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Unit 5: The Competition Act, 2002

Trade: It means any trade, business, industry, profession or occupation relating to the production, Notes
supply, distribution, storage or control of goods and includes the provision of any services.
Turnover: It includes value of sale of goods or services.

5.2 Prohibition of Anti-competitive Agreements

Sec.3 provides for prohibition of entering into anti-competitive agreements. Thus no enterprise
or association of enterprises or person or association of persons shall enter into any agreement in
respect of production, supply, distribution, storage, acquisition or control of goods or provision
of services, which causes or is likely to cause an appreciable adverse effect on competition within
India. Any agreement entered into in contravention of this provision shall be void.
Activities having adverse effect on competition. Further, this section also specifi es certain
activities which shall be presumed to have an appreciable adverse effect on competition. Thus
any (i) agreement entered into between enterprises or associations of enterprises or persons
or associations of persons or between any person and enterprise or (ii) practice carried on, or
decision taken by any association of enterprises or association of persons, including cartels,
engaged in identical or similar trade of goods or provision of services shall be presumed to have
an appreciable adverse effect on competition of it: (a) directly or indirectly determines purchase or
sale prices; (b) limits or controls production, supply, markets, technical development, investment
or provision of services; (c) shares the market or source of production or provision of services
by way of allocation of geographical area of market, or type of goods and services, or number of
customers in the market or any other similar way; (d) directly or indirectly results in bid rigging
or collusive bidding.

Factors which cause adverse effect on competition. Sec.19 enumerates the factors which are to be
kept in mind by the Commission while determining whether an agreement has an appreciable
adverse effect on competition or not under s.3.

Tasks Do the following practices affect competition adversely:

1. A manufacturer of pressure cookers requires the purchasers, as a condition of such
purchase, to purchase containers separators along with the pressure cookers.

2. A dealer agreed to issue new gas connections with the sale of gas stoves only.
3. A dealer selling scooters quotes its price as inclusive of the cost of the helmet and
comprehensive insurance policy and gives no indication that the purchase of helmet
or securing the insurance would be optional for the buyers of the scooters.
4. A bank requires a person to keep a fixed deposit while allotting him a locker.

5. A dealer compels and pressurizes the purchaser of a refrigerator to take a post-
warranty service contract at the time of purchase of the fridge as a condition of such
purchase.

[Hint. All the cases involve anti-competition agreements].
5.3 Prohibition of abuse of Dominant Position

Sec.4 prohibits abuse of dominant position by any enterprise. There shall be an abuse of dominant
position, 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; or (b) limits or restricts (i) production of goods or provision of services or

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