The Competition Commission of India and Small
and Medium Enterprises (SMEs)
The
Small and Medium Enterprises (SMEs) have been globally recognized as a priority
sector for growth and development and India is not an exception to this
generality. In India, the Micro, Small and Medium Enterprises (MSMEs)
contribute over 45 percent of the country s industrial production and around 40
percent of total exports. The SMEs increase competition, contribute
comprehensively by the GDP ensure varied supply of goods and services and give
customers wider and customized choice. Thus MSMEs unhesitatingly play a vital
role and in fact they are the backbone of the Indian economy and prudence
suggests that the backbone not only be protected but strengthened too on a
perennial basis.
Small and Medium Enterprises (SMEs) needs to
know
What
SMEs needs to know is that the law is applicable to them as well. The focus of
law is not on “size of the enterprise” which could be in terms of assets
/turnover or investment in plant and machinery etc. but on the effects of
business practices on competition in the relevant market in India. However, it
is unlikely that SMEs would unwittingly fall foul of the law. On individual
basis, since SMEs lack market power, their actions are not likely to have
appreciable adverse effects on competition in India. Moreover, the exclusions
and exemptions from the applicability of law are likely to dilute the
effectiveness of competition law which is increasingly believed to be benign
for consumers, enterprises as well as economies.
Power of Small and Medium Enterprises (SMEs)
A
SMEs or an Association can file information in the prescribed form with the CCI
and request for enquiry against any delinquent enterprises in case the latter
is allegedly indulging in anti-competitive practices/ agreement or abuse the
dominant position. SMEs can also file objection with the CCI in response to
public notice or otherwise against any proposed acquisition, merger or
amalgamation as sometimes a survival of SME is threatened. Thus, there is an
obligation on the CCI to listen to the aggrieved SMEs.
Competition Commission of India and
Competition Appellate Tribunal (COMPAT)
The
Amendment made to the Act in 2007, casts an obligation upon the Central
Government to establish Competition Appellate Tribunal (COMPAT), which shall be
a three member quasi –judicial body to
•Hear
and dispose of appeals against any direction issued or decision made or the
Order passed by the Commission;
•Adjudicate
on any claim for compensation that may arise from the findings of the
Commission or the Orders of the Appellate Tribunal in an appeal against any
finding of the Commission or under section 42A or sub-section (2) of section
53Q of this Act, and pass Orders for the recovery of compensation under section
53N of the Act.
The
Competition Appellate Tribunal will be guided by principle of natural justice
and it can regulate its own procedure. COMPAT can dismiss a petition for
default or decide it ex parte and such order of dismissal or ex parte order can
be set aside. The proceedings before COMPAT are deemed to be judicial proceedings.
If Appellate Tribunal cannot execute its order, it will be sent to Court within
whose local jurisdiction the registered office of the company or place of
residence of the person is situated. Order of the C OMPAT will be executed as a
degree of court. COMPAT can directly send the order to a civil court for
execution. The order will be executed by that Court as if it is a decree of
that Court.
Procedure for Investigation of Combination by
the Competition Commission of India
On
coming to a prima facie opinion that the combination is likely to cause or has
caused appreciable adverse effect on competition within the relevant market,
the commission shall issue a show cause notice to parties to the combination
calling upon them to show within 30 days of receipt as to why investigation of
such combination should not be conducted. After the receipt of the response
from the parties, the commission may call for a report from the DG within the
time as may be specified.
Orders that CCI can pass in respect of
Combinations
The
commission is empowered to pass the following orders after the due process:
a) Approve
the combination where no appreciable adverse effect on competition in the
relevant market in India;
b) Direct
that combination shall not take effect where the Commission is opinion that
there is or is likely to have appreciable adverse effect on competition;
c) Propose
modification in the combination where the commission is of the appreciable
adverse effect cause or likely to be caused by the combination can be
eliminated by the modification.
Competition Law and Leniency Provisions
Most
competition laws either exempt specific sectors and/ or types of economic
activity, and /or have provision s for the granting of such exemptions in given
situations. It is worth observing that there generally tend to be fewer
exemptions in countries which have recently adopted competition laws (mainly
developing and transition market economies) as compared with more
industrialized nations. In India the Competition Commission of India ,While
passing orders in respect of cartels , the Commission is vested with the
discretion to impose a proportionate /lesser penalty than leviable under the
Act upon a producer, seller, distributor, trader or service providers, provided
the following conditions are met;
1. Such
producer, seller, distributor, trader or service provider included in the
cartel had made full and true disclosure in respect of the alleged violations
and such disclosure is vital.
2. Such
disclosure has been made before receipt of DG s report on investigation order
under section 26 of the Act
3. The
party making disclosure s continues to co-operate with the Commission till the
completion of proceedings before the commission.
4. The
party making disclosure s has;
a) Complied
with the condition of which the lesser penalty was imposed and
b) Not
given false evidence.
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