पाठशाला Pathshala · नियम Niyam, Law and compliance · Lesson 26 · Scale

Competition law and the CCI: when scale brings scrutiny

A startup meets the Competition Commission in three ways: through an agreement, through a position it has won, or through a deal. Learn which conduct, contracts and acquisitions draw scrutiny, and what the 2023 amendments changed.

Pathshala, The Founder Library · 11 October 2026 · 7 min read

Heaps of fresh vegetables laid out side by side on a market stall. — Photograph: Muhamad Guruh Budi Hartono · Pexels

Competition law feels like a problem for incumbents until the day a seller on your marketplace files an information with the Commission, a rival’s founder forwards a screenshot from an industry WhatsApp group, or a buyer’s lawyers ask whether your acquisition needs approval. Each of those is a scale problem, and each is cheaper to prevent than to answer.

The Competition Act 2002 covers three things: anti-competitive agreements in section 3, abuse of a dominant position in section 4, and combinations, meaning mergers and acquisitions above set thresholds, in sections 5 and 6. The Competition (Amendment) Act 2023, Act 9 of 2023, changed each of them: penalties on global turnover, platforms caught in cartels, settlements and commitments, and a deal value threshold aimed at acquisitions of fast-growing companies with small balance sheets. This lesson takes them in the order a growing company meets them. Provisions were read on 11 October 2026.

Agreements with competitors: the four presumptions

Section 3(3) lists four kinds of agreement among enterprises in the same trade that are presumed to have an appreciable adverse effect on competition: those that fix prices directly or indirectly; that limit or control production, supply, markets, technical development or investment; that share markets by territory, product or customer; and that amount to bid rigging. Presumed means the Commission does not have to prove harm; the parties have to disprove it. Efficiency-enhancing joint ventures are carved out.

The 2023 amendment added a proviso that matters to platforms and trade bodies. An enterprise that is not in the same trade is still presumed to be part of the agreement if it participates, or intends to participate, in furthering it. A marketplace that circulates a common discount cap among sellers, an aggregator that relays one restaurant’s price to another, an association secretariat that drafts a minimum fee schedule: each can now be swept in. The practical rules are old ones. Do not discuss prices, margins, discounts, capacity or customers with competitors. Leave the meeting, and say so in the minutes, when anyone starts. Keep industry association agendas written and minuted. The Act also rewards the first to confess: section 46 offers a lesser penalty for disclosure, and since 2023 a further reduction for a cartel member that discloses a second, separate cartel.

Agreements up and down the chain

Section 3(4) covers agreements between enterprises at different levels: supplier and distributor, brand and retailer, platform and seller. It names five: tie-in arrangements, exclusive supply, exclusive distribution, refusal to deal and resale price maintenance. None is presumed harmful; each is unlawful only if it causes or is likely to cause an appreciable adverse effect on competition in India. That makes them a question of scale. An exclusive arrangement by a company with a few per cent of a market is a commercial choice. The same clause in the contracts of the company everyone has to sell through is evidence.

A vendor at a crowded market stall stacked with fresh vegetables. — A stall chooses what to stock. The question for the law is whether a supplier or a platform has taken that choice away from it. Photograph: Markus Winkler · Pexels

Read your standard contracts with that in mind, especially the [ten clauses that decide disputes](/library/contracts-ten-clauses-that-decide-disputes). Minimum resale prices imposed on distributors, discounts conditional on not stocking a rival, a requirement to buy a second product to get the first, and blanket refusals to supply a reseller who discounts are the patterns section 3(4) describes, written into everyday commercial terms. Where you need exclusivity, keep it limited in time and territory and write down the commercial reason at the time.

Dominance is a position; abuse is conduct

Being large is not unlawful. The Act defines a dominant position as a position of strength in the relevant market in India that lets an enterprise operate independently of competitive forces or affect competitors and consumers in its favour, and section 19(4) lists the factors the Commission weighs: market share, size and resources, the size of competitors, vertical integration, the dependence of consumers, entry barriers and countervailing buying power among them. What section 4(2) prohibits is abuse: imposing unfair or discriminatory conditions or prices, including predatory pricing; limiting production or technical development; denying market access in any manner; making contracts conditional on unconnected supplementary obligations; and using dominance in one market to enter or protect another.

A vegetable seller surrounded by baskets of produce, in black and white. — Size alone is not the offence. What a large seller does with its position is. Photograph: Rahul Sapra · Pexels

Everything turns on how the market is drawn, and founders tend to draw it two ways at once: narrowly in the pitch deck, where leading a niche is the story, and broadly in any conversation with a regulator. Pick one honest definition, by product and by geography, the way a customer choosing between substitutes would see it, and use it in both places. A board deck that says the company has seventy per cent of quick grocery delivery in six cities is a document the Commission can ask for.

The cost of getting it wrong is set by section 27. After the 2023 amendment the Commission may impose a penalty of up to 10 per cent of the average turnover or income of the last three financial years, and an explanation now defines turnover as global turnover derived from all products and services, not only Indian revenue from the market in question. On 20 October 2022, before that change, the Commission imposed a penalty of ₹1,337.76 crore on Google for anti-competitive practices relating to Android mobile devices. For a founder the relevant question is earlier than any penalty: in which market could the company plausibly be found dominant within three years, and which of its growth tactics, deep discounts, exclusive supply, bundled products, self-preferencing on its own platform, would read as abuse once it is? The Act now also lets an enterprise under investigation offer commitments before the investigation report or seek a settlement after it, under sections 48A and 48B, which turns early legal advice into a real option.

The clause that is a commercial choice at five per cent of a market is evidence at fifty. Review your contracts at the share you expect to have, not the share you have.

Deals: when an acquisition needs approval

A combination above the thresholds in section 5 may not be completed until the Commission approves it. Two separate tests now apply. The size tests look at the assets and turnover of the parties and their groups, in India and worldwide, at levels revised by notification from time to time. Alongside them sits an exemption for small targets: under the 2024 rules, as the Commission’s newsletter Fair Play (volume 50) summarises them, acquisitions of targets with assets in India up to ₹450 crore or turnover in India up to ₹1,250 crore do not need notice on the size tests.

The deal value threshold, in force from 10 September 2024, catches what the size tests miss: any transaction whose value exceeds ₹2,000 crore where the target has substantial business operations in India. For a digital service that means Indian business or end users are 10 per cent or more of its global users; for other businesses, Indian turnover or gross merchandise value of 10 per cent or more of the global figure, with a floor of ₹500 crore that digital services do not face. Notice must be given before consummation; the Commission has thirty days to form a prima facie view, failing which the deal is deemed approved, and an outer limit of 150 days, down from 210. Run a deal through the figure at the term sheet, not at signing: a ₹2,400 crore acquisition of an app with a third of its users in India needs approval even if its Indian balance sheet is small.

The figure is a first screen, not an opinion. Control, minority protections and the treatment of interconnected steps all change the analysis, and the [M&A lesson](/library/selling-the-company-legal-mechanics-indian-m-and-a) explains where the approval sits among the conditions to closing. One time limit runs the other way: under the amended section 19 the Commission will not ordinarily entertain an information filed more than three years after the cause of action arose, though it may condone delay.

A quarterly competition check

Once the company leads a segment, or expects to within three years, put five questions on the agenda of one leadership meeting a quarter. Has anyone discussed prices, discounts, capacity or customers with a competitor, directly, through an association or through a shared vendor, and is there a note of it? Have any distribution, seller or supply contracts added exclusivity, minimum resale prices, tie-ins or refusals to deal, and is the reason written down? What is our honest share of each market we sell into, defined as a customer would define it, and which practices would look different at twice that share? Which deals in the pipeline could exceed ₹2,000 crore or meet the size tests, and has the notice question been answered before the term sheet? Who is the one person every employee should call when a rival, a regulator or a journalist asks about any of this? Keep the answers in the board pack. A company that can show it asked these questions every quarter starts any investigation from a better place than one that cannot.

Nothing here is legal or tax advice; confirm the current rule with a chartered accountant or lawyer before acting.