written by | January 24, 2023

Know Everything About The Competition Commission of India (CCI)

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The Competition Commission of India (CCI) was formed under the Competition Act 2002. The Act prohibits entering into anti-competitive agreements, prevents the abuse of dominant position in the market, and regulates combinations such as mergers, acquisitions, takeovers, etc., which may harm competition in the Indian market. 

Due to the liberalization of the Indian economy in 1991, the government felt a need to promote competition and encourage private enterprises in India. The setup of the Competition Commission of India was considered necessary to regulate competition in the Indian markets. 

The Competition Act 2002 replaced the Monopolies and Restrictive Trade Practices Act 1969 (MRTP Act). 

Did You Know? The Vajpayee Government was the one that introduced and conceived the idea of the Competition Commission in the form of the Competition Act, of 2002.

Formation Of Competition Commission of India (CCI)

 The Competition Act 2002 was passed in the year 2002. The President gave his assent in January 2003. It was subsequently amended by the Competition (Amendment) Act of 2007. The amendment led to the introduction and establishment of the Competition Commission of India and the Competition Appellate Tribunal. 

The Central Government has set up the Competition Appellate Tribunal (COMPAT) to hear and dispose of appeals against the direction or order originally issued by the CCI. The government replaced the Competition Appellate Tribunal (COMPAT) with the National Company Law Appellate Tribunal (NCLAT) in 2017.

Objectives of the Competition Commission of India (CCI)

The Competition Commission of India was established in March 2009 by the Government of India under the Competition Act, 2002 to administer, implement and enforce the Act.

The following are the objectives of the Competition Commission of India:

  • Eliminate practices having adverse effects on the competition in Indian markets
  • Promote and sustain healthy and positive competition
  • Protect consumers’ interests
  • Ensuring that vendors enjoy the freedom of trade in Indian markets
  • Establishing a competitive environment through the following actions – 
  • Proactive engagement with all stakeholders, such as consumers, industries, government, and others.
  • Functioning as an organization by being knowledge-intensive and competent
  • Enforcement is to be done by considering professionalism, transparency, resolve, and wisdom

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Functions of the Competition Commission of India (CCI)

The Competition Act 2002 consists of a preamble that lays down the functions or roles to be performed by the Competition Commission of India (CCI), which are as follows:

  • To ensure that the benefit and welfare of the customers are taken care of 
  • To bring about accelerated and inclusive economic growth, ensuring fair and healthy competition in the Indian markets.
  • To ensure the efficient utilisation of the nation’s resources. 
  • To ensure the advocation of competition.
  • Act as the antitrust ombudsman for small organisations.
  • To scrutinise the composition and plans of any foreign company which enters the Indian market through mergers or acquisitions and make sure that it abides by the Competition Act of 2002
  • To interact and cooperate with other regulatory bodies, thereby ensuring that regulatory laws brought about by these bodies are following competition laws.

Challenges: Competition Commission of India (CCI)

The Competition Commission of India (CCI) faced many backlashes and challenges to function efficiently and implement competition laws which are enlisted as follows: 

  • Constant and continuous changes in the method and ways of doing business in dynamic environments and the evolution of antitrust issues.
  • Emerging business models depend on the business's digital and electronic functioning, but competition laws are still backdated.
  • There is a need to include parameters such as data accessibility, digitalization, and network effects in the competition and antitrust laws to increase their relevance in this digital economy.
  • There is a need to increase the number of benches of CCI for the speedy disposal of competition cases. 

Composition: Competition Commission of India (CCI)

The appointment of members of the Competition Commission of India (CCI) is made by the Central Government. 

The following are the details regarding the composition of the Competition Commission of India (CCI):

  • The CCI shall consist of one chairperson and a minimum of two other members. 
  • The maximum limit on the number of members, excluding the chairperson, is six
  • Chairperson and the other members shall be full-time members of CCI.
  • Eligibility to become a member of CCI is as follows – 
  • Should be a person of ability and integrity
  • Has in-depth and specialized knowledge and professional experience of at least fifteen years in areas such as international trade, economics, business, commerce, law, finance, accountancy, management, industry, public affairs, administration or in any other area as specified by the government.

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Need for the Competition Commission of India (CCI)

The following are the three main benefits the Competition Act serves in society – 

  • Free enterprise concept

The Competition Act ensures that the market and economic system are driven solely by demand and supply. Private businesses and consumers control the market without the intervention of the government. Hence, the government does not have a say in prices and competition in the market.

  • To avoid market distortions

There is always the risk that some people may abuse their dominant positions or resort to anti-competitive activities to disrupt the market. The Competition Commission of India, supported by the Competition Act, shall ensure that the market is free from such distortions. 

  • Promoting domestic industries

The Competition Act shall ensure that domestic industries are not suppressed in the wake of large-scale globalization. The Competition Commission of India shall ensure that domestic industries flourish and grow healthily with international competition.

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Powers of the Competition Commission of India (CCI)

To protect the competition in Indian markets, the CCI has certain powers, making it the chief regulator of competition in India. 

Here are the Powers of the Competition Commission of India:

  • CCI has the authority to inquire into agreements made by enterprises to check for abuse of dominant power
  • CCI can make an inquiry on its motion or based on reports given by any person to CCI.
  • CCI has the authority to impose punishments and fines on enterprises committing defaults or violating the provisions of the Competition Act, 2002.
  • CCI has the right to make regulations that align with the Competition Act. The Act itself provides CCI with this power. 

Conclusion

The Competition Commission of India (CCI) was launched in March 2009 by the Government of India under the Competition Act, 2002 for the administration, implementation, and enforcement of the Act. The Act calls for the establishment of CCI, which shall be the chief competition regulator in India. It is a statutory body under the Ministry of Corporate Affairs (MCA). CCI aims to promote competition and prevent activities that harm the competition in Indian markets.

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FAQs

Q: What is meant by an acquisition?

Ans:

Section 2 of the Competition Act states that acquisition includes the direct or indirect acquiring or agreeing to acquire shares, voting rights, or control over the management of assets of another enterprise.

Q: What is the penalty amount for anti-competitive agreements?

Ans:

The Competition Commission of India (CCI) has the authority to direct any enterprise or person to modify, discontinue, and not re-enter into anti-competitive agreements. CCI can impose penalties on parties up to 10% of the average turnover for the last three years of such enterprise or person.

Q: What is CCI approval?

Ans:

The Competition Commission of India (CCI) regulates the formation of mergers, amalgamations, and acquisitions in India. CCI has the authority and responsibility to review these combinations and assess whether they are anti-competitive or shall negatively affect the competition in Indian markets.

Q: What are anti-competitive agreements?

Ans:

Anti-competitive agreements are agreements among competing enterprises that are entered into to prevent, restrict, or distort competition in the Indian markets.

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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.