Adv. PRIYANKA GANGWAR,
Karkardooma Court, New Delhi
Competition is vital for the development of healthy economy as well as for the welfare of the consumers. So competition policy as well as consumers welfare is interdependent on each other. Time has gone when the sellers used to rule over consumers or customers. It is time and again said that customers are the king; it is their fundamental right to choose the best option beneficial for them. The unequal relation among the consumers and producers results into the disputes among them, the inability to meet the demand and supply of the consumers has resulted in to a gap and hence to an extent watered down the concept of consumer sovereignty. Many initiatives are being carried out by government to aware consumers regarding their rights so as to protect their interest “Jago grahak jago is one of them”. Beside this consumer protection Act is also enforced to shield consumers against the deceptive practices of sellers. In 2002 another law i.e., competition Act in order to protect consumers from those producers or manufacturers who by indulging into anti-competitive activities harms their interest as well as free flow of competition was enacted. The act enlarge the ambit of definition of consumer so as to cover even those who are not protected under consumer protection Act The act also contains provision of competition advocacy as a result of which competition commission undertakes to aware public regarding competition policy.
Key words: competition, competition policy, anti-competitive activities
Competition refers to a situation in market in which firms and sellers independently strive for buyer’s patronage in order to achieve particular business objectives. So many times to achieve their vary objectives, the market players indulge themselves in such activities which helps them to make money but are detrimental to the interest of consumers. Consumers are the one of the essential parties of the market. Without the consumers or customers the market is like a school without students, the vary objective would be frustrated.
Now a day’s many anti-competitive activities are flourishing in the market which harms the interest of the consumers. They are being forced to buy what they don’t want to buy, they are getting products which are not meeting the safety standards or required quality, or are getting the product on a high price. So Competition law was established to act as a watchdog authority over the market players to control their activities and thus strives to protect the interest of the customers from getting harmed by the hands of market players.
All the countries are in the race of development of economy, which can-not be achieved without providing a sound market condition where both the competitors and the consumers can get easy access. The market will be developed when their will be a balance between the market players and the buyers. Over the globe the buyers are asking value for their money in terms of good quality and services. Modernization though has uplifted the status of consumers but still they are the victims of many unscrupulous activities carried out by market players.
The researcher in this paper will deal with how consumer’s rights are being protected under the competition law.
INTRODUCTION TO COMPETITION ACT
The competition law was established in 2002 with intent to protect and preserve competition in market by curbing all the anti-competitive practices which are detrimental to the interest of the consumers and thus aims to maximize the welfare of the consumers. This Act encourages the enterprises to attain efficiency, and creates a wider choice for consumers and helps reduce prices and improve quality of products/services. With this it seeks to promote free and fair competition as effective competition results in providing wider choices to the customers among various products and helps them getting best quality product at best price. Pursuant to this Act competition Commission of India was established under section 7 of the Act, to deal with all the complaints regarding the anti-competitive practices. The CCI has been provided with many duties and powers under sec 18 and 19, 20, 21 of the Act respectively. The Act has also provided with the establishment of COMPAT. It is the appellate tribunal wherein any party aggrieved by the order of the CCI may file the appeal petition.
EVOLUTION OF COMPETITION ACT
These articles provide that:
- The ownership and control of material resources of the community must be distributed as best to sub serve the common goods;
- The operation of the economic system does not result in the concentration of wealth and means of production to common detriment.
MRTP ACT 1969
After Independence many committees were appointed to look into the distribution of economy and concentration of power. In 1964 monopolies inquiries commission was appointed by the government of India to inquire the extent of concentration of economic power and the prevalence and effect of monopolistic and restrictive trade practices in private sectors. It was year 1965 when the commission submitted its report along with the Monopolies and Restrictive Trade Bill, 1965. The bill was passed by both the houses and finally received the assent of president in year 1969 and came into effect on June 01, 1970.
The objective behind the enactment of the Act was to keep a check on the operation of economic systems so that they do not result in concentration of economic power to common detriment and to control monopolies, for prohibition of monopolistic and restrictive trade practices. This Act has been amended many times but the major changes took place in year 1984 when provision regarding the unfair trade practices under part B of chapter 5 was added and 1991 where in after LPG Reforms major changes were done by way of repeal of provisions relating to the merger, acquisitions and takeover.
It was soon realized that the MRTP Act has become obsolete in certain areas in the light of international economic developments relating to competition laws, and there is a need to shift our focus from curbing monopolies to promote competition.
HIGH LEVEL COMMITTEE
With the change in time and in the wake of LPG there was a demand for a competition law so as to ensure the free flow of competition. It was said by many that the previous MRTP Act is inadequate because of its limited enforcement powers. Soon in 1999 the Government of India appointed the O’ level committee on competition policy and law in order to examine the various aspects of the competition policy and to suggest various reforms in the present competition policy in line with international development. The committee headed by Mr. S.V.S Raghvan submitted its report in year 2000 with following recommendations:
- The competition act according to the committee has become obsolete and can-not sub serve the purpose of new competitive environment. The committee was of opinion that this MRTP Act should be repealed as it is beyond repair.
- All trade policies should be open and non-discriminatory and should fall under the counter of competition policies. State monopolies, government procurements and foreign companies should also be subject to the competition law.
- They committee was also of opinion that all consumers irrespective of the purpose for which the product is hired or bought must fall within the ambit of competition law.
- The Industrial Dispute Act must be amended in a manner to provide with easy exist to non-viable and inefficient units subject to their legal obligations in respect of their liabilities.
- There is a need for new competition law, in order to meet the needs of changing economic condition and setting up of competition commission of India.
- Mergers harming the competition need to be discouraged.
- All the pending cases of MRTP commission must be transferred to CCI.
- The cases of unfair trade practices should be dealt by consumer courts under consumer protection Act.
- There must be provisions to adjudicate upon some anti-competitive practices harming the competition.
- The CCI must be given extra-territorial jurisdiction unlike MRTP Commission.
- The dominance needs to be appropriately defined under the Act.
So, as a result of the recommendations of this committee competition Act 2002 was enacted after receiving the assent of the president and was published in gazette of India in year 2003. This enactment is India’s response to the opening up of its economy, removing controls and resorting to liberalization. The natural corollary of this is that the Indian market should be geared to face competition from within the country and outside.
PREAMBLE AND OBJECTIVE OF COMPETITION ACT 2002
The preamble of the Act states-“An Act to provide, keeping in view of economic development of the country, for the establishment of a commission, to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interest of consumers and to ensure freedom of trade carried out by other participants in markets in India, and for matters connected therewith or incidental thereto”.
So by the mere reading of the preamble it is very clear that the Act provides for the establishment of the CCI, which will act as a watchdog over the anti-competitive activities or activities which are having appreciable adverse effect on the competition. By curbing the practices having appreciable adverse effect on competition and other anti-competitive activities, it strives to promote free flow of competition in the market which will ensure fairness and equity in market place transactions, will help in economic growth and development of the country, will increase the producing efficiencies of the market players and provide the consumers with wider choice and good quality product as low price.
It thus protects the interest of the consumers, as they will be getting wider choice among the products when there will be no practices going on having appreciable adverse effects. The Act also provides that market will not be restricted and there will be a freedom of trade, so that other participants can enter the market and provide with good deals in the favor of consumers. If there would not have been any such Act to curb anti-competitive practices, and monopolies, the competitors would have been into activities which are detrimental to the interest of the consumers, they might abuse their dominance power or enter into practices like cartelization, combination etc, resulting in harming the interest of the consumers as they would have to buy products with limited or no choice at the rates which would not have been reasonable.
So, it could be said that the Act was enacted with following objective:
- To promote free flow of competition in market.
- To ensure freedom of trade for all participants by controlling entry barriers in market.
- To promote economic efficiencies in both static and dynamic form and thus protecting the interest of the consumers.
- To ensure fairness and equity in market place transactions.
- To curb all anti-competitive activities having appreciable adverse effect on competition in market.
- Preserve and promote sound development of market economy.
The Supreme Court of India was of view that the principle objects of the Act, in terms of its preamble and Statement of Objects and Reasons, are to eliminate practices having adverse effects on the competition to promote and sustain competition in the market, to protect the interests of the consumers and ensure freedom of trade carried on by the participants in the market, in view of the economic developments of the country
MEANING OF CONSUMERS
In layman’s language the word consumer refers to that individual who buys or hires goods or services on consideration being paid or promised and consumes them.
Consumers have been defined under consumer protection Act as well as competition Act in following ways:
MEANING OF CONSUMER UNDER CONSUMER PROTECTION ACT 1986:
Consumer protection Act 1986 defines consumer in following words-
One who buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or
(ii) One who hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment”.
So, after reading this particular section it is understood that, under consumer protection Act 1986, person who buys or hires goods and services on consideration being paid or promised or partly paid or promised for individual purpose falls under the ambit of consumers, and can be thus protected for unfair practices etc.
MEANING OF CONSUMER UNDER COMPETITION ACT 2002
The competition Act 2002 defines consumers in following words-
“Consumer” means any person who—
(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, whether such purchase of goods is for resale or for any commercial purpose or for personal use;
(ii) hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first-mentioned person whether such hiring or availing of services is for any commercial purpose or for personal use;
Competition Act has a wider scope in relation to the definition of consumers. It includes within the ambit of consumer any person who buys or hires goods or services on consideration being paid or partly paid or promised or partly promised, for personal use as well as traders who buys the goods and services for commercial purpose or for resale unlike consumer protection Act.
CONSUMER PROTECTION UNDER COMPETITION ACT 2002 AND CONSUMER PROTECTION ACT 1986
Comparing the above written definitions of consumer both, under consumer protection Act as well as Competition Act, it is very clear that scope of the definition of consumer under competition Act is larger than that of consumer protection Act. The competition act enables a person who buys goods and services for resale to challenge the anti-competitive practices as a consumer unlike the consumer protection Act.
The competition Act as well as consumer protection Act provides adequate protection to the consumers within their ambit.
The Competition policy aims primarily at safeguarding the consumers’ right of economic self-determination or guarantees the private autonomy and its exercise, unhampered by exploitation of market power, and guarantees the efficiency of the market on a microeconomic level. i.e. the competition policies protects the interest of the consumers against the activities causing appreciable adverse effect on competition, as every consumer wants to enjoy much competition in order to attain the wider choice, lower price, improved quality and wider services.
Whereas consumer protection Act viva its protective measures aims at redressing disputes which arises between the consumers and the sellers, or manufactures or producers etc, in situations where consumers are cheated due to incomplete or misleading information, through laws dealing with advertising and promotion techniques, unfair contract terms, product safety and product liability, labeling, distance selling, door step selling and the like, which correct market failures.
Both the competition policy as well as consumer policy aims at providing the welfare to the consumers in their own ways. The competition policy wherein, protects the consumers from anti-competitive practices which harms the rights to consumers to wider choice, reasonable price, etc, the consumer policy protects them from getting deceived on the hand of sellers or market players in following ways:
- may be because of not getting the product of same standard as was asked by the consumer, or
- the right of the consumer of the caveat emptor was hampered wherein the seller either concealed some material truth about the product asked by the consumer or
- The product offered and sold by the seller to the consumer was not fulfilling the safety standards. Etc.
Although there was already an act providing the protection to the consumers but still competition Act enacted in year 2002 via its preamble provides for welfare of the consumers because consumer protection Act within its ambit does not provide protection to those who buys goods for resale or trading purpose as well as it does not provide protection against the anti-competitive practices causing AAEC, as provided by the competition Act by curbing all the evils provided under sec 3, 4, 5 of the Act.
CONSUMERISM UNDER COMPETITION ACT 2002
The word consumerism refers to consumer activism which seeks to protect the consumers. It refers to the concept that the marketplace itself is responsible for ensuring social justice through fair economic practices. The above-mentioned definition clearly shows that the interest and welfare of the consumer is the main focus. As is mentioned earlier the geneses of the consumer protection are in Constitution of India under article 38 and 39. On the basis of these article the consumer protection Act and competition Act strives for the welfare of the consumers. The supreme court of India was of opinion that-
“In a market governed by free economy where competition is the buzzword, producers may fix their own price. It is, however, difficult to give effect to the constitutional obligations of a State and the principles leading to a free economy at the same time. A level playing field is the key factor for invoking the new economy. Such a level playing field can be achieved when there are a number of suppliers and when there are competitors in the market enabling the consumer to exercise choices for the purpose of procurement of goods. If the policy of the open market as to be achieved the benefit of the consumer must be kept uppermost in mind by the State”.
The competition Act 2002 advocates consumerism through following aspects:
- Protection of consumers from anti-competitive activities
- Protection from abuse of dominance power
- Protection consumers from combination
- Promoting competition Advocacy to consumers.
PROTECTION UNDER SECTION 3 OF COMPETITION ACT: ANTI-COMPETITIVE ACTIVITIES
Competition Act 2002 via section 3 controls the anti-competitive activities. It prohibits any enterprise or association of enterprise or person or association of person to enter into any agreement or arrangement in respect of Production; Storage; Acquisition; or Control of goods or provision of services, which causes or is likely to cause appreciable adverse effect on competition. For the purpose of this Act any agreement is not required to be in writing neither any intention to legally enforce that is required. Thus competition Act viva this section protects the interest of the consumers from being harmed on the hand of the market players indulging in such activities which cause appreciable adverse effect on competition. The anti-competitive agreements under section 3 of the Act are of two types:
- Horizontal agreements : these are arrangement among the enterprises at same stage of production chain engaged in identical or similar trade of goods like cartel, in respect of :
- Price determination
- Limit or control of production, supply and technical development
- Market allocation
- Directly or indirectly result in bid rigging.
The horizontal agreements are perse void. It is like cancer to the competition in market. By destroying competition they cause serious harm to our economies and consumers. The horizontal agreement restricts the entry to the market for other participants as well as restricts the choice of the consumers for the products.
- Vertical agreements. These are agreements among the market players who are at different stage of the production chain, like manufacturer and distributers in respect of production, supply, storage, selling price etc. which puts extra economic burden on the buyer. It is not per-se void but rule of reason will be applied. If the agreement will be resulting in activities having appreciable adverse effect on competition, it will be void.
If any of the above mentioned anti-competitive activities are causing appreciable adverse effect on the competition in market the CCI may impose fine in the form of penalty up to 10% of the average profit earned by the enterprise in the last three years. So by imposing the penalty on the defaulting parties the competition Act strives to prevent such anti-competitive practices and hence protects the welfare of the consumers by providing them more and more competition in the market.
PROTECTION UNDER SECTION 4 (ABUSE OF DOMINANT POWER)
Competition Act via section 4 expressly prohibits the abuse of dominant power by any enterprise. The expression dominance here means the position of Strength enjoyed by an undertaking that enables it to operate independently of the competitive pressures in the relevant market and also to affect relevant market, competitors and consumers by its actions.  To dominate the market is not bad but to abuse that dominant position detrimental to other market players and consumers is prohibited. Section 4(2) of the competition Act provides that if any enterprise which is in dominant position in market, directly or indirectly imposes unfair and discriminatory
- conditions in purchase or sale of goods or services or
- Prices in purchase or sale(including predatory pricing)
Or limits or restricts production of goods or services, technical development or indulges in practices resulting in denial to market access, it shall be treated as abuse of such dominance power.
The commission while enquiring into whether the enterprise is enjoying a dominant position or not has to look into all or any of the following factors:
- Market share of enterprise
- Size and resources of enterprise
- Economic power of enterprise including commercial advantage over companies
- Dependence of consumer on enterprise
- Countervailing buying power
- Or any other factor mentioned in sec 19(4) of the Act or as deems fit to the commission.
The term predatory pricing under the act refers to the “the sale of goods or provision of services, at a price which is below the cost, as may be determined by regulations, of production of goods or provision of services, with a view to reduce competition or eliminate the competitors”. The predatory firm after driving the competitors out from the market generally increases the price above the level of the competition so as to earn supra profit. These types of practices undermine the competition in the market and are detrimental to the interest of the customers. The commission when is satisfied that any enterprise or individual is indulged in abuse of dominant position it can pass following orders:
- a) Direct the parties to discontinue and not to re-enter such agreement; b) direct modification of
the agreement; c) impose a penalty which shall not be more than 10 per cent of the average of the turnover for the last preceding three financial year; and d) award compensation to the parties in accordance with provision of Section 34 of the Act
PROTECTION UNDER SECTION 5 (COMBINATION)
Competition Act via section 5 provides that the acquisition of enterprises, by one or more persons or merger or amalgamation, in the manner set out therein, which would be a combination. Combination of two firms or enterprise can result in adverse effect on the competition, if the parties to the combination start manipulating the market according to them and detrimental to other market player and thus drives out the existing small market players and will indirectly result in loss to consumers as they will have to buy goods with limited choice at the price demanded by the dominating market players. The CCI under section 6 have power to regulate all the mergers and combinations having appreciable adverse effect on the market. it is mandatory for all the enterprises engaged in combination to inform the CCI regarding this. The commission then provides them specific instructions if combination results in violation of the provisions of the competition Act and hence detrimental to the consumers. The provisions relating to regulation of combination and enquiry is provided under section 20, 29 and 30 of the Act.
PROMOTION OF COMPETITION ADVOCACY
Competition law plays an important role in protecting the interests of consumers. It via section 47 provides power to the central and state government to formulate the competition policies for the welfare of the consumers and thereby makes reference to the commission for their opinion, although the opinion of commission is not binding on the central government. The aim behind this is welfare of consumers as well as to aware the consumers regarding effective competition in market. Keeping this provision in mind central government has formulated many policies to aware the consumers, such as:
- Spreading awareness regarding harmful effects of anticompetitive measures adopted by suppliers and manufactures among various levels of Government Officers
- Helping identifying areas which are more prone to activities like bid-rigging, cartelization or abuse of dominance may be
- Protection of small enterprises, self-employed and micro-retailers against abuse of dominance by bigger enterprises.
- Creating positive effect on wages, working conditions and workers’ welfare as a result of increase in allocation of efficiencies arising in labor market.
- Familiarizing with the legal remedies available in competition law.
CONCLUSION AND SUGGESTION
In the interest and welfare of consumers and the national economy, it is necessary to promote a market condition wherein fair competition is flourished, and all the anti-competitive activities are curbed as well as market players are being discouraged from indulging in practices causing appreciable adverse effect on the market. It is rightly said by “Charles Darwin” in his theory of “survival of fittest”, that it is the dominating or the fittest who survives and the weaker are eliminated. If we related this theory to the competition in market, the dominant market players they enter into anti-competitive practices and limits the supply or production or play with the prices of the products and eliminates the other small market competitor and indirectly affects the consumers who are the main ingredients of the market, as they are left with no or very little choice and are forced to buy a product at a price asked by the market players. Although competition Act do not directly protects the interest of the consumers but it indirectly by curbing all the market evils which are detrimental to the interest of the consumers strives for welfare of the consumers.
I believe that competition law is doing well in its field but if instead of fine, if there will be penalizing provisions it will deter the miscreants from indulging in such activities having appreciable activities, which are detrimental to the welfare of the consumers, and as a result of this market players will stop playing with the interest of the customers. Many times it happens that the bridges are constructed by the builders and constructors, not fully utilizing the resources and money provided to them for the purpose, which as result broke down and leading to loss of so many lives, but since for activities like bid rigging, cartel etc there can only be fine which can be imposed on the parties, the defaulting parties escape their liabilities easily by paying off the penalties.
 Competition means economic rivalry among market players to attract buyers.
 The world bank and OECD, “ framework for the design and implementation of competition law and policy”
 Section 2(f) of consumer protection Act defines consumers as : consumer” means any person who— (I) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, whether such purchase of goods is for resale or for any commercial purpose or for personal use; (II) hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first-mentioned person whether such hiring or availing of services is for any commercial purpose or for personal use; also refer section 2(d) of consumer protection Act
 See section 3 of competition Act 2002
 Abir Roy, “Competition Law in India: A Practical Guide”, (© Kluwer Law International; Kluwer Law International 2016), Chapter 01, pg no. 1.
 Article 38: State to secure a social order for the promotion of welfare of the people
(1) The State shall strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic and political, shall inform all the institutions of the national life
(2) The State shall, in particular, strive to minimize the inequalities in income, and endeavor to eliminate inequalities in status, facilities and opportunities, not only amongst individuals but also amongst groups of people residing in different areas or engaged in different vocations
 Article 39: certain principles of policy to be followed by the State: The State shall, in particular, direct its policy towards securing
(a) that the citizens, men and women equally, have the right to an adequate means to livelihood;
(b) that the ownership and control of the material resources of the community are so distributed as best to subserve the common good;
(c) that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment;
(d) that there is equal pay for equal work for both men and women;
(e) that the health and strength of workers, men and women, and the tender age of children are not abused and that citizens are not forced by economic necessity to enter avocations unsuited to their age or strength;
(f) that children are given opportunities and facilities to develop in a healthy manner and in conditions of freedom and dignity and that childhood and youth are protected against exploitation and against moral and material abandonment
 LPG: Liberalization, Privatization, and Globalization
 Yashwant sinha, then finance minister made this statement in “budget speech” on 27 February 1999.
 Abir Roy, “Competition Law in India: A Practical Guide”, (© Kluwer Law International; Kluwer Law International 2016), Chapter 01, pg no. 2.
 Preamble, “competition Act 2002”
 See section 3 of competition Act
 See section 19(3)
 Competition Commission of India v. Steel Authority of India Ltd Civil Appeal No. 7779 of 2010 ; Indian kanoon.com ; competition Act 2002, bare Act
 Sweta Rao, “consumer protection under competition Act 2002” , “international journal of science and research”, ISSN (online) 2319-7064, Paper Id: 17061401
 Ashoka Smokeless Coal Ind. P. Ltd. v.Union of India (2007) 2 SCC 640
 Section 19(3): The Commission shall, while determining whether an agreement has an appreciable adverse effect on competition under section 3, have due regard to all or any of the following factors, namely:—
(a) creation of barriers to new entrants in the market;
(b) driving existing competitors out of the market;
(c) foreclosure of competition by hindering entry into the market;
 See section 3 (1) of competition Act 2002
 Supra note 20
 SEE Section 27 of the competition Act
 Explanation (a) of Section 4(2).
 Competition Act, 2002, Explanation (b) of Section 4
 Supra note 27
 See Section 5 of the competition Act; T. Ramappa, Competition Law in India- Policy issues and Developments, Oxford University Press, New Delhi, 2006.