DR RAM MANOHAR LOHIYA NATIONAL LAW UNIVERSITY,

LUCKNOW

2022-2023

COMPETITION LAW

PROJECT

AATMANIRBHAR BHARAT AND DIVESTMENT: INTERPOLATED

COMPETITION LAW ISSUES IN COMPETING SCHEMES

SUBMITTED BY: SUBMITTED TO:

KISHALAYA PAL MISS. PRIYA ANURAGINI
190101083 ASSISTANT PROFESSOR
(LAW)
 ACKNOWLEDGEMENT
I would like to convey my heartfelt gratitude to Miss. Priya Anuragini for her tremendous
support and assistance in the completion of my project and for providing me with this
wonderful opportunity to work on a project with the topic Food Culture during the Pandemic.
The completion of the project would not have been possible without their help and insights.

KISHALAYA PAL
 AATMANIRBHAR BHARAT AND DIVESTMENT: INTERPOLATED
COMPETITION LAW ISSUES IN COMPETING SCHEMES
Abstract
This article is an attempt to study the interaction of competition law with two of India’s central
schemes of economic policy: Aatmanirbhar Bharat and Divestment. This article is divided into
4 chapters. The first chapters provide a background of how the new law came about to be and
on what grounds do they meet. The second chapter elucidates upon how the two schemes move
in opposite direction on the plane of competition law. In effect, one scheme seems to add a
balancing effect to the other even though it must not have been contemplated by the
policymakers. It identifies two factors specifically where the effects are contradictory which
are the effect of government control and the effect on quality and innovation. The third chapter
identifies two issues with the current scenario which are interpolated in between the two
schemes and can be of major detriment to industries. Finally, the article discusses
comprehensive suggestions from the point of view of competition law to reconcile the two
schemes. The readers may note that, some of the inferences drawn especially with respect to
Aatmanirbhar Bharat are reasoned speculations as it is a fairly new scheme so some of the
results of it are yet to be seen. Therefore, in those areas the article proceeds on principles and
on that basis postulating what might be the effects on some industries.

Introduction

Background

The emerging economy of India has faced two moments of reckoning of unparalleled
magnitudes. The first one was in 1991 where accumulating problems in balance of payments
had culminated into a situation where the country’s foreign reserve would have been able to
sustain only two more weeks of essential imports. Together with an increased rate of external
borrowings especially in the defence sector and a massive outflow of foreign reserves, India’s
debt obligations rose.1 The second one was much recent during the Covid- 19 pandemic which
forced the economy of the country to a complete halt for few months. 2 From April to June,
2020 large parts of which constituted lockdown, India’s GDP shrank by 24.4% which is 19%

1
Arunabha Ghosh, Pathways Through Financial Crisis: India, Global Economic Governance
Programme, 413 (2006).
2
S. Mahendra Dev & Rajeshwari Sengupta, Impact of Covid-19 on Indian Economy: An interim
assessment, Indira Gandhi Institute of Development Research, 13 (2020).
more than the all-time second highest percentage of contraction of 5.2% in 1980.3 These
statistics clearly show the unprecedented nature of these crisis situations, something which
India faced for the first time respectively.

However, both these situations gave way to drastic measures by the government. The 1991
crisis led to the liberalisation, privatisation, and globalisation (henceforth, LPG) of India’s
economy which transformed it forever. 4 The government gradually started lifting barriers from
international trade, investments and imports and the entire scheme of licensing raj was
abolished, which led to privatisation.5 These extraordinary measures had economical, political,
social and legal ramifications. One of the major issues in the legal sphere was that of how will
this reform affect the competition in the market. The competition law regime of the country
had to be at par with the addition of entire new dimensions namely private and foreign
investment. The Competition Act, 2002 was the need of the hour in view of the rapidly
changing economic scenario of the country as the MRTP Act, 1969 was not adequate to deal
with the whole new raft of competition law challenges that the LPG reforms brought with it.6
This statute was largely a product of the Report of the Competition Law Review Committee
headed by Raghavan and published in 1999. 7 During the pandemic, India announced a massive
stimulus package worth 20.7 Lakh Crores to revive the economy and make India self-reliant
by boosting local domestic production. 8

Integrality of the schemes

It must be kept in mind that for the foreseeable future, both, Aatmanirbhar Bharat and
Divestment Policy will be integral to the economic discourse of India. These schemes should
not be seen in isolation but should be viewed in light of previous measures in the same
direction.
India was preparing for Atmanirbhar Bharat even before the pandemic as could be justifiably

3
WORLD BANK, https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=IN ( last visited Mar.
11,2023).
4
Sanket V. Ravan, Impact of LPG on Indian Economy, PRIME INTERNATIONAL RESEARCH JOURNAL, 4, 21
(2014)..
5
Valerie Cerra & Sweta Chaman Saxena, What caused the 1991 currency crisis in India, 49 INTERNATIONAL
MONETARY FUND 395, 398 (2002).
6
S M DUGAR, GUIDE TO COMPETITION LAW, (7th Edition, Lexis Nexis 2016).
7
High level committee on competition policy and law, 2000,
8
Rajesh Chaddha. 2020, Skewed critical minerals global supply chainspost COVID-19: Reforms for making
India self-reliant, <https://www.think-asia.org/bitstream/handle/11540/12033/Skewed-critical-minerals-global-
supply-chains-post-COVID-19.pdf?sequence=1> accessed on 16 February 2023.
inferred from its opting out from the Comprehensive Economic Partnership (RECP).9
Similarly, India’s ‘Make in India’ campaign was based on the commitment to no longer remain
a market for the global industry and instead become a global manufacturing hub. 10 The scale
of the scheme can be gauged by the fact that a total of 10,81,908 participants are involved in it
in some capacity and it constitutes the work of 354 ministries and organizations. 11 Even as far
as strategic divestment is concerned, India has shown an uptrend in divesting in the recent
years. It went up from Rs. 22,846 cr in 2010-2011 to Rs. 94,727 cr in 2018-2019.12

Moreover, the Indian economy has actively started to employ the Nudge theory in its policy
implementation. Nudge Theory is based upon the idea that by shaping the environment, also
known as the choice architecture, one can influence the likelihood that one option is chosen
over another by individuals. 13 India has seen its successful partial use in previous welfare
schemes launched by the government like the Swatchh Bharat Abhiyan Mission and the Beti
Bachao Beti Padhao scheme. 14 Therefore, we see that these schemes have not come about out
of thin air but the groundwork was being laid for it since long before. It can only be said that
in the recent years these measures have taken a more pronounced stance. Moreover, the scale
of these measures suggests how central these policies are to the economic scenario of the
country and are going to remain so in the foreseeable future. Together it can be justifiable
averred that these two schemes will largely shape the economic future of the country in the
coming few years ahead of us. This aversion forms the basis for actually delving into the
schemes and delineating its effects on competition law and regulation.

Competing effects of competition laws.

Intuitively, divestment by government should foster competition. Divestment is housed in the

theory of economic liberalism which, in a classical sense, is based on the principles of personal
liberty, private property and limited government interference. 15 Divestment which in effect

9
Dr. Ajay Massand, M.K. Lodi and Dr. Lubna Ambreen, Atmanirbhar Bharat: Economic, legal, and social
aspects, 11 INTERNATIONAL JOURNAL OF MANAGEMENT 1038, 1042 (2020).
10
Swaminathan A. Aiyar, India’s New Protectionism Threatens Gains from Economic
Reform, CATO Institute Policy Analysis, 851 https://www.cato.org/publications/policy-analysis/indias-new-
protectionism-threatens-gains-economic-reform.
11
Atmanirbhar Bharat, https://aatmanirbharbharat.mygov.in/ (last visited Mar. 12, 2023).
12
PRS India, https://prsindia.org/policy/vital-stats/disinvestment-in-india. (last visited Mar. 08, 2023)
13
R.H. Thaler & C.R. Sunstein, Nudge: improving decisions about health, wealth, and happiness, Penguin 2009.
14
INDIAN FINANCE MINISTRY, Policy for Homo Sapiens, Not 02 Homo Economicus: Leveraging the
Behavioural Economics of “Nudge”,
https://www.indiabudget.gov.in/budget201920/economicsurvey/doc/vol1chapter/echap02_vol1.pdf
15
Encyclopedia of Violence, 3 Political economy of violence 215, 219 (2022).
imparts structural changes in the entity can be a very effective remedy to enhance competition
in the market.16 Even the Competition Law Review Committee Report prescribed that the
Government’s policy should be to divest its shares and assets from state monopolies and public
enterprises in all sectors other than sectors related national security. 17

Divestment also promotes ‘competitive neutrality’ which implies that no business entity gains
some advantaged or becomes disadvantaged just by virtue of its ownership by exercising their
legislative or fiscal powers to favour their own business over the private sector.18 This happens
mainly because the government has many strong incentives to shield Public Sector Enterprises
(hereinafter referred as PSE’s) from any competition. Along with financial incentives like their
interest in protecting fiscal revenue, using PSEs as the main instrument of a country’s industrial
policy, a government also has strong political incentives especially in a democratic country like
India.19 Divestments have repeatedly taken centre stage in the political scenario of India and
have aroused protests and demonstrations. 20

On the other hand, Aatmanirbhar Bharat, on the face of it, seems to be protectionist in nature.
The CLRC Report stated that Trade policy, industrial policy, privatisation, de-regulation,
regional policy and labour and social policy all need to be conducted in a manner compatible
with the market mechanism for an economy to function as efficiently as possible. 21 However,
the current dispensation took measures like disallowing the participation of foreign companies
in procurement tenders up to 200 crores while raising slogans like “vocal for local”. 22 These
measures can be detrimental to the economy as it restricts market access, limits competition,
and results in purchases of inferior goods and services. 23 However, the Indian dispensation has
tried to counter this narrative by presenting Aatmanirbhar Bharat as not being protectionism or

16
Divestiture as a competition remedy: Stocktaking of International Experiences
, https://www.oecd.org/daf/competition/divestiture-of-assets-as-a-competition-remedy.htm (12th March 2023,
01:45 AM).
17
High Level Committee on Competition Policy and Law, Supra note 7.
18
REFORMING SOES IN ASIA: LESSONS FROM COMPETITION LAW AND POLICY IN INDIA,
https://www.adb.org/sites/default/files/publication/546871/adbi-wp1056.pdf.
19
OECD LIBRARY, Competitive Neutrality and State-Owned Enterprises: Challenges and Policy Options
https://www.oecdilibrary.org/docserver/5kg9xfgjdhg6en.pdf?expires=1678775756&id=id&accname=guest&che
cksum=5B8257B45A6830E489FF35A6A7FA9B0E.
20
https://www.deccanchronicle.com/business/in-other-news/230821/aiiea-meet-protests-against-divestment-in-
lic.html.
21
CLRC Report, 1999.
22
MINISTRY OF FINANCE, DEPARTMENT OF EXPENDITURE, PUBLIC PROCUREMENT DIVISION,
Office Memorandum, No. F .20/1/2020-PPD Also available on <
https://doe.gov.in/sites/default/files/Global%20Tender%20Enquiry%20-%20Clarification.pdf>.
23
Mukesh Rawat; Dr. K.D Raju, Government Procurement During Covid-19: Prioritizing Value For Money Over
Discriminatory Policies, SPECIALUSIS UGDYMAS 2022 1 (43), https://sumc.lt/index.php/se/article/view/777/610.
even isolationism. 24 It is also said that Aatmanirbhar Bharat is a move towards achieving self-
sufficiency and not protectionism. 25 Furthermore, at forums like WTO which vehemently
promotes free market and liberal ideas, India has maintained a stance that with schemes like
Aatmanirbhar Bharat, it is infusing dynamism in certain aspects of the Indian economy. 26
Therefore, while the elements of the scheme are restrictive and interventionist in nature, India
is reiterating that it is for fostering self-sufficiency and not protectionism.

However, this paper will not delve into the debate surrounding whether Aatmanirbhar Bharat
is protectionist or not. The authors understand that there are other motivations and implications
of the scheme other than competition law related aspects which are outside the purview of this
article. This article is concerned about whether the elements that constitute the scheme are
restrictive and interventionist in nature which clearly, it is.

Therefore, we see that on the issue of competition law, these two schemes seem to have
opposing effects. While divestment is enhancing the level of competition in the country,
Aatmanirbhar Bharat is running antithetical to competition. At a more specific level, the effects
of these developments can be seen with respect to two areas which have been identified as: (a)
government control and (b) quality and innovation.

Reduction in Government control

In the days of electronic media being solely in the hands of the Government, the Supreme Court
in the case of Ministry of Information and Broadcasting v Cricket Association of Bengal, noted
that there is need for rescuing the electronic media from the Government monopoly. 27
Furthermore, the tendency of government monopoly is bolstered when public welfare is
concerned. In the case of Trilocharan Mishra v State of Orissa, it was held that an act which
has the effect of establishing a state monopoly is valid as long as it is administered for the
benefit of the general public. 28 The Department of Disinvestment which has now become
Department of Investment and Public Asset Management laid out certain objectives in a June

24
Atmanirbhar Bharat is neither ‘isolationism’ nor ‘protectionism’: Nirmala Sitharaman, The Times Of India
(Mar. 01, 2023, 11:20 PM) https://timesofindia.indiatimes.com/business/india-business/atmanirbhar-bharat-is-
neither-isolationism-nor-protectionism-nirmala-sitharaman/articleshow/94796303.cms.
25
Hitesh Jain, Atmanirbhar internet is about self sufficiency, not protectionism, INDIAN EXPRESS (Feb. 27,
2023, 9:29 PM), https://indianexpress.com/article/opinion/columns/atmanirbhar-internet-is-about-self-
sufficiency-not-protectionism-7890562/.
26
Ibid.
27
Ministry of Information & Broadcasting v Cricket Association of Bengal, (1995) 2 SCC 161.
28
Trilocharan Mishra v State of Orissa, (1971) 3 SCC 153.
2001 publication which averred that in many sectors, the end of public sector monopoly will
bring relief to customers. 29 There is also a greater chance that the dominant position so enjoyed
by the PSE will be exploited as it enjoys government patronage and support. 30 This monopoly
is exploited in different ways like by creating entry barriers as was the case in MAHAGENCO
v Coal India and Mahanadi Coalfields Ltd31 or by exclusionary practices like reimbursement
of travelling allowance from the government being made available only when that person has
used Public sector transport services.

Strategic divestment has the effect of neutralising this monopoly of the government and
possible abuse arising from it by diluting its stake in the entity and allowing entry of new
private players in its place.

On the other hand, Aatmanirbhar Bharat has the effect of increasing interventionist approach
of government. For example, India had raised import tariffs on over 3200 goods from most
favoured nations, which signals a protectionist stance to shield domestic industries. 32
Government also opened a portal named ‘Government e-marketplace’ for government
procurement which lends preferential treatment.33

Quality and innovation

One of the biggest success stories of a financial sector advancing as a whole is that of
telecommunications. It started from a backlog under-provision and poor services and then came
the watershed moment of opening up of the sector to private investment, after which both the
quality and efficiency of services skyrocketed.34 Similar results were seen in the Insurance
sector where earlier it comprised of two state owned monolithic institutions namely Life

29
Dipti Kumar Chakravorty, Divestment in India: An Insight into its Rationale, https://www.caluniv.ac.in/dj/BS-
Journal/2002-2004/disinvestment_in_india.pdf. ( Mar. 12, 2023).
30
High Level committee on Competition law and policy, Supra 7
31
MAHAGENCO v Coal India and Mahanadi Coalfields Ltd, 2017 CompLR 0525 (CCI)
32
Pushkar Mekuwar, Protectionist stance or free trade: Why Budget 2022 should consider the impact of trade
tariffs on Indian exporters, THE ECONOMIC TIMES,
https://economictimes.indiatimes.com/small-biz/trade/exports/insights/protectionist-stance-or-free-trade-why-
budget-2022-should-consider-the-impact-of-trade-tariffs-on-indian-
exporters/articleshow/89172264.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst.
33
Ibid.
34
Jai Bhatia, The Indian road to financialisation: a case study of the Indian telecommunication sector,
46 Cambridge Journal of Economics 1025, 1034 (2022).
insurance Corporation of India and the General Insurance Corporation but was opened for
private investment in 1999.35

On the other hand, reservation of products for small scale and micro enterprises has led to poor
quality of output. Since, many of them are suppliers of ancillaries to organised producers, it
leads to the overall poor quality of products to consumers. 36 It must be noted that India’s
previous tryst with self-reliance schemes fell behind the curve on quality, technology and
productivity which can attributed to industrial and trade policies, particularly industrial
licensing, physical barriers high tariffs etc.37 Some of these protectionist measures can be
attributed to the prevailing geopolitical situations like driving dependence away from China,
but they should not amount to anti-competitive practices and such modification shall be strictly
carved out.38 Even in the case of MSMEs, for their own benefit, In order to continue being in
business they have to keep on competing and enhancing the performance. 39

Thus, we see on two grounds Aatmanirbhar Bharat and Divestment are having opposing or
competing competition related effects. Privatisation is especially beneficial for large firms with
high turnovers whereas the smaller businesses still need to be protected. This combination of
two schemes whether intended or not certainly seem to be maintaining a balance and could be
designed in a way so that they complement each other instead of competing.

Interpolating Issues that arise

Right at the outset of this chapter, the authors would like to demarcate the scope of this article.
The authors here are not criticizing or endorsing the two schemes in their entirety but are
actually dissecting the competition law related issues interpolated between the two schemes.
The authors admit that there are other political, social or economic considerations which led to
the implementation of the schemes but they are outside the purview of this article. For this
article, we shall assume these two schemes to be of significant relevance in the foreseeable
future of our economic discourse. Therefore, there is all the more reason to discuss these

35
A. Gunasekaran, Post economic reforms in insurance sector, 70 THE INDIAN JOURNAL OF POLITICAL SCIENCE,
199, 204 (2009).
36
High Level Committee on Competition Policy and Law, supra note 7.
37
Rishikesha T Krishnan, ‘Atmanirbhar must be competitive’, HINDU BUSINESSLINE (March 1, 2023, 10:04 AM),
https://www.thehindubusinessline.com/opinion/atmanirbhar-india-must-becompetitive/article31773104.ece.
38
K. Bharat Kumar, What will be the impact of Chinese apps ban?, THE HINDU (Feb 24, , 10:10 AM),
https://www.thehindu.com/news/national/the-hindu-explains-what-will-be-the-impact-of-chinese-apps-
ban/article61687681.ece
39
Mehak Majeed et. al., Under-Informed Policy Interventions and Long-Run Damage to Industrialization (An
Analysis of the Aatmanirbhar Bharat Abhiyaan) , RESEARCH SQUARE, https://assets.researchsquare.com/files/rs-
599545/v1/b8c1952a-ff07-49b2-8b44-37a70fcbd158.pdf?c=1634840647.
interpolating issues in order to have as flawless an implementation as possible. Illustratively,
if E1, E2 and E3 are entities in the same relevant market and E1 and E2 are benefitting from
either of the two schemes in some way, our goal in this article is to analyse how can the
competition law related underlying ills of the scheme by resolved.

Formation of Private Monopoly

While the competitive effects of divestment cannot be denied, in contradiction, divestment can
turn out to be counterproductive with respect to competition. This is because ever-increasing
divestment may lead to the establishment of private monopoly. There is a strong perception
that private monopoly is far more harmful than public sector monopoly. While the monopoly
in the public sector can make the management inefficient, monopoly in the private sector will
make its entrepreneurs exploitative. 40 There are many precedents for this proposition like the
experience of Bangladesh, that carried out one of the largest privatisation programmes between
1975 and 1990, where the allocative efficiency was largely affected by privatisation resulting
in greater disparities in income and wealth.41 Likewise, when Mexico opened up its economy
to foreign trade and investment specifically for fostering competition by lifting restrictive
barriers, it was seen that eliminating trade barriers was not sufficient to guarantee competition
if it is negatively affected by the behaviour of private parties. 42

In the case of D.R. Venkatachalam v Deputy Transport Commissioner, it was stated that while
the state is entitled to confer some benefit on a government enterprise over and above what it
confers on private undertakings, caution must be exercised to ensure that it is the state which
gains a monopoly and not a third party. 43 Even in the US, the perception that government
monopoly was intrinsically benign and private monopoly malignant prevailed and it was
reflected in the massive power projects undertaken by Bonneville Power Administration and
Tenesse Valley authority. 44 Moreover, especially when sectors which are critical for the needs
of the public welfare like health, education etc. public monopolization should be a preferrable

40
Dipti Kumar Chakravorty, Disinvestment in India : An Insight into its Rationale, BUSINESS STUDY JOURNAL,
https://www.caluniv.ac.in/dj/BS-Journal/2002-2004/disinvestment_in_india.pdf.
41
K. Basu, Structural reform in India, ECONOMIC AND POLITICAL REVIEW, (14th March, 2023, 07:44 AM).
42
Divestiture as a competition remedy: Stocktaking of International Experiences,
https://www.oecd.org/daf/competition/divestiture-of-assets-as-a-competition-remedy.htm (12th March 2023,
01:45 AM).
43
Venkatachalam v. Deputy Transport Commissioner, AIR 1977 SC 842
44
John O. Haley, Competition Policy for East Asia, 3 Wash. U. GLOBAL Stud. L. REV. 277 (2004).
option.45 One of the rationale is that the Government has many external constrains like political
pressure, electoral pressure or general accountability which is bound to keep the exploitation
of their dominant position in check.

This is where the underlying drawbacks of the schemes with respect to competition law come
together. It can be understood as a spectrum being created with two extreme ends which are
‘absolute government monopoly’ and ‘absolute private monopoly’. India by virtue of LPG
schemes had considerably moved towards private monopoly or at least far from government
monopoly and this endangered the smaller industries. The solution to this problem lies in
finding the right balance of government control. One of the earlier notions on this was to
support government monopoly and then expect trickling down of wealth to the lower strata.
But one has to remember that Government monopoly also harms the entity itself as they suffer
from operational inefficiencies. 46

For remedying this, schemes like Aatmanirbhar Bharat could have helped for their upliftment.
However due to their eligibility parameters and implementation a lot of smaller entities miss
out which is particularly detrimental for them as on one hand they are getting suppressed by
the private monopolies and on the other hand they are not even benefitting from the state’s
protectionist schemes. A large section of the MSME sector has fallen victim to these cascading
drawbacks. There is empirical data to show that the stimulus package did not meet the
expectations and the need of the MSME’s sector because of definitional changes that were
brought in.47

Relaxations Provided

One of the key reasons that led to the failure of the MRTP Act apart from its inadequacy, was
its truncated enactment on even those practices which it accounted for. This rendered it to be
an appropriate and much less, an affective tool to regulate the market.48 There was the eternal
efficiency versus competition debate and the MRTP surrendered itself before it and had its
most important regulatory provisions Section 20 to Section 26 removed. 49 All of this was done
in the name of increasing efficiency but in reality they proved to be undue exemptions given

45
Robin Room, Jenny Cisneros Ornberg, Government monopoly as an instrument for public health and welfare:
Lessons for cannabis from experience with alcohol monopolies, INTERNATIONAL JOURNAL OF DRUG POLICY,
Volume 74, December 2019, Pages 223-228.
46
Dr. Yallagandala, Divestment Policy- Issues and challenges, SSRN,
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3946901.
47
Mehak Majeed et. al., Supra at 39.
48
T. RAMAPPA, COMPETITION LAW IN INDIA, THE HISTORY OF ENGLISH LAW, 18 (3rd ed. 2013).
49
Part A (Ss. 20 to 26) omitted by Act 58 of 1991 (w.e.f. 27-9-1991).
to the big entities. Even the judicial pronouncements were made favouring the large entities
who have large bargaining powers. For instance in the case of B.S.N Joshi & Sons Ltd v Ajoy
Mehta, the Apex Court held that the extent of interference by the superior courts in the award
of contracts through tendering process should be limited where the public sector undertaking
has exercised bona fide discretion even if the tendering process revealed the existence of a
cartel.50 This was an eccentric judgement where an entity other than any authority was given
massive powers to deal with serious issues like cartelization even though, the entity itself might
have been involved. Furthermore, in the case of D.R. Venkatachalam v. Deputy Transport
Commissioner, it was held that the In India, a state is empowered to confer some benefit on a
government enterprise over and above what it confers on private undertakings. 51 Even at a
global level, a bias toward state-owned enterprises by Governments in giving concessions,
relaxing norms and promoting finances has been observed. 52

Whenever such relaxations are provided, it opens the floodgates for exploitation and this comes
at the cost of the smaller businesses. These practices are even more profound in sectors
involving public services like health as the large entities could easily hide under the garb of
public welfare.

Suggestions

Positive Behavioural remedies

Positive behavioural remedies are remedies which consist of the imposition of an affirmative
obligation instead of just prohibition.53 One of the examples of behavioural control is access
regulation which means that the regulator intervenes to fix terms and conditions at which rival
firms in the competitive component acquire access to the non-competitive services.54 Positive
behavioural remedies are therefore affirmative in nature. One of the chief advantages of these
remedies is that it can be tailored to the case specific firms and thus are effective where
competition issues are not homogeneous.55 One of the most pragmatic legislative provision is
Clause (g) of Section 27 of the act whereunder the commission can pass appropriate order

50
B.S.N Joshi & Sons Ltd v Ajoy Mehta, (2009) 3 SCC 458
51
D.R. Venkatachalam v. Deputy Transport Commissioner, AIR 1977 SC 842
52
https://www.adb.org/sites/default/files/publication/546871/adbi-wp1056.pdf
53
OECD (2006), Remedies and sanctions in abuse of dominance cases,
54
https://www.oecd.org/daf/competition/19635977.pdf.
55
A. Exrachi, . Under (and Over) Prescribing of Behavioural Remedies, THE UNIVERSITY OF OXFORD CENTRE FOR
COMPETITION LAW AND POLICY WORKING PAPERS, (2005),
http://dx.doi.org/www.law.ox.ac.uk/sites/files/oxlaw/cclp_l_13-05.pdf.
which may be deemed fit in the facts and circumstances of a particular case. This enables the
commission to come up with creative solution like positive behavioural control. 56

Positive behavioural remedies which are progressive in nature are best suited to deal with the
said interpolated issues in two ways. Firstly, there is larger flexibility which allows for creative
solutions like having multiple options to enter the competition either by leveraging their IPR
or employing access regulations by entering a contract which they were earlier non-
competitively restricted. Secondly, because of its small scope of impact, the efficiency of the
entities will remain intact and thus could reconcile the efficiency versus competition debate to
a large extent.

One of the chief criticisms it carries is that the remedies will be difficult to monitor and easy
for the entity to flout. However, when it comes from a judicial body or a tribunal the
instruments of civil contempt of court can be invoked against the violators. 57 The remedies in
the order must be precisely and narrowly ordered so that a targeted intervention is possible.

Strengthening the competitive elements

Along with employing appropriate remedies, the authorities should also strengthen the
competitive elements which are found within. For instance, despite massive divestment, almost
all sectors, like securities, food, banking and insurance are regulated by their own regulators
which need to be empowered. Undue exemptions as were provided in many cases as was
mentioned earlier should be avoided as they might have a far-reaching adverse effect.

Rigorous monitoring mechanisms including reporting obligations from the firms concerned,
appointment of trustees or external experts to oversee the status quo of right object of a
divestment procedure is maintained.58 For instance in the case of Columbia Broadcasting
System v Democratic National Committee, it was held that the role of the Government is as an
‘overseer’ and that of the licensee as a ‘public trustee. 59’

Conclusion

We find that Aatmanirbhar Bharat and divestment schemes are not merely peripheral issues
but are actually quite central to the idea of how to develop the Indian Economy in the coming

56
Section 27 (g), Competition law, 2002.
57
Order 39, Rule 2a, Civil Procedure Code.
58
OECD (2011), Report on Experiences with Structural Separation,
http://dx.doi.org/www.oecd.org/daf/competition/50056685.pdf.
59
Columbia Broadcasting System v Democratic National Committee, 412 U.S 94 (1973).
few years. The effects these schemes have on competition regime are opposite to each other.
However there are some mitigating factors which further complicate the situation. For example,
whereas privatisation prevents government monopoly, it carries the risk of forming private
monopoly. Therefore, a strict balance has to be sought between the two extremes. Moreover,
the current regime also provides various relaxations to larger entities in the name of efficiency
which further aggravates the issue. When it comes to the choice of remedy to employed by the
authorities, positive behavioural remedy is the most suited as its flexibility and restorative
effect can be used to tailor-make particular situations and also keep the efficiencies of the
entities largely intact.