11/22/22, 8:21 AM Competition Act 2002: History, Definition and Salient Features

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Competition Act, 2002

The Competition Act, 2002 is a law that governs commercial competition in India. It replaced the erstwhile
Monopolies and Restrictive Trade Practices Act, 1969.

The Competition Act aims to prevent activities that have an adverse effect on competition in India.

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History of the Competition Act, 2002

The Monopolies Inquiry Commission was established in April 1964 under Justice KC Das Gupta, a Supreme Court
(https://byjus.com/free-ias-prep/supreme-court-of-india/) judge. The objective of the commissions was to inquire
about the effect and extent of monopolistic and restrictive trade practices in important sectors of the Indian
economy.

The Monopolies and Restrictive Practices Act of 1969 was enacted to limit the concentration of wealth in a few
hands and limit monopolistic practices, but it was too archaic in its definitions of what is a ‘monopolistic practice’.
Thus, it was decided that a new law governing competition in India was required.

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prep/the-lok-sabha/) on 6 August 2001.

Competition Act: UPSC Notes:- Download PDF Here

Definitions under the Competition Act

The following are the definitions cited under the Competition Act

1. Acquisition: Acquisition is defined as the direct or indirect agreement to acquire shares, voting rights or control
of assets over any enterprise.

2. Cartel: A cartel is defined as an association of producers, sellers who limit control distribution, sale or
promotions on goods through an arrangement previously made.

3. Position: A dominant position means a position of power held by an enterprise in the related market. It enables
the enterprise to function freely and influence the market to its directions.

4. Predatory pricing: Predatory pricing is where the price of goods and services is reduced to well below the cost
of production in order to eliminate competition.

5. Rule of reason: The interpretation of activity on the basis of business justification, market impact on competition
and on the consumer.

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Salient Features
The following are the features of the Competition Act:

1. Anti Agreements: Any individual or enterprises shall not deal in production supply or distribution that may
cause a negative impact regarding competition in India. Any existence of such agreements is considered illegal.

2. Abuse of dominant position: In the event, an enterprise or an associated individual, it is found to indulge in
practices that are unfair or discriminatory in nature shall be considered an abuse of dominant position. If a party is
found to be in abuse of its position, then they will be subjected to an investigation from the concerned authorities.

3. Combinations: As per the act a combination is defined as terms which lead to acquisitions or mergers. But
should such combinations cross the limits as put forth by the Act, then the parties involved would be under the
scrutiny of the Competition Commission of India.

4. Competition Commission of India: The Competition Commission of India (https://byjus.com/free-ias-prep/the-

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11/22/22, 8:21 AM Competition Act 2002: History, Definition and Salient Features

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Frequently Asked Questions about Competition Act 2002

What are the main features of Competition Act 2002?
The Act mainly covers these aspects;

Prohibition of anti competitive agreements.

Prohibition of abuse of dominance.
Regulation of combination (acquisition, mergers, and amalgamation of certain size)
Establishment of the competition commission of India.
Power and functions of the competition commission of India.

What is the main purpose behind the Competition Act 2002?

It is a tool to implement and enforce competition policy and to prevent and punish anti-competitive business
practices by firms and unnecessary Government interference in the market. Competition laws is equally applicable
on written as well as oral agreement, arrangements between the enterprises or persons.

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11/22/22, 8:21 AM Competition Act 2002: History, Definition and Salient Features

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