Last updated: December 17th, 2019 3:43 PM

Competition Commission of India

The goal of the Competition Commission of India is to create and sustain fair competition in the economy that will provide a ‘level playing field’ to the producers and make the markets work for the welfare of the consumers. A major role and responsibility of the Competition Commission of India is to eliminate practices that have an adverse effect on competition, promotion, and sustenance of competition and upholding the interest of the consumers, thus ensuring freedom of trade in the markets of India. In this article, we look at some of the behaviours that could be held as anti-competitive and subject to action from the Competition Commission of India.

Dominance

Dominance means to acquire a significant market power that enables an increase in price. This helps to limit production and customers of competitors, independently. This position is determined based on the relevant markets. Exploitation of dominant position is prohibited and it would be punishable if a business is witnessed indulging in such an act. Predatory pricing can be used to establish market dominance and abuse of position. Predatory pricing can be established if an entity fixes the selling price lower than the purchase price with a motive of getting rid of a particular competitor.

Horizontal Agreements

Any agreement which causes an unpleasant effect on competition is called an anti-competitive agreement. Agreement between enterprises at the same stage of production chain is called horizontal agreements. For example, an agreement between two rivals for fixing prices or limiting production for sharing the markets might adversely affect the competition and is held to be abusive. A cartel is also a type of horizontal agreement between producers of goods or providers of services for fixing prices or sharing the market.

Vertical Agreement

A vertical agreement is fixed between enterprises at different stages of production. For example, an agreement between a manufacturer and a distributor is vertical agreement. Franchising is another type of vertical agreement.

Regulation of Combinations

The word combination denotes mergers, amalgamations and acquisitions of control, shares, voting rights or assets. These combinations might be horizontal, vertical or conglomerate. In case the proposed combination effects the competition unfavourably, it will not be permitted. Horizontal combinations are the ones between rivals and could lead to market dominance and predatory pricing. Conglomerate agreements are those between enterprises, which aren't in the same line of business or same market.