       Shri Subodh Ray

12.       Shri P.H. Pandian

13.       Dr. Bikram Sarkar

14.       Sardar Simranjit Singh Mann

15.       Shri E. Ponnuswamy

 

SECRETARIAT

 

            Shri Satish Kumar, Additional Secretary

            Shri A.K. Singh, Under Secretary

            Shri Narendra Kumar, Research Officer

            Shri Ashok Kumar  Sahoo, Committee Officer

 

            WITNESSES

 

            Representatives of Ministry of Law, Justice and Company Affairs

 

Department of Company Affairs

 

1.         Shri Vinod Dhall, Secretary

2.         Shri Rajiv Mehrishi, Joint Secretary

3.         Dr. S. Chakravarthy, Consultant

4.         Shri S.B. Mathur, Consultant

5.         Shri V.S. Rao, Director (Inspection & Investigation)

6.         Shri Aditya Prakash, Director

 

Department of Legal Affairs

 

 

Shri K.D. Singh, Additional Secretary

 

Legislative Department

 

1.         Shri V.K. Bhasin, Joint Secretary  & Legislative Counsel

2.         Shri A. Vijay  Kumar, Deputy Legislative Counsel

 

2.0       The Chairman shared with the Members about the letter of Union Finance Minister for clearing the Competition Bill, 2001.  He indicated that the Report on the Bill could be presented before the adjournment of Parliament.  Thereafter he  requested Shri  Ram Jethmalani, M.P. and a Member of the Committee  to express his views on the Competition Bill, 2001.

 

2.1       That Member mentioned that the Bill is based upon a new economic theory.  He begun his presentation by referring to the notes of Dr. S. Chakravarthy, Mr. P.M. Narielvala and Mr. Sudhir Mulji appended to the High Level Committee on Competition Policy and Law. He also mentioned that the elements of competition law had been present in India since long.

 

2.2       Speaking about Mr. Sudhir Mulji’s note he felt that his idea that the law was not required was not proper.  Again touching upon the views of Mr. Narielvala, he felt that the suggestion for doing away with the requirement of pre-notification was not appropriate. Thus, both of the views could be ignored.He said that this would in no way lead us to lose our bargaining power.  He cited the efforts of WTO in formulating the International Competition Law just like our domestic competition law.  Further on, he suggested that it would help the economy if the trade barriers are removed.  He felt that at this stage after adoption of WTO views and the new philosophy there was no reason to object the Bill. He also referred to the fact that even China has become a member of WTO which shows that global consensus has emerged on the fact that market forces and economic efficiency are the best ways.

 

2.3       Referring to the issues of poverty and hunger which are global problem required global solution and not a regional one.  He further pointed out that for equitable distribution a whole process was required and a modification of the existing one would not do.

 

2.4       On the aspect whether the Bill would affect the PSUs and small scale sector he believed that in a climate of disinvestments it would not affect the public interest.  He felt that exposing the public sector was not bad as it would improve their efficiency and in turn will benefit the consumer.

 

2.5       He further said that anti-dumping law would remain and affect the domestic market.  This Bill would rather protect against the predatory practices of the foreign companies.  On the effect of Competition Law on the labour opportunities, he felt that in the long run due to increased wealth, new employment would be generated.

 

2.6       Thereafter another Member aired his disagreement with the basic approach of the Bill.  He felt that Government is trying to bring distribution in the hands of market forces and benefit the enterprises.  He apprehended that on coming into force of this Bill, the Public Distribution Scheme and Support Price Mechanism would be affected.

 

2.7       To his query Shri Jethmalani clarified that subsidies were not prohibited by Competition Bill.  The Chairman also clarified that it would lead the Government to redraft the subsidies and only the negative subsidies would go. 

2.8       At that stage the Consultant in Department of Company Affairs clarified that minimum support price of Government department is a sovereign power of the Government and the Bill would not affect that power of the Government.

 

2.9       The Committee then took up clause-by-clause consideration of the Bill.

 

Clause 2

 

3.0       One of the suggestions that words “is proposed to be engaged in any activity” in the definition of ‘enterprise’ in sub clause (g) of the clause appears to be confusing and thus may be deleted.  The Department had agreed to delete those words. Further on the suggestion pertaining to sub-clause (t) only one professional service i.e. accounting has been included in the definition of service whereas medical and legal services are excluded.  The Department of Company Affairs had proposed deletion of ‘accounting’ in the clause.

 

3.1       The Committee adopted  the clause subject to the aforesaid amendments.

 

Clause 3

 

4.0       On the  suggestion that any of the four per se offences may have negative effect on desirable joint venture,   and   to exempt such joint ventures from per se offences, the Department had agreed to add proviso to the sub-clause (3) of the clause to the effect that the genuine joint venture would be exempted from per se offence but would be examined on the basis of rule of reason.

 

4.1       The Department had further agreed to the suggestion to add the words “in India” after the words adverse effect on competition “in sub clause (4) of the clause and proposed to bring an amendment to that effect.

 

4.2       The Department  after examining the suggestion to give blanket exemption to Intellectual Property Rights (IPRs) had felt that clause 4(6) of the Concept Bill which permits the application of competition law to examine any unreasonable conditions that may be imposed by the right holder while exploiting his/her rights, may be incorporated in the present Bill.

 

4.3       The Committee adopted the clause subject to the amendments.

 

Clause 4

 

5.0       A suggestion was made to add a proviso to make the expression clear as  the term ‘discrimination’ in clause 4(2) is without any additional guidance.  The Department has agreed to the suggestion.

 

5.1       Another suggestion was received for deleting words “or outside India” in explanation (a) to clause 4(2) (e) not to discourage an Indian company having a position/strength outside India by the competition law of India to which the Department has agreed.

 

5.2       The Committee  adopted  the clause  subject to the amendment.

 

Clause 8

 

6.0       The Committee desired that the Chairperson of the CCI should be a person from Judiciary i.e. a serving/retired judge of a High Court.  Thus qualification for the office should be different from Members of the CCI.

 

6.1       The Committee adopted the clause subject to the amendment.

 

Clause 9

 

7.0       The Committee had observed that keeping Minister-in-charge of Ministries in the Selection Committee may lead to executive interference.

 

7.1       The Department had, accordingly, proposed change in the composition of the Selection Committee by bringing in Secretaries Ministry of Finance, Labour, Department of Company Affairs, Department of Legal Affairs and Legislative Department in place of Ministers.

 

7.2       The Committee adopted the clause subject to the proposed amendments.

 

Clause 10

 

8.0       The Department had proposed  lowering age cap for the chairperson of the CCI  to 67 years instead of 70 years as has been done in the case of proposed National Company Law Tribunal (NCLT) under the Companies Act, 1956.

 

8.1       The Committee adopted the clause subject to the amendment proposed.

 

Clause 11

 

9.0       The Department had agreed to delete sub-clauses (2) & (3) of the clause wherein the provision of reference to the Supreme Court for removal of Chairperson/Members of the CCI  mentioned, on the  suggestion of a witness.

 

9.1        The Committee  adopted the clause subject to  above amendments.

 

Clause 12

 

10.0     The Department had accepted the suggestion that Chairperson/Members of CCI should be debarred for a period of 12 months after retirement from accepting any employment instead of 6 months and agreed to bring an amendment in the clause to that effect.

 

10.1     The Committee adopted the clause subject to amendment.

 

Clause 16

 

11.0     The Department had accepted the suggestion not to count the experience in CBI/Police investigations for the post of Director-General and Additional/Joint/Deputy and Assistant Directors General in the CCI and agreed to  provide it in the rules while defining investigation.

 

11.1     The Committee understood that the acceptance of such suggestion could not effect any amendment in the clause hence the clause is adopted without any change.

 

Clause 19

 

12.0     The Department had agreed to the suggestion to  delete the sub-clause as IPRs would not be given blanket power to exert its dominance in relevant market in consultation with the Ministry of Law. 

 

12.1     On the suggestion that while considering the relevant market, the CCI should consider both relevant geographic market and relevant product market and the Department had proposed amendment in the sub-clause (5) to substitute the word ‘or’ between the relevant geographic market and the relevant product market with ‘and’.

 

12.2     The Committee adopted the clause  subject to above.

 

Clause 21

 

13.0     On the suggestion that the clause should  make it mandatory for the statutory body to make a reference to the CCI  but when any party to the proceeding raise that the issue is contrary to the competition law.  The Department had proposed to substitute the word ‘shall’ in the last line of sub-clause (1) of the clause with ‘may’.

 

13.1     On the suggestion that a time frame may be provided in the clause within which the CCI should dispose the reference made to it by statutory body. The Department has proposed a time limit of sixty days for the purpose under sub-clause (2).

 

13.2     The Committee  adopted the clause subject to amendments.

 

Clause 23

 

14.0     The Department had not agreed to  the suggestion to dispense with the requirement of prior approval of Union Government in case of a transfer of a member by the chairperson of the CCI in toto.  The amendment proposed by the Department was to the effect that prior approval of the Central Government is required when there is transfer of a member from one city to another.

 

14.1     The Committee  adopted the clause subject to above amendments.

 

Clause 27

 

15.0     The Department had agreed to correct the expression of ‘an enterprise’ occurring in the first line of the clause by ‘or an enterprise’ as pointed out by a witness. 

 

15.1     The department had agreed to the suggestion to vest  the authority with the CCI to protect whistle blower for setting leniency programme and incorporate appropriate leniency/ amnesty provision.

 

15.2     The Department had agreed to amend the sub-clause (b) to the effect that a penalty of three times the proven gain to the cartel may be levied subject to atleast 10% of the average turnover for the last three preceding financial years.

 

15.3     The Committee  adopted the clause subject to the amendments.

 

Clause 31

 

16.0     A witness had suggested that the CCI should be conferred with powers to cooperate with competition authorities in other countries.  The Department had clarified that such power should be with the Government rather than with the CCI.  The Department had agreed to incorporate a provision in the Bill to provide power to Government in this regard.

 

16.1    The Committee adopted the clause subject to  the amendment.

 

Clause 32

 

17.0     The Department had accepted the suggestion to delete sub-clause (c) as a consequential change of amendments to clause 4 (2) (C).

 

17.1     The Committee  adopted the clause subject to  the amendment.

 

Clause 38

 

18.0     The Committee had pointed out that under sub-clause 2(a) of the Clause, the CCI can amend any order passed by it suo moto.

 

18.1     The Committee recommended that the Government should make the clause specific to the extent that the amendment of its own order for rectification of mistakes, by the Commission should not touch the substantive part of its order.

 

Clause 47

 

19.0     On the suggestion that the CCI should have power to recommend to Central or State Government, after examining any existing or proposed law from competition angle. The Department had communicated the Committee that if the Government in its own discretion make a reference, the CCI can examine the policy/law from competition angle and to that extent the clause can be amended.

 

19.1      The Committee adopted  the clause subject to  the amendment.

 

Clause 52

 

20.0     A witness had pointed out that an enterprise may be performing sovereign and non-sovereign functions.  Any exemption of the enterprise from the application of competition law would mean exemption relating to non-sovereign function also.  Therefore, the provision under sub-clause (c ) of the clause should lay emphasis on function rather than enterprise.  He had accordingly suggested re wording of the sub-clause. The Department had welcomed the suggestion and proposed rewording of the sub-clause as: “any sovereign function including functions incidental thereto performed by an enterprise on behalf of the Central Government or a State Government”.

 

20.1      The Committee  adopted the clause subject to the amendment.

 

 

Clause 1, Enacting Formula and the Title

 

21.0     Clause 1, the Enacting Formula and the title were adopted with some changes which are of consequential nature, namely, ‘2001’ and ‘Fifty-second’ to be substituted by ‘2002’ and ‘Fifty-third’, respectively.

 

22.0     The Committee recommended that the bill may be passed after incorporating amendments suggested by it and giving due considerations to other observations of the Committee.

 

23.0     The Committee then adjourned at 5.00 P.M. to meet at 3.30 P.M. on Monday, 12 August 2002.

 

 

XXXII

 

THIRTY-SECOND MEETING

 

The Committee met at 3.30  P.M. on Monday,  12 August  2002 in  Committee Room  ‘D’, Ground Floor, Parliament House Annexe, New Delhi.

 

MEMBERS PRESENT

 

1.         Shri Pranab Mukherjee         — Chairman

 

RAJYA SABHA

 

2.         Shri Kapil Sibal

3.         Shri Kalraj Mishra

4.         Shri S. Ramachandran Pillai

5.         Shri C.P. Thirunavukkarasu

6.         Shri Drupad Borgohain

7.         Shri Ram Jethmalani

8.         Shri Moti Lal Vora

 

            LOK SABHA

 

9.         Shri Lal Bihari Tiwari

10.       Shri Anadi Sahu

11.       Shri Swadesh Chakraborty

12.       Shri Ramji Lal Suman

13.       Sardar Simranjit Singh Mann

14.       Shri Kishan Singh Sangwan

15.       Shri E. Ponnuswamy

 

SECRETARIAT

 

            Shri Satish Kumar, Additional Secretary

            Shri Tapan Chatterjee, Director

            Shri A.K. Singh, Under Secretary

            Shri Narendra Kumar, Research Officer

           

 

2.0       The Chairman initiated the meeting by recalling the deliberations held in the previous meeting on the Competition Bill, 2001 in which clause-by-clause consideration of the Bill was taken up.

 

2.1       The Chairman then placed the draft Report on the Competition Bill, 2001 before the Committee for its approval and invited the Members to make suggestions thereon.

 

3.0       A Member suggested a change in para 7.23 of the draft report.  He desired that there should be a reference to the need for certain safeguards and protection for certain period for the Indian industry, both private and public sector.  The Chairman requested him to give his formulation in writing for being incorporated in the paragraph.

 

3.1       Another Member suggested a change in para 9.9.3 so as not to allow the Government to exclude officers from CBI for the posts of  Additional, Joint, Deputy and  Assistant Directors in CCI.  The Member requested that his view in the matter should also be reflected in the Report.  After a brief discussion on the contents of para 9.9.3 and the suggestion of the Member, the Committee decided to make suitable additions/modifications in para 9.9.3 with consequential changes in other paragraphs.

 

3.2       The Committee, then, adopted the draft Report and authorised the Chairman to present the Report, along with Evidence recorded on the Bill, to Hon’ble Chairman, Rajya Sabha during the inter-session period,  as it could not be presented to  Parliament because of the premature adjournment sine die of the Monsoon Session.

 

4.0       *                                                 *                                                       *

 

4.1       *                                                 *                                                       *

 

4.2       *                                                   *                                                     *

 

4.3       *                                                  *                                                      *

 

4.4       *                                                  *                                                      *

 

4.5       *                                                  *                                                      *

 

5.0       The Committee adjourned at 4.09 P.M.

________________________________________________________________________

***Relates to other matters.


ANNEXURE

 

ANNEXURE  I

(See para 1,  page 1 of the Report)

AS INTRODUCED IN LOK SABHA

On 6 August 2001

 

THE COMPETITION BILL, 2001

_________

ARRANGEMENT OF CLAUSES

_________

CHAPTER  I

 

PRELIMINARY

CLAUSES

1.                  Short title, extent and commencement.

2.                  Definitions.

CHAPTER II

 

PROHIBITION OF CERTAIN AGREEMENTS, ABUSE OF DOMINANT POSITION AND REGULATION OF COMBINATIONS

 

Prohibition of agreements

3.                  Anti-competitive agreements

Prohibition of abuse of dominant position

4.                  Abuse of dominant position

Regulation of combinations

5.                  Combinations.

6.                  Regulation of combinations.

CHAPTER  III

COMPETITION COMMISSION OF INDIA

 

7.                  Establishment of Commission.

8.                  Composition of Commission.

9.                  Appointment of Chairperson and other Members.

10.              Term of office of Chairperson and other Members.

11.              Resignation, removal and suspension of Chairperson and other Members.

12.              Restriction on employment of Chairperson and other Members in certain cases.

13.              Administrative powers of Chairperson.

14.              Salary and allowances and other terms and conditions of service of  Chairperson and other Members

15.              Vacancy, etc., not to invalidate proceedings of Commission.

16.              Appointment of Director General, etc.

17.              Registrar and officers and other employees of Commission.

 

CHAPTER  IV

DUTIES, POWERS AND FUNCTIONS OF COMMISSION.

18.              Duties of Commission.

19.              Inquiry into certain agreements and dominant  position of enterprise.

20.              Inquiry into combination by Commission.

21.              Reference by statutory authority.

CLAUSES

22.              Benches of Commission.

23.              Distribution of business amongst Commission and Benches.

24.              Procedure for deciding a case where Members of a bench differ in opinion.

25.              Jurisdiction of Bench.

26.              Procedure for inquiry on complaints under section 19.

27.              Orders by Commission after inquiry into agreements or abuse of dominant position.

28.              Division of enterprise enjoying dominant position.

29.              Procedure for investigation of combinations.

30.              Inquiry into disclosures under sub-section (2) of section 6.

31.              Orders of Commission on certain combinations.

32.              Acts taking place outside India but having an effect on competition in India.

33.              Power to grant interim relief.

34.              Power to award compensation.

35.              Appearance before Commission.

36.              Power of Commission to regulate its own procedure.

37.              Review of orders of Commission.

38.              Rectification of orders.

39.              Execution of orders of Commission.

40.              Appeal.

CHAPTER  V

DUTIES OF DIRECTOR GENERAL

41.              Director General to investigate contraventions.

CHAPTER  VI

PENALTIES

42.              Contravention of orders of Commission.

43.              Penalty for failure to comply with directions of Commission and Director General.

44.              Penalty for making false statements or omission to furnish material information.

45.              Penalty for offences in relation to furnishing of information.

46.              Contravention by companies.

CHAPTER  VII

COMPETITION ADVOCACY

47.              Competition advocacy.

CHAPTER  VIII

FINANCE, ACCOUNTS AND AUDIT

48.              Grants by Central Government.

49.              Constitution of Fund.

50.              Accounts and audit.

51.              Furnishing of returns, etc., to Central Government.

CHAPTER  IX

MISCELLANEOUS

CLAUSES

52.              Power to exempt.

53.              Power of Central Government to issue directions.

54.              Power of Central Government to supersede Commission.

55.              Restriction on disclosure of information.

56.              Members, Director-General, Registrar, officers and employees etc., of Commission to be public servants.

57.              Protection of action taken in good faith.

58.              Act to have overriding effect.

59.              Exclusion of jurisdiction of civil courts.

60.              Application of other laws not barred.

61.              Power to make rules.

62.              Power to make regulations.

63.              Power to remove difficulties.

64.              Repeal and saving.


AS INTRODUCED IN LOK SABHA

Bill No. 67 of 2001

THE COMPETITION BILL, 2001

A

BILL

to provide for the establishment of a Commission to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets, in India, and for matters connected therewith or incidental thereto.

 

    BE it enacted by Parliament in the Fifty-second Year of the Republic of India as follows:-

CHAPTER I

PRELIMINARY

 

 

 

 

 

 

 

 

1.   (1) This Act may be called the Competition Act, 2001.

 

    (2). It extends to the whole of India except the State of Jammu and Kashmir.

 

    (3). It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint:

 

      Provided that different dates may be appointed for different provisions of the Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.

 

2.   In this Act, unless the context otherwise requires,-

 

    (a) "acquisition" means, directly or indirectly, acquiring or agreeing to acquire-

(i)    shares, voting rights or assets of any enterprise; or

             (ii) control over management or control over assets of any    

     enterprise;

Short title, extent and commencement.

 

 

 

 

 

 

 

 

 

 

Definitions

 

 

 

 

 

 

 

 (b) "agreement" includes any arrangement or understanding or action in concert,-

 

           (i) whether or not, such arrangement, understanding or action is formal or in writing; or

          (ii) whether or not such arrangement, understanding or action is intended to be enforceable by legal proceedings;

 

(c) "Chairperson" means the Chairperson of the Commission appointed under sub-section (1) of section 9;

 

 

 

 

 

 

 

 

 

(d) "Commission" means the Competition Commission of India established under sub-section (1) of  section 7;

 

(c) "consumer" means any person who-

 

        (i)  buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods  other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, whether such purchase of goods is for resale or for any commercial purpose or for personal use;

 

       (ii) hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first-mentioned person whether such hiring or availing of services is for any commercial purpose or for personal use;

 

(f)   "Director General" means the Director General appointed under sub-section (1) of section 16 and includes any Additional, Joint, Deputy or Assistant Directors General appointed under that section;

 

(g)    "enterprise" means a person or a department of the Government, who or which is, or has been, or is proposed to be, engaged in any activity, relating to the production, storage, supply, distribution, acquisition or control of articles or goods, or the provision of services, or any kind, or in investment, or in the business of acquiring, holding, underwriting or dealing with shares, debentures or other securities of any other body corporate, either directly or through one or more of its units or divisions or subsidiaries, whether such unit or division or subsidiary is located at the same place where the enterprise is located or at a different place or at different places, but does not include any activity of the Government relatable to the sovereign functions of the Government including all activities carried on by the departments of the Central Government dealing with atomic energy, currency, defence and space.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Explanation-For the purposes of this clause,

 

(a) "activity" includes profession or occupation;

(b) "article" includes a new article and "service" includes a new service;

(c) "unit or "division", in relation to an enterprise, includes-

             (i) a plant or factory established for the production, storage, supply, distribution, acquisition or control of any article or goods;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 of 1956

             (ii) any branch or office established for the provision of any service;

 

(h) "financial institution" means a public financial institution specified under section 4A of the Companies Act, 1956 and includes a State Financial, Industrial or Investment Corporation;

 

(i) "goods" means goods as defined in the Sale of Goods Act, 1930 and includes-

              (A) products manufactured, processed or mined;

             (B) debentures, stocks and shares after allotment;

             (C) in relation to goods supplied, distributed or controlled in India, goods imported into India;

(j) "Members" means a Member of the Commission appointed under sub-section

 

(1) of section 9 and includes the Chairperson;

 

(k) "notification" means a notification published in the Official Gazette;

 

(l) "person" includes-

 

                (i) an individual;

                (ii) a Hindu undivided family;

                (iii) a company;

                 (iv) a firm;

                 (v) an association of persons or a body of individuals, whether        incorporated or not, in India or outside India;

                 (vi) any corporation established by or under any Central, State or provincial  Act or a Government company as defined in section 617 of the Companies Act, 1956;

                (vii) any body corporate incorporated by or under the laws of a country outside India;

                (viii) a co-operative society registered under any law relating to co-operative societies;

                (ix) a local authority;

                 (x) every artificial juridical person, not falling within any of the preceding sub-clauses;

 

 

 

1 of 1956

 

 

 

8 of 130

 

 

 

(m) "Practice" includes any practice relating to the carrying on of any trade by a person or an enterprise;

 

(n) "Prescribed" means prescribed by rules made under this Act;

 

(o) "price", in relation to the sale of any goods or to the performance of any services, includes every valuable consideration, whether direct or indirect, or deferred, and includes any consideration which in effect relates to the sale of any goods or to the performance of any services although ostensibly relating to any other matter or thing;

 

(p) "regulations" means the regulations made by the Commission under section 62;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(q) "relevant market" means the market which may be determined by the commission with reference to the relevant product market or the relevant geographic market or with reference to both the markets;

 

(r) "relevant geographic market" means a market comprising the area in which the conditions of competition for supply of goods or provision of services or demand of goods or services are distinctly homogenous and can be distinguished from the conditions prevailing in the neighbouring areas;

 

(s) "relevant product market" means a market comprising all those products or services which are regarded as inter changeable or substitutable by the consumer, by reason of characteristics of the products or services, their prices and intended use;

 

(t) "service" means service of any description which is made available to potential users and includes the provision of services in connection with business of any industrial or commercial matters such as accounting, banking,  communication, education, financing, insurance, chit funds, real estate, transport, storage, material treatment, processing, supply of electrical or other energy, boarding, lodging, entertainment, amusement, construction, repair, conveying of news or information and advertising;

 

(u) "shares" means shares in the share capital of a company carrying voting rights and includes-

 

         (i) any security which entitles the holder to receive shares with voting rights;

         (ii) stock except where a distinction between stock and share is expressed or implied;

 

(v) "statutory authority" means any authority, board, corporation, council, institute, university or any other body corporate, established by or under any Central, State or Provincial Act for the purposes of regulating production or supply of goods or provision of any services or markets therefor or any matter connected therewith or incidental thereto;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(w) "trade" means any trade, business, industry, profession or occupation relating to the production, supply, distribution, storage or control of goods and includes the provision of any services;

 

 

 

 

(x) "turnover" includes value of sale of goods or services;

 

(y) words and expressions used but not defined in this Act and defined in the Companies Act, 1956 shall have the same meanings respectively assigned to them in that Act.

 

 

 

1 of 1956

 

 

 

 

 

 

Anti-competitive agreements.

 

CHAPTER II

 

PROHIBITION OF CERTAIN AGREEMENTS, ABUSE OF DOIMINANT POSITION AND REGULATION OF COMBINATIONS

 

Prohibition of agreements

 

3. (1) No enterprise or association of enterprises or person or association of persons shall enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India

 

    (2) Any agreement entered into in contravention of the provisions contained in sub-section (1) shall be void.

 

    (3) Any agreement entered into between enterprises or associations of enterprises or persons or associations of persons or between any person and enterprise or practice carried on, or decision taken by, any association of enterprises or association of persons, including cartels, engaged in identical or similar trade of goods or provision of services, which-

 

            (a)   directly or indirectly determines purchase or sale prices;

 

            (b) limits or controls production, supply, markets, technical development, investment or provision of services;

 

           (c) shares the market or source of production or provision of services by way of allocation of geographical area of market, or type of goods or services, or number of customers in the market or any other similar way;

 

          (d) directly or indirectly results in bid rigging or collusive bidding, shall be presumed to have an appreciable adverse effect on competition.

 

Explanation-For the purposes of this sub-section,-

 

       (a) "bid rigging" means any agreement, between enterprises or persons referred to in sub-section (3) engaged in identical or similar production or trading of goods or provision of services, which has the effect of eliminating or reducing competition for bids or adversely affecting or manipulating the process for bidding;

 

 

 

 

       (b) "cartel" includes an association of producers, sellers, distributors, traders or service providers who, by agreement amongst themselves, limit, control or attempt to control the production, distribution, sale or price of, or, trade in goods or provision of services.

 

      (4) Any agreement amongst enterprises or persons at different stages or levels of the production chain in different markets, in respect of production, supply, distribution, storage, sale or price of, or trade in goods or provision of services, including-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)  tie-in arrangement;

(b) exclusive supply agreement;

(c) exclusive distribution agreement;

(d) refusal to deal;

(e) resale price maintenance;

 

shall be an agreement in contravention of sub-section (1) if such agreement causes or is likely to cause an appreciable adverse effect on competition.

 

Explanation-For the purposes of this sub-section,-

 

        (a) "tie-in arrangements" includes any agreement requiring a purchaser of goods, as a condition of such purchase, to purchase some other goods;

 

        (b)"exclusive supply agreement" includes any agreement restricting in any manner the purchaser in the course of his trade from acquiring or otherwise dealing in any goods other than those of the seller or any other person;

 

      (c) "exclusive distribution agreement" includes any agreement to limit, restrict or withhold the output or supply of any goods or allocate any area or market for the disposal or sale of the goods;

 

      (d) "refusal to deal" includes any agreement which restricts, or is likely to restrict, by any method the persons or classes of persons to whom goods are sold or from whom goods are bought;

 

      (e) "resale price maintenance" includes any agreement to sell goods on condition that the prices to be charged on the resale by the purchaser shall be the prices stipulated by the seller unless it is clearly stated that prices lower than those prices may be charged;

 

 

 

14 of 1957

 

39 of 1970

 

 

47 of 1999

 

 

48 of 1999

    (5) Nothing contained in this section shall apply to-

 

         (a) "copyright" under the Copyright Act, 1957;

 

         (b) "patent" or "exclusive right" granted under the Patents Act, 1970;

 

         (c) "collective mark", "permitted use", "registered proprietor", "registered trade mark" or "registered user" under the Trade Marks Act, 1999;

 

        (d) "homonymous geographical indication" or "geographical indications" registered under the Geographical Indications of Goods (Registration and Protection) Act, 1999;

 

 

16 of 2000

 

37 of 2000

 

 

 

 

 

 

 

 

 

 

 

 

        (e)   "design" registered under the Designs Act, 2000;

 

        (f) "layout-design" registered under the Semi-conductor Integrated Circuits Layout-Design Act, 2000;

 

       (g) the right of any person to export goods from India to the extent to which the agreement relates exclusively to the production, supply, distribution or control of goods or provision of services for such export.

 

Prohibition of abuse of dominant position

 

4.   (1) No enterprise shall abuse its dominant position.

 

      (2) There shall be an abuse of dominant position under sub-section (1), if an enterprise,-

 

     (a)  directly or indirectly, imposes unfair or discriminatory-

 

(i) condition in purchase or sale of goods or services; or

 

           (ii) price in purchase or sale (including predatory price) of goods; or    service;

 

         (b)  limits or restricts-

 

            (i)  production of goods or provision of services or market therefor; or

 

            (ii) technical or scientific development relating to goods or services to the prejudice of consumers; or

 

       (c) indulges in practice or practices  resulting in denial or market access; or

 

       (d) makes conclusion of contracts subject to acceptance by other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts; or

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Abuse of dominant position

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     (e) uses its dominant position in one relevant market to enter into, or protect, other relevant market.

 

 

      Explanation - For the purposes of this section, the expression-

 

     (a) "dominant position" means a position of strength, enjoyed by an enterprise, in the relevant market, whether in India or outside India, which enables it to-

 

           (i) operate independently of competitive forces prevailing in the relevant market; or

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Combination

           (ii) affect its competitors or consumers or the relevant market in its favour;

 

    (b) “predatory price” means the sale of goods or provision of services, at a price which is below the cost, as may be determined by regulations, of production of the goods or provision of services, with a view to reduce competition or eliminate the competitors.

 

Regulation of combinations

 

5.     the acquisition of one or more enterprises by one or more persons or merger or amalgamation of enterprises shall be a combination of such enterprises and persons or enterprises, if-

 

(a)     any acquisition where-

 

          (i) the parties to the acquisition, being the acquirer and the enterprise, whose control, shares, voting rights or assets have been acquired or are being acquired jointly have,-

 

               (A) either, in India, the assets of the value of more than rupees one thousand crores or turnover more than rupees three thousand crores; or

 

               (B) in India or outside India, in aggregate, the assets of the value of more than five hundred million US dollars or turnover more than fifteen hundred million US dollars; or

 

        (ii) any group or an enterprise belonging to such group whose control, shares, voting rights or assets have been acquired or are being acquired jointly have,-

 

            (A) either in India, the assets of the value of more than rupees four thousand crores or turnover more than rupees twelve thousand crores; or

 

            (B) in India or outside India, in aggregate, the assets of the value of more than two billion US dollars or turnover more than six billion US dollars; or

 

 

 

 

 

 

 

 

       (b)  acquiring of control by a person over an enterprise when such person has already direct or indirect control over another enterprise engaged in production, distribution or trading of a similar or identical or substitutable goods or provision of a similar or identical or substitutable service, if-

 

 

 

 

     (i)  the enterprise over which control has been acquired along with the enterprise over which the acquirer already has direct or indirect control jointly have-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

           (A)  either in India, the assets of the value of more than rupees one thousand  crores or turnover more than rupees three thousand crores; or

 

          (B) in India or outside India, in aggregate, the assets of the value of more than five hundred million US dollars or turnover more than fifteen hundred million US dollars; or

 

      (ii)  the group or its constituent enterprise over which control has been acquired, or is being acquired along with the enterprise over which the acquirer already has direct or indirect, control jointly have,-

 

            (A) either in India, the assets of the value of more than rupees four thousand crores or turnover more than rupees twelve thousand crores; or

 

             (B) in India or outside India, in aggregate, the assets of the value of more than two billion US dollars or turnover more than six billion US dollars; or

 

            (C) any merger or amalgamation in which-

 

          (i) the enterprise remaining after merger or the enterprise created as a result of the amalgamation, as the case may be, have,-

 

              (A) either in India, the assets of the value of more than rupees one thousand crores or turnover more than rupees three thousand crores; or

 

              (B) in India or outside India, in aggregate, the assets of the value of more than five hundred million US dollars or turnover more than fifteen hundred million US dollars; or

 

          (ii) the group, or its constituent enterprise remaining after merger of the enterprise created as a result of the amalgamation, as the case may be, have,-

 

             (A) either in India, the assets of the value of more than rupees four thousand crores or turnover more than rupees twelve thousand crores; or

 

             (B) in India or outside India, the assets of the value of more than two billion US dollars or turnover more than six billion US dollars.

 

 

 

 

Explanation-For the purposes of this section,-

 

(a)   “control” includes controlling  the affairs or management by-

 

 

 

                (i) one or more groups, either jointly or singly, over another group or enterprise;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

         (ii) one or more groups, either jointly or singly, over another group or enterprise;

 

          (b) “group” means two or more enterprises which, directly or indirectly, are in a position to-

 

                (i) exercise twenty-six per cent or more of the voting rights in another enterprise; or

          

                (ii) appoint more than fifty per cent of the members of the board of    directors in another enterprise; or

 

               (iii) control the management of affairs of another enterprise;

 

         (c) the value of assets shall be determined by taking the book value of the assets as shown, in the audited books of account of the enterprise, in the financial year immediately preceding the financial year in which the date of proposed merger falls, as reduced by any depreciation, and the value of assets shall include the brand value, value of goodwill, or value of copyright, patent, permitted use, collective mark, registered proprietor, registered trade mark, registered user, homonymous geographical indication, geographical indications, design or layout-design or similar other commercial rights, if any, referred to in sub-section (5) of section 3.

 

6.     (1) No person or enterprise shall enter into a combination which causes or is likely to cause an appreciable adverse effect on competition within the relevant market in India and such a combination shall be void.

 

        (2) Subject to the provisions contained in sub-section (1), any person or enterprise, who or which proposes to enter into a combination, may, at his or its option, give notice to the Commission, in the form as may be specified, and the fee which may be determined, by regulations, disclosing the details of the proposed combination, within seven days of-

 

              (a) approval of the proposal relating to merger or amalgamation, referred to in clause (c) of Section 5,  by the board of directors of the enterprises concerned with such merger or amalgamation, as the case may be;

 

             (b) execution of any agreement or other document for acquisition referred to in clause (a) of section 5 or acquiring of control referred to in clause (b) of that section.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulation of combinations.

 

 

 

 

 

 

 

 

 

       (3) The Commission shall, after receipt of notice under sub section (2), deal with such notice in accordance with the provisions contained in sections 29, 30 and 31.

 

 

 

 

 

 

        (4) The provisions of this section shall not apply to share subscription or financing facility or any acquisition, by a public financial institution, foreign institutional investor, bank or venture capital fund, pursuant to any covenant of a loan agreement or investment agreement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Establishment of Commission

 

 

 

 

Composition of Commission

        (5) The public financial institution, foreign institutional investor, bank or venture capital fund, referred to in sub-section (4), shall within seven days from the date of the acquisition, file, in the form as may be specified by regulations, with the Commission the details of the acquisition including the details of control, the circumstances for exercise of such control and the consequences of default arising out of such loan agreement or investment agreement, as the case may be.

 

Explanation-For purposes of this section, the expression-

 

        (a) “foreign institutional investor” has the same meaning as assigned to it in clause (a) of the Explanation to section 115AD of the Income-tax Act, 1961;

 

        (b) “venture capital fund” has the same meaning as assigned to it in clause (b) of the Explanation to clause (23FB) of section 10 of the Income-tax Act, 1961.

 

CHAPTER III

 

COMPETITION COMMISSION OF INDIA

 

7. (1) With effect from such date as the Central Government may, by notification appoint, there shall be established, for the purposes of this Act, a Commission to be called the “Competition Commission of India”.

 

    (2) The Commission shall be a body corporate by the name aforesaid having perpetual succession and a common seal with power,  subject to the provisions of this Act, to acquire, hold and dispose of property, both movable and immovable, and to contract and shall, by the said name, sue or be sued.

 

   (3) The head office of the Commission shall be at such place as the Central Government may decide from time to time.

 

   (4)The Commission may establish offices at other places in India.

 

8. (1) The Commission shall consist of a Chairperson and not less than two and not more than ten other Members to be appointed by the Central Government:

 

 

 

 

 

 

 

 

 

 

 

 

 

43 of 1961

 

 

 

43 of 1961

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Provided that the Central Government shall appoint the Chairperson and a Member during the first year of the establishment of the Commission.

 

       (2) The Chairperson and every other Member shall be the persons of ability, integrity and standing, who-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

            (a) are, or have been, or are qualified to be, a Judge of a High Court;      or

           (b) have special knowledge of, and professional experience in, not less than fifteen years, 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, be useful to the Commission.

 

      (3) The Chairperson and other Members shall be whole-time Members.

 

9.(1) The Chairperson and every other Member shall be appointed by the Central Government on the recommendation of a Selection Committee consisting of-

 

         (a) the Chief Justice of India or his nominee                      - Chairperson;

 

         (b) the Union Minister-in-charge of the Ministry  of Finance – Member;

 

         (c) the Union Minister-in-charge of the Ministry or Department dealing with this Act                                                                                     - Member;

 

         (d) the Governor of the Reserve Bank of India                        -Member;

 

         (e) the Cabinet Secretary                                                          -Member.

 

      (2) The Secretary-in-charge of the Ministry or the Department of the Central Government dealing with this Act shall be the Convenor of the Selection Committee.

 

      (3) The Central Government shall, within one month from  the date of occurrence of any vacancy by reason of death, resignation or removal of the Chairperson or a member and six months before the superannuation or end of tenure of the Chairperson or a Member, make a reference to the Selection Committee for filling up of the vacancy.

 

     (4) The Selection Committee shall finalise the selection of the Chairperson and a Member within one month from the date on which the reference under sub-section (3) is made to it.

 

     (5) The Selection Committee shall recommend a panel of two names for every vacancy referred to it.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appointment of Chairperson and other Members.

 

 

 

 

 

 

 

 

 

       (6) Before recommending any person for appointment as the Chairperson or other Member of the Commission, the Selection Committee shall satisfy itself that such person does not have any financial or other interest which is likely to affect prejudicially his functions as the Chairperson or a Member.

 

     (7) No appointment of the Chairperson or a Member shall be invalid merely by reason of any vacancy in the Selection Committee.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10. (1) The Chairperson and every other Member shall hold office as such for a term of five years from the date on which he enters upon his office and shall be eligible for reappointment:

 

Provided that no Chairperson or other Member shall hold office as such after he has attained,-

 

(a)  in the case of the Chairperson, the age of seventy years;

(b)   in the case of any other Member, the age of sixty-five years.

 

  (2) A vacancy caused by the resignation or removal of the Chairperson or any other Member under section 11 or by death or otherwise shall be filled by fresh appointment in accordance with the provisions of section 9.

 

 (3) The Chairperson and every other Member shall, before entering upon his office, make and subscribe to an oath of office and of secrecy in such form, manner and be such authority, as be prescribed.

 

 (4) In the event of the occurrence of a vacancy in the office of the Chairperson by reason of his death, resignation or otherwise, the senior-most Member shall act as the Chairperson, until the date on which a new Chairperson, appointed in accordance with the provisions of this Act to fill such vacancy, enters upon his office.

 

(5) When the Chairperson is unable to discharge his functions owing to absence, illness or any other cause, the senior-most Member shall discharge the functions of the Chairperson until the date on which the Chairperson resumes the charge of his functions.

 

11. (1) The Chairperson or any other member may, by notice in writing under his hand addressed to the Central Government, resign his office:

 

Provided that the Chairperson or a Member shall, unless he is permitted by the Central Government to relinquish his office sooner, continue to hold office until the expiry of three months from the date of receipt of such notice or until a person duly appointed as his successor enters upon his office or until the expiry of his term of office, whichever is the earliest.

 

Term of office of Chairperson and other Members.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Resignation, removal and suspension of Chairperson and other Members.

 

 

(2) Subject to the provisions of sub-section (4), any Member shall only be removed from his office by order of the Central Government on the ground of proved misbehaviour after the Supreme Court, on reference being made to it by the Central Government, has, on an inquiry, held in accordance with the procedure prescribed in this behalf by the Supreme Court, reported that the Member, ought on any such ground to be removed.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restriction an employment of Chairperson and other Members in certain cases.

   (3) The Central Government may suspend from office the Chairperson or a Member, as the case may be, in respect of whom a reference has been made to the Supreme Court under sub-section (2), until the Central Government has passed an order on receipt of the report of the Supreme Court on such reference.

 

   (4) Notwithstanding anything contained in sub-section (1) or sub-section (2), the Central Government may, by order, remove the Chairperson or any other Member from his office if such Chairperson or Member, as the case may be,-

 

(a)  is, or at any time has been, adjudged as an insolvent; or

 

           (b) has engaged at any time, during his term of office, in any paid employment; or

           (c) has been convicted of an offence which, in the opinion of the Central Government, involves moral turpitude; or

 

          (d) has acquired such financial or other interest as is likely to affect prejudicially his functions as a Member; or

 

          (e) has so abused his position as to render his continuance in office prejudicial to the public interest; or

 

          (f) has become physically or mentally incapable of acting as a Member.

 

     (5) Notwithstanding anything contained in sub-section (4), no Member shall be removed from his office on the ground specified in clause (d) or clause (e) of that sub-section unless the Supreme Court, on a reference being made to it in this behalf by the Central Government, has, on any inquiry, held by it in accordance with such procedure as prescribed in this behalf by the Supreme Court, reported that the Member, ought on such ground or grounds to be removed.

 

12. The Chairperson and other Members shall not, for a period of six months from the date on which they cease to hold office, accept any employment in, or connected with the management or administration of, any enterprise which has been a party to a proceeding before the Commission under this Act:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Provided that nothing contained in this section shall apply to any employment under the Central Government or a State Government or local authority or in any statutory authority or any corporation established by or under any Central, State or Provincial Act or a Government company as defined in section 617 of the Companies Act, 1956.

 

1 of 1956

 

 

 

Administrative powers of Chairperson

 

 

Salary and allowances and other terms and conditions of Chairperson and other Members.

 

 

 

 

 

 

 

 

 

 

Vacancy, etc. not to invalidate proceedings of Commission.

 

 

 

 

 

 

 

 

 

Appointment of Director-General, etc.

13. The Chairperson shall have the powers of general superintendence, direction and control in respect of all administrative matters of the Commission.

 

14. (1) There shall be paid to the Chairperson a salary, which is equal to the salary of a Judge of the Supreme Court.

 

    (2) There shall be paid to a Member a salary, which is equal to the salary of a Judge of a High Court.

 

   (3) The other terms and conditions of service including travelling expenses, house rent allowance and conveyance facilities, sumptuary allowance and medical facilities shall be such as may be prescribed.

 

  (4) The salary, allowances and other terms and conditions of service of the Chairperson or a Member shall not be varied to his disadvantage after appointment.

 

15. No act or proceeding of the Commission shall be invalid merely by reason of-

 

           (a) any vacancy in, or any defect in the constitution of, the Commission; or

           (b) any defect in the appointment of a person acting as a Chairperson or as a Member; or

           (c) any irregularity in the procedure of the Commission not affecting the merits of the case.

 

16. (1) The Central Government may, by notification, appoint a Director General and as many Additional, Joint, Deputy or Assistant Directors General, as it may think fit, for the purposes of assisting the Commission in conducting inquiry into contravention of any of the provisions of this Act and for the conduct of cases before the Commission and for performing such other functions as are, or may be, provided by or under this Act.

 

     (2) Every Additional, Joint, Deputy and Assistant Directors General shall exercise his powers, and discharge his functions, subject to the general control, supervision and direction of the Director General.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

       (3) The salary, allowances and other terms and conditions of service of the Director General and Additional, Joint, Deputy and Assistant Directors General shall be such as may be prescribed.

 

       (4) The Directors General, and Additional, Joint, Deputy and Assistant Directors General shall be appointed from amongst persons of integrity and outstanding ability and who have experience in investigation, and knowledge of accountancy, management, business, public administration, international trade, law or economics and such other qualifications as may be prescribed.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17. (1) The Commission may appoint a Registrar and such officers and other employees, as it considers necessary for the efficient performance of its functions under this Act.

 

     (2) The salaries and allowances payable to and other terms and conditions of service of the Registrar and officers and other employees of the Commission shall be such as may be prescribed.

 

 

CHAPTER IV

 

DUTIES, POWERS AND FUNCTIONS OF COMMISSION

 

18. Subject to the provisions of this Act, it shall be the duty of the Commission to eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers, and ensure freedom of trade carried by other participants, in markets in India.

 

19. (1) The Commission may inquire into any alleged contravention of the provisions contained in sub-section (1) of section 3 or sub-section (1) section 4 either on its won motion or on-

 

             (a) receipt of a complaint from any person, consumer or their  association or trade association; or

 

             (b) a reference made to it by the Central Government or a State Government or a statutory authority.

 

  (2) Without prejudice to the provision contained in sub-section (1), the powers and functions of the Commission shall include the powers and functions specified in sub-sections (3) to (7).

 

 (3) The Commission shall, while determining whether an agreement has an appreciable adverse effect on competition under section 3, have due regard to all or any of the following factors, namely:-

 

            (a) creation of barriers to new entrants in the market;

            (b)driving existing competitors out of the market;

            (c) foreclosure of competition by hindering entry into the market;

 

Registrar and officers and other employees of Commission.

 

 

 

 

 

 

 

 

 

 

 

 

Duties, of Commission.

 

 

 

 

 

Inquiry into certain agreements and dominant position of enterprise.

 

 

 

 

 

 

 

 

 

 

           (d) accrual of benefits to consumers;

           (e) improvements in production or distribution of goods or provision of services; or

            (f) promotion of technical, scientific and economic development by means of production or distribution of goods or provision of services.

 

 

 

       (4) The Commission shall, while inquiring whether an enterprise enjoys a dominant position or not under section 4, have due regard to all or any of the following factors, namely:-

 

            (a) market share of the enterprise;

 

            (b) size and resources of the enterprise;

 

            (c) size and importance of the competitors;

 

           (d) economic power of the enterprise including commercial advantages over competitors;

 

           (e) vertical integration of the enterprises or sale or service network of such enterprises;

 

           (f) technical advantages including advantages such as copyright patents, permitted use, collective mark, registered proprietor, registered trade mark, registered user, homonymous geographical indication, geographical indications, design or layout-design referred to in clauses (a) to (f) of sub-section (5) of section 3, or similar commercial rights acquired by the enterprise;

 

           (g) dependence of consumers on the enterprise;

 

           (h) monopoly or dominant position whether acquired as a result of any statute or by virtue of being a Government company or a public sector undertaking or otherwise;

 

           (i) entry barriers including barriers such as regulatory barriers, financial risk, high capital cost of entry, marketing entry barriers, technical entry barriers, economies of scale, high cost of substitutable goods or service for consumers;

 

          (j) countervailing buying power;

 

          (k) market structure and size of market;

 

          (l) social obligations and social costs;

 

          (m) any other factor which the Commission may consider relevant for the inquiry.

 

      (5) For determining whether a market constitutes a “relevant market” for the purposes of this Act, the Commission shall have due regard to the “relevant geographic market” or “relevant product market”.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

       (6) The Commission shall, while determining the “relevant geographic market”,  have due regard to all or any of the following factors, namely:-

 

  (a) regulatory trade barriers;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

             (b) local specification requirements;

  (c) national procurement policies;

             (d) adequate distribution facilities;

             (e) transport costs;

  (f) language;

  (g) consumer preferences;

             (h) need for secure, regular supplies or rapid after-sales services.

      (7) The Commission shall, while determining the “relevant product market”, have due regard to all or any of the following factors, namely:-

 

             (a) physical characteristics or end-use of goods;

  (b) price of goods or service;

             (c) consumer preferences;

             (d) exclusion of in-house production;

             (e) existence of specialised producers;

             (f) classification of industrial products.

20. (1) The Commission may, upon its own knowledge or information relating to acquisition referred to in clause (a) of section 5 or acquiring of control referred to in clause (b) of section 5 or merger or amalgamation referred in clause (c) of that section inquire into whether such a combination has caused or is likely to cause an appreciable adverse effect on competition in India:

 

   Provided that the Commission shall not initiate any inquiry under this sub-section after the expiry of one year from the date on which such combination has taken effect.

 

   (2) The Commission shall, on receipt of a notice under sub-section (2) of section 6 or upon receipt of a reference under sub-section (2) of section 21, inquire whether a combination referred to in that notice or reference has caused or is likely to cause an appreciable adverse effect on competition in India.

 

  (3) Notwithstanding anything contained in section 5, the Central Government shall, on the expiry of a period of two years from the date of commencement of this Act and thereafter every two years, in consultation with the Commission, by notification, enhance or reduce, on the basis of the wholesale price index or fluctuations in exchange rate of rupee or foreign currencies, the value of assets or the value of turn over, for the purposes of that section.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inquiry into combination by Commission

 

 

 

 

     (4) For the purposes of determining whether a combination would have the effect of or is likely to have an appreciable adverse effect on competition in the relevant market, the Commission shall have due regard to all or any of the following factors, namely:-

 

 

 

 

 

           (a) actual and potential level of competition through imports in the market;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(b) extent of barriers to entry to the market;

(c) level of combination in the market;

           (d) degree of countervailing power in the market;

           (e) likelihood that the combination would result in the parties to the combination being able to significantly and sustainably increase prices or profit margins;

           (f) extent of effective competition likely to sustain in a market;

           (g) extent to which substitutes are available or are likely to be available in the market;

           (h) market share, in the relevant market, of the persons or enterprise in a combination, individually and as a combination;

          (i) likelihood that the combination would result in the removal of a vigorous and effective competitor or competitors in market;

          (j) nature and extent of vertical integration in the market;

          (k) possibility of a failing business;

          (l) nature and extent of innovation;

          (m) whether the benefits of the combination outweigh the adverse impact of the combination, if any.

21. (1) Where in the course of a proceeding before any statutory authority an issue is raised by any party that any decision which such statutory authority has taken or proposes to take, is or would be, contrary to any of the provisions of this Act, then such statutory authority shall make a reference in respect of such issue to the Commission.

 

        (2) On receipt of a reference under sub-section (1), the Commission shall, after hearing the parties to the proceedings, give its opinion to such statutory authority which shall thereafter pass such order on the issues referred to in that sub-section as it deems fit.

 

22.  (1) The jurisdiction, powers and authority of the Commission may be exercise by Benches thereof.

 

    (2) The Benches shall be constituted by the Chairperson and each bench shall consist of not less than two Members.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reference by statutory authority.

 

 

 

Benches of Commission

 

 

      (3) Every Bench shall consist of at least one Judicial Member.

 

        Explanation. For the purposes of this sub-section, “Judicial Member” means a Member who is, or has been, or is qualified to be, a Judge of a High Court.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution of business amongst Commission and Benches.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Procedure for deciding a case where Members of a Bench differ in opinion.

 

 

Jurisdiction of Bench.

      (4) The Bench over which the Chairperson presides shall be the Principal Bench and the other benches shall be known as the Additional Benches.

 

      (5) There shall be constituted by the Chairperson one or more Benches to be called the mergers Bench or Mergers Benches, as the case may be, exclusively to deal with matters referred to in sections 5 and 6.

 

     (6) The places at which the Principal Bench, other Additional Bench or Mergers Bench shall ordinarily sit shall be such as the Central Government may, by notification, specify.

 

23. (1) Where any Benches are constituted, the Chairperson may, from time to time, by order, make provisions as to the distribution of the business of the Commission amongst the Benches and specify the matters, which may be dealt with by each Bench.

 

     (2) If any question arises as to whether any matter falls within the purview of the business allocated to a Bench, the decision of the Chairperson thereon shall be final.

 

     (3) The Chairperson, with the prior approval of the Central Government, may-

 

                (i)  transfer a Member from one Bench to another Bench; or

 

             (ii) authorise the Members at one Bench to discharge also the functions of the Members of other Bench.

 

      (4) The Chairperson may, for the purpose of securing that any case or matter which, having regard to the nature of the questions involved, requires or is required in his opinion or under the rules made by the Central Government in this behalf, to be decided by a Bench composed of more than two Members, issue such general or special orders as he may deem fit.

 

24. If the Members of a Bench differ in opinion on any point, they shall state the point or points on which they differ, and make a reference to the Chairperson who shall either hear the point or points himself or refer the case for hearing on such point or points by one or more of the other Members and such point or points shall be decided according to the opinion of the majority of the Members who have heard the case, including those who first heard it.

 

25. An inquiry shall be initiated or a complaint be instituted or a reference be made under this Act before a Bench within the local limit of whose jurisdiction.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

           

            (a) the respondent, or each of the respondents, where there are more than one, at the time of the initiation of inquiry or institution of the complaint or making of reference, as the case may be, actually and voluntarily resides, or carries on business, or personally works for gain; or

 

            (b) any of the respondents, where there are more than one, at the time of the initiation of the inquiry or institution of complaint or making of reference, as the case may be, actually and voluntarily resides or carries on business or personally works for gain provided that in such case either the leave of the Bench is given, or the respondents who do not reside, or carry on business, or personally works for gain, as aforesaid, acquiesce in such institution; or

 

            (c) the cause of action, wholly or in part, arises.

 

       Explanation- A respondent, being a person referred to in sub-clause (iii) or sub-clause (vi) or sub-clause (vii) or sub-clause (viii)  of clause (1) of section 2, shall be deemed to carry on business at its sole or principal place of business in India or at its registered office in India or where it has also a subordinate office at such place.

 

26. (1) On receipt of a complaint or a reference from the Central Government or a State Government or a statutory authority or on its own knowledge or information, under section 19, if the Commission is of the opinion that there exists a prima facie case, it shall direct the Director General to cause an investigation to be made into the matter.

 

    (2) The Director General shall, on receipt of direction under sub-section (1), submit a report on his findings within such period as may be specified by the Commission.

 

   (3) Where on receipt of a complaint under clause (a) of sub-section (1) of section 19, the Commission is of the opinion that there exists no prima facie case, it shall dismiss the complaint and may pass such orders as it deems fit, including imposition of costs, if necessary.

 

   (4) The Commission shall forward a copy of the report referred to in sub-section (2) to the parties concerned or to the Central Government or the State Government or the statutory authority, as the case may be.

 

   (5) If the report of the Director General relates on a complaint and such report recommends that there is no contravention of the any of provisions of this Act, the complainant shall be given an opportunity to rebut the findings of the Director General.

 

  (6) If, after hearing the complainant, the Commission agrees with the recommendation of the Director General, it shall dismiss the complaint.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Procedure for inquiry on complaints under section 19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    (7) If, after hearing the complainant, the Commission is of the opinion that further inquiry is called for, it shall direct the complainant to proceed with the complaint.

 

   (8) if the report of the Director General  relates on a reference made under sub-section (1) and such report recommends that there is no contravention of the provisions of this Act, the Commission shall invite comments  of the Central Government or the State Government or the statutory authority, as the case may be, on such report and on receipt of such comments, the Commission shall return the reference if there is no prima facie case or proceed with the reference as a complaint if there is a prima facie case.

 

   (9) if the report of the Director General referred to in sub-section (2)  recommends that there is contravention of any of the  provisions of this Act, and the Commission is of the opinion that further inquiry is called for, it shall inquire into such contravention in  in accordance with the provisions of this Act.

 

27. Where after inquiry the Commission finds that any agreement or action, of an enterprise in a dominant position, is in contravention of section 3 or section 4, as the case may be, it may pass all or any of the following orders, namely:

           (a) direct any enterprise or association of enterprises or person or association of persons, as the case may be, involved in such agreement, or abuse of dominant position, to discontinue and not to re-enter such agreement or discontinue such abuse of dominant position, as the case may be;

           (b) impose such penalty, as  it may deem fit which shall be not more than ten per cent of the average of the turnover for the last three preceding financial years, upon each of such person or enterprises which are parties to such agreements or abuse;

           (c) award compensation to parties in accordance with the provisions contained in section 34;

           (d) direct that the agreements shall stand modified to the extent and in the manner as may be specified in the order by the Commission;

           (e) direct the enterprises concerned to abide by such other orders as the Commission may pass and comply with the directions, including payment of costs, if any;

           (f) recommend to the Central Government for the division of an enterprise enjoying dominant position;

           (g) pass such other order as it may deem fit.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Orders by Commission after inquiry into agreements or abuse of dominant position.

 

Division of enterprise enjoying dominant position.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Procedure for investigation of combinations.

 

28. (1) The Central Government, on recommendation under clause (f) of section 27, may, notwithstanding anything contained in any other law for the time being in force, by order in writing, direct division of an enterprise enjoying dominant position to ensure that such enterprise does not abuse its dominant position.

 

    (2) In particular, and without prejudice to the generality of the foregoing powers, the order referred to in sub-section (1) may provide for all or any of the following matters, namely:

 

 (a) the transfer or vesting of property, rights, liabilities or obligations;

 

            (b) the adjustment of contracts either by discharge or reduction of any liability or obligation or otherwise;

 

            (c) the creation, allotment, surrender or cancellation of any shares, stocks or securities;

 

            (d) the payment of compensation to any person who suffered any loss due to dominant position of such enterprise;

 

            (e) the formation or winding up of an enterprise or the amendment of the memorandum of association or articles of association or any other instruments regulating  the business of any enterprise;

 

            (f) the extent to which, and the circumstances in which, provisions of the order affecting an enterprise may be altered by the enterprise and the registration thereof;

 

            (g) any other matter which may be necessary to give effect to the division of the enterprise;

 

     (3) Notwithstanding anything contained in any other law for the time being in force or in any contract or in any memorandum or articles of association, an officer of a company who ceases to hold office as such in consequence of the division of an enterprise shall not be entitled to claim any compensation for such cesser.

 

29. (1) Where  the Commission is of the opinion that a combination is likely to cause, or has caused an appreciable adverse effect on competition within the relevant market in India, it shall issue a notice to show cause to the parties to combination calling upon them to respond within thirty days of the receipt of the notice, as to why investigation in respect of such combination should not be conducted.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    (2) The Commission, if it is prima facie of the opinion that the combination has, or is likely to have, an appreciable adverse effect on  competition, it shall, within seven working days from the date of receipt of the response of the parties to the combination, direct the parties to the said combination to publish details of the combination within ten working days of such direction, in such manner, as it thinks appropriate, for bringing the combination to the knowledge or information of the public and persons affected or likely to be affected by such combination.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   (3) The Commission may invite any person or member of the public, affected or likely to be affected by the said combination, to file his written objections, if any, before the Commission within fifteen working days from the date on which the details of the combination were published under sub-section (2).

 

   (4) The Commission may, within fifteen working days from the expiry of the period specified in sub-section (3), call for such additional or other information as it may deem fit from the parties to the said combination.

 

   (5) The additional or other information called for by the Commission shall be furnished by the parties referred to in sub-section (4) within fifteen days from the expiry of the period specified in sub-section (4).

 

   (6) After receipt of all information and within a period of forty-five working days from the expiry of the period specified in sub-section (5), the Commission shall proceed to deal with the case in accordance with the provisions contained in section 31.

 

30. Where any person or enterprise has given a notice under sub-section (2) of section 6, the Commission shall inquire:

 

           (a) whether the disclosure made in the notice is correct;

 

           (b) whether the combination has or is likely to have, an appreciable adverse effect on competition.

 

31. (1) Where the Commission is of the opinion that any combination does not, or not likely to, have an appreciable adverse effect on competition, it shall, by order, approve that combination including the combination in respect of which a notice has been given under sub-section (2) of section 6.

 

     (2) Where the Commission is of the opinion that the combination has, or is likely to have, an appreciable adverse effect on competition, it shall direct that the combination shall not take effect.

 

    (3) Where the Commission is of the opinion that the combination has, or is likely to have, an appreciable adverse effect on competition but such adverse effect can be eliminated by suitable modification to such combination, it may propose appropriate modification to the combination, to the parties to such combination.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inquiry into disclosures under sub-section (2) of section 6.

 

 

 

 

 

Orders of Commission on certain combinations.

 

 

 

 

 

 

      (4) The parties, who accept the modification proposed by the Commission under sub-section (3), shall carry out such modification within the period specified by the Commission.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     (5) If the parties to the combination, who have accepted the modification under sub-section (4),  fail to carry out the modification within the period specified by the Commission, such combination shall be deemed to have an appreciable adverse effect on competition and the Commission shall deal with such combination in accordance with the provisions of this Act.

 

    (6) If the parties to the combination do not accept the modification proposed by the Commission under sub-section (3), such parties may, within thirty working days of the modification proposed by the Commission, submit amendment to the modification proposed by the Commission under that sub-section.

 

    (7) If the Commission agrees with the amendment submitted by the parties under sub-section (6), it shall, by order, approve the combination.

 

   (8) If the Commission does not accept the amendment submitted under sub-section (6), then, the parties shall be allowed a further period of thirty working days within which such parties shall accept the modification proposed by the Commission under sub-section (3).

 

   (9) If the parties fail to accept the modification proposed by the Commission within thirty working days referred to in sub-section (6) or within a further period of thirty working days referred to in sub-section (8), the combination shall be deemed to have an appreciable adverse effect on competition and be dealt with in accordance with the provisions of this Act.

 

   (10) Where the Commission has directed under sub-section (2) that the combination shall not take effect or the combination is deemed to have an appreciable adverse effect on competition under sub-section (9), then, without prejudice to any penalty which may be imposed or any prosecution which may be initiated under this Act, the Commission may order that:

 

           (a)  the acquisition referred to in clause (a) of section 5; or

 

           (b) the acquiring of control referred to in clause (b) of section 5; or

 

           (c) the merger or amalgamation referred  to in clause (c) of section 5, shall not be given effect to:

 

 Provided that the Commission may, if it considers appropriate, frame a scheme to implement its order under this sub-section.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acts taking place out-side India but having an effect on competition in India.

 

     (11) If the Commission does not, on the expiry of a period of ninety working days from the date of publication referred to in sub-section (2) of section 29 pass an order or issue direction in accordance with the provisions of sub-section (1) or sub-section (2) or sub-section (7),  the combination shall be deemed to have been approved by the Commission.

 

Explanation For the purposes of determining the period of ninety working days specified in this sub-section, the period of thirty working days specified in sub-section (6) and a further period of thirty working days specified in sub-section (8) shall be excluded.

 

   (12) Where any extension of time is sought by the parties to the combination, the period of ninety working days shall be reckoned after deducting the extended time granted at the request of the parties.

 

   (13) Where the Commission has ordered a combination to be void, the acquisition or acquiring of control or merger or amalgamation referred to in section 5,  shall be dealt with by the authorities under any other law for the time being in force as if, such acquisition or acquiring of control or merger or amalgamation had not taken place and the parties to the combination shall be dealt with accordingly.

 

   (14) Nothing contained in this Chapter shall affect any proceeding initiated or which may be initiated under any other law for the time being in force.

 

32. The Commission shall, notwithstanding that:

 

           (a)  an agreement referred to in section 3 has been entered into outside India, or

 

(b) any party to such agreement is outside India; or

 

           (c) an abuse of dominant position referred to in section 4 has taken place outside India; or

 

           (d) any enterprise abusing the dominant position is outside India; or

 

           (e) a combination has taken place outside India; or

 

           (f) any party to combination is outside India; or

 

          (g) any other matter or practice or action arising out of such agreement or dominant position or combination is outside India,

 

have power to inquire into such agreement or abuse of dominant position or combination if such agreement or dominant position or combination has, or is likely to have, an appreciable adverse effect on competition in the relevant market in India.

 

 

 

Power to grant interim relief.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Power to award compensation.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appearance before Commission.

33. (1) Where during an inquiry before the Commission, it is proved to the satisfaction of the Commission, by affidavit or otherwise, that an act in contravention of sub-section (1) of section 3 or sub-section (1) section 4 or section 5 has been committed and continues to be committed or that such act is about to be committed, the Commission may grant a temporary injunction restraining any party from carrying on such act until the conclusion of such inquiry or until further orders,  without giving notice to the opposite party, where it deems it necessary.

 

    (2) The provisions of rules 2A to 5 (both inclusive)  of Order XXXIX of the First Schedule to the Code of Civil Procedure, 1908  shall, as far as may be, apply to a temporary injunction  issued by the Commission under the Act, as they apply to a temporary injunction issued by a civil court, and any reference in any such rule to a suit shall be construed as a reference to any inquiry before the Commission.

 

34. (1) Without prejudice to any other provisions contained in this Act, any person may make an application to the Commission for an order for the recovery of compensation from any enterprise for any loss or damage shown to have been suffered, by such person as a result of any contravention of the provisions of Chapter II,  having been committed by such enterprise.

 

    (2) The Commission may, after an inquiry made into the allegations mentioned in the application made under sub-section (1),  pass an order directing the enterprise to make payment to the applicant, of the amount determined by it as realisable from the enterprise as compensation for he loss or damage caused to the applicant as a result of any contravention of the provisions of Chapter II having been committed by such enterprise.

 

     (3) Where any loss or damage referred to in sub-section (1) is caused to numerous persons having the same interest, one or more of such persons may, with the permission of the Commission, make an application under that sub-section for and on behalf of, or for the benefit of, the persons so interested,  and thereupon, the provisions of rule 8 of Order 1 of the First Schedule to the Code of Civil Procedure, 1908, shall apply subject to the modification that every reference therein to a suit or decree shall be construed as a reference to the application  before the Commission and the order of the Commission thereon.

 

35. A complainant or defendant or Director General may either appear in person or authorise one or more chartered accountants or company secretaries or cost accountants or legal practitioners or any of his or its officers to present his or its case before the Commission.

 

      Explanation.- For the purposes of this section,-

 

 

 

 

 

 

 

 

 

 

 

 

5 of 1908

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5        of

1908

 

 

 

 

 

 

 

 

38 of 1949

      (a) “ chartered accountant” means a chartered accountant as defined in clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 and who has obtained a certificate of practice under sub-section (1) of section 6 of that Act;

 

 

56 of 1950

           

 

 

 

23 of 1959

 

 

 

 

 

 

 

 

5    of

1908

 

 

 

 

 

 

 

 

 

 

5   of

1908

 

 

 

 

 

 

 

 

 

 

 

1 of 1872.

 

     (b) “company secretary” means a company secretary as defined in clause (c) of sub-section (1) of section 2 of the Company secretaries Act, 1980 and who has obtained a certificate of practice under sub-section (1) of section of that Act;

 

    (c)  “cost accountant” means a cost accountant as defined in clause (b) of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959 and who has obtained a certificate of practice under sub-section (1) of section 6 of that Act;

 

    (d) “legal practitioner” means an advocate, vakil or an attorney of any High Court, and includes a pleader in practice.

 

36. (1) The Commission shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908, but shall be guided by the principles of natural justice and,  subject to the other provisions of this Act and of any rules made by the Central Government, the Commission shall have powers to regulate its won procedure including the places at which they shall have their sittings, duration of oral hearings when granted, and times of its inquiry.

 

    (2) The Commission shall have, for the purposes of  discharging its functions under this Act, the same powers as are vested in a civil court under the Code of Civil Procedure, 1908, while trying a suit, in respect of the following matters, namely:-

 

      (a) summoning and enforcing the attendance of any person and examining him on oath;

 

     (b) requiring the discovery and production of documents;

 

     (c) receiving evidence on affidavits;

 

     (d) issuing commissions for the examination of witnesses or documents;

 

     (e) subject to the provisions of sections 123 and 124 of the Indian Evidence Act, 1872, requisitioning any public record or document or copy of such record or document from any office;

 

     (f) dismissing an application in default or deciding it ex parte;

 

     (g) any other matter which may be prescribed.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Power of Commission to regulate its  own procedure.

 

 

45 of 1860

2 of 1974.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Review of orders of Commission.

      (3) Every proceeding before the Commission shall be deemed to be a judicial proceeding within the meaning of sections  193 and 228 and for the purposes of section 196 of the Indian Penal Code and the Commission shall be deemed to be a civil court for the purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973.

 

    (4) The Commission may call upon such experts, from the fields of economics, commerce, accountancy, international trade or from any other discipline as it deems necessary, to assist the Commission in the conduct of any inquiry or proceeding before it.

 

    (5) The Commission may direct any person:

 

    (a) to produce before the Director General or the Registrar or an officer authorised by it, such books, accounts or other documents in the custody or under the control of such person so directed as may be specified or described in the direction, being documents relating to any trade, the examination of which may be required for the purposes of this Act;

 

   (b) to furnish to the Director General or the Registrar or any officer authorised by it, as respects the trade or such other information as may be in his possession in relation to the trade carried on by such person, as may be required for the purposes of this Act.

 

   (6) If the Commission is of the opinion that any agreement referred to in section 3 or abuse of dominant position referred to in section 4 or the combination referred to in section 5 has caused or is likely to cause an appreciable adverse effect on competition in the relevant market in India and it is necessary to protect, without further delay, the interests of consumers and other market participants in India,  it may conduct an inquiry or adjudicate upon any matter under this Act after giving a reasonable oral hearing to the parties concerned.

 

37. Any person aggrieved by an order of the Commission from which an appeal is allowed by this Act but no appeal has been preferred, may, within thirty days from the date of the order, apply to the Commission for review of its order and the Commission may make such order thereon as it thinks fit:

 

Provided that the Commission may entertain a review application after the expiry of the said period of thirty days, if it is satisfied that the applicant was prevented by sufficient cause from preferring the application in time:

 

Provided further that no order shall be modified or set aside without giving an opportunity of being heard to the person in whose favour the order is giving and the Director General where he was a party to the proceedings.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rectification of orders.

38. (1) With a view to rectifying any mistake apparent from the record, the Commission may amend any order passed by it under the provisions of this Act.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Execution of orders of Commission.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appeal.

        (2) Subject to the other provisions of this Act, the Commission may make-

 

        (a) an amendment under sub-section (1) of its own motion;

 

       (b) an amendment for rectifying any such mistake which has been brought to its notice by any party to the order.

 

39. Every order passed by the Commission under this Act shall be enforced by the Commission in the same manner as if it were a decree or order made by a High Court or the principal civil court in a suit pending therein and its shall be lawful for the Commission to send, in the event of its inability to execute it, such order to the High Court or the principal civil court, as the case may be, within the local limits of whose jurisdiction,-

 

      (a) in the case of an order against a person referred to in sub-clause(iii) or sub-clause (vi) or sub-clause (vii) of clause (1) of section 2, the registered office or the sole or principal place of business of the person in India or where the person has also a subordinate office, that subordinate office, is situated;

 

      (b) in the case of an order against any other person, the place where the person concerned voluntarily resides or carries on business or personally works for gain, is situated,

 

and thereupon the court to which the order is so sent shall execute the order as if it were a decree or order sent to it for execution.

 

40. Any person aggrieved by any decision or order of the Commission may file an appeal to the Supreme Court within sixty days from the date of communication of the decision or order of the Commission to him on one or more of the grounds specified in section 100 of the Code of Civil Procedure, 1908:

 

Provided that the Supreme Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days:

 

Provided further that no appeal shall lie against any decision or order of the Commission made with the consent of the parties;

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5    of

1908

 

 

 

 

 

 

 

 

 

CHAPTER V

 

DUTIES OF DIRECTOR GENERAL

 

41. (1) The Director General shall, when so directed by the Commission, assist the Commission in investigating into any contravention of the provisions of this Act or any rules or regulations made thereunder.

 

    (2) The Director-General shall have all the powers as are conferred upon the Commission under sub-section (2) of section 36.

 

 

 

 

 

Director-General to investigate contraventions.

 

 

 

 

 

1 of 1956

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     (3) Without prejudice to the provisions of sub-section (2), sections 240 and 240A of the Companies Act, 1956, so far as may be, shall apply to an investigation made by the Director General or any other person investigating under his authority, as they apply to an inspector appointed under that Act.

 

CHAPTER VI

 

PANALTIES

 

42. (1) Without prejudice to the provisions of this Act, if any person contravenes, without any reasonable ground, any order of the Commission, or any condition or restriction subject to which any approval, sanction, direction or exemption in relation to any matter has been accorded,  given,  made or granted under this Act or fails to pay the penalty imposed under this Act, he shall be liable to be detained in civil prison for a term which may extend to one year, unless in the meantime the Commission directs his release and he shall also be liable to a penalty not exceeding rupees ten lakhs.

 

     (2) The Commission may, while making an order under this Act, issue such directions to any person or authority, not inconsistent with this Act, as it thinks necessary or desirable, for the proper implementation or execution of the order, and any person who commits breach of, or fails to comply with,  any obligation imposed on him under such direction, may be ordered by the Commission to be detained in civil prison for a term not exceeding one year unless in the meantime the Commission directs his release and he shall also be liable to a penalty not exceeding rupees ten lakhs.

 

43. If any person fails to comply with a direction given by-

 

      (a) the Commission under sub-section (5) of section 36; or

 

      (b) the Director General while exercising powers referred to in sub-section (2) of section 41.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contravention of orders of Commission.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Penalty for failure to comply with directions of Commission and
Director General.

 

 

 

the Commission shall impose on such person a penalty or rupees one lakh for each day during which such failure continues.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

44. if any  person, being a party to a combination, -

 

      (a) makes a statement which is false in any material particular, or knowing it to be false; or

 

      (b) omits to state any material particular knowing it to be material,

 

Such person shall be liable to a penalty which shall not be less than rupees fifty lakhs but which may extend to rupees one crore, as may be determined by the Commission.

 

45. (1) Without prejudice to the provisions of section 44, if any person, who furnishes or is required to furnish under this Act any particulars, documents or any information,-

 

      (a) makes any statement or furnishes any document which he knows or has reason to believe to be false in any material particular; or

 

     (b) omits to state  material fact knowing it to be material; or

 

     (c) wilfully alters, suppresses or destroys any document which is required to be furnished as aforesaid.

the Commission shall impose on such person a penalty which may extend to rupees ten lakhs.

     (2) Without prejudice to the provisions of sub-section (1), the Commission may also pass such other order as it deems fit.

46. (1) Where a person committing contravention of any of the provisions of this Act or of any rule, regulation, order made or direction issued  thereunder is a company, every person who, at the time the contravention was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly:

Provided that nothing contained in this sub-section shall render any such person liable to any punishment if he proves that the contravention was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such contravention.

     (2) Notwithstanding anything contained in sub-section (1), where a contravention of any of the provisions of this Act, or of any rule, regulation, order made  or direct issued thereunder has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that contravention    and shall    be   liable to be proceeded against and punished accordingly.

Penalty for making false statements or omission to furnish material information

 

 

 

 

 

 

 

 

Penalty for offences in relation to furnishing of information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contravention by companies.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Competition advocacy.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grants by Central Government.

 

 

 

Constitution of Fund.

 

     Explanation-For the purposes of this section-

 

       (a) “company” means a body corporate and includes a firm or other association of individuals; and

 

      (b)  “director”, in relation to a firm, means a partner in the firm.

 

 

CHAPTER VIII

 

COMPETITION ADVOCACY

 

47. (1) In formulating a policy on competition, the Central Government may make a reference to the Commission for its opinion on possible effect of such policy on competition  and on receipt of such a reference, the Commission shall, within sixty days of many such reference  give its opinion to the Central Government, which may thereafter formulate the policy as it deems fit.

 

(2) The opinion given by the Commission under sub-section (1) shall not be binding upon the Central Government in formulating such policy.

 

(3) The Commission shall take suitable measures, as may be prescribed, for the promotion of competition advocacy, creating awareness and imparting training about competition issues.

 

CHAPTER VIII

 

FINANCE, ACCOUNTS AND AUDIT

 

48. The Central Government may, after due appropriation made by Parliament by law in this behalf, make to the Commission grants of such sums of money as the Government may think fit for being utilised for the purposes of this Act.

 

49. (1) There shall be constituted a fund to be called the “Competition Fund” and there shall be credited thereto-

 

      (a) all Government grants received by the Commission;

 

      (b) the monies received as costs from parties to proceedings before the Commission;

 

      (c) the fees received under this Act;