CCI Cometh

With its operationalisation, Competition Commission of India (CCI) is ready to usher in a new era of Competition in the markets of India. Empowered with a wider jurisdiction and powers to impose severe penalties, it can and hopefully it will change the way business is done by Corporate India.

Competition law, also known as Anti-trust law in United States is that branch of law which regulates ‘competition in market’. Competition has been defined beautifully by the Black's Law Dictionary as 'an effort or action of two or more commercial interests to obtain the same business from third parties'. It is considered desirable because it forces the enterprises to become more efficient and provide better quality and wider range of products and services at the lowest price. It ensures consumer welfare and induces economic growth.

Competition Act, 2002 by establishing CCI seeks to protect competition in the market by prohibiting anti-competitive agreements and abuse of dominance. CCI would also regulate combinations, through mergers, acquisitions or amalgamations.   Any combination above a certain threshold limit, specified in Competition Act, 2002, would require the approval of CCI. However as of now only Section 3 and 4 of the Competition Act, which deal with Anti-competitive agreements and abuse of dominance have been notified. Section 5 and 6 which deal with Combinations and their regulation is yet to be notified. Hence, as of now, enterprises do not require the approval of CCI before getting into a combination.

CCI would be replacing the existing MRTP Commission which was functioning under MRTP Act. MRTP Commission was tasked to ensure that the operation of economic system does not result in the concentration of economic power to the common detriment and to prohibit monopolistic and restrictive trade practices which are prejudicial to public interest. The reasons for the failure of MRTP Commission are manifold. Suffice to say that the law makers preferred to bring in a new law instead of simply amending the MRTP Act.

Needless to say that next couple of years are going to be exciting for the students of Competition law. It will take at least two years for this law to stabilize.   Every case would develop new concepts and principles and lay down the foundations of the competition regime in India. Possible conflicts with other sectoral regulators caused by overlap of jurisdiction would raise and answer some very interesting legal issues.

A note of warning for managers and entrepreneur in India. CCI is not MRTP Commission. It has much wider jurisdiction and it can levy very very serious penalties. Hence, unless you want to become a precedent in the yet to be written history of Competition law in India, it may be advisable for the managers and entrepreneurs to reassess their strategies and practices to ensure compliance with the new law. It’s a new world friends and the Corporate India will have to adjust to the new realties.