Practices controlled by competition law: an overview

1. Three kinds of harm

Competition law addresses conduct that harms competition in one of three ways.

• Collusion — independent firms stop competing and act together. This is the field of agreements (section 3).
• Unilateral abuse of market power — a firm with power uses it to exploit customers or exclude rivals. This is abuse of dominance (section 4).
• Structural change — two firms become one, or one acquires control of another, and the market loses a competitor. This is merger control (sections 5, 6, 20, 29 to 31).

2. Horizontal agreements: the hard-core practices

These are agreements between competitors, firms “engaged in identical or similar trade”. Section 3(3) presumes that they have an appreciable adverse effect on competition.

• Price fixing — agreeing on sale or purchase prices, discounts or price increases, directly or indirectly (section 3(3)(a)). The classic cartel.
• Output and supply restriction — limiting production, supply, investment or technical development (section 3(3)(b)). A boycott falls here: in CCI v. Co-ordination Committee of Artists and Technicians of W.B. Film and Television (2017) associations that stopped the telecast of a dubbed serial were held to limit the supply of services.
• Market sharing — allocating territories, customers or product lines (section 3(3)(c)).
• Bid rigging and collusive bidding — agreements that eliminate or reduce competition for bids or manipulate the bidding process: cover bidding, bid rotation, bid suppression (section 3(3)(d) and its Explanation).

A cartel, defined in section 2(c), is an association of producers, sellers, distributors, traders or service providers who by agreement among themselves limit, control or attempt to control the production, distribution, sale or price of goods or services.

3. Vertical agreements

These are agreements between firms at different levels of the production chain — manufacturer and distributor, supplier and retailer. They are judged by their effect (rule of reason) under section 3(4), which lists five examples:

• Tie-in arrangement — requiring a buyer, as a condition of purchase, to buy some other distinct goods or services.
• Exclusive supply / exclusive dealing — restricting a buyer or seller from dealing in goods other than those of the other party.
• Exclusive distribution — limiting supply or allocating an area for sale.
• Refusal to deal — restricting the persons to whom goods are sold or from whom they are bought.
• Resale price maintenance (RPM) — any direct or indirect restriction that resale must be at a price stipulated by the seller, unless lower prices are clearly permitted.

The 2023 amendment widened section 3(4) to “any other agreement” including but not restricted to those at different stages, extended the Explanation to services, and excluded agreements between an enterprise and an end consumer.

4. Abuses by a dominant enterprise

Section 4(2) lists five kinds of abuse. They divide into two families.

• Exploitative abuses harm customers directly: unfair or discriminatory prices or conditions (section 4(2)(a)), including excessive pricing and price discrimination.
• Exclusionary abuses harm rivals and, through them, the market: predatory pricing (pricing below cost to drive out competitors, section 4(2)(a)(ii) and Explanation (b)); limiting production or technical development (section 4(2)(b)); denial of market access in any manner (section 4(2)(c)), including refusal to supply an essential input and margin squeeze; supplementary obligations unrelated to the contract, i.e. tying (section 4(2)(d)); and using dominance in one market to enter or protect another (section 4(2)(e)).

Predatory pricing deserves its own paragraph because it is often set as a short note. It means the sale of goods or provision of services at a price below cost, as determined by regulations, with a view to reducing competition or eliminating competitors (Explanation (b) to section 4). Three elements: (i) the seller is dominant; (ii) the price is below the relevant cost (the CCI’s cost regulations use average variable cost as the usual benchmark); and (iii) the intent to reduce competition or eliminate competitors. Low prices by a non-dominant firm are simply competition. Under the MRTP Act, which had no predatory pricing provision, the Supreme Court refused in Haridas Exports (2002) to treat cheap imports as a restrictive trade practice in themselves.

5. Anti-competitive combinations

An acquisition, acquisition of control, merger or amalgamation crossing the asset, turnover or (since 10 September 2024) deal value thresholds in section 5 must be notified and cannot be consummated before approval (section 6(2) and (2A)). A combination that causes or is likely to cause an AAEC in the relevant market in India is void (section 6(1)). The concern is unilateral effects (the merged firm can raise price on its own), coordinated effects (fewer firms find it easier to collude) and vertical foreclosure.

6. The MRTP categories: monopolistic, restrictive, unfair

The Monopolies and Restrictive Trade Practices Act, 1969 worked with three categories, and exam questions still use its vocabulary.

• Monopolistic trade practice (section 2(i) MRTP) — a practice that represents abuse of market power by maintaining prices at unreasonable levels, limiting production, unreasonably increasing costs or profits, or preventing or reducing competition.
• Restrictive trade practice (section 2(o) MRTP) — a trade practice which has, or may have, the effect of preventing, distorting or restricting competition in any manner, in particular by obstructing the flow of capital or resources into production, or by manipulating prices or conditions of delivery to impose unjustified costs or restrictions on consumers. Section 33 listed agreements that had to be registered. In Tata Engineering & Locomotive Co. Ltd. v. Registrar of the Restrictive Trade Agreement, 1977 INSC 24, (1977) 2 SCC 55, the Supreme Court held that a dealership agreement with territorial restrictions is not a restrictive trade practice merely because it falls within a section 33 category; whether it restricts competition must be judged on the facts, in the light of the rule of reason. That reasoning was followed in Mahindra & Mahindra Ltd. v. Union of India, 1979 INSC 16, (1979) 2 SCC 529.
• Unfair trade practice (section 36A MRTP, inserted in 1984) — false or misleading representations, bargain sales and bait advertising, false gifts and prizes, non-compliance with safety standards, hoarding. These are consumer harms rather than harms to competition, and the Competition Act left them to the consumer law (now section 2(47) of the Consumer Protection Act, 2019).

How this is examined

As short notes: “restrictive trade practice” (January 2026, Unit I) and “predatory pricing” (January 2026, Unit III) are both answered from this note. As part of an essay on the overview of practices controlled by competition law, use the three-box structure (agreements, abuse, combinations) and give one example of each with the section. If asked to compare MRTP and the Competition Act on practices, add section 6 above as the “before” and the three boxes as the “after”.