A Q&A guide to competition law in India.
The Q&A gives a high level overview of merger control, restrictive agreements and practices, monopolies and abuse of market power, and joint ventures. In particular, it covers relevant triggering events and thresholds, notification requirements, procedures and timetables, third party claims, exclusions and exemptions, penalties for breach, and proposals for reform.
To compare answers across multiple jurisdictions visit the Competition law Country Q&A tool.
This Q&A is part of the PLC multi-jurisdictional guide to competition and cartel leniency. For a full list of jurisdictional Competition Q&As visit www.practicallaw.com/competition-mjg.
For a full list of jurisdictional Cartel Leniency Q&As, which provide a succinct overview of leniency and immunity, the applicable procedure and the regulatory authorities in multiple jurisdictions, visit www.practicallaw.com/leniency-mjg.
The provisions of the Competition Act 2002, as amended (Competition Act), which regulate mergers and acquisitions (which qualify as combinations requiring investigation), have been implemented with effect from 1 June 2011 (see Question 39).
On 4 March 2011, the government published a series of notifications (Notifications). These set out the merger control provisions (sections 5 and 6, Competition Act), raised the asset and turnover thresholds in the Competition Act, and contained certain exemptions (exercising its powers under section 54 of the Competition Act (see Question 15)).
In addition, on 11 May 2011 the Competition Commission of India (Commission) issued final regulations governing merger control in India (Combination Regulations).
(The provisions of the Competition Act relating to restrictive agreements and abuse of dominance came into force on 20 May 2009 (see Questions 13 to 26 on restrictive agreements and practices, and Questions 27 to 35 on monopolies and abuse of dominance).)
A combination (see Question 2) that meets the prescribed financial thresholds (see Question 2, Thresholds) must be pre-notified to the Commission (sections 5 and 6, Competition Act). The Commission can also inquire into a combination on its own initiative for a one-year period after the conclusion of a relevant transaction. A combination is void if it causes, or is likely to cause, an appreciable adverse effect on competition in a relevant market in India (see Question 7).
The Competition Act specifically exempts certain combinations from the pre-merger notification requirements where they involve share subscriptions, financing facilities or any acquisitions by public financial institutions, foreign institutional investors, banks or venture capital funds under a loan or an investment agreement.
However, details of these acquisitions must be notified in Form III within seven days of the acquisition (see Question 3, Timing).
The Competition Act is enforced by the Commission (see box, The regulatory authorities) established under the Competition Act. The Office of the Director General (DG) carries out investigations to assist the Commission.
For the purposes of the Competition Act:
Combinations are the acquisition of one or more enterprises by one or more enterprises or persons, or a merger or amalgamation of enterprises, that cross the prescribed financial thresholds (see below, Thresholds).
Acquisition means acquiring (directly or indirectly), or agreeing to acquire, an enterprise's shares, voting rights or assets, or control over an enterprise's management or assets.
Combinations must be pre-notified to the Commission if any of the following financial thresholds apply (section 5, Competition Act):
The acquirer and acquired enterprise in the combination jointly have (or the enterprise remaining after the combination would have) one or more of the following:
Indian assets worth more than INR15 billion (as at 1 December 2011, US$1 was about INR52.2) or turnover in India of more than INR45 billion;
worldwide assets (wherever situated) worth more than US$750 million, including assets worth at least INR7.5 billion in India; or
worldwide turnover of more than US$2.25 billion including at least INR22.5 billion in India.
The group or entity, to which the target or merged entity will belong after the combination, has, or will have, one or more of the following:
Indian assets worth more than INR60 billion or turnover in India of more than INR180 billion;
worldwide assets (wherever situated) of more than US$3 billion including assets worth at least INR7.5 billion in India; or
worldwide turnover of more than US$9 billion including at least INR22.5 billion in India.
In determining whether the thresholds are met, the rate of conversion of foreign exchange currencies into INR or US$ is based on the average spot rate of the last six months quoted by the Reserve Bank of India from the date on which the triggering event occurred (see Question 3, Timing).
The following are exempt from the pre-notification requirement (Notifications):
Transactions where the target (including its subsidiaries, units or divisions) being acquired has either:
assets in India of less than INR2.5 billion; or
turnover in India of less than INR7.5 billion.
Where the target exceeds both of these, the parties to the transaction must consider whether the transaction meets the cumulative jurisdictional thresholds for pre-notification outlined above.
Groups exercising less than 50% of the voting rights in the other enterprise, even if they meet the threshold requirements for pre-notification set out in section 5 of the Competition Act (see above).
The Commission has not yet clarified whether this only exempts certain enterprises (where less than 50% voting rights are held) within a group from being included in the threshold calculations, or if it amends the definition of "group" for the purposes of the merger control regime altogether.
In addition, the Combination Regulations also list certain categories of transactions, which the Commission believes are "ordinarily" not likely to cause an appreciable adverse effect on competition in India and, therefore, do not "normally" require notification. These categories include:
Non-controlling share acquisitions of not more than 15% of the total shares or voting rights for investment purposes or in the ordinary course of business.
Acquisitions of shares or voting rights where the acquirer already holds more than 50% in the target (except when going from joint to sole control).
Asset acquisitions for investment purposes or in the ordinary course of business, not leading to control of the enterprise whose assets are being acquired (except where the assets represent substantial business operations of a particular location/product/service of the vendor).
Acquisition of current assets (such as stock-in-trade and raw materials) in the ordinary course of business.
Acquisition of shares pursuant to bonus issues, stock splits or consolidation of face value of shares or subscription to rights issues (to the extent of their entitled proportion), not leading to acquisition of control.
Acquisition by underwriters/stock brokers in the ordinary course of business for underwriting/stock broking.
Amended or renewed tender offers.
Purely offshore transactions taking place outside India with "insignificant local nexus and effect" on markets in India.
Notification of a combination is mandatory.
Notification must take place within 30 days of either:
The board of directors of the relevant enterprises approving the merger or amalgamation referred to in section 5(c) of the Competition Act.
The execution of any agreement or other document for an acquisition referred to in section 5(a) or 5(b) of the Competition Act (see Question 2). "Other document" means any binding document, which conveys an agreement/decision to acquire control, shares, voting rights or assets (Combination Regulations). The Combination Regulations further clarify that:
in the event of a hostile acquisition, "other document" is any document executed by the acquirer, which conveys a decision to acquire;
where a document has not been executed but the intention to acquire is communicated to the central government, state government or a statutory Authority, the date of this communication is deemed to be the date of execution of the other document for acquisition.
Where an acquisition, share subscription or financing facility is carried out by any of the following under a covenant in a loan agreement or an investment agreement, a notification must be made within seven days of the acquisition in the prescribed form:
A public financial institution.
A foreign institutional investor.
A venture capital fund (as defined under the Competition Act).
There is no provision for formal or informal guidance under the Competition Act or the Combination Regulations. However, the Commission states on its website that it offers informal, verbal, non-binding pre-notification consultation as an additional assistance facility. Consultation only applies to procedural issues with filing and not in relation to substantive interpretive issues.
In an acquisition, the acquirer must notify the Commission and in a merger/amalgamation, the parties must jointly notify the Commission (Combination Regulations).
The notification must be made to the Commission.
The Competition Act does not specify a form of notification. However, the Combination Regulations prescribe three forms for filing a merger notification:
Form I (short form). This is the most common form. The Combination Regulations set out certain transactions that can ordinarily be filed in Form I and the parts that must be completed.
Form II (long form). This form is used when the Commission requires more information. The parties can also opt to use this.
Form III. This is a post-completion notification form and must be filed within seven days of an acquisition, share subscription or financing facility, entered into:
by a public financial institution, registered foreign institutional investor, bank or registered venture capital fund;
under a covenant in a loan agreement or an investment agreement.
The fees vary depending on the form that is filed (Combination Regulations):
Form I: INR50,000.
Form II: INR1,000,000.
Form III: no fee payable.
All fees are payable by the person filing the notification.
A combination notified to the Commission must be suspended for 210 days from the date of the notification or until an order clearing the transaction is passed by the Commission, whichever is earlier (section 31(11), Competition Act).
Although not specifically referred to as such in the Competition Act or the Combination Regulations, the merger control process has two phases:
Phase I. The Commission must form a prima facie opinion on whether a combination is likely to cause an appreciable adverse effect on competition within the relevant market in India within 30 calendar days of the notification by the parties. The Commission can either decide to clear a transaction within this period or subject it to further investigation. This period is extended to 45 calendar days if modifications are proposed by the parties (Regulation 19, Combination Regulations).
Phase II. If the Commission forms a prima facie opinion that a combination is likely to cause an appreciable adverse effect on competition, it launches a detailed investigation. This phase can last up to an additional 180 calendar days. The standstill obligation continues until the Commission reaches a final decision or 210 days lapse from the date of filing the notification (see below, Outcome: Approve the combination and Question 3, Obligation to suspend).
In forming its prima facie opinion, the Commission can (Regulation 19(2), Combination Regulations):
Ask parties to the combination to file additional information.
Accept modifications proposed by the parties.
Ask for information from any other enterprise in relation to a proposed combination.
If the Commission is of the prima facie opinion that a combination is likely to cause an appreciable adverse effect on competition, it will issue a show-cause notice to the parties to the combination. The parties must respond within 30 days of receiving the notice giving reasons as to why a detailed investigation should not proceed (section 29(1), Competition Act).
After receiving the parties' responses, the Commission can call for a report from the DG (Regulation 20, Combination Regulations). Within seven working days of the receipt of the parties' response or receipt of the DG's report (whichever is later), the Commission will direct the parties to publish details of the combination to the public within a further ten working days (see Question 5, Publicity).
The Commission can invite affected parties or members of the public to file written objections to the combination within 15 working days of the date of publication of details of the combination (section 29(3), Competition Act) (see Questions 5 and 6).
The Commission can call for additional information from the parties to the combination, if necessary, within 15 working days from the expiry of the time for filing objections. The parties must file the additional documents within a further 15 days (sections 29(4) and (5), Competition Act).
The Commission must deal with the case within 45 working days of the receipt of all of the information (section 29(6), Competition Act).
Depending on the Commission's opinion of the combination at the end of the investigation, it can do one of the following:
Approve the combination. The Commission can approve the combination unconditionally by written order if it is not likely to cause an appreciable adverse effect on competition in the relevant market(s). If no order is passed within 210 days from the date of a valid notification to the Commission, the approval is deemed to have been granted (section 31(1) and 31(11), Competition Act).
Prohibit the combination. If the Commission finds an appreciable adverse effect on competition, it will direct that the combination will not take effect (section 31(2), Competition Act).
Propose a modification to the combination (remedies or commitments). If the adverse effect can be eliminated by suitable modifications to the combination:
the Commission will propose modifications to the parties (section 31(3), Competition Act);
if the Commission's proposed modifications are acceptable to the parties, they are to be carried out within a specified period (section 31(4), Competition Act);
if however, the parties do not accept the Commission's original proposed modification, they can submit amendments within 30 working days of the Commission's proposal (section 31(6), Competition Act);
if the Commission finds the parties' proposed amendments acceptable, it will approve the combination (section 31(7), Competition Act);
if however, the Commission rejects the parties' proposed amendments, the parties are allowed a further 30 working days to accept the Commission's original proposed modification (section 31(8), Competition Act).
The combination is deemed to have an appreciable adverse effect on competition and cannot take effect if either of the following applies:
having accepted the Commission's modifications, the parties do not carry them out within the specified period (section 31(5), Competition Act);
the parties do not agree to the modifications suggested by the Commission within the time periods specified above (section 31(9), Competition Act).
If either of the parties or the Commission accepts the modifications under this procedure, the Commission will, by order, approve the proposed combination (Regulation 25(3), Combination Regulations).
To date, only 16 combinations have been cleared by the Commission (without any modifications or conditions) within the 30-day prima facie review period.
For an overview of the notification process, see flowchart, India: merger notifications.
There is no obligation on the parties or the Commission to make details of the combination public at the time of notification. The Commission will direct the parties to publish the details of the combination after it is of the prima facie opinion that a combination has, or is likely to have, an appreciable adverse effect on competition within the relevant market(s) in India, at the end of Phase I (section 29(2), Competition Act) (see Question 4).
After the end of Phase I (see Question 4), the Commission must issue a direction for the publication of the details of the combination. This must be done within ten working days of the Commission's prima facie direction (see Question 4). Parties must publish, using Form IV, in all-India editions of four leading daily newspapers, including at least two business newspapers and on the parties' websites (Regulation 22, Combination Regulations).
Generally, information relating to any enterprise obtained by the Commission or the Competition Appellate Tribunal (CompAT) (see box, The regulatory authorities and Question 10) cannot be disclosed without the enterprise's prior written approval (section 57, Competition Act). This provision does not apply if the disclosure is made to comply with the Competition Act or any other existing law.
The Competition Act provides for a process by which parties to proceedings before the Commission can inspect documents on file (Regulation 37, General Regulations (see Question 6)). If a party to proceedings requires the information it has provided to be kept confidential, it must specifically claim confidentiality in accordance with the procedure set out in Regulation 35 of the Competition Commission of India (General) Regulations 2009 (No. 2 of 2009), as amended (General Regulations).
The Commission must generally maintain confidentiality of the information that the parties request to be kept confidential (section 57, Competition Act and Regulation 35, General Regulations) (see Question 21).
If any confidential or commercially sensitive information is submitted, a party can file a request to the Commission to treat the information as confidential. The request must be accompanied with all of the following:
Reasons/justifications for confidential treatment.
Duration of time for which confidential treatment is claimed.
Details of the implications for the parties if the information is not treated as confidential.
The request for confidential treatment must be accompanied by confidential and non-confidential versions of the documents submitted, in the form prescribed by Regulation 35 of the General Regulations.
There are no provisions for third parties to make any representations to the Commission in respect of a proposed combination before it forms its prima facie opinion in Phase I. At the commencement of a Phase II investigation, the Commission requires the parties to publish details of the combination and invites written objections from any person or member of the public who has been affected, or who is likely to be affected, by a combination. Objections must be made within 15 working days from the date on which the details of the combination are published (section 29(3), Competition Act).
Generally, only parties to a proceeding before the Commission can apply to inspect and obtain copies of the documents or records submitted during proceedings. Access will be granted on payment of specified fees and subject to confidentiality (Regulation 37, General Regulations).
However, the Commission can allow third parties, on written application, to present their opinion and take part in the proceedings if both of the following are satisfied (Regulation 25(1), General Regulations):
The third party has substantial interest in the outcome of proceedings.
It is in the public interest to do so.
It is currently unclear if third parties, who make successful applications to the Commission, would be considered to be party to the proceedings and therefore be allowed to access the documents.
To date, the Commission's practice has been not to grant access to the file during the Phase I review period.
While the Commission retains the discretion to provide an opportunity to be heard to the parties to the combination, no equivalent right or discretion exists for third parties, in respect of a combination (Regulation 24, Combination Regulations). Third parties can apply to the Commission to present their opinion and take part in proceedings (see above, Document access).
The substantive test for the assessment of combinations is whether they cause, or are likely to cause, an appreciable adverse effect on competition within the relevant market in India.
The Competition Act provides a list of factors for consideration by the Commission in determining whether a combination causes, or is likely to cause, appreciable adverse effects within the relevant markets, namely the (section 20(4), Competition Act):
Actual and potential level of competition from imports in the market.
Extent of barriers to market entry.
Level of combination in the market.
Degree of countervailing power in the market.
Likelihood that the combination will result in a significant or sustained increase in prices or profit margins for the parties.
Extent of effective competition likely in the market.
Extent to which substitutes are, or are likely to be, available.
Market share in the relevant market of the persons or enterprises in a combination, individually or as a combination.
Likelihood that the combination will result in the removal of a vigorous and effective competitor.
Nature and extent of vertical integration in the relevant market.
Possibility of the business failing.
Nature and extent of innovation.
Contribution to economic development.
Whether any benefits outweigh the adverse impact of the combination.
The Commission and/or the parties can propose modifications to the combination that eliminate the appreciable adverse effect on competition, during both Phase I and Phase II of the combination review process (section 31, Competition Act and Regulation 19, Combination Regulations).
There is no precedent or guidance regarding the Commission's preference for structural or behavioural remedies. The parties to the combination must carry out the modification in the time specified by the Commission and file a compliance report within seven days of completion (Regulation 26, Combination Regulations).
In addition, if the Commission is of the opinion that a modification requires supervision, it can appoint independent agencies (such as accounting firms, management consultancies, law firms, reputed independent practitioners, and so on) to oversee the modification on the terms and conditions specified by the Commission (Regulation 27, Combination Regulations).
Failure to notify a combination is punishable by a penalty of up to 1% of the total turnover or assets of the combination (whichever is higher) (section 43A, Competition Act). The Commission can also initiate separate proceedings under section 43A of the Competition Act, where parties notify a combination after the passage of the statutory 30-day trigger period (see Question 3). In addition, the Commission can investigate an un-notified combination on its own initiative or on information received by it, up to one year from the completion date of the combination (proviso to section 20(1), Competition Act).
A penalty of between INR5 million and INR10 million can be levied for making a false statement or omitting material information in the notification (section 44, Competition Act).
The Competition Act does not provide any specific penalty for implementation of the combination before approval, but it provides that the combination does not take effect until the expiry of 210 days from the date of the notice or the Commission issues an order, whichever is earlier (section 6 (2A), Competition Act) (see Question 6, Outcome). While this has not happened in practice, implementation before approval could adversely affect the outcome of the Commission's assessment. In addition, if the combination is later found to cause or be likely to cause an appreciable adverse effect on competition in India, it will be void. As a result, all acts in furtherance of the void combination will also be void.
For implementation after prohibition, see below, Failure to observe.
Civil penalties. A penalty of INR100,000 per day can be levied, up to a maximum of INR100 million, for contravention of Commission orders (section 42(2), Competition Act).
Criminal penalties. Contravention of Commission orders can also lead to imprisonment for a term of up to three years, or with a fine of up to INR250 million, or both, as the Chief Metropolitan Magistrate of Delhi deems fit (section 42(3), Competition Act).
Personal liability. Persons in charge of, or responsible for, a company's business at the time of the breach can also be liable, unless they can demonstrate that either the breach was committed without their knowledge or they had exercised all due diligence to prevent the breach.
In addition, if it is proved that the breach was committed with the consent or involvement (or is attributable to neglect on the part) of any director, manager, secretary or other officer of the company, they will also be liable (see Question 24).
In Competition Commission of India v Steel Authority of India Limited (Civil Appeal No. 7779 of 2010), the Supreme Court of India (Supreme Court) decided that both:
An appeal lies to the CompAT only against Commission directions, decisions or orders which have been specifically stated under section 53A(1)(a) of the Competition Act.
Any other orders not mentioned in section 53A(1)(a) of the Competition Act cannot be treated as being appealable by implication.
Any order of the Commission passed under section 31 of the Competition Act, in respect of a combination, can be appealed before the CompAT within 60 days by any of the following (section 53A(1)(a) and Section 53B(1), Competition Act):
The government (both central and state-level).
A local authority.
An enterprise or person aggrieved by the Commission's order.
Further, any person aggrieved by a decision of the CompAT can file an appeal to the Supreme Court of India within 60 days of the date of communication of the decision (section 53T, Competition Act).
An appeal from any Commission decision, order or direction must be filed within 60 days of receipt of the decision, order or direction. The CompAT can allow delays in filing the appeal where justified.
Prima facie, any aggrieved person can file an appeal against any Commission direction, decision or order before the CompAT (section 53B, Competition Act). This includes a third party who is not a party to the combination.
However, under the Combination Regulations, the right of appeal has been restricted to an aggrieved party to the proceedings on matters relating to the combination. (Regulation 29, Combination Regulations). Therefore, while there is no Commission clarification on this point, it seems that third parties who are not a party to the proceedings have no right of appeal. It is anticipated that this provision will be challenged in the future.
Neither the Competition Act nor the Combination Regulations specifically provide that any restrictions in the agreements relating to the combination will be automatically cleared on approval of a combination by the Commission. However, it is likely that the Commission will consider the restrictive provisions during their substantive assessments of the combination.
In general, any ancillary restraint or non-compete agreement for engaging in any business during the continuation of the contract are usually valid under Indian law. Therefore, it is expected that the Commission will take a similar view in this regard.
No industry is specifically regulated either by, or outside of, the merger control regime under the Competition Act. However, there is currently a bill before parliament, in which the Reserve Bank of India (the banking sector regulator) has sought specific exemption for bank mergers from the merger control regime.
In addition, the Indian Planning Commission recently suggested that all combinations in the pharmaceutical industry should be subject to review by the Commission, irrespective of whether they meet the financial thresholds (see Question 2, Thresholds), in order to prevent all of the following:
The creation of monopolies.
The shift of Indian pharmaceutical companies' core business away from the needs of the Indian citizens.
Rising drug prices. (Although this would be in the public interest, the government has not yet implemented this suggestion, which is likely to require an amendment to the existing law.)
The provisions of the Competition Act relating to restrictive agreements came into force on 20 May 2009.
An agreement entered into by an enterprise or person is void if both of the following apply (sections 3(1) and 3(2), Competition Act):
It is in respect of the production, supply, distribution, storage, acquisition or control of goods, or the provision of services.
It causes, or is likely to cause, an appreciable adverse effect on competition in India.
Agreements between enterprises or persons engaged in an identical or similar trade in goods or provision of services, including cartels and decisions of associations of enterprises or persons, are presumed to have an appreciable adverse effect on competition when they (section 3(3), Competition Act):
Determine purchase or sale prices.
Limit or control production, supply, markets, technical development, investment or provision of services.
Share the market, source of production or provision of services, by allocating geographical market areas, types of goods or services, customers, or any similar arrangement.
Result in bid-rigging or collusive bidding.
However, if a horizontal agreement relating to the above behaviour is entered into by way of an efficiency enhancing joint venture, the presumption of appreciable adverse effect on competition does not apply and a rule of reason approach is applicable (see Question 37).
Vertical agreements (for example, tie-in arrangements, exclusive supply agreements, exclusive distribution agreements, agreements involving refusals to deal and resale price maintenance agreements) are prohibited only if they are found to cause, or be likely to cause, an appreciable adverse effect on competition in India (section 3(4), Competition Act).
If the Commission is of the prima facie view that an agreement or practice causes an appreciable adverse effect on competition, it can direct the DG to conduct an investigation either on its own initiative or on receiving a:
Complaint from any person, consumer or consumer association or trade association.
Reference from the central or state government.
Reference from a statutory authority.
The DG must submit a report on its findings to the Commission within the time specified by the Commission. The Commission proceeds with its inquiry on the basis of those findings (see Question 18).
The prohibition applies to both formal and informal agreements. The term "agreement" is defined widely to include any arrangement, understanding or action in concert, regardless of whether it is formal or in writing, or is intended to be enforceable by legal proceedings (section 2(b), Competition Act).
The central government can exempt from the application of the Competition Act (section 54, Competition Act), in certain limited circumstances:
Any class of enterprise, if it is in the public interest or in the interest of the security of India.
Any practice or agreement arising out of, and in accordance with, any obligation assumed under a treaty, agreement or convention with other countries.
Any enterprise that performs a sovereign function on behalf of the state or central government. In this case, the exemption is only in respect of activity relatable to the sovereign functions.
There are no block exemptions under the Competition Act.
The Competition Act provides the following exclusions from the regulation of restrictive practices (see Question 13):
The right of any person to prevent any infringement of, or to impose reasonable conditions necessary for the protection of, any of his intellectual property rights under the following Indian statutes:
Copyright Act 1957;
Patents Act 1970;
Trade and Merchandise Marks Act 1958 or the Trade Marks Act 1999;
Geographical Indications of Goods (Registration and Protection) Act 1999;
Designs Act 2000; or
Semi-conductor Integrated Circuits Layout-Design Act 2000.
The export of goods from India to the extent to which the restrictive agreement relates exclusively to the production, supply, distribution or control of goods or provision of services for export.
There are no specific periods given under the Competition Act and the Limitation Act 1963 applies. The limitation period provided for civil disputes is three years. (However, there has been no judicial determination on this in relation to the Competition Act.)
No notification of restrictive agreements is required or permissible under the Competition Act.
There is no specific provision for informal guidance under the Competition Act.
The Commission can start investigations on its own initiative (section 19(1), Competition Act).
Any person, consumer, consumer association or trade association can make a complaint to the Commission. These third parties can initiate an investigation by both:
Making a complaint to the Commission under the Competition Act.
Paying the requisite fee of (General Regulations and Competition Commission of India (General) Amendment Regulations, 2009 (No. 5 of 2009)):
INR5,000 for individuals, Hindu undivided families, non-governmental organisations, consumer associations, co-operative societies and trusts;
INR20,000 in case of a firm or company having a turnover in the preceding year up to INR10 million; or
INR50,000 in all other cases.
In addition, the central or state government or any statutory authority can make a reference to the Commission.
Complainant. The complainant who initiates a case has various rights to make representations, and can make oral submissions or file written arguments during the course of an inquiry within the time specified by the Commission (Regulation 29(1), General Regulations).
The Commission can also invite the complainant to participate in the preliminary conference called to decide whether a prima facie case exists for further investigation (Regulation 17(2), General Regulations). However, the Supreme Court held in Competition Commission of India v Steel Authority of India Limited that:
The Commission does not have a statutory duty to issue a direction to the DG to start an investigation.
No party can, as a matter of right, claim that they should be heard at the preliminary conference.
The Commission has discretion to direct the concerned party or parties to provide assistance or produce information.
The complainant can be invited to present its objections or suggestions to the Commission where the DG's report finds no contravention of the Competition Act (Regulation 21(2), General Regulations).
Third parties. The Commission can add third parties as parties to the proceedings on written application by any party to the proceedings if (Regulation 24(1), General Regulations):
The third party has either:
any alleged right to relief in respect of, or arising out of, the same act or transaction, or series of acts or transactions;
an interest in common with the complainant.
The third party's participation is necessary for the determination of issues.
The Commission can permit a third party to take part in further proceedings and present its opinion on a particular matter if (Regulation 25(1), General Regulations):
It has a substantial interest in the outcome of the proceedings.
It is in the public interest to allow it to present its opinion on that matter.
Complainant. The complainant can inspect or obtain copies of documents or records submitted during the proceedings on written application to the Secretary of the Commission and payment of a fee of INR1,000 per day per case. The charge for copying is fixed at INR20 per page (Regulations 37(1) and 50, General Regulations).
Third parties. Third parties who are added as parties to the proceedings can access documents previously filed in the matter by other parties, by making a written application to the Commission (Regulations 24(3) and 25(3), General Regulations) and paying a fee and charges (see above, Complainant).
Third parties who are not parties to the proceedings can inspect the documents or records of the proceedings if the party both (Regulations 37(2) and 50, General Regulations):
Demonstrates sufficient cause before the Commission through a written application.
Pays the required fees (see above, Complaint).
See above, Representations.
The investigation has the following stages:
Formation of prima facie opinion. Following receipt of a complaint, a reference from another governmental body or information that it has obtained itself, the Commission must consider the information or reference to form a prima facie opinion as to whether there is a case of a breach of the Competition Act. The information or reference is received by the Secretary to the Commission, who places it before the Commission (Regulation 16(1), General Regulations). The Commission must consider the matter, to form a prima facie opinion, at an ordinary meeting held within 15 days of the date of the Secretary placing the matter before the Commission (Regulation 16(3), General Regulations). In cases of anti-competitive agreements or abuse of dominance, the Commission must form its opinion on the existence of a prima facie case of a breach of the Competition Act within 60 days from the time that the Secretary places the matter before the Commission (Regulation 16(2), General Regulations).
The Supreme Court has held that the Commission is expected to hold its meetings and record its opinion on the existence of a prima facie case within a period shorter than the stated period of 60 days. The court also held that the Commission must record reasons for its prima facie opinion, expressing clearly that it is convinced that a prima facie case exists (Competition Commission of India v Steel Authority of India Limited).
Investigation by the DG. Where a prima facie case exists, the Commission directs the DG to conduct an investigation (section 26(1), Competition Act and Regulation 18(1), General Regulations).
The DG must submit a report on his findings within the period specified by the Commission (section 26(3), Competition Act). Under the Supreme Court's directions, the DG's report must be submitted within the time set by the Commission. In all cases they must be submitted no later than 45 days from the date of the directions passed under section 26(1) of the Competition Act until the Commission passes suitable regulations in relation to this (Competition Commission of India v Steel Authority of India Limited). The Commission has amended the General Regulations to allow for an initial period of 60 days, after which the DG applies to the Commission for an extension on the provision of sufficient reasons (Regulations 20(2) and 20(3), General Regulations). If, on consideration of the DG's report, the Commission is of the opinion that further investigation is required, it can order the DG to (Regulation 20(6), General Regulations):
conduct further investigation on specific issues; and
submit its supplementary report within 45 days.
The Commission can forward a copy of the DG's report(s) to the parties concerned and/or to the central or state government, or to the statutory authority that made the reference (section 26(4), Competition Act and Regulation 21(1), General Regulations).
Outcome of the DG's report. If the DG decides that the allegations regarding the breach of the Competition Act are not substantiated, the parties concerned, or the referring authority, are given an opportunity to respond (section 26(5), Competition Act). After this response, the Commission can, on consideration of any suggestions or objections to the DG's report, either (section 26, Competition Act and Regulation 21, General Regulations):
close the case and communicate its orders to the central or the relevant state government, statutory authority or the parties concerned, as the case may be; or
direct the DG to continue the inquiry (or continue the inquiry itself).
If the DG finds that the allegations regarding the breach of the Competition Act have been substantiated, the Commission must invite objections and suggestions from the central or state government, statutory authority or the parties concerned, as applicable. If the Commission considers that further investigation is necessary, it directs the DG to continue the inquiry and submit supplementary reports on specific issues within a specified reasonable period (Regulations 21(7) and 21(8), General Regulations).
Final order. The Commission must pass its orders or decision, as far as practicable, within 21 days of the date of conclusion of final arguments (Regulation 32(2), General Regulations). The Competition Act does not prescribe a maximum time limit for an investigation initiated in respect of an anti-competitive agreement or an abuse of dominance. However, where the Commission has granted interim relief, the Supreme Court has ordered that a final order should be passed within 60 days of the interim order (Competition Commission of India v Steel Authority of India Limited). The Commission amended the General Regulations to provide that where an interim order under Section 33 has been passed, a final order must, as far as possible, be passed by the Commission within 90 days of the date of the interim order (Regulation 31(3), General Regulations).
There is no provision under the Competition Act for making the details of potentially restrictive agreements or practices that are under investigation public. The proceedings before the Commission are not public unless the Commission decides otherwise, keeping in mind considerations such as (Regulation 47, General Regulations):
Harm caused by disclosure to the public.
Efficient and proper conduct of proceedings.
Resources of the Commission.
The Commission can publish a brief summary or full text of its orders or decisions if it considers that it is in the public interest (Regulation 53, General Regulations). However, in practice, complainants often inform the press of pending investigations without effective redress under the Competition Act, as the Competition Act's provisions only bind the Commission and the CompAT, but not the parties.
As a matter of general principle, the Commission cannot disclose any information relating to an enterprise, obtained by or on its behalf for the purposes of the Competition Act, without the prior written permission of the enterprise involved, except to comply with the provisions of the Competition Act or any other law (section 57, Competition Act).
However, the Competition Act specifically provides for a process by which parties to proceedings before the Commission can inspect documents on file, subject to confidentiality (Regulation 37, General Regulations).
If a party to proceedings requires the Commission to keep information provided by it during the proceedings confidential, it must specifically claim confidentiality over this information. A party must submit a written request to the Commission or the DG to treat information as confidential for a specified time period, if making the information public would either (Regulation 35, General Regulations):
Disclose trade secrets or destroy or appreciably diminish the commercial value of any information.
Cause serious injury.
If a party has its request rejected by the DG, it can approach the Commission for a decision regarding confidential treatment.
Where confidential information is included in the party's written submissions, the party must file the complete version of the submissions with the words:
"Restriction of publication claimed" on the top of the first page.
"Confidential" near the top on each page in red ink.
The party must also file a public version of the submissions with the confidential information clearly redacted (Regulation 35(5), General Regulations).
In addition, the Commission must maintain as confidential the identity of an informant (a complainant or whistleblower, as applicable) if requested to do so in writing (Regulation 35(1), General Regulations).
The DG can investigate only if the Commission directs it to do so (sections 26(1) and 41(1), Competition Act) (see Question 20).
The DG and the Commission's powers include:
Summoning and enforcing the attendance of any person for examination on oath.
Requiring the discovery and production of documents or material objects.
Receiving affidavit evidence.
Issuing commissions for the examination of witnesses or documents.
Requisitioning any public record or document, or copy of a public record or document, from any office (subject to sections 123 and 124 of the Indian Evidence Act 1872, dealing with issues of privilege).
The Commission's additional powers include:
Calling on experts from the fields of economics, commerce, accountancy, international trade or other discipline as they deem necessary.
Dismissing an application in default or deciding it without the party being present.
Issuing interim orders, without giving notice to the party, to restrain any act in contravention of the Competition Act until the inquiry's conclusion or further orders (section 33, Competition Act).
Joining or substituting parties in proceedings (Regulation 24, General Regulations).
Permitting a person or enterprise to take part in proceedings (Regulation 25, General Regulations).
Consolidation of two or more similar information requests, references or applications (Regulation 27, General Regulations).
The DG's additional powers include:
Requiring any person to furnish any information, books or papers necessary for an investigation.
Calling for personal appearance and examination on oath of any officer, employee or agent of a company or any other person.
Power of search and seizure of documents relating to the company or employees and officers, including dawn raids on their official and residential premises (with the permission of the Chief Metropolitan Magistrate of Delhi).
There is no specific provision under the Competition Act allowing the Commission to reach settlements or accept binding or informal commitments from the parties without reaching an infringement decision. The Competition Act also does not allow parties to withdraw from proceedings.
The Commission can:
Order the parties involved to discontinue or not to re-enter into the agreement.
Direct that the agreement be modified to the extent and in the manner it specifies.
Impose a penalty (see below, Fines).
The Commission can also pass any order that it deems fit, such as ordering the parties concerned to abide by any other orders it passes and comply with any directions (section 27, Competition Act).
The Commission can impose a penalty of up to 10% of the average turnover for the previous three financial years on each party to the agreement or abuse.
If the agreement has been entered into by a cartel, the Commission imposes on each producer, seller, distributor, trader or service provider in the cartel, a penalty equivalent to the higher of either:
Three times its profits for each year of the duration of the agreement.
10% of its turnover for each year of the duration of the agreement.
Additional fines of up to INR100,000 can be imposed for each day of non-payment, subject to a cap of INR100 million (section 42(2), Competition Act). Non-payment of these fines is a criminal offence punishable by imprisonment for a maximum term of three years or maximum fine of INR250 million, or both (section 42(2), Competition Act).
Only two fines have been imposed for violation of section 3 of the Competition Act so far. In both cases, the Commission imposed fines of INR100,000 on each of the alleged participants in the cartel because the cartel only lasted for a short period.
If a breach has been committed by a company, every person who, at the time the breach was committed, was in charge of and responsible for conducting the business of the company, is deemed guilty of the breach. These persons are liable unless they can prove that the breach was committed without their knowledge or that they exercised due diligence to prevent the breach.
If it is proved that the breach has taken place with the assistance or consent of, or is attributable to any neglect on the part of any director, manager, secretary or other officer of the company, that person is also liable for the breach (section 48, Competition Act).
There are no specific penalties prescribed in the Competition Act in relation to breaches by individual managers or directors. Nor is there any precedent or specific guidance in this area. However, the Competition Act provides for a penalty of imprisonment for a term up to three years, a fine of up to INR250 million or both if any orders of the Commission are contravened. These penalties are imposed on persons in their individual capacities. Similarly, if a person makes false statements or omits to furnish material information, the Commission can impose a penalty between INR5 million and INR10 million on that person.
The Commission can impose a lesser penalty on a producer, seller, distributor, trader or service provider included in a cartel, who makes a full, true and vital disclosure in relation to the alleged cartel agreement or practice. However, the Commission cannot do so if the DG's investigation report has been received before the disclosure (section 46, Competition Act).
The Commission can revoke a lesser penalty and re-impose the original penalty if it is satisfied that any of the following apply:
The person concerned had not complied with the conditions attached to the lesser penalty.
The person concerned had given false evidence.
The disclosure made is not vital.
The person concerned stops co-operating with the Commission before the proceedings are complete.
The Commission can grant a reduction in fines of up to (Regulation 4, Competition Commission of India (Lesser Penalty) Regulations 2009 (Lesser Penalty Regulations)):
100% to the first applicant.
50% to the second applicant.
30% to the third applicant.
The Commission will only grant leniency to the second and subsequent applicants both:
After evaluation of the evidence provided by the first applicant.
If it is of the opinion that each applicant can provide evidence that significantly adds value to the evidence that the Commission has in its possession.
If the restrictive provisions in an anti-competitive agreement are severable, then the Commission can order modification of the agreement. If the restrictive provisions are not severable, the entire agreement is void. The Commission has adopted this approach in some cases, asking the parties to sever or modify the offending clauses of a restrictive agreement (Vijay Gupta v. Paper Merchants Association, Delhi − Case No. 7/2010).
Any person can apply to the CompAT for compensation for loss or damage suffered as a result of a breach of the Competition Act. The pre-condition for making the application is a finding by the Commission (or the CompAT in an appeal) of a contravention of the Competition Act.
The CompAT makes an inquiry into the allegations and where it is satisfied that the applicant has suffered loss or damage, it makes an order directing the infringing enterprise to make the payment to the applicant (section 53N, Competition Act).
The CompAT has the power to regulate its own procedure and is not bound by the Code of Civil Procedure 1908. It is, however, bound by the principles of natural justice in all of its activities.
Where loss or damage is caused to many persons with the same interest, one or more persons can obtain permission from the CompAT to make an application for the benefit of all persons (section 53N(4), Competition Act).
The right and process of appeal against any Commission decision, order or direction made under the sections noted in section 53A of the Competition Act, is the same as for combinations (see Question 10).
Abuse of dominance is regulated under the civil jurisdiction of the Competition Act, which came into force on 20 May 2009. The Competition Act prohibits an abuse of a dominant position (section 4, Competition Act).
The Commission can investigate an alleged abuse of a dominant position on:
Its own initiative.
Receiving a complaint from any person, consumer, consumer association or trade association.
Receiving a reference from the central or state government.
Receiving a reference from a statutory authority.
On determining that there has been a breach of section 4 of the Competition Act, the Commission can issue various orders, including cease and desist orders, division of a dominant enterprise, compensation and penalties (see Questions 33 and 34).
The test for dominance is whether an enterprise, in the relevant market in India, is able to operate independently of competitive forces prevailing in the relevant market, or affect its competitors or consumers in its favour (section 4, Competition Act).
The Commission examines the following factors in determining whether an enterprise enjoys a dominant position (section 19(4), Competition Act):
Market share of the enterprise.
Size and resources of the enterprise.
Size and importance of the competitors.
Economic power of the enterprise.
Vertical integration of the enterprises or sale or service network of the enterprises.
Dependence of consumers on the enterprise.
Whether the dominant position was acquired as a result of any statute or by virtue of being a government company or a public sector undertaking or otherwise.
Countervailing buying power.
Market structure and size of market.
Social obligations and social costs.
Relative advantage, in relation to its contribution to economic development.
An abuse of dominance is where a dominant enterprise, directly or indirectly (section 4(2), Competition Act):
Imposes discriminatory or unfair conditions on purchases, sales of goods or provision of services.
Imposes discriminatory or unfair prices on purchases or sales of goods or provision of services, including predatory pricing.
Limits or restricts the provision of goods or services (or technical or scientific developments relating to goods or services) to the prejudice of consumers.
Indulges in practices which prevent market access.
Makes the conclusion of contracts subject to acceptance by other parties of supplementary obligations that have no connection with the subject matter of the contract.
Uses its dominant position in one market to enter into, or protect, other relevant markets.
The Competition Act does not provide for any exclusions or exemptions in the case of abuse of dominance.
There is no provision under the Competition Act for the notification of practices constituting abuse of dominance or for obtaining approval or guidance from the Commission.
See Question 22.
The Commission can issue orders including:
Cease and desist orders against the abuse of dominant position.
Penalties (see Question 24).
Recommending the division of an enterprise (see below).
The penalties for abuse of a dominant position are the same as those for engaging in restrictive practices (see Question 24). The Commission can also order a dominant enterprise to be divided into two or more entities, to ensure that it does not abuse its dominant position (section 28, Competition Act).
In abuse of dominance cases decided by the Commission so far, the following fines have been imposed:
INR6.3 billion (equivalent to 7% of the average turnover of the past three years): imposed on DLF Limited (in Belaire Owner's Association v DLF Limited and HUDA).
INR555 million (equivalent to 5% of the average turnover of the past three years): imposed on National Stock Exchange of India Limited (in MCX Stock Exchange Ltd & Ors. v National Stock Exchange of India Ltd & Ors).
This is the same as for restrictive agreements and practices (see Question 25).
The Competition Act does not specifically deal with joint ventures, except in relation to horizontal agreements falling under section 3(3) that both:
Are entered into by way of joint ventures.
Increase efficiencies in production, supply, distribution, storage, acquisition or control of goods or provision of services.
These horizontal joint ventures are not subject to the presumption of appreciable adverse effect on competition (see Question 13) under section 3(3) of the Competition Act. Therefore, once it is proven that these horizontal agreements are joint ventures that increase efficiencies, they are subject to a rule of reason assessment of their overall anti-competitive effect (applying the factors in section 19(3) of the Competition Act). All other horizontal joint ventures which do not fall within section 3(3) are assessed by the Commission for their overall anti-competitive effect using a rule of reason test (sections 3(1) and 19(3), Competition Act).
The Competition Act does not specifically provide for the treatment of vertical joint ventures. However, it is believed that they will be treated by the Commission in the same manner as other vertical agreements and assessed for their overall anti-competitive effect under sections 3(1), 3(4) and 19(3) of the Competition Act.
The Competition Act does not state whether joint ventures that meet the relevant thresholds for merger control will be treated as combinations subject to mandatory pre-notification (see Question 2). However, the incorporation of Greenfield joint ventures is likely to be exempt from merger control. This is due to the de minimis target exemption introduced by the Notifications for target enterprises where either the Indian assets are less than INR2.5 billion or the Indian turnover is less than INR7.5 billion (see Question 2).
The Commission began its operations in May 2009 (see Question 39). It has already established contact and interaction with the various regulators, including the US Federal Trade Commission, US Department of Justice (Antitrust Division) and the European Commission (DG Competition), to establish co-operation protocols. The Secretary to the Commission is responsible for entering into formal relationships, including the signing of any memorandum or arrangement, with the foreign competition authorities and any other foreign agencies with the prior approval of the Commission and the central government (section 18, Competition Act and Regulation 14 (3), General Regulations). In the context of merger control, the Commission can seek the opinion of other agencies in relation to a particular combination (Regulation 34, Combination Regulations). In addition, the Commission is an active member of the International Competition Network.
A committee headed by Dhanendra Kumar (formerly Chairman of the Commission) has been set up to frame a national competition policy for effectively ensuring fair competition laws and policies across India (NCP Committee). To implement the new national competition policy, it is proposed that both:
All government ministries, authorities and agencies will be encouraged to have an in-house cell to undertake competition impact assessments of new laws and policies.
A new body, the National Competition Policy Council, will be set up, among other things, to assist the government in the competition impact assessments and the mobilisation of awareness of the competition policy principles across India, including through the consumer movement.
The NCP Committee has proposed amendments to the Competition Act (including collective dominance and a control-based merger control test). If accepted by parliament, these are expected to be incorporated into the law in the next few years.
Head. Ashok Chawla (Chairperson)
Outline structure. The Commission consists of a chairperson and six members appointed by the central government.
Responsibilities. The duties of the Commission are to:
Eliminate practices having adverse effects on competition.
Promote and sustain competition.
Protect the interests of consumers.
Ensure freedom of trade for other market participants in India.
Engage in competition advocacy.
Procedure for obtaining documents. The documents issued by the Commission are publicly available on its website (see above). Documents relating to cases can be obtained as specified above (see Question 19).
Head. Justice Arijit Pasayat (Chairman)
Outline structure. The CompAT consists of a chairperson and a maximum of two other members to be appointed by the central government.
Responsibilities. The functions of the CompAT are to:
Hear appeals from the directions, orders and decisions of the Commission specified in section 53A of the Competition Act.
Award compensation to aggrieved parties on the Commission's or the CompAT's determination of a breach of the Competition Act (see Question 25).
Procedure for obtaining documents. The documents relating to the CompAT will be publicly available on the CompAT's website.
T +91 11 2692 0500 (ext 6003)
F +91 11 2692 4900
Qualified. India, 1981
Areas of practice. Competition/anti-trust; mergers; litigation; dispute resolution; financial reconstruction; corporate and commercial litigation; power and telecom litigation; anti-dumping; international and domestic arbitration; company and commercial law; intellectual property.