Unlike its predecessor, the MRTP Act, the Competition Act provides for high penalties for violations of its provisions. In the event of anti-competitive agreements and abuse of a dominant position, CCIs may impose fines of up to 10 % of the average turnover of the last three previous financial years on any person or undertaking involved in such agreements or abuses. In the case of cartels, the CCI may set the highest amount equal to three times the total profit for each year of the continuation of this Agreement or 10 % of the turnover for each year of the continuation of the Agreement. CCIs may also require parties to an anti-competitive agreement or companies abusing their dominant position to “refrain” from pursuing such agreements or practices. The ICC may also sanction the amendment of agreements that prove to be anti-competitive. In the event of an abuse of a dominant position, the ICC has the power to order the division of the dominant undertaking. In recent years, CCI has sent a strong message to industry that it will not hesitate to use its significant fineing powers under the Competition Act if the seriousness and nature of the violation so require. The IHK has imposed penalties of up to 10 percent of the average annual turnover of the past three years, including a cartel case in which seven regional film associations were involved in forming cartels. As mentioned above, in another cartel case involving 11 cement plants, CCI imposed fines amounting to 50 per cent of the profit made during the cartel period.
One question that remains unclear is how the CCI is likely to determine the amount of the fine that can be imposed on parties for contravening the provisions of the Competition Act. While most jurisdictions around the world, such as the European Union, take into account the degree of involvement of a party as well as mitigating factors at that time in determining the amount of the fine, the ICC has remained silent in its orders to date in this regard. However, the reports suggest that, given the seriousness of the violation, cci may soon come up with regulations/guidelines on the method of quantifying fines. With respect to consolidations, if the CCI believes that the combination will result or is likely to result in an AAEC in India, the ICC may either issue an order prohibiting the proposed merger or authorize the merger subject to changes in the scheme of the merger, acquisition or merger. Failure to notify a consolidation to the Commission may result in a fine of up to 1 % of the total value of the undertakings` turnover or assets, whichever is greater. CCI has exercised these powers in a number of cases. For a late filing, the ICC imposed fines of up to INR 100 million in a transaction between Titan International and Titan Europe. In addition, in cases where the parties entered into a transaction (in whole or in part) before obtaining ICC approval (jumping), the ICC has imposed penalties of INR 10 million and INR 30 million respectively in two cases (well below the maximum amount it is allowed to impose) within its powers under the Competition Act. To date, CCI has not exercised its authority to impose the highest possible penalty under the Competition Act. In addition, failure to comply with ICC orders or DG instructions may also result in a penalty of INR 100,000 for each day of non-compliance of up to INR 10 million. Failure to pay the fine can result in a prison sentence of up to three years or a fine of up to INR 250 million. The ICC had for the first time fined Kingfisher Airlines Limited (Kingfisher) INR 10 million for failing to provide information during the ongoing investigation into Kingfisher`s proposed strategic deal with Jet Airways.
Although the fine was later reduced by compat to INR 7.25 million, this particular ICC order sent a strong message to the industry that the ICC can use its power to impose fines for non-compliance with ICC/DG instructions. Dominance refers to a position of strength that allows an enterprise to operate independently of competitive forces or to be able to influence its competitors or consumers or the market in its favour. The Competition Act is based on the “doctrine of effects” and grants the ICC jurisdiction over any agreement, abuse of dominance or combination that takes place outside India, as long as such agreements, practices or combinations have or are likely to have an AAEC in India. This is an important development of the new competition regime, as the former MRTP Commission has no extraterritorial competence. Simply put, anti-competitive agreements are agreements entered into by two or more companies that compete in the same market in order to set prices or reduce inventories, etc., in order to manipulate the market favorably for them. As a result, companies restrict competition in the market, which has a detrimental effect on the final consumer. Anti-competitive agreements are agreements that restrict competition or drive competitors away from the market, such agreements are illegal. Upon receipt of the investigation report, the ICC will forward it to the parties concerned and to the statutory authority in order to obtain their objections. After reviewing the objections received, CCI may, if necessary, adopt the DG`s report or request the DG to continue the investigations or conduct its own investigations. The ICC will consult with all parties involved and determine whether this is an anti-competitive agreement or an abuse of dominance, or both, and issue appropriate orders. If the vaccine developed during this pandemic was under the control of only a few pharmaceutical industries, and if these pharmaceutical industries had made an agreement among themselves to sell the vaccine at a much higher price, or if they had made an agreement between them to sell these vaccines only to a few rich people, what would have happened? A very large number of the world`s population would have suffered from not being vaccinated, even at such crucial moments! Thanks to the legal systems in each country that regulate these illegal and unethical business practices, we have all had access to vaccines.
This article will help you understand everything about anti-competitive agreements in the pharmaceutical industry in India. To better understand the article, it is important to understand Send your article via our online form Click here Note* We only accept original articles, we do not accept articles that have already been published on other sites. For more details, please contact: editor@legalserviceindia.com The law aims to provide the legal framework and tools necessary to ensure compliance with competition policy, prevent anti-competitive practices and provide for the punishment of such acts. The law protects free and fair competition, which protects the freedom of trade, which in turn protects the interests of the consumer. The purpose of the act is to prevent monopolies and prevent unnecessary government intervention. The main objectives of the Competition Act 2002 are as follows: An AAEC agreement is classified as all agreements that lead to the following: – Competition is the act of sellers who individually attempt to acquire the patronage of buyers in order to make profits or market shares. The Competition Act, 2002 was enacted by the Indian Parliament and replaced the Monopolies and Restrictive Business Practices Act, 1969. It is in force to regulate Indian competition law. Following its adoption, the Competition Act 2002 was amended twice, the Competition (Amending Act) Act 2007 and the Competition (Amending Act) Act 2009. Two of the main features of the Competition Act 2002 are the framework it provides for the establishment of the Competition Commission and the tools it provides to prevent anti-competitive practices and promote positive competition in the Indian market. The Competition Act aims to regulate two types of agreements: (a) anti-competitive agreements between competitors (horizontal agreements) and (b) anti-competitive agreements between undertakings or persons at different stages or levels of the production chain (vertical agreements). Under the Competition Act, certain types of horizontal agreements (described in the following paragraph) are considered to cause a FACA in India.
The presumption does not mean that all so-called horizontal agreements are necessarily anti-competitive; the parties entering into such an agreement remain free to demonstrate that their agreement does not result in a DSAA and to rebut the presumption. On the other hand, such a presumption does not apply to vertical agreements. Vertical agreements are generally permitted unless it is determined that they cause or are likely to cause AAEC in India. The Competition Act contains an exhaustive list of horizontal agreements that are expected to cause a FACA in India, as well as a comprehensive list of vertical agreements that may be prohibited based on their impact on the conditions of competition in India. The Competition Act also created a new law enforcement agency, the Competition Commission of India (CCI), which is solely responsible for the enforcement and administration of the Competition Act. The ICC shall consist of a Chairperson and at least two and no more than six other members appointed by the Government of India. The ICC currently consists of five members, including President Ashok Chawla. .