What do you understand by the Competition Test ?

Section 5 of the Competition Act, 2002 explain the combination. Section 6 of the Competition Act, 2002 prohibits any person or enterprise from entering into a combination which causes or is likely to cause an appreciable adverse effect on competition within the relevant market in India and if such a combination is formed, it shall be void. The Competition Commission of India shall have due regard to all or any of the following factors listed under section 20(4) for the purposes of determining whether the combination causes or is likely to cause an 'Appreciable Adverse Effect on Competition' (AAEC) in the relevant market. Most of the facts enumerated in section 20(4) are external to an enterprise. It requires the Commission to evaluate whether the benefits of the combination outweigh the adverse impact of the combination, if any. In other words, if the benefits of the combination outweigh the adverse effect of the combination, the Commission will approve the combination. Conversely, the Commission may declare such a combination as void.