Section 28 of CA, 2002 : Section 28: Division Of Enterprise Enjoying Dominant Position

Explanation using Example

Imagine a scenario where a company, "Techie Gadgets Ltd.," holds a dominant position in the market for smart home devices. The Competition Commission of India (CCI) investigates and finds that Techie Gadgets Ltd. has been abusing its dominant position by imposing unfair prices and restricting the entry of new competitors.

Under Section 28 of The Competition Act, 2002, the CCI has the authority to order the division of Techie Gadgets Ltd. into smaller, independent entities. This is done to prevent the company from continuing its abusive practices and to promote fair competition in the smart home device market.

The CCI's order may include the following directives:

• (a) The transfer of certain product lines to a new company to ensure competitiveness in the market.
• (b) Adjustment of existing contracts with suppliers and distributors to reflect the division.
• (c) The issuance of new shares for the newly formed entity to the current shareholders of Techie Gadgets Ltd.
• (e) The establishment of a new company with its own memorandum of association to operate one of the divided product lines.
• (f) The newly formed company may alter the provisions of the division order to a certain extent, with proper registration of these changes.
• (g) Any additional arrangements necessary to facilitate the division, such as employee transfers.

Furthermore, if any company officer loses their position due to the division, they are not entitled to compensation for the loss of office as per Section 28(3) of the Act.