Escape Clause in the Competition Act 2002

The Monopolies and Restrictive Trade Practices Act,1969 was passed to restrain monopolistic and trade restrictive practices. But this act proved ineffective in the era of new economic reforms coupled with liberalization, privatization, and globalization. Thus, this act was repealed and replaced by the Competition Act, 2002.The purpose of Competition Act 2002 was to ensure democratic setup in the Indian market by upholding free enterprises and averting market distortion practices. Consequently, the act created a statutory body called Competition Commission of India which encourages competition and discourages any activities that can have a detrimental effect on healthy competition. Accordingly, Competition Commission of India nurtures a level playing field for all the stakeholders by regular monitoring and taking action against violations. The Competition Act was passed in 2002. Thus, it has been 20 years since any significant changes in the act. During these 20 years, new businesses have emerged, and many old businesses have transposed. More importantly, technology began to take the pivotal position of businesses. But the Competition Act has not been able to keep pace with the accelerating changes in the business environment. Consequently, many loopholes exist in the Competition Act, which are successfully used by the business players to circumvent the restrictions placed by the Competition Act to prevent any market distortion practices. In Bharti Airtel Ltd. v. Reliance Jio Industries Ltd., Airtel accused Jio’s action of providing freebie services as predatory practice which is in contravention to the provisions of the Competition Act 2002. But the competition commission dismissed the case by stating that the above provision applies only to dominant players and not to Jio, who is a new entrant with a market share less than 30 %. This study focuses on the above irrational clause in the Competition Act 2002.