The year 1991 was a watershed. A financial crisis provoked the government to open up the economy for the first time, allowing privatization, private investment in previously closed sectors, liberalization of international trade, and other reforms. The Monopolies and Restrictive Trade Practices Act, 1969, was found to lack provisions to deal with anti-competitive practices in an era of globalization and liberalization and was later replaced by the Competition Act, 2002.
The Competition Act was challenged and amended in 2007 in light of decisions of the Supreme Court. The provisions pertaining to “anti-competitive agreements” and “abuse of dominant position” took effect in May 2009, and those regulating “combinations”, i.e. mergers and acquisitions, took effect in June 2011.
Huge penalty imposed
On 12 August 2011, the Competition Commission of India (CCI), the regulator under the act, in Belaire Owners’ Association v DLF Limited and HUDA, imposed a penalty of ₹6.3 billion (US$115 million) on the real estate giant DLF for abuse of dominant position through unfair conditions in its contracts with flat buyers, and directed DLF to “cease and desist” from framing and imposing such unfair conditions and to modify them within three months.
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Amitabh Chaturvedi is the managing partner of Mine & Young, where Kamakshi Hora is an associate.
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