Safeguarding Competition In India: Understanding The CCI’s Operational And Legal Framework
Introduction
Competition law in India has developed from a model of competition that is based on structural control to the one based on conduct. The changes made over time reflect the evolution of economic policy, market structure, as well as the development of legal principles with regard to competition law, leading to the enactment of the Competition Act in 2002 and the establishment of the Competition Commission of India (CCI) as the main regulator for competition. The transition from a concentration-based to an effects-based regulation is evident in a greater emphasis on competitive activity, fairness in the market, and the protection of consumers through the MRTP Act of 1969.
Table of Contents
From MRTP Act to the Competition Act
The MRTP Act focuses on the prevention of monopoly or restraints on trade practices by establishing rules to regulate the accumulation of power in the market, while the MRTP Commission was responsible for monitoring structural and ownership concentrations and assessing them against existing regulations with no consideration given to the actual activities of businesses or their interactions with consumers. Therefore, as India’s economy began to open up to greater foreign investment and the development of global economic standards in 1991, it became clear that the existing regulation under the MRTP Act was no longer adequate to address the types of behaviour that could arise as a result of these developments.
To remedy this shortcoming, the Indian government enacted the Competition Act, 2002, which established a new modern competition framework that specifically addresses issues such as anti-competitive agreements, abuses of dominance, and the regulation of mergers and acquisitions. The Competition Act delegated to the Competition Commission of India (CCI) the powers to investigate and adjudicate on competition issues, and to impose civil penalties on those found to be in violation of the Act.
Structure under the Competition Act
According to the Competition Act, the CCI can investigate claims that violate the following sections of the Act:
- Section 3 (Anti-competitive Agreements)
- Section 4 (Abuse of Dominance)
- Sections 5-7 (Combinations)
A person may submit information about a potential violation to the CCI, and the CCI can initiate an investigation on its own. In terms of investigations, the CCI operates through a division led by its Director General (DG). The DG has powers similar to those of a civil court, including summoning documents and witnesses, and impounding records. The CCI may also conduct raids if deemed necessary.
If a violation is found, the CCI will have the authority to issue cease and desist orders, declare agreements null and void, impose penalties (up to 10% of an entity’s average revenue), and take other corrective measures, including initiating litigation in instances where necessary. All decisions made by the CCI may be appealed to the National Company Law Appellate Tribunal (NCLAT). After the NCLAT resolves an appeal, a further appeal can be made to the Supreme Court.
Also, as part of its role as a regulator, the CCI has an important function as an advocate for competition. This includes conducting market studies, issuing guidelines, collaborating with both regulatory bodies and industry organizations to increase awareness regarding the benefits of competition, and providing assistance to government in order to foster a competitive marketplace and create a better consumer experience through education and outreach.
Judicial Interpretation
One of the primary areas of influence for judicial decisions continues to be in defining the scope, authority and procedural constraints of the CCI, as established by cases decided under the Competition Act, 2002. The case of Competition Commission of India v. Steel Authority of India Ltd.1 provided significant judicial clarity on the powers of the CCI related to Section 26(1) by confirming that the CCI could order an investigation based on a prima facie determination and that such directions would be considered to be an administrative (not quasi-judicial) function, and that a hearing to adjudicate everything at the prima facie stage was unnecessary.
The proceedings originated from a complaint made by Jindal Steel & Power Limited alleging that SAIL had entered into an exclusive supply agreement with Indian Railways to supply rails. The Court ruled that a finding of exclusivity may constitute a violation of Section 3(4) or of Section 4(1) relating to abuse of dominant position. Through this ruling, the Court established a strong framework for the investigatory and enforcement powers of the CCI, including a distinction between preliminary orders and final judgments.
A good example would be the case of M/s Cine Prekshakula Viniyoga Darula Sangham v. Hindustan Coca Cola Beverages Pvt. Ltd2. In this case, following the repeal of the MRTP Act along with the removal of all pending matters to the CCI as per Section 66(6) of the new Competition Act, the CCI looked at allegations against an exclusive supply agreement and discriminatory pricing of a beverage supplier at both cinema theatres and amusement parks.
The complaint alleged that the supplier was setting higher rates in enclosed areas (theatres, amusement parks, bus stations) than in the open market (M.R.P.), thereby limiting consumer choice and placing an unjustified cost onto consumers. Based upon its analysis of the complaint, the CCI found it necessary to still apply the Appreciable Adverse Effect on Competition (AAEC) test but did not see adequate evidence for market exclusion or abuse within the context of evidence-based analysis and the effects-based approach under the new Competition Act.
Merger Control
Under the original Competition Act, combinations (mergers, acquisitions) exceeding certain asset or turnover thresholds required pre-notification to the CCI and awaited approval prior to consummation. The larger Indian markets and increasing global investment flows made it necessary to update the statutory regime. Recent reforms (notably in 2023) have introduced a deal-value threshold for large transactions (especially in digital and infrastructure sectors), widened the definition of “control,” and streamlined procedural timelines.
The CCI can grant permission without conditions, impose structural or behavioural remedies (for example, divestment or exclusivity termination), or block combinations that could result in an AAEC. The updated framework also establishes the CCI’s capacity to assess not only traditional industrial mergers but particularly large transactions involving foreign investors, share acquisition and also areas of technology/digital
Conclusion
To conclude, the evolution of anti-trust law from the MRTP Act to the Competition Act represents a change from structural control of markets to regulation of market processes based upon how businesses conduct themselves in the market. The CCI conducts investigations and adjudicates matters related to agreements and dominant market position and combinations which affect the market processes of India. The CCI, through its legal framework, continues to work to promote competitive conditions in an expanding economy and growing digital markets while protecting consumer rights and support efficient market outcomes.
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