Q.1 What is the primary objective of competition law?
To promote monopolies
To regulate employment contracts
To maintain fair competition and prevent anti-competitive practices
To control international trade
Explanation - Competition law aims to prevent practices like monopolies, cartels, and abuse of dominant position to ensure a fair market.
Correct answer is: To maintain fair competition and prevent anti-competitive practices
Q.2 Which of the following practices is considered anti-competitive?
Price fixing among competitors
Offering discounts to loyal customers
Innovating new products
Hiring skilled employees
Explanation - Price fixing is an agreement between competitors to set prices, which reduces competition and harms consumers.
Correct answer is: Price fixing among competitors
Q.3 Which body enforces competition law in India?
RBI
SEBI
Competition Commission of India (CCI)
FEMA
Explanation - CCI is the statutory body responsible for enforcing the Competition Act, 2002, and preventing anti-competitive practices in India.
Correct answer is: Competition Commission of India (CCI)
Q.4 Under competition law, what is 'monopoly'?
When many sellers compete for a product
When a single firm dominates the market without competition
When firms collaborate legally
When the government sets prices
Explanation - A monopoly exists when one company controls the market, limiting consumer choices and restricting competition.
Correct answer is: When a single firm dominates the market without competition
Q.5 Which section of the Competition Act, 2002 deals with abuse of dominant position?
Section 3
Section 4
Section 5
Section 6
Explanation - Section 4 prohibits abuse of dominant position by enterprises to ensure fair market practices.
Correct answer is: Section 4
Q.6 What is a 'cartel' in competition law?
A legal association of firms for research
A group of firms colluding to fix prices or limit production
A government regulatory body
An independent auditor
Explanation - Cartels are illegal agreements between competitors to manipulate prices, limit production, or divide markets, harming consumers.
Correct answer is: A group of firms colluding to fix prices or limit production
Q.7 Which of the following is an example of vertical restraint?
A manufacturer fixing prices with retailers
Two competitors agreeing on output limits
A dominant firm abusing its position
Mergers between two large companies
Explanation - Vertical restraints occur between different levels of the supply chain, such as manufacturer-retailer agreements that restrict competition.
Correct answer is: A manufacturer fixing prices with retailers
Q.8 Which of these is a main objective of the Competition Commission of India?
To regulate banking interest rates
To promote competition and prevent practices with adverse effects on competition
To manage tax collection
To control foreign investments
Explanation - CCI ensures markets are competitive, preventing monopolistic or unfair trade practices.
Correct answer is: To promote competition and prevent practices with adverse effects on competition
Q.9 Which of the following agreements is generally prohibited under Section 3 of the Competition Act?
Joint research on new technology
Price-fixing agreements between competitors
Collaboration for charity
Training programs for employees
Explanation - Section 3 prohibits anti-competitive agreements, including price-fixing, output restriction, and market allocation agreements.
Correct answer is: Price-fixing agreements between competitors
Q.10 What does 'anti-competitive agreement' mean?
An agreement that enhances market competition
An agreement that reduces or prevents competition in the market
A contract between employer and employee
A government subsidy plan
Explanation - Anti-competitive agreements restrict free market competition and harm consumers by controlling prices or supply.
Correct answer is: An agreement that reduces or prevents competition in the market
Q.11 Which of the following is an example of abuse of dominant position?
Offering discounts to customers
Selling products below cost to drive competitors out
Launching a new product
Collaborating with suppliers
Explanation - Predatory pricing is an abuse of dominant position where a firm lowers prices to eliminate competition.
Correct answer is: Selling products below cost to drive competitors out
Q.12 Which of these is a remedy available under the Competition Act for anti-competitive practices?
Imprisonment of consumers
Imposition of fines on violators
Cancellation of property rights
Issuing passports
Explanation - CCI can impose penalties, order cessation of anti-competitive agreements, or direct corrective measures to restore competition.
Correct answer is: Imposition of fines on violators
Q.13 Which type of market situation is a concern under competition law?
Monopolistic and oligopolistic markets
Perfectly competitive markets
Markets with free entry and exit
Small-scale local markets
Explanation - Competition law primarily addresses situations where few firms dominate the market, potentially restricting competition.
Correct answer is: Monopolistic and oligopolistic markets
Q.14 Which section of the Competition Act covers combinations (mergers and acquisitions)?
Section 5
Section 6
Section 7
Section 8
Explanation - Section 5 defines 'combinations' and Section 6 regulates them to ensure they do not cause appreciable adverse effect on competition.
Correct answer is: Section 5
Q.15 Which of the following is considered a horizontal agreement?
Two competing companies agreeing on prices
Supplier controlling retail prices
Company collaborating with a charity
Government setting industry standards
Explanation - Horizontal agreements occur between competitors at the same level of the supply chain and may involve price-fixing or market allocation.
Correct answer is: Two competing companies agreeing on prices
Q.16 What is the maximum penalty the CCI can impose on enterprises for anti-competitive practices?
Up to 1% of turnover
Up to 10% of turnover
Up to 100% of turnover
No financial penalty, only warning
Explanation - CCI can impose fines up to 10% of the average turnover of the company for a financial year in which the violation occurred.
Correct answer is: Up to 10% of turnover
Q.17 Which of the following is NOT covered under the Competition Act?
Anti-competitive agreements
Abuse of dominant position
Combinations (M&A)
Income tax compliance
Explanation - The Competition Act regulates market competition, not tax laws.
Correct answer is: Income tax compliance
Q.18 Which of these is a key principle of competition law?
Promotion of monopoly power
Free market competition and consumer welfare
Price control by government
Limiting new businesses
Explanation - Competition law aims to enhance consumer choice, reduce prices, and encourage efficiency through fair competition.
Correct answer is: Free market competition and consumer welfare
Q.19 What does the term 'appreciable adverse effect on competition' mean?
Minor effect that can be ignored
Significant negative impact on market competition
Government control of all prices
Collaborative marketing
Explanation - Combinations or agreements that significantly reduce competition are prohibited as they harm consumers and market efficiency.
Correct answer is: Significant negative impact on market competition
Q.20 Which of these is an example of market allocation?
Competitors dividing markets among themselves
A company offering seasonal discounts
Supplier delivering products on time
Advertising new products
Explanation - Market allocation is an anti-competitive agreement where competitors agree to divide markets, customers, or territories to limit competition.
Correct answer is: Competitors dividing markets among themselves
Q.21 Which of these is considered a vertical combination?
Merger of a manufacturer and a retailer
Merger of two competing telecom companies
Competitors fixing prices together
Government enforcing price controls
Explanation - Vertical combinations are mergers or acquisitions between companies at different levels of the supply chain.
Correct answer is: Merger of a manufacturer and a retailer
Q.22 The Competition Act, 2002, replaced which older legislation in India?
Monopolies and Restrictive Trade Practices Act, 1969
Indian Contract Act, 1872
Companies Act, 1956
Sale of Goods Act, 1930
Explanation - The Competition Act, 2002, replaced the MRTP Act to provide a modern framework for promoting competition and preventing anti-competitive practices.
Correct answer is: Monopolies and Restrictive Trade Practices Act, 1969
Q.23 Which of the following statements about CCI is TRUE?
CCI can enforce criminal law
CCI is an appellate tribunal
CCI regulates competition in India and can investigate anti-competitive practices
CCI collects taxes
Explanation - CCI is the authority that promotes competition, prohibits anti-competitive agreements, and regulates mergers and combinations.
Correct answer is: CCI regulates competition in India and can investigate anti-competitive practices
Q.24 What is 'predatory pricing'?
Setting prices above market rates
Setting extremely low prices to drive competitors out
Offering discounts legally
Government price control
Explanation - Predatory pricing is a practice where a dominant firm sets prices very low to eliminate competition and then potentially increase prices later.
Correct answer is: Setting extremely low prices to drive competitors out