Introduction to Competition Law: Evolution, Market Concepts, and the Competition Act, 2002

Introduction

Competition is the backbone of a healthy economy, as it ensures efficiency, innovation, and fair prices for consumers. To maintain a level playing field and prevent unfair practices, countries across the world have developed competition laws. These laws regulate how businesses operate in the market, prevent monopolies, and promote consumer welfare.

In India, the journey of competition law has evolved from the Monopolies and Restrictive Trade Practices (MRTP) Act, 1969, which primarily aimed to curb monopolies, to the more modern Competition Act, 2002, which focuses on promoting competition and protecting consumer interests.

Along with this, concepts such as market, open market, regulated market, and the salient features of the Competition Act provide the foundation for understanding how competition shapes economic activity. Studying the evolution, growth, and key principles of competition law is essential for appreciating its role in ensuring fair trade, fostering innovation, and safeguarding the larger public interest.

F Evolution and Growth of Competition Law

Ø Global Evolution of Competition Law

The roots of competition law can be traced back to ancient civilizations where rulers attempted to curb unfair trade practices such as hoarding, black-marketing, and price manipulation to protect common consumers.

However, the modern era of competition law began in the late 19th century with the enactment of the Sherman Antitrust Act, 1890 in the United States, which is widely regarded as the first comprehensive legislation to combat monopolies, cartels, and collusive agreements. It marked the beginning of a legal framework aimed at preventing the abuse of economic power and safeguarding market freedom.

This was followed by other U.S. legislations such as the Clayton Act, 1914 and the establishment of the Federal Trade Commission (FTC), which together strengthened antitrust enforcement.

In Europe, the adoption of the Treaty of Rome in 1957 laid the foundation for the European Union’s competition law, focusing on prohibiting anti-competitive agreements, abuse of dominant position, and regulating mergers that could distort market dynamics.

Over time, competition law expanded globally as liberalization and globalization gained momentum, with countries across Asia, Latin America, and Africa adopting similar frameworks to ensure open markets and consumer protection.

Today, around 130 countries have competition laws, reflecting its universal acceptance as an essential tool for promoting economic efficiency, innovation, and consumer welfare in an interconnected global economy.

Ø Indian Evolution of Competition Law

The evolution of competition law in India reflects the country’s broader economic journey from a controlled economy to a liberalized, market-driven system. The first comprehensive attempt came with the Monopolies and Restrictive Trade Practices (MRTP) Act, 1969, enacted in the backdrop of a socialist economic policy aimed at curbing the concentration of wealth and economic power in a few hands.

The MRTP Act sought to prevent monopolistic, restrictive, and unfair trade practices, but its focus was largely on controlling the size and expansion of enterprises rather than promoting competition. With the onset of economic liberalization in 1991, India opened its markets to private and foreign players, dismantling many state controls. This shift highlighted the inadequacy of the MRTP framework, which was seen as outdated, overly restrictive, and misaligned with the needs of a liberalized economy. Recognizing this gap, the government set up the Raghavan Committee in 1999, which recommended replacing the MRTP Act with a modern law that encouraged fair competition, protected consumer interests, and aligned with international best practices.

Acting on these recommendations, Parliament enacted the Competition Act, 2002, which represented a paradigm shift by focusing on promoting and sustaining competition rather than merely controlling monopolies. The Act also established the Competition Commission of India (CCI) as the regulatory authority with powers to investigate, adjudicate, and penalize anti-competitive conduct. Although the Act was passed in 2002, it became fully operational in 2009, when the CCI began functioning actively. Since then, India’s competition law has grown significantly, dealing with cases of cartelization, abuse of dominance, and mergers, while also expanding its scope to digital markets, e-commerce, and global transactions, ensuring that the Indian market remains competitive, innovative, and consumer-friendly.

1) Monopolies and Restrictive Trade Practices (MRTP) Act, 1969

The MRTP Act, 1969, marked India’s first major step towards regulating economic concentration and monopolistic practices. Enacted in a socialist economic environment, its primary aim was to prevent the concentration of wealth in a few hands and to regulate restrictive and unfair trade practices.

However, the law focused more on restricting the size and expansion of enterprises rather than actively promoting competition. Its enforcement was weak, and it lacked the necessary teeth to tackle modern forms of anti-competitive conduct. As India’s economy began to change, especially with the rise of private enterprise and global trade, the MRTP Act increasingly appeared outdated, both in philosophy and in practice.

2) Economic Reforms of 1991

The year 1991 was a turning point in India’s economic history, as the government introduced sweeping reforms under the policy of liberalization, privatization, and globalization (LPG). This shift from a controlled to a market-driven economy opened the doors for private sector growth and foreign investment, drastically transforming the competitive landscape.

However, the MRTP Act, designed for a protectionist era, could not address the needs of a liberalized economy. The growing importance of free markets highlighted the need for a new legal framework that would promote competition, encourage innovation, and protect consumer interests rather than merely restricting business growth.

3) Raghavan Committee Report (2000)

Recognizing the inadequacy of the MRTP Act in the new economic context, the government set up the High-Level Committee on Competition Policy and Law, chaired by S.V.S. Raghavan, in 1999. The committee submitted its report in 2000, recommending the enactment of a modern competition law aligned with international best practices. The report emphasized that the new law should focus not on controlling monopolies by size but on promoting competition, ensuring consumer welfare, and preventing abuse of market power.

This was a decisive shift in philosophy, moving India closer to global standards of competition regulation and paving the way for the Competition Act.

4) Competition Act, 2002

Acting on the Raghavan Committee’s recommendations, Parliament enacted the Competition Act, 2002, which represented a complete transformation of India’s competition policy. The Act’s objectives were to prevent anti-competitive practices, regulate the abuse of dominant positions, oversee mergers and acquisitions that could harm competition, and safeguard consumer welfare.

Importantly, it established the Competition Commission of India (CCI) as an autonomous regulatory authority with the power to investigate, adjudicate, and penalize anti-competitive conduct. The enforcement of the Act was gradual: some provisions came into effect in 2003, but the CCI became fully operational only in 2009.

Since then, the Competition Act has played a vital role in ensuring fair competition in India’s rapidly expanding economy, dealing with cases ranging from cartels in traditional industries to dominance in digital markets.

Ø Growth of Competition Law in India

Competition law in India grew rapidly after the Competition Commission of India (CCI) became fully active in 2009. Since then, the CCI has taken action against cartels, unfair pricing, and abuse of dominance by big companies.

Important cases like the DLF case (real estate), Cement Cartel case, and Google case (digital market dominance) show how the law has been applied in different sectors. Over time, competition law has also expanded to cover e-commerce and digital platforms like Amazon and Flipkart.

To keep up with changing markets, the law has been updated through amendments, including the Competition (Amendment) Act, 2023, which introduced quicker merger approvals and stricter penalties. In short, competition law in India has grown from targeting traditional industries to also regulating modern digital markets, aiming to ensure fair competition, consumer protection, and innovation.

1) 2009 onwards

The real growth of competition law in India began after 2009, when the Competition Commission of India (CCI) became fully operational. From that point, the CCI actively started investigating cases related to cartels, mergers, and abuse of dominance, laying the foundation for modern competition regulation in the country.

2) Landmark Cases

Over the years, several landmark cases have shaped Indian competition law. The DLF case highlighted abuse of dominance in the real estate sector, while the Cement Cartel case exposed price-fixing among major cement companies. In the digital space, the Google case dealt with abuse of dominance in online search and the Android ecosystem, and the scrutiny of Amazon and Flipkart raised concerns about unfair practices in India’s fast-growing e-commerce sector. These cases show how the CCI has tackled both traditional industries and new-age markets.

3) Dynamic Expansion

Competition law in India has not remained limited to old-style industries. It is now extending to digital markets, e-commerce platforms, and technology giants, which play a big role in today’s economy. Issues like platform dominance, predatory pricing, and data use have brought tech companies under the CCI’s radar, showing the law’s adaptability to changing market structures.

4) Amendments

To keep up with global standards and modern challenges, India has made ongoing amendments to its competition law. The most significant is the Competition (Amendment) Act, 2023, which introduced stricter penalties, quicker approval timelines for mergers, and new provisions to regulate digital markets. These reforms ensure that the law remains flexible, relevant, and aligned with international best practices.

F Concept of Market

A market, in competition law, refers not just to a physical place of exchange but also to the broader economic concept where buyers and sellers interact.

Instead, it refers to the broader economic space where buyers and sellers interact, and where the forces of demand and supply determine the conditions of trade. The Competition Act, 2002 introduces the idea of a “relevant market”, which helps in assessing the extent of competition and the impact of a company’s conduct.

This relevant market is analyzed in two dimensions: the relevant product market and the relevant geographic market. The relevant product market includes all goods or services that are regarded as interchangeable or substitutable by consumers based on their characteristics, price, and intended, etc…

For example, tea and coffee may be considered substitutes. The relevant geographic market, on the other hand, refers to the area in which competition conditions are uniform and distinct from neighboring areas, which could be local, regional, national, or even global.

By studying both product and geographic aspects, competition authorities can accurately identify where companies compete and whether their actions restrict competition. Thus, the concept of market under competition law is dynamic and analytical, aimed at understanding consumer choices, substitutability, and the real competitive pressures that shape trade.

F Open Market vs. Regulated Market

Ø Open Market

An open market is an economic system where the forces of demand and supply operate freely to determine the prices of goods and services. In such a system, there is minimal government interference, which allows businesses to compete on equal terms. This type of market encourages efficiency, innovation, and consumer choice, as companies strive to offer better quality products at competitive prices to attract customers. Open markets foster healthy competition and ensure that resources are allocated based on consumer demand. A common example of an open market in India is the e-commerce sector, with platforms like Amazon and Flipkart, where multiple sellers compete to provide the best deals to consumers.

1) A system where demand and supply determine prices freely.

2) Minimal government interference.

3) Encourages efficiency, innovation, and consumer choice.

4) Example: E-commerce platforms in India (Amazon, Flipkart, etc.).

Ø Regulated Market

A regulated market, on the other hand, is one that functions under the direct oversight of the government or a regulatory authority to ensure fairness, prevent exploitation, and achieve broader social and economic objectives. Regulation may take the form of price controls, licensing requirements, restrictions on monopolies, or service obligations. Such markets are particularly important in sectors where unrestricted competition might harm consumers or the public interest, such as essential goods and public utilities. For instance, in India, the telecom sector, electricity distribution, and essential commodities are subject to strict regulation to maintain affordability, quality, and universal access. By regulating such markets, the government seeks to balance free-market forces with the need to protect consumers and achieve social welfare goals.

5) Subject to government oversight to prevent exploitation, ensure fairness, or achieve social objectives.

6) Regulation can be through price controls, licensing, or monopoly restrictions.

7) Example: Telecom sector, electricity, and essential commodities.

Open Market	Regulated Market
An economic system where prices and trade are determined freely by demand and supply.	A market controlled by the government or regulatory bodies to ensure fairness and protect public interest.
Minimal government interference; market forces decide outcomes.	Significant government role; rules, licenses, and price controls are imposed.
Prices are flexible and based on competition.	Prices may be fixed, capped, or closely monitored.
Encourages efficiency, innovation, and consumer choice.	Prioritizes consumer protection, stability, and social welfare.
Example: E-commerce platforms like Amazon, Flipkart.	Example: Telecom sector, electricity, and essential commodities.

Competition law seeks to strike a balance between free market forces and necessary regulation.

F Salient Features of the Competition Act, 2002

The Act is the primary legislation governing competition in India.

Ø Objectives

The main aim of the Competition Act, 2002 is to promote healthy competition in the market. It seeks to prevent anti-competitive agreements, stop the abuse of dominance by powerful companies, regulate mergers and acquisitions that could harm competition, and protect consumer interests. In short, the law ensures that markets remain fair, open, and efficient for both businesses and consumers.

Ø Prohibition of Anti-Competitive Agreements (Section 3)

The Act makes it illegal for companies to enter into agreements that restrict competition. This includes practices like cartels, price-fixing, bid-rigging, and market sharing. Both horizontal agreements (between competitors) and vertical agreements (between manufacturers, suppliers, or distributors) are covered. These restrictions prevent businesses from unfairly controlling the market.

Ø Abuse of Dominant Position (Section 4)

The law does not stop a company from being dominant in a market, but it prohibits the abuse of that dominance. Abusive practices include charging unfair prices, denying other businesses access to the market, using predatory pricing to drive out competitors, or unfairly leveraging power in one market to dominate another. This ensures that strong players do not misuse their position to harm smaller competitors or consumers.

Ø Regulation of Combinations (Sections 5 & 6)

The Act regulates large mergers, acquisitions, and amalgamations to prevent them from reducing competition. If a proposed deal crosses certain thresholds of assets or turnover, it requires mandatory approval from the CCI. This safeguard ensures that big corporate combinations do not create monopolies or stifle competition in the market.

Ø Establishment of the Competition Commission of India (CCI)

The Act created the Competition Commission of India (CCI), an independent body that functions like a quasi-judicial authority. The CCI has the power to investigate cases, pass orders, impose penalties, and issue directives. It plays a key role in enforcing the law, maintaining fair competition, and spreading awareness about competition issues among businesses and consumers.

Ø Consumer Welfare Orientation

Unlike the old MRTP Act, which focused mainly on preventing monopolies, the Competition Act is centered on consumer welfare. It ensures that consumers benefit from fair prices, more choices, and better quality products or services, while also improving overall market efficiency.

Ø Extra-Territorial Jurisdiction (Section 32)

The Act has a special provision that allows the CCI to look into anti-competitive practices even if they take place outside India, as long as they affect the Indian market. This ensures that global companies operating in India also comply with Indian competition law and cannot harm Indian consumers or businesses through unfair practices.

F Conclusion

The evolution of competition law in India reflects the country’s shift from a restrictive, state-controlled economy to a dynamic, liberalized, and globally integrated market. Beginning with the MRTP Act, 1969, which focused mainly on preventing monopolies, India eventually recognized the need for a modern framework that promotes competition, safeguards consumer welfare, and encourages innovation. This led to the enactment of the Competition Act, 2002, enforced by the Competition Commission of India (CCI), which plays a crucial role in preventing anti-competitive practices, regulating mergers, and ensuring fair market access.

Over time, competition law has grown to address new challenges, especially in digital markets and e-commerce, while continuous amendments have kept it aligned with global standards. Overall, competition law serves as a cornerstone of India’s economic governance, ensuring that markets remain open, efficient, and consumer-friendly, thereby fostering both business growth and public welfare.