In what could be a business friendly move, the Competition Commission of India (CCI) is set to implement a new mechanism that would provide ‘advanced guidance’ to enterprises seeking to comprehend the interpretation of competition law provisions and regulations as regards their commercial decisions.
While such advanced guidance would offer valuable clarity, it would not constitute definitive rulings on factual or legal matters by the CCI, its members, or officers, sources said. “The advanced guidance to stakeholders would be non binding on the Commission or its members”, they added.
Corporate India may particularly be keen on getting advanced guidance from the CCI around anti-competitive agreements and abuse of dominant position (Section 3 and 4 respectively).
Section 3 of the Competition Act 2002 deals with anti-competitive agreements. It prohibits agreements between enterprises that have an appreciable adverse effect on competition in the relevant market in India. Such agreements can include price-fixing, bid-rigging, market-sharing, and production limitations.
Section 3 aims to promote fair competition by preventing collusion and practices that restrict competition.
Section 4 of the Competition Act focuses on abuse of dominant position. It prohibits enterprises that hold a dominant position in a relevant market from abusing that position to the detriment of competition and consumers. Abuses may include unfair pricing, discriminatory practices, and exclusionary conduct.
This provision is designed to prevent entities with significant market power from exploiting their position to the detriment of consumers and smaller competitors.
While Section 3 addresses anti-competitive agreements, Section 4 deals with preventing the abuse of dominant positions in order to ensure fair competition in the Indian market. Both sections are vital for promoting competitive markets and protecting consumers from unfair business practices.
Drawing inspiration from the European Commission’s practice, the CCI’s move is expected to align with international norms. Much like the European Commission, which provides guidance on the application of critical articles within EU competition law, the CCI aims to enhance understanding and transparency.
The European Commission’s approach involves issuing guidelines, communications, and notices pertaining to Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU). These articles pertain to anti-competitive agreements and the abuse of dominant positions, respectively, forming the foundation of EU competition law.
These documents serve as invaluable resources for stakeholders seeking to comprehend the European Commission’s interpretation of the law, its priorities, and the principles that govern its assessment of specific issues. Typically, the Commission’s Directorate-General for Competition (DG COMP) oversees these crucial matters.
Already, in India, the tax department provides a facility of Advance Rulings through the Authority on Advance Rulings (AAR).
Anshuman Sakle, a Partner in competition law practice, Khaitan & Co, a law firm, said, “A broader consultation process, beyond the existing pre-filing consultation process for combinations, would be welcome as it would allow parties to seek guidance from the Commission or its staff on what they should be mindful or before entering into certain arrangements”.
If such a system were to be implemented, the devil would lie in the detail and it would be important to see the manner in which it is being implemented and the scope of guidance the Commission or its Staff would be providing, Sakle added.