Competition Law: formula sheet

Key formulas

Four aims of the Act

Prevent adverse effect on competition + promote and sustain competition + protect consumers' interests + ensure freedom of trade of other market participants

Use as the opening of any 'objectives' answer.

Dominant position (section 4 Explanation)

A position of strength in the relevant market, in India, enabling the enterprise to (i) operate independently of competitive forces, or (ii) affect competitors, consumers or the relevant market in its favour

Both limbs are alternatives. The market must be in India.

Relevant market (section 19(5))

Relevant market = relevant geographic market + relevant product market

The CCI must have due regard to both.

Factors for relevant geographic market (section 19(6))

Regulatory trade barriers, local specification requirements, national procurement policies, distribution facilities, transport costs, language, consumer preferences, need for secure or regular supplies or rapid after-sales services, characteristics of goods or nature of services, switching costs

The CCI considers all or any of these.

Factors for relevant product market (section 19(7))

Physical characteristics or end-use, price, consumer preferences, exclusion of in-house production, specialised producers, classification of industrial products, switching costs, categories of customers

Use end-use, price and consumer preferences as core points.

Predatory price (section 4 Explanation)

Sale of goods or provision of services below the cost (as determined by regulations) with a view to reduce competition or eliminate competitors

Both below-cost sale and intent are needed.

Turnover (section 27, Explanation 2)

Turnover = global turnover derived from all products and services of a person or enterprise

Used for penalty computation under section 27(b).

Limitation for information (section 19(1) provisos)

Filing within three years from the date the cause of action arose; later only if sufficient cause is shown and reasons for condoning the delay are recorded

Inserted w.e.f. 18-5-2023.

Base rule

Agreement causing or likely to cause AAEC in India → prohibited (Section 3(1)) → void (Section 3(2))

The test covers both actual and likely effect.

Horizontal agreements (Section 3(3))

Agreement between parties in identical or similar trade + price fixing / limiting supply / market sharing / bid rigging → AAEC is presumed

The presumption is rebuttable. The parties must show there is no AAEC.

Vertical agreements (Section 3(4))

Agreement between parties at different stages of the production chain → void only if AAEC is shown

No presumption. Does not apply to agreements between an enterprise and an end consumer.

Four horizontal heads

(a) prices; (b) limit production, supply, markets, technical development, investment, services; (c) market sharing; (d) bid rigging

Remember as P-L-M-B.

Listed vertical agreements

Tie-in; exclusive dealing; exclusive distribution; refusal to deal; resale price maintenance

The list uses 'including', so other vertical agreements can also be tested.

Joint venture proviso

Joint venture that increases efficiency → Section 3(3) presumption does not apply

Efficiency in production, supply, distribution, storage, acquisition or control of goods or services.

Hub-and-spoke proviso

Enterprise not in identical or similar trade but participating or intending to participate in furtherance of the agreement → presumed to be part of it

Inserted w.e.f. 18-5-2023.

Core prohibition

Section 4(1): No enterprise or group shall abuse its dominant position

Dominance is not prohibited. Abuse is.

Dominant position

Position of strength in the relevant market, in India, enabling the enterprise to (i) operate independently of competitive forces, or (ii) affect competitors, consumers or the relevant market in its favour

Either limb is enough. Quote the words 'in India'.

Forms of abuse

Section 4(2): (a) unfair or discriminatory condition or price (including predatory price); (b) limiting or restricting production, services, market, or technical or scientific development to the prejudice of consumers; (c) denial of market access; (d) supplementary obligations with no connection to the contract; (e) using dominance in one relevant market to enter into or protect another

Learn the five heads in order. Each needs a matching fact.

Predatory price

Sale of goods or provision of services at a price below the cost (as determined by regulations) of production or provision, with a view to reduce competition or eliminate competitors

Both below-cost pricing and the intent to reduce or eliminate competition are needed.

Meeting competition defence

Unfair or discriminatory condition or price does not include a condition or price adopted to meet the competition

Applies to clause (a) only, as per the Explanation.

Dominance factors

Section 19(4): market share, size and resources, size and importance of competitors, economic power, vertical integration or network, dependence of consumers, statutory or government monopoly, entry barriers, countervailing buying power, market structure and size, social obligations and costs, relative advantage from contribution to economic development, any other relevant factor

The Commission must have due regard to all or any of these factors.

Limitation for information

Section 19(1) provisos: information or reference must be filed within three years from the date the cause of action arose; later filing allowed if sufficient cause is shown and reasons are recorded

Added by the 2023 amendment.

Extra-territorial reach

Section 32: the Commission can inquire into abuse by an enterprise outside India if it has, or is likely to have, an appreciable adverse effect on competition in the relevant market in India

The conduct or the enterprise may be outside India. The effect must be in India.

Substantive prohibition

Combination with AAEC in the relevant market in India = void (s. 6(1))

The test is effect on competition in the relevant market in India, not the size of the deal alone.

When to file notice

After board approval of merger/amalgamation OR execution of agreement/other document for acquisition (or acquiring of control) – but BEFORE consummation (s. 6(2))

'Other document' includes a document conveying a decision to acquire. For a hostile acquisition, it includes the acquirer's own document. A public announcement under the SEBI Takeover Regulations also counts.

Standstill period

No combination takes effect until 150 days from notice OR Commission's order under s. 31, whichever is earlier (s. 6(2A))

Earlier figure was 210 days; it was cut to 150 days by the 2023 amendment.

Deemed approval

No order within 150 days from date of notice under s. 6(2) = combination deemed approved (s. 31(6))

Also, if the Commission forms no prima facie opinion under s. 29(1B), the combination is deemed approved (proviso to s. 31(1)).

Orders available to the CCI

Approve (s. 31(1)); direct it shall not take effect (s. 31(2)); approve with modifications (s. 31(3))

Under s. 31(5) it may also order that the combination not be given effect to, declare it void, or frame a scheme to address the AAEC.

Green channel route

Notice under s. 6(4) for combinations meeting prescribed criteria; on filing and acknowledgement, deemed approved (s. 6(5))

If the notice is wrong or incomplete, approval is void ab initio, after a hearing (s. 6(6)).

Suo motu inquiry limit

No inquiry on own knowledge after one year from the date the combination took effect (s. 20(1) proviso)

Applies to inquiries started by the Commission on its own information.

Strength of the Commission (Section 8(1))

Chairperson + not less than 2 and not more than 6 other Members

Appointed by the Central Government. Total is therefore 3 to 7 persons, all whole-time (Section 8(3)).

Qualification (Section 8(2))

Ability, integrity and standing + special knowledge and not less than 15 years' professional experience in the listed fields

Fields include international trade, economics, business, commerce, law, finance, accountancy, management, industry, technology, public affairs, competition law and policy.

Selection Committee (Section 9(1))

CJI or nominee (Chairperson) + Secretary, Ministry of Corporate Affairs + Secretary, Ministry of Law and Justice + two experts of repute

Five persons. It recommends a panel of names; the Central Government appoints.

Term of office (Section 10(1))

5 years from entering office; eligible for re-appointment; not beyond age 65

The age limit is in the proviso.

Acting Chairperson (Section 10(4) and (5))

Senior-most Member acts if the Chairperson's office falls vacant or he cannot discharge functions

In a vacancy, until the new Chairperson enters office. In absence or illness, until the Chairperson resumes charge.

Resignation (Section 11(1))

Written notice to the Central Government; continue for 3 months, or until successor enters, or term ends, whichever is earliest

The Central Government may permit an earlier exit.

Removal by Central Government (Section 11(2))

Insolvent; paid employment during term; conviction involving moral turpitude; prejudicial interest; abuse of position; physical or mental incapacity

Six grounds, clauses (a) to (f).

Supreme Court inquiry (Section 11(3))

Grounds (d) and (e) need a Supreme Court report before removal

The reference is made by the Central Government.

Post-service restriction (Section 12)

2 years: no employment, advice or management connection with a party to a proceeding or a person appearing under Section 35; no representation before the Commission

Does not apply to Government, statutory authority, corporation or Government company employment.

Duty of the Commission (section 18)

Eliminate adverse practices + promote and sustain competition + protect consumers + ensure freedom of trade, in markets in India

Learn the four limbs. The Commission may sign memoranda with foreign agencies only with prior Central Government approval, and with Indian statutory authorities or departments without that approval.

Interim order (section 33)

Temporary restraint until the conclusion of inquiry or until further orders, without notice to the party where necessary

Applies where the Commission is satisfied that a contravention of section 3(1), section 4(1) or section 6 has been committed and continues, or is about to be committed.

General penalty (section 27(b))

Penalty ≤ 10% of the average of turnover or income for the last three preceding financial years

Imposed on each person or enterprise party to the agreement or abusing dominance. Turnover means global turnover from all products and services.

Cartel penalty (proviso to section 27(b))

Up to the higher of: 3 × profit for each year of the agreement, or 10% of turnover or income for each year of the agreement

Applies to each producer, seller, distributor, trader or service provider in the cartel.

Other orders (section 27)

Discontinue and not re-enter; modify the agreement; abide by other directions including costs; any other order

The Commission may also pass orders against other members of the same group if they contributed to the contravention.

Non-compliance fine (section 43)

Up to ₹1,00,000 per day of failure, maximum ₹1,00,00,000

For failing without reasonable cause to follow directions of the Commission under section 36(2) and (4) or of the DG under section 41(2).

Lesser penalty (section 46)

Full, true and vital disclosure by a cartel member, before the DG's investigation report is received, with continued cooperation

The lesser penalty is as specified by regulations.

Section 49(1): who may refer and time limit

Central Government or State Government refers a policy → Commission gives opinion within 60 days of the reference → Government may take further action as it deems fit

The reference is made by the government while formulating a policy on competition or any other matter. The opinion concerns the possible effect of the policy on competition.

Section 49(2): effect of opinion

Opinion of the Commission is not binding on the Central Government or the State Government

The government is free to accept, modify or ignore it.

Section 49(3): promotion duty

Commission shall take suitable measures for competition advocacy, creating awareness and imparting training about competition issues

This is a mandatory duty ("shall"). The words "as may be prescribed" were omitted in 2007.

Section 53: reporting

Returns and particulars on advocacy measures to Central Government as required (s.53(1)); annual report each year (s.53(2)); laid before each House of Parliament (s.53(3))

Links advocacy to accountability.

Section 21: reference by statutory authority

Statutory authority refers an issue → Commission gives opinion within 60 days of receipt → authority considers it and gives findings with reasons

Compare with Section 49. Here the referring body is a statutory authority, and the authority must record reasons for its findings.

Appeal to NCLAT (section 53B)

Time limit = 60 days from receipt of the copy of the Commission's direction, decision or order

Appellant can be the Central Government, a State Government, a local authority, an enterprise or any person. NCLAT may allow a late appeal if there was sufficient cause.

Disposal target (section 53B(5))

NCLAT to endeavour to dispose of the appeal within 6 months from receipt

It is an endeavour, not a mandatory limit.

Powers on appeal (section 53B(3))

After hearing the parties: confirm, modify or set aside the order

A copy of every NCLAT order goes to the Commission and the parties.

Appeal to Supreme Court (section 53T)

Time limit = 60 days from communication of the NCLAT decision or order

Supreme Court may condone delay if there was sufficient cause.

Non-compliance with CCI orders (section 42(2))

Fine up to ₹1 lakh per day of non-compliance, maximum ₹10 crore

Applies to orders under sections 27, 28, 31, 32, 33, 42A and 43A, if there is no reasonable clause.

Further default (section 42(3))

Imprisonment up to 3 years, or fine up to ₹25 crore, or both, as the Chief Metropolitan Magistrate, Delhi deems fit

For not complying or not paying the fine. Cognizance only on a complaint by the Commission or its authorised officer.

Contravening NCLAT orders (section 53Q(1))

Penalty up to ₹1 crore or imprisonment up to 3 years or both, by the Chief Metropolitan Magistrate, Delhi

Without reasonable ground. Cognizance only on a complaint by an officer authorised by the NCLAT.

Compensation (section 53N)

Application to NCLAT only after a finding of violation by the Commission, NCLAT or Supreme Court (or where section 42A or 53Q(2) applies)

The inquiry decides eligibility and quantum, not whether a violation occurred.

Quick revision

• The Act's focus: eliminate practices harming competition, promote and sustain competition, protect consumers, ensure freedom of trade (section 18).
• Section 4(1): no enterprise or group shall abuse its dominant position.
• Dominant position means strength in the relevant market in India allowing independence from competitive forces or the ability to affect competitors, consumers or the market.
• Predatory price means selling below cost, as set by regulations, to reduce competition or eliminate competitors.
• Conditions or prices adopted to meet competition are not abuse under section 4(2)(a).
• Section 4(2)(e): using dominance in one relevant market to enter or protect another is abuse.
• Section 27 orders include discontinuing the practice, penalty, modifying agreements, costs and other directions.
• General penalty: not more than ten per cent of average turnover or income of the last three preceding financial years.
• Cartel penalty: up to three times profit or ten per cent of turnover for each year of the agreement, whichever is higher.
• Turnover for penalty means global turnover from all products and services.
• Section 28: the Commission may order division of a dominant enterprise to stop abuse.
• Section 32: the Commission can inquire into foreign agreements, dominance or combinations that harm competition in India.

Common mistakes

• Saying dominance itself is prohibited under the Act. Fix: Write that the Act prohibits abuse of dominant position, not dominance. Quote the opening words of section 4: no enterprise or group shall abuse its dominant position.
• Treating the relevant market as only a product market. Fix: Always state both relevant product market and relevant geographic market, and list a few factors from each.
• Saying every horizontal agreement is presumed to have AAEC. Fix: The presumption applies only to agreements that fall in the four heads of Section 3(3): prices, limits on output or markets, market sharing and bid rigging.
• Presuming AAEC for tie-in, exclusive dealing or resale price maintenance. Fix: Section 3(4) agreements are tested on effect. AAEC must be shown. Write this clearly.
• Saying that being dominant is itself illegal. Fix: Write that Section 4(1) bans only the abuse of dominance. Dominance alone is lawful.
• Skipping the relevant market and jumping to dominance. Fix: Always define the relevant product and geographic market first. Dominance is judged in the relevant market in India.
• Writing that notice must be filed within 30 days of the trigger event. Fix: Write that notice is given after the board approval or agreement and before consummation (s. 6(2)). There is no 30-day window in the current text.
• Quoting 210 days as the standstill or approval period. Fix: Use 150 days in both s. 6(2A) and s. 31(6). Mention that the 2023 amendment shortened it.
• Saying the Commission has a Chairperson and six Members, or a fixed number. Fix: Write: Chairperson and not less than two and not more than six other Members.
• Saying the Selection Committee appoints the Members. Fix: The Committee only recommends a panel of names. The Central Government appoints (Sections 8 and 9).

Exam tips

• Begin every theory answer with the four objectives. It earns marks quickly and frames the rest.
• Learn the MRTP versus Competition Act comparison as three points: focus, approach, scope. Write each in one sentence.
• For definitions, break them into limbs and use the Act's key words. Examiners reward structure.
• In case-study questions, the relevant market must be settled before dominance is discussed. Say this order explicitly.
• Use the post-2023 position for limitation and penalty (three years; ten per cent of average turnover or income for three years, global turnover), not older versions.
• Draw the horizontal versus vertical contrast in the first lines of any theory answer. Examiners look for the presumption versus proof distinction.
• Learn the four heads of Section 3(3) and the five listed types in Section 3(4) by heart. Write each with its explanation from the Act.
• In case-style questions, first classify the parties by level of trade. The rest of the answer follows from that.