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A. AIMS AND OBJECTS OF THE ACT

The Act seeks, inter alia, to promote and protect the following rights of consumers, under its
Section 6:

1. the right to be protected against marketing of goods and services, which are hazardous to
life and property;

2. the right to be informed about the quality, quantity, potency, purity, standard, and price of
goods or services, as the case may be, so as to protect the consumer against unfair trade
practices;

3. the right to be assured, wherever possible, access to variety of goods and services at
competitive prices;

4. the right to be heard and to be assured that customers' interests will receive the
consideration at appropriate forums;

5.the right to seek redressal against unfair trade practices, or, restrictive trade practices, or,
unscrupulous exploitation of consumers; and

6.The right to consumer education.

B. WHO IS A CONSUMER?

1.Who is a consumer?
"consumer" means, implies, and includes any person,

i) who buys any "goods" for a consideration, which has been paid or promised or partly paid and
partly promised, or, under any system of deferred payment, and includes

ii)any user of such goods, other than the person, who buys such goods for a consideration, as
mentioned above, or,

iii) who "uses the goods" with the approval of the person, who has bought the goods, for a
"consideration", or,

iv) who hires, or, avails of any "services" for a "consideration", as mentioned above, and includes.

v) any "beneficiary of such services" with the consent of the person, who has hired the services
for a "consideration."

What is meant by "Consumer Protection"?

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In the light of the above concepts of "consumer" and "consideration" expression "consumer
protection" means and includes protection of consumer:

i) against excessive, unfair, or, exorbitant prices, levied on primary, essential goods and
commodities, and articles of daily consumption;

ii) against adulteration of goods, commodities, drugs, and other articles;

iii) against underweight of goods, articles, and commodities;

iv) against substandard quality of products; and

v) against short measures and unfair practices.

vi) against deficiency in service in any respect.

C. DEFINITIONS OF KEYWORDS (SECTION 2) WITH CASE STUDIES

1.Complainant [Sec. 2(1) (b)]

"Complainant" means

i)an individual consumer; or,

ii)any voluntary consumer association, registered under the Companies Act, 1956, or under any
other law for the time being in force; or,

iii) the Central Government or any State Government; or,

iv) one or more consumers, where there are numerous consumers having the same interest; who
or which makes a complaint; or,

v)in case of death of a consumer, his legal heir or representative.

A complainant is the party, who makes the complaint before a consumer Redressal Forum, such
as, (i) the District Forum, (ii) the State omission, and (iii) the National Commission.

2.Complaint [Sec. 2(1) (c)]

Complaint" means any allegation in writing, made by a complainant to the effect that:

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i)an unfair trade practice, or a restrictive trade practice has been adopted by any trader or
service provider;

ii) the goods, bought by him, or agreed to be bought by him, suffer from one or more defects;

iii) the services, hired, or availed of or agreed to be hired, or availed of by him, suffer from
deficiency in any respect;

iv) a trader or the service provider, as the case may be, has charged for the goods, or for the
services, mentioned in the complaint, a price, in excess of the price, fixed by or under any law,
for the time being in force, or displayed on the goods, or any package containing such goods, or
displayed on the price list exhibited by him or under any law for the time being in force, or
agreed between the parties;

v) goods, which will be hazardous to life and safety, when used, are being offered for sale to
the public in contravention of the provisions of any law, for the time being in force, if the
trader could have known with due diligence that the goods so offered, are unsafe to the public,
or services which are hazardous or likely to be hazardous to life and safety of the public when
used, are being offered by the service provider, which such person could have known with due
diligence to be injurious to life and safety.

3.Consumer [Sec. 2(1) (a)]

The concept of a "Consumer" has already been defined

4.Defect [Sec. 2(1) (f)]

"Defect" means any fault, imperfection, or shortcoming, in the quality, quantity, potency, purity
or standard, which is required to be maintained by, or under any law, for the time being in force,
or as is claimed by the trader in any manner, whatsoever in relation to any goods.

5.Deficiency [Sec. 2(1) (g)]

Deficiency" means any fault, imperfection, shortcoming, or inadequacy in the quality, nature and
manner of performance, which is required to be maintained by or under any law for the time
being in force, or has been undertaken to be performed by a person in pursuance of a contract
or otherwise in relation to any service.

6.Service [Sec. 2 (1) (0)]

"Service" means service of any description, which is made available to potential users and
includes the provision of facilities in connection with (a) banking, (b) financing, (c) insurance, (d)
transport, (e) processing, (f) supply of electrical, or other energy, (g) board or lodging or both,
(h) housing construction, (i) entertainment, amusement, or (i)the purveying of news or other
information, but does not include the rendering of any service free of charge, or, under a
contract of personal service.

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Following are a few instances, which are held not to be services :

1. Medical treatment, offered free of charge in a Government hospital;

2. services rendered by a private tutor, as it is a contract of personal service;

3. Services, rendered by Municipalities, or Municipal Corporations, as payment of direct or

indirect taxes by public is not considered to be a consideration, paid for hiring the services; and

4.any service, rendered gratuitously.

7.Manufacturer [Sec.-2-(1) (j)]

Manufacturer" means a person who,

i) makes or manufactures any goods, or parts thereof

ii) ; or assemble parts, manufactured or made by others; or

iii) puts or causes to put his own mark on any goods, made or manufactured by any other
manufacturer.

8.Trader [Sec. 2 (1) (q)]

"Trader", in relation to any goods, means a person, who sells or distributes any goods for sale
and includes the manufacturer thereof, and where such goods are sold or distributed in package
form, includes the packer thereof.

Where the 'packer' is merely an "employee in the business" his employer should be held
responsible for the act of his servant.

9.Unfair Trade Practice [Sec. 2 (1) (r)]

The expression "unfair trade practice" means a trade practice, which; for the purpose of
promoting the sale, use or supply of any goods, or for the provision of any services adopts any
unfair method, or unfair, or deceptive, practice, including any of the following practices, namely:

1. the practice of making any statement, whether orally, or in writing, or by visible

representation, which, -

i)falsely represents that the goods are of a particular standard, quantity, grade, composition,
style, or models;

ii)falsely represents that the services are of a particular standard, quality or grade;

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iii) falsely represents any rebuilt, second hand, renovated, reconditioned, or old goods, as new
goods;

iv) represents that the goods or services have sponsorship, approval, performance,
characteristics, accessories, uses, or benefits, which such goods or services do not have;

v)represents that the seller, or the supplier, has a sponsorship or an approval, or affiliation,
which such seller or supplier does not have;

vi) makes a false or misleading representation concerning the need for, or the usefulness of any
goods or services;

vii) gives to public any warranty or guarantee of the performance, efficiency, or length of life of
a product, or of any goods, that is not based on an adequate or proper test thereof:

vi) makes to the public a representation in a form, that purports to be

2. permits the publication of any advertisement, whether in any newspaper or otherwise, for the
sale or supply, at a bargain price, of goods or services, that are not intended to be offered for
sale or supply at the bargain price, or for a period that is, and in quantities that are, reasonable,
having regard to the nature of the market, in which, the business is carried on, the nature and
size of business, and the nature of the advertisement

3. permits -

i) the offering of gifts, prices, or other items with the intention of not providing them as
offered or creating the impression that something is being given or offered free of charge
when it is fully or partly covered by the amount, charged in the transaction as a whole,

ii) the conduct of any contest, lottery, game of chance or skill, for the purpose of promoting,
directly or indirectly, the sale, use, or supply of any product, or any business interest

D. CONSUMER PROTECTION COUNCIL

Central Consumer Council

The objects of the Central Council shall be to promote and protect the rights of the consumers
such as:

a) the right to be protected against the marketing of goods which are hazardous to life and
property;

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b) the right to be informed about the quality, quantity, potency, purity, standard and price of
goods so as to protect the consumer against unfair trade practices;

c) the right to be assured, wherever possible, access to a variety of goods at competitive prices;

d) the right to be heard and to be assured that consumers' interests will receive due
consideration at appropriate forums;

e)the right to seek Redressal against unfair trade practices or unscrupulous exploitation of
consumers; and

f) the right to consumer education.

The Constitution of the Central Consumer Protection Council and the Working Groups:

1. The Central Government shall, by notification in the Official Gazette constitute the Central
Consumer Protection Council which shall consist of the following members, not exceeding 35,
namely:

a)the Minister in-charge of Consumer Affairs in the Central Government who shall be the
Chairman of the Central Council;

b)the Minister of State (where he is not holding independent charge) or Deputy Minister in
charge of Consumer Affairs in the Central Government who shall be the Vice-Chairman of the
Central Council;

c) the Minister in-charge of Consumer Affairs of two of the States from each region as
mentioned in Schedule I to be changed by rotation on expiration of the term of the Council on
each occasion;

2.Procedure of the Central Council:

1.The meeting of the Central Council shall be presided over by the Chairman. In the absence of
the Chairman, the Vice-Chairman shall preside over the meeting of the Central Council. In the
absence of the Chairman and the Vice-Chairman, the Central Council shall elect a member to
preside over that meeting of the Council.

2.Each meeting of the Central Council shall be called by giving, not less than ten days from the
date of issue, notice in writing to every member.

3. Every notice of a meeting of the Central Council shall specify the place and the day and hour
of the meeting and shall contain a statement of business to be transacted thereat.

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4.No proceedings of the Central Council shall be invalid merely by reasons of existence of any
vacancy in or any defect in the constitution of the Council.

5. The non-official members shall be given to & fro I class or II AC fare whichever is less. Daily
allowance of 1,000/- to outstation members & maximum 200/- to local members.

6. The resolution passed by the Central Council shall be recommendatory in nature.

The Constitution of the District Consumer Protection Council and the Working Groups

1. The State Government may, by notification, establish with effect from such date as it may
specify in such notification, a Council to be known as the State Consumer Protection Council.

2.The State Council shall consist of the following members, namely:

a) the Minister in-charge of consumer affairs in the State Government who shall be its
Chairman;

b) such number of other official or non-official members representing such interest as may
be prescribed by the State Government.

3. The State Council shall meet as and when necessary but not less than two meetings shall be
held every year.

4. The State Council shall meet at such time and place as the Chairman may think fit and shall
observe such procedure in regard to the transaction of its business as may be prescribed by the
State Government.

5.The resolution passed by the Central Council shall be recommendatory in nature.

District Consumer Protection Council

The Constitution of the State Consumer Protection Council and the Working Groups

1. The State Government shall establish for every district, by notification, a council to be known
as the District Consumer Protection Council with effect from such date as it may specify in such
notification.

2. The District Consumer Protection Council (hereinafter referred to as the District Council)
shall consist of the following members, namely:

a) the Collector of the district (by whatever name called), who shall be its Chairman; and

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b) such number of other official and non-official members representing such interests as may
be prescribed by the State Government.

3. The District Council shall meet as and when necessary but not less than two meetings shall be
held every year.

4.The District Council shall meet at such time and place within the district as the Chairman may
think fit and shall observe such procedure in regard to the transaction of its business as may be
prescribed by the State Government.

5. The resolution passed by the Central Council shall be recommendatory in nature.

A.DISTINCT CONSUMER DISPUTES REDRESSAL FORUM. (DISTRICT FORUMS)

1.District Forum

Composition of the District Forum

Each District Forum shall consist of:

a)a person who is, or has been, or is qualified to be a District Judge, who shall be its President;

b) two other members, who shall be persons of ability, integrity and standing, and have adequate
knowledge or experience of, or have shown capacity in dealing with, problems relating to
economics, law, commerce, accountancy, industry, public affairs or administration, one of whom
shall be a woman.

1. Monetary Jurisdiction:
The District Forum shall have jurisdiction to entertain complaints where the value of the goods
or services and the compensation, if any, claimed does not exceed rupees twenty lakh.

2. Territorial Jurisdiction:
A complaint shall be instituted in a District Forum within the local limits of whose jurisdiction :

a)the opposite party or each of the opposite parties, where there are more than one, at the
time of the institution of the complaint, actually and voluntarily resides or carries on business,
or has a branch office or personally works for gain/or

b) any of the opposite parties, where there is more than one, at the time of the institution of
the complaint, actually and voluntarily resides, or carries on business or has a branch office, or
personally works for gain provided that in such case either the permission of the District Forum
is given, or the opposite parties who do not reside, or carry on business or have a branch office,
or personally work for gain, as the case may be, acquiesce in such institution; or

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c)the cause of action, wholly or in part, arises.

A complaint in relation to any goods sold or delivered or agreed to be sold or delivered or any
service provided or agreed to be provided, may be filed with a District Forum, by:

a) the consumer to whom such goods are sold or delivered or agreed to be sold or delivered or
such service provided or agreed to be provided;

b) any recognised consumers association whether the consumer to whom the goods sold or
delivered or service provided or agreed to be provided is a member of such association or not;
or

c) one or more consumers, where there are numerous consumers having the same interest, with
the permission of the District Forum, on behalf of, or for the benefit of, all consumers so
interested; or

d) the Central or the State Government.

STATE COMMISSIONS

1.State Commission

Composition of the State Commission

1.Each State Commission shall consist of:

a) a person who is or has been a Judge of a High Court, appointed by the State Government, who
shall be its President

b) two other members, who shall be persons of ability, integrity and standing and have adequate
knowledge or experience of, or have shown capacity in dealing with, problems relating to
economics, law, commerce, accountancy, industry, public affairs or administration, one of whom
shall be a woman:

C.NATIONAL COMMISSION

National Commission

Composition of the National Commission (Section 20) The National Commission shall consist of:

a) a person who is or has been a Judge of the Supreme Court, to be appointed by the Central
Government, who shall be its President

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b) four other members who shall be persons of ability, integrity and standing and have adequate
knowledge or experience of,or have shown capacity in dealing with, problems relating to
economics, law, commerce, accountancy, industry, public affairs or administration, one of whom
shall be a woman:

A. OBJECTIVES OF COMPETITION ACT, 2002

The preamble to the Competition Act, 2002, embodies a statement of objects and reasons,

Following are the objectives:

1. To prevent and eliminate the forces, factors and practices, that cause adverse and negative
impact on competition;

To promote and sustain the forces of competition in the Indian economy;

3. To protect and promote the interests of consumers; and

4 To ensure freedom of trade, carried on by all other participants in Indian markets.

B. SALIENT FEATURES OF COMPETITION ACT, 2002

The competition Act, 2002 as amended till date, highlights its salient features, as follows
herein under :

1.Definitions of all important words, terms and expressions which have legal implications in the
Competition Act, 2002. All such definitions have been defined in and under sec. 2 of the Act.

2. Prohibition of Anti-Competitive agreements with the objective of promotion of competition in

the market within India as well as outside India.

3. Prohibition of abuse of dominant position, enjoyed by an enterprise with the objective of

enabling all enterprises to operate independently of competitive forces in the market.

4.Regulation of combinations with the objective of preventing an appreciable adverse or

negative impact on competition.

5.Appointment, composition, terms of office and service conditions, duties and powers of the
competition of India, which is the directing, regulating and controlling authority in all matters
concerning all issues relating to competition. 5.

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6. Competition Advocacy with the objective of promotion of competition in the market by

formulation, by the Central Government, of a policy of competition in the market in India and
outside India.

7. Penalties for violation of the provisions of the Act, which is essential for observance of the
Act.

8. Finance, accounts and audit of various bodies, established under the act.

9. Competition appellate tribunal has been appointed to give the judgement.

PROHIBITION OF ANTI-COMPETITIVE AGREEMENTS

Section 3 of the Competition Act, 2002. The Act under Section 3(1) prevents any enterprise
association from entering into any agreement which causes or is likely to cause an appreciable
adverse effect on competition (AAEC) within India. The Act clearly states that an agreement
which is contravention of the provisions of the Act shall be void. The Act provides that any
agreement including cartels, which :

● Directly or indirectly determines purchase or sale prices;

● Limits production, supply, technical development or provision of services in market;

● Results in bid rigging or collusive bidding;

● Shall be presumed to have an appreciable adverse effect on competition in India;

Horizontal Agreements

Horizontal agreements are arrangements between enterprises at the same stage of production.
Section 3(3) of the Act provides that such agreements include cartels, engaged in identical or
similar trade goods or provision of services, which:

1. Directly or indirectly determines purchase or sale prices.

2. Limits or controls production, supply.

3. Share the market or source of production.

4. Directly or indirectly results in bid rigging or collusive bidding.

Vertical Agreements

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Vertical agreements are those agreements which are entered into between two or more
enterprises operating at different levels of production. For instance, between suppliers and
dealers. Other examples of anti-competitive vertical agreements include:

1. Exclusive supply agreement & refusal to deal.

2. Resale price maintenance.

3. Tie-in-arrangements.

4. Exclusive distribution agreement.

The Act under Section 3 of the Act also prohibits any agreement amongst enterprises which
materialise in :

Tie-in arrangement: According to the Statute it includes any

agreement requiring purchaser of goods, as a condition of purchase, to purchase some other
goods. In the case of Sonam Sharma v. Apple & Ors., the CCI stated that in order to have a
tying arrangement, the following ingredients must be present :

1. There must be two products that the seller can tie together. Further, there must be a sale or
an agreement to sell one product or service on the condition that the buyer purchases the other
product or service. In other words, the requirement is that purchase of a commodity is
conditioned upon the purchase of another commodity.

2. The seller must have sufficient market power with respect to the tying product to
appreciably restrain free competition in the market for the tied product. That is, the seller has
to have such power in the market for the tying product that it can force the buyer to purchase
the tied product; and

3. The tying arrangement must affect a "not insubstantial" amount of commerce. Tying
arrangements are generally not perceived as being anti- competitive when a substantial portion
of the market is not affected.

● Exclusive supply agreement: The Act defines such agreements to include any agreement
restricting in any manner the purchaser in the course of his trade from acquiring or
otherwise dealing in any goods other than those of the seller or any other person.

● Exclusive distribution agreement : This includes any agreement to limit, restrict or

withhold the output or supply of any goods or allocate any area or market for the
disposal or sale of goods.

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● Refusal to deal - The Act states that this criteria includes agreement which restricts
by any method the persons or classes of persons to whom the goods are sold or from
whom goods are bought.

Resale price maintenance

What is resale price maintenance? It includes any agreement to sell goods on condition that the
prices charged on the resale by the purchaser shall be the prices stipulated by the seller unless
it is clearly stated that prices lower than those prices may be charged.

D. PREVENTION OF ABUSE OF DOMINANT POSITION

Meaning of Abuse of Dominant Position

Section 4 of the Competition Act, 2002, dominant position means the strength of an enterprise
in the relevant market in India which enables the enterprise to operate independently of
competitive forces prevailing in the market and to affect the consumers or competitors or the
market in its favour.

Dominant Position has been defined as a position enjoyed by an enterprise whereby enables it to:

i) operate independently of competitive forces prevailing in the relevant market;

ii) affect its competitors or consumers or the relevant market in its favour.

Abuse of dominant position includes:

An enterprise in dominant position performs any of the following acts:

a)directly or indirectly, imposes unfair or discriminatory practices.

b)limits or restricts production of goods or provision of any services in any form.

c)indulges in practice or practices resulting in denial of market access.

d) makes conclusion of contracts subject to acceptance by other parties of supplementary

obligations which have no connection with the subject of such contracts; or

e)uses its dominant position in one relevant market to enter into, or protect, another relevant
market.

Determining Abuse of Dominant Position

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For determining abuse of dominance – it involves a three-step process

1.Relevant Market

Relevant geographical market means a market comprising the area in which the conditions of
competition for the supply of the goods or provision of the services or demand of goods or
services are distinctly homogeneous and can be distinguished from the condition prevailing in
the neighbouring areas.

2.Dominance

Section 4(1) of the Act prohibits any enterprise from abusing its dominant position. Dominant
position means a position of strength, enjoyed by an enterprise, in the relevant market, in India,
which enables it to:

1. Operate independently of competitive forces prevailing in the relevant market; or

2. Affect its competitors or consumers or the relevant market in its favour.

In American Tobacco Co. vs. United States [328 US 781], the Court observed that a dominant
position is a market controlling position, capable of driving competing business from the market
and also dictating price. Section 19(4) of the Act enumerates factors that determine dominant
position.

3.Abuse of Dominant Position

Dominance per se is not considered bad under competition law in any jurisdiction, however, it has
been universally accepted that abuse of such dominance constitutes an anti-competitive
practice. The acts of the abuse of dominant position are set out in Section 4(2) of the Act:

1. Imposing unfair or discriminatory conditions or price (including predatory pricing).

2 Limiting or restricting production, market, technical or scientific development relating to

goods or services.

3. Practices resulting in the denial of market access.

4.Conditional contract as an abuse of dominant position.

Using dominant position in one relevant market to enter into other relevant markets.

Prohibition of abuse of dominant position

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Section 4(1) of the competition Act, 2002 prohibits abuse of that dominant position by any
enterprise or group. Sub- section (1) says no enterprise or group shall abuse its dominant
position.

Remedies

Once the abuse of dominant position has been established, the competition authorities can take
the following measures:

1.A cease and desist order.

2.Penalty which may be 10% of annual turnover

3.Direct the enterprise to take action which the authority deems fit.

4.Give any other order which it may think fit

5.Divide the dominant enterprise

6.In case of appeal to competition appellate Tribunal,the tribunal may order for compensation to
the party bearing loss

E. COMPETITION COMMISSION OF INDIA

What is the Competition Commission of India?

Competition Commission of India is a statutory body of the Government of India, which is

responsible for enforcing, The Competition Act of 2002, throughout India and to prevent
activities that have an appreciable adverse effect on the competition in India. The Competition
Commission of India is also popularly known as CCI. When was the Competition Commission of
India established?

The Competition Commission of India was established on October 14, 2013. It became fully
functional during May 2009 with Dhanendra Kumar as its first Chairman.

Term of office

The Chairperson and every other Member should hold office for a term of five years

Qualification

The Chairperson & every member shall be a person of ability, integrity, & standing who, has
been, or is qualified to be, a judge of a High Court; The statutory provision further entails that

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the Chairperson and other members of the Commission shall possess special knowledge and
professional experience of not less than 15 years in international trade, economics, business,
commerce, law, finance, accountancy etc.

Disqualification

The Central Government can remove the Chairperson or any other Member from his office, if
such Chairperson or member :

a)or at any time has been, adjudged as an insolvent;

b)or has engaged at any time, during his term of office, in any paid employment; or

c)has been convicted of an offence which, in the opinion of the Central Government, involves
moral turpitude; or

d) has acquired such financial or other interest as is likely to affect prejudicially his functions
as a Member; or

e)has so abused his position as to render his continuance in office prejudicial to the public
interest; or

f) has become physically or mentally incapable of acting as a Member

Role of Competition Commission of India

● To prevent practices having an adverse effect on competition.

● To promote and to sustain competition in markets.

● To promote the interest of consumers.

● To ensure freedom of trade is carried on by other participants in markets in India.

Objective of Competition Commission of India

The objective of CCI is to play the role of market regulator across all the sectors with the
focus on the anti-competitive behaviour of enterprises that may distort competition.

Powers and Functions of the Commission

1. To eliminate practices having adverse effect on competition, promote and sustain competition,
protect interests of consumers and ensure freedom of trade by other participants.

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2. Inquire into certain agreements and dominant position of enterprise: It provides that the
Commission may either in its own proposal or on receipt of any information of alleged
contravention of Section 3 (prohibits anti-competitive agreements) may inquire into the same.

3. Inquiry into combinations : Section 20 of the Act entrusts the Commission with the power to
inquire into any information relating to acquisition and determine whether such combination or
acquisition may have an appreciable adverse effect on competition (AAEC).

4. Reference of an issue by a statutory authority to the Commission : Section 21 of the Act

enumerates that in the course of a proceeding if any issue is raised that any decision of a
statutory authority will be in conflict with the provisions of the Competition Act, 2002, the
statutory authority shall make a reference in this regard to the Commission.

5. Reference by Commission : Section 21A of the Act provides that if in the course of
proceeding an issue is raised by any party that any a decision taken by the Commission is in
contravention of the provisions of Competition Act, whose authority is entrusted to a statutory
authority then the Commission may make a reference in respect of the issue to the statutory
authority.

6. Power to issue interim order : Section 33 of the Act empowers the Commission to issue
interim orders in cases of anti-competitive agreements and abuse of dominant position, thereby
temporarily restraining any party from carrying on such an act.

7. Competition Advocacy: Section 49 of the Act provides for competition advocacy and
enumerates that the Central or the State Government may while formulating any policy on
Competition or any other matter may make reference to the Commission for its opinion on
possible effect of such policy on Competition. However, the opinion given by the Commission is
not binding on the Central Government.

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