Section 2 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 2 of the Competition Act, 2002 is the definitions section. The definitions in this article decide who can be investigated (an "enterprise" or a "person"), who can complain or be heard (a "consumer" or a "party"), and what the Act is about (goods, services, price and turnover). Each is explained below as it reads after the Competition (Amendment) Act, 2023.
This article follows the consolidated text of the Act published by the Competition Commission of India (amendments shown up to the Finance Act, 2017), read with the Competition (Amendment) Act, 2023 as published in the Gazette of India on 11 April 2023. The 2023 Act changes the opening of "enterprise" in Section 2(h) (it now speaks of "economic activity" and names units, divisions and subsidiaries), adds a definition of "party" in a new clause (ka), and updates the references to the Companies Act in clauses (l)(vi) and (p). The 2023 change applies from the date notified for that provision; the notification is not in the sources consulted and should be checked.
Enterprise: Section 2(h)
The consolidated text defines an enterprise as "a person or a department of the Government, who or which is, or has been, engaged in any activity, relating to the production, storage, supply, distribution, acquisition or control of articles or goods, or the provision of services, of any kind, or in investment, or in the business of acquiring, holding, underwriting or dealing with shares, debentures or other securities of any other body corporate", either directly or through units, divisions or subsidiaries. It excludes "any activity of the Government relatable to the sovereign functions of the Government including all activities carried on by the departments of the Central Government dealing with atomic energy, currency, defence and space".
The 2023 Act (its Section 3(b)) replaces the portion from "a person or a department of the Government" to "defence and space" with new words. As substituted, the clause begins "a person or a department of the Government, including units, divisions, subsidiaries, who or which is, or has been, engaged in any economic activity, relating to the production, storage, supply, distribution, acquisition or control of articles or goods, or the provision of services, of any kind, or in investment, or in the business of acquiring, holding, underwriting or dealing with shares, debentures or other securities of any other body corporate, either directly or through one or more of its units or divisions or subsidiaries". It still ends with the sovereign-functions exclusion and the same list of departments.
Compare the two versions side by side.
| Point | Before (consolidated text) | After (2023 Act) |
|---|---|---|
| Kind of activity | "any activity" | "any economic activity" |
| Units, divisions, subsidiaries | Mentioned only in the words "directly or through one or more of its units or divisions or subsidiaries" | Named near the start ("including units, divisions, subsidiaries") and again in the same closing words |
| Location words | The clause went on to say "whether such unit or division or subsidiary is located at the same place where the enterprise is located or at a different place or at different places" | Those words do not appear in the substituted portion |
| Sovereign functions | Excluded, with the departments dealing with atomic energy, currency, defence and space | Same exclusion and list |
The Explanation to the clause is not mentioned in the 2023 Act, so it reads as printed: "activity" includes profession or occupation; "article" includes a new article and "service" includes a new service; and "unit" or "division" includes a plant or factory established for the production, storage, supply, distribution, acquisition or control of any article or goods, and any branch or office established for the provision of any service.
Example. Kaveri Wholesale LLP has a cold-storage unit in one city and a trading subsidiary in another. Both are within the enterprise because the clause names units, divisions and subsidiaries. A government department that sells surplus stationery in the open market is engaged in an economic activity; a department doing a function relatable to defence is within the exclusion. If you are unsure which of your units or group companies fall within the clause, a legal consultation can map them before a notice has to be answered. The terms agreement, cartel and relevant market are in our companion article on the remaining Section 2 definitions, and a plain-language overview is in the introduction to the Competition Act 2002.
Person: Section 2(l)
"Person" includes an individual, a Hindu undivided family, a company, a firm, an association of persons or a body of individuals (incorporated or not, in India or outside India), a corporation established by or under any Central, State or Provincial Act or a Government company, a body corporate incorporated under the laws of a country outside India, a registered co-operative society, a local authority and every other artificial juridical person.
For sub-clause (vi) the consolidated text reads "a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956)". The 2023 Act (Section 3(d)) substitutes "clause (45) of section 2 of the Companies Act, 2013". Companies Act references are quoted as printed; check the current company law for the corresponding provision.
Party: new clause (ka)
The 2023 Act (Section 3(c)) inserts after clause (k): "'party' includes a consumer or an enterprise or a person or an information provider, or a consumer association or a trade association, or the Central Government or any State Government or any statutory authority, as the case may be, and shall include an enterprise or a person against whom any inquiry or proceeding is instituted; and any enterprise or person impleaded by the Commission to join the proceedings". There was no such definition in the consolidated text.
Consumer, goods and service
Consumer, clause (f). A consumer buys goods for a consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, and includes a user of the goods with the approval of the buyer. The text expressly covers a purchase "for resale or for any commercial purpose or for personal use". For services, the consumer hires or avails of services on similar terms, including a beneficiary of the services, "for any commercial purpose or for personal use". So a business buyer can be a consumer for this Act.
Goods, clause (i). "Goods" means goods as defined in the Sale of Goods Act, 1930 (8 of 1930) and includes products manufactured, processed or mined; debentures, stocks and shares after allotment; and, for goods supplied, distributed or controlled in India, goods imported into India. Check the current law for the corresponding provision of the Sale of Goods Act.
Service, clause (u). A service is "service of any description which is made available to potential users" and includes services in connection with business of industrial or commercial matters such as banking, communication, education, financing, insurance, chit funds, real estate, transport, storage, material treatment, processing, supply of electrical or other energy, boarding, lodging, entertainment, amusement, construction, repair, conveying of news or information and advertising.
Practice, price, shares, statutory authority, trade, turnover
- Practice, clause (m): includes any practice relating to the carrying on of any trade by a person or an enterprise.
- Price, clause (o): includes every valuable consideration, whether direct or indirect, or deferred, and any consideration that in effect relates to the sale of goods or performance of services although ostensibly relating to another matter.
- Shares, clause (v): shares in the share capital of a company carrying voting rights, including any security entitling the holder to receive shares with voting rights, and stock unless a distinction between stock and share is expressed or implied.
- Statutory authority, clause (w): any authority, board, corporation, council, institute, university or other body corporate established by or under any Central, State or Provincial Act for regulating production or supply of goods or provision of services or markets for them.
- Trade, clause (x): any trade, business, industry, profession or occupation relating to the production, supply, distribution, storage or control of goods, including the provision of any services.
- Turnover, clause (y): "includes value of sale of goods or services". Section 5 of the Act, as amended in 2023, has its own Explanation that defines turnover for the thresholds of that section; it is dealt with in our article on the Explanation to Section 5.
Public financial institution: Section 2(p)
The consolidated text defines it as "a public financial institution specified under section 4A of the Companies Act, 1956 (1 of 1956) and includes a State Financial, Industrial or Investment Corporation". The 2023 Act (Section 3(e)) substitutes the clause: "public financial institution as defined in clause (72) of section 2 of the Companies Act, 2013 and includes a State Financial Corporation, State Industrial Corporation or State Investment Corporation". As the amended Section 6 treats public financial institutions specially, this definition matters for lenders.
What the 2023 Amendment Act changed in this article's clauses
| Clause | Before | After |
|---|---|---|
| 2(h) | "any activity"; location words; units named only in the closing words | "any economic activity"; "including units, divisions, subsidiaries" |
| 2(ka) | No definition | New definition of "party" |
| 2(l)(vi) | "section 617 of the Companies Act, 1956 (1 of 1956)" | "clause (45) of section 2 of the Companies Act, 2013" |
| 2(p) | Section 4A of the Companies Act, 1956 | Clause (72) of section 2 of the Companies Act, 2013 |
| (f), (i), (m), (o), (u), (v), (w), (x), (y) | As printed | Not changed |
Clause (ba) ("Appellate Tribunal") is not printed in the copy consulted; see our article on Section 1 for that point.
Need help with a definition that decides your position?
Whether a body counts as an "enterprise", whether a buyer is a "consumer" or who is a "party" can change how a notice or complaint should be answered. If you need to map your group, units or subsidiaries against the wording above, a legal consultation is the right first step.
Key takeaways
- "Enterprise" now speaks of "economic activity" and names units, divisions and subsidiaries; the sovereign-functions exclusion remains.
- "Party" is a new definition in clause (ka) and includes the person against whom an inquiry or proceeding is instituted.
- A buyer for resale or commercial purposes can still be a "consumer".
- Clauses (l)(vi) and (p) now refer to the Companies Act, 2013.
- The 2023 change applies from the date notified for that provision; the notification is not in the sources consulted and should be checked.
Read next
- Section 1: short title, extent, commencement and the terms that name the Commission
- Agreement, cartel, relevant market, settlement and commitment defined
- Explanation to Section 5: control, group, turnover and value of assets
- Introduction to the Competition Act 2002
Disclaimer: Based on the consolidated text of the Competition Act, 2002 published by the Competition Commission of India (amendments shown up to the Finance Act, 2017), read with the Competition (Amendment) Act, 2023 as published in the Gazette of India on 11 April 2023, and on the regulations and guidelines of the Commission as notified in 2024, as consulted on 2 October 2026. Commencement notifications, notified thresholds, rules and later amendments should be checked. This article is general information, not legal advice; check the official text before acting.