Syllabus: GS2/Governance; Statutory Body
Context
- A recent investigation by the Competition Commission of India (CCI) found that food delivery giants Zomato and Swiggy breached antitrust laws by favouring select restaurants listed on their platforms.
Ethical Concerns
- Unfair Competition, Exploitation of Small Businesses, Lack of Transparency & Consumer Manipulation
About the Antitrust Laws in India
- These are also known as Competition Laws, are designed to promote fair competition and prevent monopolistic practices that can harm consumers and the economy.
- In India, the primary legislation governing antitrust issues is the Competition Act, 2002, which is enforced by the Competition Commission of India (CCI).
About Competition Act, 2002
- Aim: To prevent practices that have an adverse effect on competition, promote and sustain competition in markets, protect the interests of consumers, and ensure freedom of trade.
- Key Components
- Anti-Competitive Agreements: These are agreements that can cause an appreciable adverse effect on competition within India. They are classified into:
- Horizontal Agreements: Agreements between enterprises at the same level of the production chain, such as price-fixing, market allocation, and bid-rigging.
- Vertical Agreements: Agreements between enterprises at different levels of the production chain, such as tie-in arrangements, exclusive supply agreements, and resale price maintenance.
- Anti-Competitive Agreements: These are agreements that can cause an appreciable adverse effect on competition within India. They are classified into:
- Abuse of Dominant Position: This occurs when an enterprise uses its dominant position in the market to affect competitors or consumers unfairly. Practices such as predatory pricing, limiting production, and creating barriers to entry fall under this category.
- Regulation of Combinations: This involves the regulation of mergers, acquisitions, and amalgamations to ensure they do not lead to a significant reduction in competition.
| Competition Commission of India (CCI) – About: It plays a pivotal role in maintaining a fair and competitive market environment in India. 1. It was established under the Competition Act, 2002, with the aim to prevent practices that have an adverse effect on competition, promote and sustain competition, protect the interests of consumers, and ensure freedom of trade in Indian markets. – Vision and Mission: To promote and sustain an enabling competition culture through engagement and enforcement. – Key Functions: The CCI investigates and adjudicates cases related to anti-competitive agreements and abuse of dominant positions. It includes cartels, bid-rigging, and other practices that distort competition. 1. The CCI reviews mergers, acquisitions, and amalgamations to ensure they do not adversely affect competition. Recent amendments to the Competition Act have introduced new thresholds for mergers, particularly in the digital ecosystem. 2. The CCI engages in advocacy to promote awareness about competition issues among businesses, consumers, and other stakeholders. It includes workshops, conferences, and publications. 3. The CCI collaborates with international competition authorities to share best practices and enhance enforcement capabilities. |
Challenges Associated with the Competition Law in India
- Despite the robust framework, enforcing antitrust laws in India faces several challenges, including lengthy legal processes, Low rate of recovery of penalties, and the need for greater awareness among businesses and consumers.
Way Ahead
- Data Analytics and AI for Market Surveillance: Equip CCI with advanced data analytics and AI capabilities to proactively monitor market trends, pricing patterns, and potential anti-competitive conduct.
- Strengthening Regional Presence: To streamline case handling and reduce delays, the government should consider establishing regional CCI offices.
- Enhanced Collaboration with Global Regulators: Form alliances and MOUs with competition regulators from other countries, like the EU, US, and Japan, to share insights, best practices, and coordinate on cases involving multinational corporations to ensure consistency in handling cross-border anti-competitive practices.
- Public Awareness and Transparency Initiatives: Launch programs to educate businesses and consumers on their rights and responsibilities under the Competition Act.
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