On 20 May 2009, the Indian Government formally notified
provisions in the Competition Act of India (Act) relating to
anti-competitive agreements and abuse of dominance. The provisions
relating to mergers (combinations) have yet to be brought into
operation, but are likely to be in force later this year. In
addition to this, the Indian Government has now made the
Competition Commission of India (CCI), a body set up to oversee the
operation of the Act, fully functional.
These steps are part of a broader initiative to bring
India's competition regulatory framework into line with
international best practices. Domestic Indian or foreign entities
conducting business in India will now need to be mindful of the
impact of the new provisions and ensure their conduct does not
result in a breach of the Act. As a result, India is now another
jurisdiction that must be considered, from a competition law
perspective, in conducting international business operations and
Outline of the changes
Following the recent notifications, sections 3 (anti-competitive
agreements) and 4 (abuse of dominance) of the Act are now in
Anti competitive agreements
Section 3 of the Act prohibits agreements which restrict the
production, supply, distribution, acquisition or control of goods
or provision of services, which cause or are likely to cause an
appreciable adverse effect on competition within India. A party
that breaches these provisions may be liable for penalties of up to
10 per cent of the average turnover for the last three years with
sanctions relating to cartels potentially even higher.
Abuse of dominance
Section 4 of the Act prohibits the abuse of a dominant position
by an enterprise. An entity that contravenes this section may be
liable for financial penalties (10 per cent of the dominant
firm's average turnover for the three proceeding years) or
structural remedies such as undertakings ordering the division of
the dominant firm.
Competition Commission of India
The CCI is responsible for the enforcement of the Act's
prohibitions on restrictive agreements and abuses of dominant
positions. The CCI has a wide range of powers of investigation to
assist the commission in determining whether an infringement has
occurred. In particular, the CCI has extra-territorial jurisdiction
to undertake an inquiry into an agreement or an abuse of dominance
that has taken place outside of India so long as there is an
appreciable adverse effect on competition within India. The Indian
Government has appointed five members to the CCI including Mr
Dhanendra Kumar, a former executive of the World Bank, as
Impact of the new provisions on domestic Indian and foreign
Indian and foreign enterprises will now need to ensure existing
agreements entered into are compliant with the new provisions. Such
entities will also need to ensure their conduct both in and outside
of India, does not result in or is not likely to result in, an
appreciable adverse effect on competition within India.
Businesses should also note that the section of the Act
concerning the regulation of mergers is currently under
consideration and is likely to be brought into force later this
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The Legal Metrology Act, 2009 was passed by the Indian Parliament in order to repeal and replace The Standards of Weights and Measures Act, 1976 and the Standards of Weights and Measures (Enforcement) Act, 1985.
In the wake of liberalization and privatization that was triggered in India in early nineties, a realization gathered momentum that the existing Monopolistic and Restrictive Trade Practices Act, 1969 was not equipped adequately enough to tackle the competition aspect of the Indian economy.
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