Module_8

MODULE 8

AUTHORITIES UNDER THE COMPETITION ACT, 2002

8.1 ESTABLISHMENT AND COMPOSITION OF THE COMPETITION
COMMISSION OF INDIA

Chapter III of the Competition Act 2002 describes in detail the establishment and
composition of the CCI. Section 7 to Section 15 defines how the CCI is established and who
the CCI is composed of.

8.1.1 Section 7: Establishment of Commission

The CCI is established under section 7 of the Competition Act 2002, it is established by the
Central Government by notification and appoint a Commission to be known as “Competition
Commission of India”. According to the act the CCI is a body corporate that means it has all
the qualities of a company including perpetual succession, common seal and the capacity to
sue and be sued. The head Office of the CCI shall at such place as the Central Government
deems fit. The Commission can then establish its offices all around India.

8.1.2 Section 8: Composition of Commission

The Composition of the CCI is defined more particularly in section 8 of the Act. The CCI
shall consist of a Chairperson and have least 2 other members and a maximum of 6 members.
The Chairperson and the other members should have intricate and profound knowledge
relating to the fields of international trade, economics, business, commerce, law, finance,
accountancy, management, industry, public affairs or competition matters, including
competition law and policy with an experience of minimum 15 years in the above stated
subjects and also as the Central Government thinks it to be fit. The Chairperson and other
members are considered to be the whole-time members of the Commission.

8.1.3 Section 9: Selection Committee for Chairperson and Members of Commission

Under section 9 the Chairperson and other members shall be appointed by the Central
Government from a list of names which are decided to be fit to become members of the CCI
by the Selection Committee. The Selection Committee consists of the Chief Justice of India
and its nominee who may suggest the Chairperson. While the other members may be

suggested by the Secretary in the Ministry of Corporate Affairs, the Secretary in the Ministry
of Law and Justice and two experts who have special knowledge and professional experience
in the fields of international trade, economics, business, commerce, law, finance,
accountancy, management, industry, public affairs or competition matters, including
competition law and policy. The term of the Selection Committee and the manner of selection
of the panel may be as prescribed.

8.1.4 Section 10: Term of office of Chairperson and other Members

The term of the office of the Chairperson and other members under section 10 is 5 years from
the date they enter the office and shall eligible for re-appointment. The Chairperson shall not
be appointed or re-appointed after the age of 67 years and no other member shall be
appointed or re-appointed after the age of 65 years.

If the Chairperson or any other member vacates his office according to the conditions
explained under section 11 then the Chairperson or any other member shall be appointed as
per the provisions mentioned in section 9 of the Act. The Chairperson and the other members
shall make and subscribe to an oath before taking the office as in such manner before the
Authority as may be prescribed. In the event that the Chairperson or any other member
vacates his office for the reasons of death or resignation or any other reason, the Senior most
Member shall act as the Chairperson of the Commission till the time the new Chairperson is
not appointed. In the event the Chairperson is not able to function because of illness or
otherwise, the Senior most Member shall act as the Chairperson of the Commission till the
time the Chairperson resumes his/her position.

8.1.5 Section 11: Resignation, removal and suspension of Chairperson and other
members

Under section 11 the Chairperson or other members shall vacate their office by writing a
letter to the Central Government to resign from the Office, provided the Central Government
approves of the resignation sooner by the Chairperson or the member. The Chairperson or the
other member shall hold the office for 3 months till the new appointed Member takes their
place in the Office or the term of their office gets over whichever is earliest.

The other grounds for the Chairperson and the other Members to vacate their Office are when
any of the members are termed to be insolvent, has engaged in paid employment during their
term of Office, convicted of an criminal offence which is a moral turpitude according to the

Central Government, has acquired any other financial position which may affect his functions
as a member of the Office, has abused his position, and become physically or mentally
incapable of being a member of the Office. The member shall only vacate in the cases of
acquiring financial positions or abusing his position when he is being deemed to be unfit by
the Supreme Court.

8.1.6 Section 12: Restriction on employment of Chairperson and other Members in
certain cases

Section 12 restricts members from taking up any office of employment unless it is a statutory
or government body for two years after vacating the office.

8.1.7 Section 13: Administrative powers of Chairperson

Section 13 grants the Chairperson the authority to have administrative powers and delegate
such powers to other Members as the Chairperson deems fit.

8.1.8 Section 14: Salary and allowances and other terms and conditions of service of
Chairperson and other Members

Section 14 describes the salaries of the Chairperson and the other members. The salaries of
the Chairperson and the members shall be such as may be prescribed and should be such that
it shall not cause any disadvantage to the Chairperson and the other Members after taking the
Office.

8.1.9 Section 15: Vacancy, etc. not to invalidate proceedings of Commission

The Proceedings shall not be invalid under Section 15 in the case there is any vacancy which
does not directly affect the merits of the case. The Proceedings shall continue without any
problem when there is a vacancy and such vacancy is being filled in the time being.

8.2 POWERS AND FUNCTIONS OF THE COMPETITION COMMISSION OF
INDIA

The Duties, Powers and Functions of the CCI are defined under Chapter IV of the
Competition Act 2002. Section 18 to 40 describe in detail the duties, powers and functions of
the CCI but under the 2007 Amendment Act Sections 23,24,25, 34,37 and 40 have been
omitted from the Act.

8.2.1 Section 18: Duties of Commission

The main duties of the Commission are to eliminate practices having adverse effects on the
competition, promote and sustain competition, protect the interests of consumers and ensure
freedom of trade carried on by other participants in India. The Commission may for
discharging its duties have to enter into memorandum of arrangement with the Central
Government.

8.2.2 Section 19: Inquiry into certain agreements and dominant position of enterprise

Section 19 has to be read with Sections 26, 27 and 28 because in matter related to dominant
position section 19, 26 27 and 28 provide in detail about how the Commission functions in
the matter relating to dominant position of an enterprise.

The Commission has the power to inquire into any alleged contravention of provisions
contained in sub-section 1 of section 3 or sub-section 1 of section 4 on its own or if it
receives any information with prescribed fees from any person, consumer, or their association
or trade association or a reference is made to it by the Central Government or a State
Government or a Statutory Authority.

The Commission while determining if the Agreement has an adverse effect on the
Competition in India has to take the following factors into consideration:-

▪ creation of barriers to new entrants in the market;
▪ driving existing competitors out of the market
▪ foreclosure of competition by hindering entry into the market
▪ accrual of benefits to consumers
▪ improvements in production or distribution of goods or provision of services; or
▪ promotion of technical, scientific and economic development by means of production or

distribution of goods or provision of services.

The Commission shall inquiring whether the enterprise is in a dominant position or not shall
take such factors into consideration as follows:-

▪ market share of the enterprise competitors
▪ size and resources of the enterprise
▪ size and importance of the competitors
▪ economic power of the enterprise including commercial advantages over

▪ vertical integration of the enterprises or sale or service network of such enterprises
▪ dependence of consumers on the enterprise
▪ 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
▪ 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
▪ countervailing buying power
▪ market structure and size of market
▪ social obligations and social costs
▪ relative advantage, by way of the contribution to the economic development, by the
enterprise enjoying a dominant position having or likely to have an appreciable adverse
effect on competition
▪ any other factor which the Commission may consider relevant for the inquiry

The Commission also has to take due care determining relevant geographic market and
also relevant product market as well.

8.2.3 Section 26: Procedure for inquiry under Section 19

On receipt of a reference from Central Government or State Government or any other
Statutory Authority, if the Commission feels that there is a prima facie case then it shall
direct the Director General to carry out further investigation in the case.

If the Commission does not feel any prima facie case then the commission shall pass an
Order as it deems fit to either continue investigation or close it and send a copy of the same to
the Central government or State Government or the Statutory Authority.

The Director General shall furnish his findings as per the period decided by the Commission.

The Commission shall forward a copy of the findings if any party is involved in the case for
that matter.

If the Director General recommends that there are no contraventions to the Act then the
commission can ask for suggestions from the Central Government and State Government to
be provided to the Director General.

After considering the circumstances with the Director General the Commission feels that
there is no substance in the case then it shall pass an order to close the case. In the event if the
Commission feels that the case should be investigated further then it may direct the Director
General to carry out further investigations as it may deem fit.

8.2.4 Section 27: Orders by commission into agreements or abuse of dominant positions.

The Commission can pass Orders regarding an enterprise enjoying dominant position.

The Commission can Order an enterprise to discontinue with the agreement or re-enter a new
agreement where the enterprise will not follow a dominant position.

The Commission can impose a penalty of not more than 10 percent of the average turnover
from the last three preceding financial years.

The Commission may direct an enterprise to modify the terms of an agreement till the
commission feels that the enterprise is not in a dominant position.

The Commission may pass any such Order as it deems fit.

8.2.5 Section 28: Division of enterprise enjoying dominant position

The Commission shall pass an order in writing to create a division in an enterprise so that the
enterprise shall not be able to enjoy dominant position.
The Commission shall take effective steps regarding the enterprise’s property, amending
Memorandum of Association or Articles of Association, winding up, or any other steps as the
Commission deems fit.

8.2.6 Section 20: Inquiry into combination by Commission

For better understanding of Section 20 it should be read together with Section 29, 30 and 31.

The Commission can inquire into any action of acquiring control referred in clause (a) of
section 5 or merger or amalgamation referred in clause (b) of section 5 or combination if it
thinks that this combination may cause adverse effects to the competition in India. It may
inquire on its own within one year of the combination. The Commission shall, on receipt of a
notice under sub section (2) of section 6, inquire that the combination mentioned in the
Notice can cause adverse effects to the Competition in India.

The Central Government in consultation with the Commission shall enhance or reduce 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 turnover, for the purposes of that section.

8.2.7 Section 29: Procedure for investigation of combination

If the Commission feels that there is a prima facie case relating to combination which may
adversely affect the competition in India then, the Commission shall issue a show cause
notice to the Parties and the Parties have thirty days to respond as to why the investigation is
not required to taken up by the Commission.

After the response of the Parties the Commission shall call for the report from the Director
General and the report shall be submitted within the time as the Commission deems fit.

If the Commission is still of the opinion that the combination shall have a prima facie adverse
effect on the competition in India then the Commission within 7 working days or the receipt
of Director’s report whichever is later shall direct the Parties to bring forth the details of the
Combination in front of the public in a manner as the Commission deems fit in 10 working
days.

The Commission may allow anybody from the public to file written objections regarding the
same in fifteen days in front of the Commission from the date at which the information
published.

The commission can call for other information as it deems fit in fifteen working days as the
period above stated in clause _ gets over.

The additional information shall be furnished by the Parties in the next fifteen days.

After receipt of all the information the Commission shall now take steps to investigate the
matter as per Section 31 of the Act.

8.2.8 Section 31: Orders of Commission on certain combinations

The Commission has the right to pass an Order to either stop the combination if it feels that it
can cause adverse effects to the Competition in India. The Commission can also make
suitable modifications if it thinks that such modification shall help in averting the adverse
effects to be caused by the combination.

The Parties cab either make the modifications in the specified time or they can provide
information about how the combination shall not create any effect as to the competition in
India. The Commission if after an expiry of two hundred and ten days does not respond to the
Parties then such combination shall be considered to be not effective to the competition in
India.

8.2.9 Section 32: Acts taking place outside India but having an effect on competition in
India

If any acts according to the provisions of this act are being committed by an enterprise who is
outside India but the actions of such an enterprise is causing adverse effects to the
competition in India then the Commission has the right to inquire about such an enterprise in
accordance with the Provisions of this Act.

8.2.10 Section 33: Interim Orders

The CCI can pass interim orders such as temporary injunction in the matters relating to
dominant position or combinations. The CCI has the authority under this Act to pass such
interim Orders as it may help in reducing the damage which may be caused in the long run
while the case is under investigation by the CCI.

Section 36: Power of Commission to regulate its procedures.

The Commission can regulate its own procedures as it has to follow the principles of natural
justice while discharging its functions.

The Commission shall have the same powers as vested in a Civil Court under the Civil
Procedure Code 1908 namely:

▪ summoning and enforcing the attendance of any person and examining him on oath;

▪ requiring the discovery and production of documents;

▪ receiving evidence on affidavit;

▪ issuing commissions for the examination of witnesses or documents;

▪ requisitioning, subject to the provisions of sections 123 and 124 of the Indian

Evidence Act, 1872 (1 of 1872), any public record or document or copy of such

record or document from any office.

The Commission can also call for experts in the relevant fields of the matter under inquiry in
which the commission shall need assistance.

The Commission can also Order any person to furnish any information to the Director
General.
8.2.11 Section 38: Rectification of Orders
The Commission can rectify its make amends to the Orders passed by the Commission or
where a party points out toward the mistake being omitted by the Commission.
8.2.12 Section 39: Execution of Orders of Commission imposing monetary Penalty
The Commission can recover the dues or penalty in such manner as may be prescribed from a
person who has failed to pay the dues or penalty.
In certain cases where the Commission feels that it cannot recover the penalty or dues from
the person in that event, the Commission can take necessary actions or help from the
necessary Authority to recover the dues.

8.3 DUTIES OF DIRECTOR GENERAL
Chapter V of the Competition Act defines in details the Duties of Director General
The Director General has to assist the Commission into investigating into any contravention
if directed by the Commission.
The Director General shall have all the powers as are conferred upon the Commission under
Section 36 (2) of the Competition Act 2002, that is the Director General has been vested over
the powers of a Civil Court under the Civil Procedure Code (5 of 1908).

8.4 POWERS AND FUNCTIONS OF APPELLATE TRIBUNAL UNDER THE
COMPETITION ACT, 2002
The National Company Law Appellate Tribunal (NCLAT) is the appellate authority in the
Competition Act 2002. Earlier the Competition Appellate Tribunal was the Appellate body
after the CCI. If the Central Government, State Government, Statutory Authority or any other
person feels that the Order passed by the Competition Commission of India is not in
accordance with the Act then they can file a case in the Appellate tribunal. Chapter VIII A

has been newly introduced the Competition Act 2002 which describes about the functions
and powers of the NCLAT in accordance with the Competition Act 2002.

The NCLAT can regulate its own procedures as it has to follow the principles of natural
justice while discharging its functions and also it is not bound by the procedures of Civil
Procedure Code 1908.

8.4.1 Section 53N: Awarding Compensation

The Appellate Tribunal can entertain cases relating to Compensation filed by any of the
Authorities or an enterprise or an individual against an enterprise for having committed an
action which may have caused damages to the Appellant.

The Appellate Tribunal after receiving the receipt of the case may inquire the allegations
mentioned in the suit and then award compensation which is determined to be realisable from
the enterprise for the loss or damages caused by it.

8.4.2 Section 53O: Procedures and Powers of the Appellate Tribunal

The NCLAT shall have the same powers as vested in a Civil Court under the Civil Procedure
Code 1908 namely:

▪ summoning and enforcing the attendance of any person and examining him on oath;

▪ requiring the discovery and production of documents;

▪ receiving evidence on affidavit;

▪ issuing commissions for the examination of witnesses or documents;

▪ requisitioning, subject to the provisions of sections 123 and 124 of the Indian

Evidence Act, 1872 (1 of 1872), any public record or document or copy of such

record or document from any office.
▪ reviewing its decisions;
▪ dismissing a representation for default or deciding it ex-parte;
▪ setting aside any order of dismissal of any representation for default
▪ or any order passed by it ex parte;
▪ any other matter which may be prescribed.

Every proceeding before the Appellate Tribunal shall be deemed to be judicial proceedings
within the meaning of sections 193 and 228, and for the purposes of section 196, of the
Indian Penal Code (45 of 1860) and the Appellate Tribunal shall be deemed to be a civil court

for the purposes of section 195 and Chapter XXVI of the Code or Criminal Procedure, 1973
(2 of 1974).

8.5 FROM COMPAT TO NCLAT1

As amendments were made in the Part XIV of Chapter VI of the Finance Act 2017, The
Competition Appellate Tribunal has ceased to exist and now the Appellate function has been
transferred to the National Company Law Appellate Tribunal (NCLAT). Accordingly, the
Competition Act 2002 and Companies Act 2013 have also been amended. Further Section
417A has been introduced which deals with the qualifications, terms and conditions of
service of the Chairperson and Members of the NCLAT.

Previously all the appeals against the CCI would lie with COMPAT whereas the NCLAT
dealt with inter alia, appeals arising out of the decisions of the matters of Companies Act
2013 and Insolvency and Bankruptcy Code 2016 relating to the National Company Law
Tribunal.

Now there will a transition phase where the matters in the NCLAT shall be heard afresh
which might bring the pressure on the NCLAT while already matter relating to CA 2013 And
IBC 2016 will be pending before the Hon’ble tribunal.

The other issues which would come up is regarding the procedural formalities which are
followed in NCLAT in accordance to the NCLAT Rules, 2016. The rules primarily pertain to
CA 2013 but in the transition phase it is necessary to amend the rules as the appeals from
COMPAT will come to the NCLAT. For example, the filing fees should be clarified
accordingly for an appeal filed in the NCLAT under the Competition Act.

Thinking about how the NCLAT shall handle the matters the Central Government should
make an effort to have more additional authority in the NCLAT for the smooth transition of
the COMPAT to NCLAT.

8.6 NATIONAL COMPANY LAW APPELLATE TRIBUNAL- COMPOSITION OF
THE TRIBUNAL

Under Section 410 of the CA 2013, the NCLAT shall come into existence when the Central
Government shall, by notification, constitute, with effect from such date as may be specified
therein, an Appellate Tribunal to be known as the National Company Law Appellate Tribunal

1 http://www.mondaq.com/india/x/599508/Antitrust+Competition/Compat+No+More+NCLAT+Marches+On.

consisting of a chairperson and such number of Judicial and Technical Members, not
exceeding eleven, as the Central Government may deem fit, to be appointed by it by
notification, for hearing appeals against, the orders passed by the National Company Law
Tribunal and any direction, decision or order referred to in section 53N of the Competition
Act, 2002 in accordance with the provisions of that Act.