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Competition Act ACT NO. 12 OF 2003

[13th January, 2003.]

An Act to provide, keeping in view of the economic development of the country, for the establishment of a Commission to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets, in India, and for matters connected therewith or incidental thereto.

BE it enacted by Parliament in the Fifty-third Year of the Republic of India as follows:-

CHAPTER I
PRELIMINARY
1.Short title, extent and commencement-
1)This Act may be called the Competition Act, 2002.
2)It extends to the whole of India except the State of Jammu and Kashmir.
3)It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint:
Provided that different dates maybe appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.
2.Definitions.-In this Act, unless the context otherwise requires –
a) “acquisition” means, directly or indirectly, acquiring or agreeing to acquire-
(i)shares, voting rights or assets of any enterprise;or
(ii)control over management or control over assets of any enterprise;
b) “agreement” includes any arrangement or understanding or action in concert,-
(i)whether or not, such arrangement, understanding or action is formal or in writing;or
(ii)whether or not such arrangement, understanding or action is intended to be enforceable by legal proceedings;
c) “cartel” includes an association of producers,sellers, distributors,traders or service providers who, by agreement amongst themselves,limit,control or attempt to control the production, distribution,sale or price of, or, trade in goods or provision of services;
d) “Chairperson” means the Chairperson of the Commission appointed under sub-section (1) of section 8;
e) “Commission” means the Competition Commission of India established under sub-section (1) of section 7;
f) “consumer” means any person who-
(i)buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buyssuch goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, whether such purchase of goods is for resale or for any commercial purpose or for personal use;
(ii)hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first-mentioned person whether such hiring or availing of services i for any commercial purpose or for personal use;
g)”Director General” means the Director General appointed under sub-section(1) of section 16 and includes any Additional, Joint, Deputy or Assistant Directors General appointed under that section;
h) “enterprise” means a person or a department of the Government, who or which is, or has been, engaged in any activity, relating to the production, storage, supply, distribution, acquisition or control of articles or goods, or the provision of services of any kind, or in investment,or in the business of acquiring, holding, underwriting or dealing with shares, debentures or other securities of any other body corporate,either directly or through one or more of its units or is located at the same place where the enterprise is located or at a different place or at different places, but doesnot include any activity of the Government relatable to the sovereign functions of the Government divisionsor subsidiaries, w ether such unit or division or subsidiary nt including all activities carried on by the departments of the Central Government dealing with atomic energy,currency, defence and space.
Explanation.-For the purposes of this clause,-
(a)”activity” includes profession or occupation;
(b) “article” includes a new article and “service” includes a new service;
(c)”unit” or “division”, in relation to an enterprise, includes-
(i)a plant or factory established for the production,storage, supply, distribution, acquisition or control of any article or goods;
(ii)any branch or office established for the provision of any service;
i)”goods” means goods as defined in the Sale of Goods Act, 1930(8 of 1930) and includes-
(A)products manufactured, processed or mined;
(B)debentures, stocks and shares after allotment;
(C)in relation to goods supplied, distributed or controlled in India, goods imported into India;
j) “Member”means a Member of the Commission appointed under sub-section (1) of section 8 and includes the Chairperson;
k) “notification“means a notification published in the Official Gazette;
l)”person” includes-
(i)an individual;
(ii)a Hindu undivided family;
(iii)a company;
(iv)a firm;
(v)anassociationofpersons or a bodyofindividuals,whether incorporated or not, in India or outside India;
(vi)anycorporation established by or under any Central,Stateor ProvincialActor a Government company as defined in section 617of the Companies Act, 1956 (1 of 1956);
(vii) anybodycorporateincorporated by or under thelawsofa country outside India;
(viii) a co-operative society registered under any lawrelatingto co-operative societies;
(ix)a local authority;
(x)every artificial juridical person, not falling within any ofthe preceding sub-clauses;
m)”practice”includes any practice relating to the carrying onof any trade by a person or an enterprise;
n)”prescribed” means prescribed by rules made under this Act;
o) “price”, inrelationtothesale ofanygoodsortothe performanceofany services, includes every valuableconsideration, whetherdirectorindirect,ordeferred,andincludes any considerationwhich in effect relates to the sale of any goods orto theperformanceof any services although ostensibly relating toany other matter or thing;
p)”publicfinancialinstitution” meansapublicfinancial institutionspecified under section 4A of the Companies Act, 1956 (1 of1956)andincludes a State Financial, IndustrialorInvestment Corporation;
q) “regulations” means the regulations made by the Commissionunder section 64;
r)”relevant market” means the market which may be determined by the Commissionwithreferencetothe relevant productmarketorthe relevant geographic market or with reference to both the markets;
s)”relevant geographic market” means a market comprising the area in whichthe conditions of competition for supply of goods orprovision ofservices or demand of goods or services are distinctlyhomogenous andcanbedistinguishedfromtheconditionsprevailingintheneighbouring areas;
t)”relevantproductmarket” means a market comprisingallthose productsorserviceswhichareregardedasinterchangeableor substitutablebythe consumer, by reason of characteristicsofthe products or services, their prices and intended use;
u)”service” means service of any description which is made available topotential usersandincludestheprovisionofservicesin connectionwith business of any industrial or commercial matters such asbanking,communication,education, financing,insurance,chit funds,realestate,transport,storage,materialtreatment,processing,supply of electrical or other energy, boarding,lodging, entertainment,amusement, construction, repair, conveying of newsor information and advertising;
v) “shares” means shares in the share capital of a companycarrying voting rights and includes-
(i)anysecuritywhich entitles the holder to receiveshareswith voting rights;
(ii)stock exceptwhere a distinction between stockandshareis expressed or implied;
w) “statutoryauthority” means any authority,board,corporation, council,institute,university or anyotherbody corporate, establishedby or under any Central, State or Provincial Act forthe purposesof regulating production or supply of goods or provisionof anyservices or markets therefore or any matter connected therewith or incidental thereto;
x)”trade”meansanytrade,business,industry,professionor occupationrelating to the production, supply, distribution,storage or control of goods and includes the provision of any services;
y)”turnover” includes value of sale of goods or services;
z)words and expressions used but not defined in this Act and defined intheCompanies Act, 1956 (1 of 1956) shall have the samemeanings respectively assigned to them in that Act.
CHAPTER II
PROHIBITION OF CERTAIN AGREEMENTS, ABUSE OF DOMINANT POSITION AND REGULATION OF COMBINATIONS
Prohibition of agreements
3.Anti-competitive agreements –
1)No enterprise or associationof enterprisesor person or association of persons shall enter intoany agreementinrespect of production, supply,distribution,storage, acquisitionor control of goods or provision of services, which causes orislikely to cause an appreciable adverse effectoncompetition within India.
2)Any agreemententered into in contravention oftheprovisions contained in sub-section (1) shall be void.
3)Any agreement entered into between enterprises or associations of enterprisesorpersonsor associations of personsorbetweenany personandenterprise or practice carried on, or decision takenby, anyassociationof enterprises or association of per sons,including cartels,engaged in identical or similar trade of goods orprovision of services, which
(a)directly or indirectly determines purchase or sale prices;
(b)limitsorcontrols production, supply, markets, technical development, investment or provision of services;
(c)shares the market or source of production or provision of services byway of allocation of geographical area of market, or type of goods or services, or number of customers in the market or any other similar way;
(d)directlyorindirectlyresults inbidriggingorcollusive bidding,shallbe presumed to have an appreciable adverse effecton competition:
Provided that nothing contained in this sub-section shall apply to any agreemententeredintoby way of joint ventures ifsuchagreement increasesefficiencyin production, supply,distribution,storage, acquisitionorcontrolofgoodsorprovisionofservices.
Explanation.-For the purposes of this sub-section, “bid rigging” means anyagreement,betweenenterprisesorpersonsreferredto in sub-section(3) engaged in identical or similar production or trading of goods or provision of services, which has the effect of eliminating or reducingcompetition for bids or adversely affectingor manipulating the process for bidding.
4)Any agreement amongst enterprises or persons at differentstages orlevels of the production chain in different markets, in respect of production,supply, distribution, storage, sale or price of, or trade in goods or provision of services, including-
(a)tie-in arrangement;
(b)exclusive supply agreement;
(c)exclusive distribution agreement;
(d)refusal to deal;
(e)resale price maintenance,
shallbeanagreement in contravention of sub-section (1)ifsuch agreementcauses or is likely to cause an appreciable adverseeffect on competition in India.
Explanation.- For the purposes of this sub-section,-
(a) “tie-in arrangement” includes any agreement requiring a purchaser ofgoods,asa condition of such purchase, to purchasesomeother goods;
(b) “exclusive supply agreement” includes any agreement restricting in anymanner the purchaser in the course of his trade from acquiring or otherwisedealing in any goods other than those of the seller orany other person;
(c)”exclusivedistributionagreement” includesanyagreementto limit,restrictorwithhold the output or supply ofanygoodsor allocate any area or market for the disposal or sale of the goods;
(d) “refusalto deal” includes any agreement which restricts, oris likely to restrict, by any method the persons or classes of persons to whom goods are sold or from whom goods are bought;
(e)”resale price maintenance” includes any agreement to sell goods on condition that the prices to be charged on the resale by the purchaser shallbetheprices stipulated by the seller unless itisclearly stated that prices lower than those prices may be charged.
5)Nothing contained in this section shall restrict-
(i)theright of any person to restrain any infringement of,orto imposereasonable conditions, as may be necessary for protectingany of his rights which have been or may be conferred upon him under-
(a)the Copyright Act, 1957 (14 of 1957);
(b)the Patents Act, 1970 (39 of 1970);
(c)theTradeand Merchandise Marks Act, 1958 (43 of 1958)orthe Trade Marks Act, 1999 (47 of 1999);
(d)the Geographical Indications of Goods (Registration and Protection) Act, 1999 (48 of 1999);
(e)the Designs Act, 2000 (16 of 2000);
(f)the Semi-conductor Integrated Circuits Layout-Design Act, 2000 (37 of 2000);
(ii)the right of any person to export goods from India to the extent to which the agreement relates exclusively to the production, supply, distributionorcontrol of goods or provision of servicesforsuch export.Prohibition of abuse of dominant position
4.Abuseofdominant position –
1)No enterprise shallabuseits dominant position.
2)Thereshall be an abuse of dominant positionundersub-section (1), if an enterprise,-
(a)directly or indirectly, imposes unfair or discriminatory-
(i)condition in purchase or sale of goods or service;or
(ii)price in purchase or sale (including predatory price) of goods or service.
Explanation.-Forthepurposesofthisclause,theunfairor discriminatoryconditioninpurchase or sale ofgoodsorservice referredtoin sub-clause (i) and unfair or discriminatory pricein purchaseorsaleof goods (including predatory price)orservice referredto in sub-clause (ii) shall not include suchdiscriminatory condition or price which may be adopted to meet the competition;or
(b)limits or restricts-
(i)production of goods or provision of services or markettherefor; or
(ii)technical or scientific development relating to goods or services to the prejudice of consumers;or
(c)indulgesin practice or practices resulting in denial ofmarket access;or
(d)makesconclusionof contracts subject toacceptancebyother partiesofsupplementaryobligationswhich,bytheirnatureor accordingto commercial usage, have no connection with the subject of such contracts; or
(e)uses its dominant position in one relevant market to enterinto, or protect, other relevant market.
Explanation.-For the purposes of this section, the expression-
(a) “dominantposition” means a position of strength, enjoyed byan enterprise, in the relevant market, in India, which enables it to-
(i)operateindependentlyof competitive forces prevailinginthe relevant market;or
(ii)affect its competitors or consumers or the relevant market in its favour;
(b) “predatoryprice“meansthesale ofgoodsorprovisionof services,at a price which is below the cost, as may be determined by regulations, of production of the goods or provision of services, with a view to reduce competition or eliminate the competitors.
Regulation of combinations
5.Combination –
The acquisition of one or more enterprises by one or morepersonsormerger or amalgamation of enterprises shall be a combination of such enterprises and persons or enterprises, if-
a)any acquisition where-
(i)thepartiestothe acquisition, beingtheacquirerandthe enterprise,whose control, shares, voting rights or assets havebeen acquired or are being acquired jointly have,-
(A)either, in India, the assets of the value of more than rupees one thousandcroresor turnover more than rupees three thousand crores; or
(B)in India or outside India, in aggregate, the assets of thevalue ofmorethan five hundred million US dollars or turnovermorethan fifteen hundred million US dollars;or
(ii)the group, to which the enterprise whose control, shares, assets orvotingrightshave been acquired or arebeingacquired,would belong after the acquisition, jointly have or would jointly have,-
(A)either in India, the assets of the value of more than rupees four thousandcrores or turnover more than rupees twelve thousandcrores; or
(B)in India or outside India, in aggregate, the assets of thevalue ofmore than two billion US dollars or turnover more than six billion US dollars;or
b)acquiringofcontrol by a person over an enterprisewhensuch personhas already direct or indirect control over another enterprise engagedinproduction, distribution or trading of a similar or identical orsubstitutablegoods or provision of a similar or identical or substitutable service, if-
(i)the enterprise over which control has been acquired along with the enterpriseoverwhichthe acquirer already has directorindirect control jointly have,-
(A)either in India, the assets of the value of more than rupeesone thousandcroresor turnover more than rupees three thousandcrores; or
(B)in India or outside India, in aggregate, the assets of thevalue ofmorethan five hundred million US dollars or turnovermorethan fifteen hundred million US dollars;or
(ii)the group, to which enterprise whose control has beenacquired, or is being acquired, would belong after the acquisition, jointly have or would jointly have,-
(A)either in India, the assets of the value of more than rupees four thousandcrores or turnover more than rupees twelve thousandcrores; or
(B)in India or outside India, in aggregate, the assets of thevalue ofmore than two billion US dollars or turnover more than six billion US dollars;or
c)any merger or amalgamation in which-
(i)the enterprise remaining after merger or the enterprise created as a result of the amalgamation, as the case may be, have,-
(A)either in India, the assets of the value of more than rupeesone thousandcroresor turnover more than rupees three thousandcrores; or
(B)in India or outside India, in aggregate, the assets of thevalue ofmorethan five hundred million US dollars or turnovermorethan fifteen hundred million US dollars;or
(ii)the group, to which the enterprise remaining after the merger or theenterprise created as a result of the amalgamation, wouldbelong afterthemergeror the amalgamation, as the case may be,haveor would have,-
(A)either in India, the assets of the value of more than rupees four thousand crores or turnover more than rupees twelve thousandcrores; or
(B)inIndia or outside India, the assets of the value of morethan two billion US dollars or turnover more than six billion US dollars.
Explanation.-For the purposes of this section,-
(a)”control” includes controlling the affairs or management by-
(i)oneor more enterprises, either jointly or singly, overanother enterprise or group;
(ii)one or more groups, either jointly or singly, over another group or enterprise;
(b)”group”means twoormoreenterpriseswhich,directlyor indirectly, are in a position to –
(i)exercise twenty-six per cent.or more of the voting rights in the other enterprise;or
(ii)appoint more than fifty per cent.of the members of the board of directors in the other enterprise;or
(iii)control the management or affairs of the other enterprise;
(c)the value of assets shall be determined by taking the bookvalue oftheassetsasshown, in the audited booksofaccountofthe enterprise,in the financial year immediately preceding the financial yearinwhichthe date of proposed merger falls, as educedbyany depreciation,and the value of assets shall include the brandvalue, valueofgoodwill,or value of copyright,patent,permitteduse, collectivemark, registered proprietor, registered trade mark, registereduser,homonymous geographical in indication,geographical indications,designorlayout-design orsimilarothercommercial rights, if any, referred to in sub-section (5) of section 3.
6.Regulation of combinations –
1)No person orenterpriseshall enterintoacombinationwhich causes or islikelytocausean appreciableadverse effect on competition within the relevantmarket in India and such a combination shall be void.
2)Subject to the provisions contained in sub-section (1), any person or enterprise, who or which proposes to enter into a combination, may, athisor its option, give notice to the Commission, in the formas may be specified, and the fee which may be d termined, by regulations, disclosingthe details of the proposed combination, within seven days of-
(a)approvalofthe proposal relating tomergeroramalgamation, referredto in clause (c) of section 5, by the board of directors of theenterprisesconcerned with such merger or amalgamation,asthe case may be;
(b)executionofany agreement or otherdocumentforacquisition referredtoinclause(a) of section 5oracquiringofcontrol referred to in clause (b) of that section.
3)The Commission shall, after receipt of notice under sub-section (2), deal with such notice in accordance with the provisions contained in sections 29, 30 and 31.
4)The provisions of thissectionshallnotapply to share subscriptionorfinancing facility or any acquisition, by a public financial institution, foreign institutional investor, bank or venture capitalfund, pursuanttoany covenant of a loan agreement or investment agreement.
5)The public financial institution, foreign institutional investor, bankor venture capital fund, referred to in sub-section (4),shall, withinseven days from the date of the acquisition, file, in the form asmay be specified by regulations, with the commission the details of theacquisitionincluding the details of control, thecircumstances forexercise of such control and the consequences of defaultarising outofsuch loan agreement or investment agreement, as the casemay be.
Explanation.-For the purposes of this section, the expression-
(a)”foreign institutional investor” has the same meaning as assigned toitinclause(a) of the Explanation tosection115ADofthe Income-tax Act, 1961 (43 of 1961);
(b)”venture capital fund” has the same meaning as assigned to itin clause(b)of the Explanation to clause (23FB) of section 10 ofthe Income-tax Act, 1961 (43 of 1961).
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