SC strengthens competition law, affirms tough penalties

KEY TO CONSUMER WELFARE

- Utkarsh Anand

In a ruling that underscores the strength of India's competition law framework, the Supreme Court has upheld the power of the Competition Commission of India (CCI) to impose both structural and behavioural penalties on violators, clarifying that such deterrent measures are intrinsic to the mandate of the Competition Act, 2002.

A bench of justices Manoj Misra and KV Viswanathan restored penalties imposed by CCI on the Kerala Film Exhibitors Federation (KFEF) and two of its office-bearers, who were found guilty of anti-competitive conduct by boycotting the screening of films at Crown Theatre in Thrissur.

The court held that the remedies imposed, which included restraining KFEF leaders from associating with the federation for two years in addition to financial penalties, were proportionate and essential to protect consumer interest and preserve market freedom.

It is imperative to closely examine the September 26 judgment authored by Justice Viswanathan, given its crucial implications for upholding fair competition, protecting consumer welfare, and safeguarding economic freedom.

From MRTP to Competition Act

Tracing the legislative backdrop, the judgment noted that the Competition Act, 2002 replaced the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act), which had become obsolete in the wake of global economic reforms and India's liberalisation.

While the MRTP Act focused largely on preventing the concentration of economic power and curbing monopolistic practices, it was criticised for lacking enforcement teeth.

The MRTP Commission could only pass cease-and-desist orders, and penalties were limited to instances of disobedience of such orders. This, the judgment highlighted, meant that violators could operate with impunity until pulled up, often escaping with mere compliance.