THE COMPETITION LAW,2002 AND ITS DEVELOPEMENTAL FACTORS

BY: THAKAR FORAM*

INTRODUCTION:
Today, the whole world is facing the thought cut competition and to stand in; every nation is trying to pull their economy up. The globalization and urbanization is also playing a good role in the same. To have a fair and healthy competition, our nation has set up a body judicial body which is nown as the competition commission of !ndia "##!$. !n !ndia there was an act regarding the competition in the mar et named %&T' (ct "%onopolistic ) &estrictive Trade 'ractice (ct$ but as the time changed this act was not able to prevent the needed defense for the society and mar et, and thus new act named The #ompetition (ct enacted in *++* which is widely nown as the antitrust act in ,nited -tates. The substance and practice of this act differ from jurisdiction to jurisdiction. !n todays world this law is being seen as the way to provide better public services. The history of this law was from the &oman .mpire. !t is said that the competition act is, /an act to provide, eeping in view of the economic development of the country, for the establishment of a commission to prevent practices having adverse effect on competition in the mar et, to protect the interest of consumers and to ensure freedom of trade carried on by other participants in the mar ets, in !ndia, and for matters connected there with or incidental thereto.0

OBJECTIVES:
The preamble of this act states that this is an act to establish a commission, protect the interest of the consumers and ensure freedom of trade in mar ets in !ndia. There are some elements or the objectives for the act. 1. To prohibit the agreements or practices that restricts free trading and also the competition between two business entities. *. To ban the abusive situation of the mar et monopoly. 2. To provide the opportunity to the entrepreneur for the competition in the mar et. 3. To have the international support and enforcement networ across the world. 4. To prevent from anti5competition practices and to promote a fair and healthy competition in the mar et.

SAFEGUARDING WELNESS PROVIDED BY THE ACT:

6hat has been prohibited7 This law prohibits the deliberate e8ploitation of a dominant mar et position by a firm. it also prohibits the limiting access. (nd willful ac9uisition has also been prohibited. :ere mentioning the mar et power is a necessity. !t has been defined as the power to control prices or e8clude competition and mar et share is the most important factor in measuring the mar et power. ,nlawful monopolization is an offence under the competition law and consists of following two elements; 1. 'ossession of mar et power in the relevant mar et. (nd *. The willful ac9uisition or maintenance of the power, as distinguished, from the growth and development. There has been made an anti5competition agreement for the same. !t includes; (greement to limited production or supply. (greement to allocate mar et. (greement to fi8 price. <ig rigging or collusive bidding. &efusal price maintenance. )

.8clusive supply.

The 9uestion arises is besides of all these why do we need competition in the mar et7 The answer is it ma es the enterprises more efficient and it gives a wider choice to the consumers at lower prices, fair competition is beneficiary for all.

LEGISLATIVE DEVELOPMENT:
=ow, paying attention to the legislative part, the government has enacted the %&T' (ct,1>?> is the first enactment to deal with the competition issued and it came into force on 1st june,1>@+. The %&T' (ct was not well ade9uate for the mar et; thus, with some new notifications the (ct of #ompetition, *++* had been enacted. The competition (ct, *++* received assent of the president of !ndia on Aanuary 12, *++2 and was published in the gazette of !ndia dated Aanuary 13, *++2. -ome of the sections of the act were brought into force on %arch 21, *++2 and majority of the other sections on Auly 1>, *++2. :owever, the entire act has not came into force. The ##! is a body corporate having perpetual succession and a common seal. The members of ##! should be appointed by the central government and the -# penal. .ven under the article 2BC1D of the constitution of !ndia, social order on the bases of justice5regarding political, economic and social reviews, this concept has been given. The new clause aims at e9uality in all spheres of life. !t would unable the state to have a national policy on wages and eliminate ine9ualities in various spheres of life. (nd, the article 2>, specifically deals with the principles of policy to be followed by the state for securing economic justice. This article states; to ensure that the economic system should not result in concentration of wealth and means of production to the common detriment. These both articles embody the jurisprudence doctrine of distributive justice. The constitution permits ) even directs the state to administer what may be termed /distributive justice0. This concept in the sphere of law5ma ing cannot, inter alia, the

removal of economic ine9ualities rectifying the injustice resulting from dealing and transactions between une9ual societies.

MAJOR AREAS IN FOCUS:

1. A !"#$%&'(!"!")( *+,((&( !-. S($!"% #.. C1D =o enterprise or association of enterprises or person or association of

persons shall enter into any agreement in respect of production, supply, distribution, storage, ac9uisition or control of goods or provision of services, which causes or is li ely to cause an appreciable adverse effect on competition within !ndia. C*D (ny agreement entered into in contravention of the provisions contained in sub5 section C1D shall be void. C2D (ny agreement entered into between enterprises or associations of enterprises or persons or associations of persons or between any person and enterprise or practice carried on, or decision ta en by, any association of enterprises or association of persons, including cartels, engaged in identical or similar trade of goods or provision of services, whichE CaD directly or indirectly determines purchase or sale prices; CbD limits or controls production, supply, mar ets, technical development, investment or provision of services; CcD shares the mar et or source of production or provision of services by way of allocation of geographical area of mar et, or type of goods or services, or number of customers in the mar et or any other similar way; CdD directly or indirectly results in bid rigging or collusive bidding, shall be presumed to have an appreciable adverse effect on competition; P,%)"/(/ that nothing contained in this sub5section shall apply to any agreement entered into by way of joint ventures if such agreement increases efficiency in production, supply, distribution, storage, ac9uisition or control of goods or provision of services. Explanation.EFor the purposes of this sub5section, /bid rigging0 means any agreement, between enterprises or persons referred to in sub5section C2D engaged in identical or

similar production or trading of goods or provision of services, which has the effect of eliminating or reducing competition for bids or adversely affecting or manipulating the process for bidding; C3D (ny agreement amongst enterprises or persons at different stages or levels of the production chain in different mar ets, in respect of production, supply, distribution, storage, sale or price of, or trade in goods or provision of services, includingE CaD tie5in arrangement; CbD e8clusive supply agreement; CcD e8clusive distribution agreement; CdD refusal to deal; CeD resale price maintenance, shall be an agreement in contravention of sub5section C1D if such agreement causes or is li ely to cause an appreciable adverse effect on competition in !ndia.

2. A01-( %2 /%&" * ! '%-"!"% . S($!"% #3 CaD directly or indirectly, imposes unfair or discriminatoryE CiD condition in purchase or sale of goods or services; or CiiD price in purchase or sale Cincluding predatory priceD of goods or service; or Explanation.For the purposes of this clause, the unfair or discriminatory condition in purchase or sale of goods or services referred to in sub5clause CiD and unfair or discriminatory price in purchase or sale of goods Cincluding predatory priceD or service referred to in sub5clause CiiD shall not include such discriminatory conditions or prices which may be adopted to meet the competition; or CbD limits or restrictsE CiD production of goods or provision of services or mar et therefor; or CiiD technical or scientific development relating to goods or services to the prejudice of consumers; or

CcD indulges in practice or practices resulting in denial of mar et access *4in any manner5; or CdD ma es conclusion of contracts subject to acceptance by other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts; or CeD uses its dominant position in one relevant mar et to enter into, or protect, other relevant mar et.

.. R(+16*!"% %2 $%&0" *!"% S($!"% #7. The ac9uisition of one or more enterprises by one or more persons

or merger or amalgamation of enterprises shall be a combination of such enterprises and persons or enterprises, ifE CaD any ac9uisition whereE CiD the parties to the ac9uisition, being the ac9uirer and the enterprise, whose control, shares, voting rights or assets have been ac9uired or are being ac9uired jointly have,E CAD either, in !ndia, the assets of the value of more than rupees one thousand crores or turnover more than rupees three thousand crores; or CiiD the group, to which the enterprise whose control, shares, assets or voting rights have been ac9uired or are being ac9uired, would belong after the ac9uisition, jointly have or would jointly have,E CAD either in !ndia, the assets of the value of more than rupees four thousand crores or turnover more than rupees twelve thousand crores; or CbD ac9uiring of control by a person over an enterprise when such person has already direct or indirect control over another enterprise engaged in production, distribution or trading of a similar or identical or substitutable goods or provision of a similar or identical or substitutable service, ifE CiD the enterprise over which control has been ac9uired along with the enterprise over which the ac9uirer already has direct or indirect control jointly have,E

CAD either in !ndia, the assets of the value of more than rupees one thousand crores or turnover more than rupees three thousand crores; or CiiD the group, to which enterprise whose control has been ac9uired, or is being ac9uired, would belong after the ac9uisition, jointly have or would jointly have, E CAD either in !ndia, the assets of the value of more than rupees four thousand crores or turnover more than rupees twelve thousand crores; or CcD any merger or amalgamation in whichE CiD the enterprise remaining after merger or the enterprise created as a result of the amalgamation, as the case may be, have,E CAD either in !ndia, the assets of the value of more than rupees one thousand crores or turnover more than rupees three thousand crores; or CiiD the group, to which the enterprise remaining after the merger or the enterprise created as a result of the amalgamation, would belong after the merger or the amalgamation, as the case may be, have or would have,E CAD either in !ndia, the assets of the value of more than rupees four thousand crores or turnover more than rupees twelve thousand crores

CONCLUSION:
!ndia is a country of differences and thus, the ,- or other model of this act may not wor for !ndia. !ndia is waving its own chemistry for politics and social and economic conditions and so it might become a difficult tas for !ndia for the setting. (nd moreover !ndia is also ta ing the uni9ue challenges from judiciary. Ta ing an e8ample; %r. Gipa chatterji as the chairman of ##! was elected and the 9uestions raised that he cannot stand above all the -# judges. Hovernment arged that ##! is a body which need a e8perienced in the field and which cannot be supplied by the judiciary people. <ut

under (rticle **? and 2* of the constitution of !ndia the -# and :# respectively able to e8hibited such judicial activism and thus, the -# too a firm stand against government in Aanuary, the central govt. assured the -# that amendments would be made in the competition act to enable the chair person and the member to be elected by a committee presided over by the chief justice of !ndia or his nominees. The -# on Aanuary *+, *++4 disposed off the petition in the view of the submission made by the govt. and thus, govt. made ##! a truly functional body. :ere has given the comparison of both the %&T' and #ompetition (ct;

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Based on the pre-reforms scenario Based on size as a factor Competition offences implicit or not defined Complex in arrangement and language 14 per se offences negating the principles of natural justice Fro ns upon dominance !egistration of agreements compulsory "o combinations regulation Competition Commission appointed by the $o%ernment (ery little administrati%e and financial autonomy for the Competition Commission "o competition ad%ocacy role for the Competition Commission "o penalties for offences !eacti%e and rigid *nfair trade practices co%ered +oes not %est ,!-) Commission to in#uire into cartels of foreign origin in a direct manner. Concept of 0$roup1 2ct had ider import and as un or/able

Based on the post-reforms scenario Based on structure as a factor Competition offences explicit and defined Simple in arrangement and language and easily comprehensible 4 per se offences and all the rest subjected to rule of reason. Fro ns upon abuse of dominance "o re#uirement of registration of agreements Combinations regulated beyond a high threshold limit. Competition Commission selected by a Collegium &search committee' !elati%ely more autonomy for the Competition Commission Competition Commission has competition ad%ocacy role )enalties for offences )roacti%e and flexible *nfair trade practices omitted &consumer fora ill deal ith them' Competition .a see/s to regulate them. Concept has been simplified

(nd by this view we can assure that the #ompetition (ct, *++* is needed for the country.

END NOTES:
1. www.competitionIcommission. *. www.india.nic.in.

2. www.##!.net. 3. www.wi ipedia.co.m 4. www.iimahm.ernet. ?. surabhiJlegalserviceindia.com. @. %.'.Aain, The #onstitution of !ndia. =agpur B. Gr.'andey, the constitutional law of !ndia. Kfirst year student of <.(.LL.<.C:M=-.D, =irma ,niversity, !nstitute of law, (hmedabad