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Two types of competition:

 Unfettered competition
 Regulated competition

Objectives of competition act:

 Promotion of competition prejudice to public interest in any part of india


 Protection of customers
 Prohibition of anti competitive trade practices

Scope of competition act

 Prohibition of anti competitive agreements (control of quality, quantity)


 Prohibition of abuse of dominance (dominance)
 Regulation of competition (mergers)

Competition advocacy; Steps taken to prevent ; it’s a govt task

Dominance is not bad until its objective is to exploit people, mergers allowed to a certain extent

Agreement sometimes may be an arrangement (which may be tacit)

Collection of evidence for ACAs and abuse of dominance is tough where as for mergers it is relatively easy.

CCI = competition commission of india

ANTI COMPETITIVE AGREEMENTS (ACA):

Essentials:

1. There must be agreement which need not be in writing


2. Object of the agreement may be
 to bar entry into the field
 foreclosure of competition
 adverse impact on development of the industry
3. Agreement must lead to adverse impact on public interest in any part of india

Exception

Any agreements upto 3000 crore and revenue upto 5% in product or geographical area

Forms of ACA

Horizontal ACA
between the business men in the same level and line, regarded as per se agreements

1. Bid rigging (tenders/auctions) collusive bidding (bidders form a front, regulation in bidding) 2. Rotational bidding
(members in a grp make an assessment of market, equal chance to everyone, new persons not allowed)
Squeezing bids (prices in a bid pushed to very high levels) 3. Identical bids (price quotation in new markets) 4.
Cover bids (to ward off the possibility of losing bids, a plan B,sharing of the spoils)
2. Price fixation: retail and wholesale markets, price pegging,
3. quota fixation: export markets
4. market allocation: bhais, geographical areas, no interference agreements

Objective of ACAs : Limiting the production or investment: artificial scarcities are created
Cartels: worst form of anti competition, hardcore, operate under garb or façade, encourage membership and
uniformity of policies, pressure lobbies, pressurize the earning members, bullying.

e.g., FICCI, all the chambers in india, autos in delhi, truck cartels

Exception: Joint Ventures are not ACA and are temporary in nature

Q: what are per-se agreements? Give 3 examples

Vertical ACA: not per-se anti competitive, nature of such ACA would be established legally by rule of reason, (not
presumed but proved), e.g., manufacturer, distributor, wholesaler & retailer

1. Tie up arrangement: operators for top to bottom take a united stand, contraries shall be excluded, exclusive
distributorship, RRTA vs TATA motors, vertical tieups are allowed if the objective is to improve consumer
welfare
2. Retail price maintenance (not to sell below the recommended price) fidelity/loyalty is expected

Exception: IPRs, agreement for the purpose of exports

ABUSE OF DOMINANCE:

Dominance in business activity is a situation where in an enterprise or a group of enterprises attain dominance in
either a geographical area or a particular product market

Objective of dominance: few points

Dominance must be abused in the sense of

 Distortion of competition
 Restriction of output or technical development

Method of dominance:

1. By predatory pricing (price level is established in way that competitors are driven out) skimming prices,
penetration pricing (only if detrimental to customer; initially the prices are low, later they are increased after
monopoly is established)
2. Full line forcing (customers/dealers are compelled to buy whole line of products)
3. Unjustified rebates: discriminatory pricing based on the profile of the dealer, based on quantity
4. Combination: Objective of combination is to reduce the no of players, to increase the dominance, to achieve
the concentration of economic power & to raise the prices
Types of combinations:
 Acquisitions and takeovers (e.g., grp buying a grp; entity acquired vanishes)
 Mergers and amalgamations (two units form a new unit, or only one unit remains)
Combinations beyond a particular limit of turnover or assets shall be examined by the CCI (in india or
abroad)

India (rupees) crores Outside india (dollar) millions


Assets turnovers Assets turnovers
Enterprise acquiring 1000 3000 500 1500
another
One grp acquiring other 4000 12000 2000 6000

More than the limits permission of CCI and SEBI (in all cases)

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