Ans:
A competitive
environment in business is
the dynamic external system in which it competes and functions. The more
sellers of a similar product or service, the more competitive the environment
in which you compete. Look at fast food restaurants - there are so many to
chose from, the competition is high. However, if you look at airlines servicing
Hawaii, very few actually fly to the islands.
Direct competitors are those that are selling the
same type of product or service as you. For example, McDonalds is a direct
competitor with Burger King. Indirect
competitors are businesses
that still compete even though they sell a different service or product. The
products or services offered by indirect competitors tend to be those that can
be substituted for one another. Again, considering travel, you have the option
to travel by plane, train, or car. Therefore airlines are also competing with
train lines and buses (assuming the travel does not go overseas).
Competitive
Environment Analysis:
To generate Competitive Intelligence we need
to get clarity of the Competitive Environment in which the organization
operates:
1. Economic Features
We need to identify and analyse the most
important economic features of the industry in which the organisation operates
in.
2.
Competitive Forces
We need to identify and analyse multiple
competitive forces which industry members are facing and assess the strength of
each force
3.
Changes – Competitive Intensity – Industry Profitability
We need to identify and assess forces that
are driving change in the industry where the organisation operates and assess
the impact of these changes on competitive intensity and industry
profitability.
4.
Positioning
We need to identify and assess what market
positions our competitors in the industry occupy.
5.
Strategic Maneuvers
We need to identify and assess what
strategic maneuvers are competitors likely to make NEXT.
6.
Key Success Factors
We need to identify and assess Key Success
Factors for on which future competitive success of the organisation depends.
7.
Industry Outlook
We need to identify and assess whether the
outlook for the industry presents the organisation with suitable and feasible
prospects for profitability.
Legislation
for Anti –Competitive Practices or Competition Act in India:
The
Competition Act, 2002 was enacted by the Parliament of India and governs Indian competition law. It replaced the Monopoly and Restrictive Trade Practices
Act, 1969. Under this legislation, the Competition
Commission of India was established to prevent
activities that have an adverse effect on competition in India.
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The Competition Act, 2002 was passed by the
Parliament in the year 2002, to which the President accorded assent in
January, 2003. It was subsequently amended by the Competition (Amendment)
Act, 2007.
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In accordance with the provisions of the
Amendment Act, the Competition Commission of India and the Competition
Appellate Tribunal have been established. The Competition Commission of India
is now fully functional with a Chairperson and six members. The provisions of
the Competition Act relating to anti-competitive agreements and abuse of
dominant position were notified on May 20, 2009.
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Main
Provisions of the Act:
The Act has 64 sections in all. The
provisions of the act are as follows:
1.
Short title, extent and commencement
(i) This Act may be called
the Competition Act, 2002.
(ii) It extends to the whole
of India except the State of Jammu and Kashmir.
2. Definitions: In this Act, unless the context otherwise requires,—
(a) "Acquisition"
means, directly or indirectly, acquiring or agreeing to acquire—
(i) Shares, voting rights or assets of any enterprise; or
(ii) Control over management or control over assets of any enterprise;
(b) "Agreement"
includes any arrangement or understanding or action in concert,—
(i) Whether or not, such arrangement, understanding or action is
formal or in writing; or
(ii) Whether or not such arrangement, understanding or action is
intended to be enforceable by legal proceedings;
3. Anti-competitive
agreements [Sec3]
(i) No enterprise or association of enterprises or person or
association of persons shall enter into
any agreement in respect of production, supply, distribution, storage, acquisition
or control of goods or provision of services, which causes or is likely to
cause an appreciable adverse effect on competition within India.
(ii) Any agreement entered
into in contravention of the provisions contained in subsection (1) shall be
void.
(iii) Any agreement entered
into between enterprises or associations of enterprises or persons or
associations of persons or between any person and enterprise or practice
carried on, or decision taken by, any association of enterprises or association
of persons, including cartels, engaged in identical or similar trade of goods
or provision of services, which—
(a) Directly or indirectly determines purchase or sale prices;
(b) Limits or controls production, supply, markets, technical
development, investment or provision of services;
(c) Shares the market or source of production or provision of
services by way of allocation of geographical area of market, or type of goods
or services, or number of customers in the market or any other similar way;
(d) Directly or indirectly results in bid rigging or collusive
bidding, shall be presumed to have an appreciable adverse effect on competition
4. Abuse of dominant
position [Sec 4]
i. No enterprise or group shall abuse its dominant position
ii. There shall be an abuse
of dominant position 4[under sub-section (1), if an enterprise or a group].—-
(a) Directly or
indirectly, imposes unfair or discriminatory—
(i) Condition in purchase or sale of goods or service; or
(ii) Price in purchase or sale (including predatory price) of goods
or service.
Explanation. — For the purposes of this clause, the unfair or
discriminatory condition in purchase or sale of goods or service referred to in
sub-clause (i) and unfair or discriminatory price in purchase or sale of goods
(including predatory price) or service referred to in sub-clause (ii) shall not
include such discriminatory condition or price which may be adopted to meet the
competition; or
(b) Limits or restricts—
(i) Production of goods or provision of services or market
therefore; or
(ii) Technical or scientific development relating to goods or
services to the prejudice of consumers; or
(c) Indulges in practice or
practices resulting in denial of market access 5[in any manner]; or
(d) Makes conclusion of contracts subject to acceptance by other
parties of supplementary obligations which, by their nature or according to
commercial usage, have no connection with the subject of such contracts; or
(e) Uses its dominant
position in one relevant market to enter into, or protect, other relevant
market.
5. Competition Commission of India [Secs. 7 to 17] with effect from such date as the Central Government may, by
notification, appoint, there shall be established, for the purposes of this
Act, a Commission to be called the "Competition Commission of India".
Composition of Commission: The Commission shall consist of a Chairperson and not less than two
and not more than six other Members to be appointed by the Central Government.
The Chairperson and every other Member shall be a person of ability, integrity
and standing and who has special knowledge of, and such professional experience
of not less than fifteen years in, international trade, economics, business,
commerce, law, finance, accountancy, management, industry, public affairs or
competition matters, including competition law and policy, which in the opinion
of the Central Government, may be useful to the Commission. Selection Committee for Chairperson and Members
of Commission: The Chairperson and other Members of the Commission shall be
appointed by the Central Government from a panel of names recommended by a
Selection Committee consisting of –
a) the Chief
Justice of India or his nominee ---- Chairperson;
b) the
Secretary in the Ministry of Corporate Affairs ---- Member;
c) the
Secretary in the Ministry of Law and Justice ---- Member;
d) two experts
of repute who have special knowledge ---- Members. of, and professional
experience in international trade, economics, business, commerce, law, finance,
accountancy, management, industry,
public affairs or competition matters including competition law and
policy.
Term of office
of Chairperson and other Members
The Chairperson
and every other Member shall hold office as such for a term of five years from
the date on which he enters upon his office and shall be eligible for
re-appointment. A vacancy caused by the resignation or removal of the
Chairperson or any other Member under section 11 or by death or otherwise shall
be filled by fresh appointment in accordance with the provisions of sections 8
and 9.
Restriction on
employment of Chairperson and other Members in certain cases
The Chairperson and other Members shall not,
for a period of 20[two years] from the date on which they cease to hold office,
accept any employment in, or connected with the management or administration
of, any enterprise which has been a party to a proceeding before the Commission
under this Act: Provided that nothing contained in this section shall apply to
any employment under the Central Government or a State Government or local
authority or in any statutory authority or any corporation established by or
under any Central, State or Provincial Act or a Government company as defined
in section 617 of the Companies Act, 1956 (1 of 1956).
1.
Duties of Commission Subject to the
provisions of this Act, it shall be the duty of the Commission to eliminate
practices having adverse effect on competition, promote and sustain
competition, protect the interests of consumers and ensure freedom of trade
carried on by other participants, in markets in India: Provided that the
Commission may, for the purpose of discharging its duties or performing its
functions under this Act, enter into any memorandum or arrangement with the
prior approval of the Central Government, with any agency of any foreign
country. [Secs. 18 to 40]
1.
7. Duties of Director General The Director General shall, when so directed by the Commission,
assist the Commission in investigating into any contravention of the provisions
of this Act or any rules or regulations made there under. The Director General
shall have all the powers as are conferred upon the Commission under subsection
(2) of section 36.
[Sec.41]
6.
Competition advocacy
6. The Central Government may, in formulating a policy on competition
(including review of laws related to competition) or any other matter, and a
State Government may, in formulating a policy on competition or on any other
matter, as the case may be, make a reference to the Commission for its opinion
on possible effect of such policy on competition and on the receipt of such a
reference, the Commission shall, within sixty days of making such reference,
give its opinion to the Central Government, or the State Government, as the
case may be, which may thereafter take further action as it deems fit.] The
opinion given by the Commission under sub-section (1) shall not be binding upon
the Central Government 79[or the State Government, as the case may be] in
formulating such policy. [Sec.47]
7.
Grants by Central Government The Central
Government may, after due appropriation made by Parliament by law in this
behalf, make to the Commission grants of such sums of money as the Government
may think fit for being utilized for the purposes of this Act. [Sec.48]
8.
Constitution of Fund
8. There shall
be constituted a fund to be called the "Competition Fund" and there
shall be credited thereto—
a.
all Government grants received
by the Commission;
b.
[Omitted by Competition (Amendment) Act, 2007]
c.
the fees received under this
Act;
d.
the interest accrued on the
amounts referred to in 82[clauses (a) and (c)].
d. [Sec.49]
9.
Accounts and Audit
9. The Commission shall maintain proper accounts and other relevant
records and prepare an annual statement of accounts in such form as may be
prescribed by the Central Government in consultation with the Comptroller and
Auditor-General of India and will be audited by
Comptroller and Auditor- General of India [Sec.50]
10. Power to exempt
10. The
Central Government may, by notification, exempt from the application of this
Act, or any provision thereof, and for such period as it may specify in such
notification—
(a) any class of enterprises if such exemption is necessary in the
interest of security of the State or public interest;
(b) any practice or agreement arising out of and in accordance with
any obligation assumed by India under any treaty, agreement or convention with
any other country or countries;
(c) any enterprise which performs a sovereign function on behalf of
the Central Government or a State Government:
Provided that in case an
enterprise is engaged in any activity including the activity relatable to the
sovereign functions of the Government, the Central Government may grant exemption
only in respect of activity relatable to the sovereign functions.
[Sec.52]
11. Power of Central
Government to supersede Commission
11. If at any time the
Central Government is of the opinion—
(a) that on account of circumstances beyond the control of the
Commission, it is unable to discharge the functions or perform the duties
imposed on it by or under the provisions of this Act; or
(b) that the Commission has persistently made default in complying
with any direction given by the Central Government under this Act or in the
discharge of the functions or performance of the duties imposed on it by or
under the provisions of this Act and as a result of such default the financial
position of the Commission or the administration of the Commission has
suffered; or
(c) that circumstances exist which
render it necessary in the public interest so to do, the Central Government
may, by notification and for reasons to be specified therein, supersede the
Commission for such period, not exceeding six months, as may be specified in
the notification: Provided that before issuing any such notification, the
Central Government shall give a reasonable opportunity to the Commission to
make representations against the proposed supersession and shall consider
representations, if any, of the Commission.
[Sec.54]
14. Protection of action
taken in good faith
No suit, prosecution or other
legal proceedings shall lie against the Central Government or Commission or any
officer of the Central Government or the Chairperson or any Member or the
Director- General, Additional, Joint, Deputy or Assistant Directors General or
88[the Secretary or officers or other employees of the Commission or the
Chairperson, Members, officers and other employees of the Appellate Tribunal]
for anything which is in good faith done or intended to be done under this Act
or the rules or regulations made there under.
[Sec.57]
15. Repealing of MRTP Act The
MRTP Act and MRTPC shall be repealed by the introduction of the Competition bill.
The officers and other persons appointed under the MRTP act shall be required
to vacate their office and if they are on deputation, they shall be reverted to
their parent cadre. 
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