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CS Executive · Economic, Commercial and Intellectual Property Laws · Competition Law

The Government of a State is framing a policy on licensing of agricultural produce markets and wants to know how it may affect competition. Under the Competition Act, 2002, what may the State Government do?

A State Government may make a reference to the Competition Commission seeking its opinion on the possible effect of the proposed policy on competition. The Act expressly allows both Central and State Governments to do so while formulating policy, and the opinion is advisory only.

  1. AMake a reference to the Commission for its opinion on the possible effect of the policy on competitionCorrect
  2. BDirect the Commission to approve the policy before it is notified
  3. CAsk the Commission to pass a binding order on the policy
  4. DWait for the Commission to initiate an inquiry, as a State Government cannot make a reference

Explanation

Section 49(1) lets both the Central Government and a State Government refer a policy on competition or any other matter to the Commission for its opinion on the possible effect on competition. The Commission's opinion is advisory, so options calling for a binding order or approval are wrong. State Governments are expressly included, so the last option is wrong.

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