Two rival manufacturers agree, over coffee, not to undercut each other. A dominant platform quietly makes its own service the default. A large company buys a small one with almost no revenue and forty million users. All three are competition-law problems, and only one of them looks like a deal.
The Competition Act, 2002 prohibits anti-competitive agreements under Section 3, abuse of a dominant position under Section 4, and regulates mergers and acquisitions under Sections 5–6, all enforced by the Competition Commission of India.
The bottom line
What it prohibits: agreements that harm competition, abuse of dominance, and combinations above the thresholds that would concentrate a market.
Who enforces it: the CCI, with a Director General to investigate. Appeals go to the NCLAT and then the Supreme Court.
What changed in 2023: a ₹2,000-crore deal-value threshold, a settlement and commitment route, penalties indexed to global turnover, a three-year limitation on filing information, and faster merger reviews.
Why the law exists
Markets work when firms compete on price, quality and innovation. They stop working for consumers when competitors collude to fix prices, when a dominant firm uses its power to shut rivals out, or when a merger removes a competitor and concentrates the market.
The Competition Act, 2002 replaced the older MRTP Act to prevent practices with an appreciable adverse effect on competition in India — protecting consumer welfare, and also the freedom of other businesses to compete at all.
Three pillars
The Act regulates three kinds of conduct: anti-competitive agreements between enterprises under Section 3, abuse of a dominant position under Section 4, and combinations — mergers, acquisitions and amalgamations above the thresholds — under Sections 5–6.
The CCI enforces all three, assisted by a Director General who conducts the investigations.
Anti-competitive agreements
Section 3 prohibits agreements causing or likely to cause an AAEC, and it treats two kinds very differently.
Horizontal agreements — between competitors at the same level, covering cartels, bid-rigging, price-fixing, output limits and market sharing — are presumed to have an AAEC. These are the most serious violations, and the presumption means the burden of disproving harm falls on the parties.
Vertical agreements — between firms at different levels, such as a supplier and a distributor, covering resale price maintenance, exclusive supply or distribution and tie-ins — are judged by the rule of reason, meaning the CCI examines their actual competitive effect.
The 2023 amendment brought hub-and-spoke arrangements, where a common intermediary coordinates a cartel between competitors who never speak to each other directly, clearly within the presumptive rule.
Abuse of dominant position
Being dominant is not illegal. Abusing dominance is.
Section 4 prohibits a dominant enterprise from imposing unfair or discriminatory prices or conditions, limiting production or technical development, denying market access, or using its dominance in one market to enter another.
The sequence matters. The CCI first defines the relevant market, then assesses whether the enterprise is dominant in it, and only then examines whether the conduct was abusive. Losing the first argument makes the third one moot.
Mergers and acquisitions
Large mergers and acquisitions have to be notified to the CCI and approved before completion where they cross the prescribed thresholds. Historically those thresholds turned on the parties' assets and turnover.
The CCI reviews whether the combination would cause an AAEC and can approve it, approve it with modifications, or block it outright. The 2023 amendment changed this regime considerably.
The Competition Commission of India
The CCI is the statutory regulator. It can inquire into violations on its own motion, on a reference, or on information filed by any person; direct the Director General to investigate; pass cease-and-desist orders; impose penalties; and review combinations.
Its orders are appealable to the National Company Law Appellate Tribunal, and from there to the Supreme Court.
What the 2023 amendment changed
This is the biggest overhaul since the Act itself. It received assent on 11 April 2023 and was implemented in phases through 2024.
- Deal-value threshold. On top of the asset and turnover tests, a transaction valued above ₹2,000 crore now needs CCI approval where the target has substantial business operations in India. It exists to catch acquisitions of asset-light digital companies that the old thresholds missed entirely, and it took effect in September 2024.
- Settlement and commitment. A firm under investigation for abuse of dominance or a vertical agreement can apply to settle after the DG's report, or offer commitments after the prima facie order and before that report. Neither route is open for cartels, and the CCI's decisions on them are not appealable.
- Penalties on global turnover. Penalties for anti-competitive conduct can now be computed by reference to global turnover, which sharply increases exposure for diversified and multinational groups.
- Leniency Plus. A cartel member already cooperating earns additional penalty reductions by disclosing a separate cartel.
- A three-year limitation. Information or references on contraventions must generally be filed within three years, though the CCI can condone delay.
- Faster merger review. The overall timeline was shortened towards 150 days, with a quick prima facie window, and on-market or open-offer purchases are allowed before approval provided control is not exercised until clearance.
- A 25% pre-deposit to appeal a penalty to the NCLAT.
The practical upshot: more deals are caught, reviews move faster, penalties can be far larger, and there is a route to settle that did not exist before.
Penalties and appeals
The CCI can impose substantial monetary penalties, now referable to global turnover for anti-competitive conduct, order enterprises to cease and desist, require agreements to be modified, and direct divestiture or behavioural remedies in combinations.
For cartels, penalties can be levied on each participant for each year the agreement continued, which is what turns a long-running arrangement into a very large number. Appeals lie to the NCLAT, subject to the 25% pre-deposit, and then to the Supreme Court.
A worked example
A large digital platform agrees to acquire a fast-growing app for ₹2,500 crore. The app has modest assets and turnover, so under the old asset and turnover tests the deal might have escaped scrutiny altogether, as some high-value digital deals once did.
Under the 2023 deal-value threshold it cannot. The value exceeds ₹2,000 crore and the target has substantial Indian operations, so the acquirer must notify the CCI and obtain approval before completing.
Separately, if that platform were later found to have abused its dominance, it could apply under the settlement and commitment framework to resolve the case rather than litigate it to the end — while facing penalties potentially keyed to global turnover if it did not.
Common mistakes
- Assuming a low-turnover deal is exempt. The deal-value threshold now catches high-value, asset-light acquisitions.
- Expecting to settle a cartel. Settlement and commitment do not reach cartels; leniency is the route there.
- Sizing penalty exposure off Indian turnover alone. It can now reference global turnover.
- Missing the three-year limitation for filing information.
- Closing a notifiable deal before CCI approval, which risks gun-jumping penalties.
Frequently asked questions
What does the Competition Act, 2002 prohibit? Anti-competitive agreements such as cartels and price-fixing, abuse of a dominant market position, and combinations that harm competition.
Who enforces competition law in India? The Competition Commission of India, assisted by a Director General for investigations. Appeals go to the NCLAT.
What is the deal-value threshold? Introduced by the 2023 amendment, it requires CCI approval for deals above ₹2,000 crore where the target has substantial business operations in India, capturing high-value digital acquisitions.
What is the settlement and commitment mechanism? A 2023 framework letting firms under investigation for abuse of dominance or vertical agreements close cases by settling or offering commitments. It does not apply to cartels.
How are competition penalties calculated now? Penalties for anti-competitive conduct can be calculated by reference to global turnover under the amended law, which significantly increases exposure.
Is being a market leader a problem? No. Section 4 reaches the abuse of a dominant position, not the position itself.