COMPETITIO

N LAW
ASSIGNMEN
T
SUBMITTED BY: KANISHKA VASHISTHA
ROLL NO.: A-14
CLASS: BA LLB 4TH YEAR
SEM: VIII
SUBMITTED TO: Ms. VIPASHA CHIRMULAY
Ques 1. What is a competitive market? Explain the advantages of competition with
examples.

INTRODUCTION
A competitive market is a cornerstone of modern economies, providing a dynamic
framework where buyers and sellers interact freely, influencing the pricing and
allocation of goods and services.
This economic structure is characterized by a multitude of participants, low barriers to
entry and exit, homogeneous products, and the pivotal role played by the forces of
supply and demand. Understanding the intricacies of competitive markets unveils their
significance in fostering efficiency, innovation, and consumer welfare.

WHAT IS A COMPETITIVE MARKET?

A competitive market is a structure in which no single consumer or producer has the
power to influence the market. Its response to supply and demand fluctuates with the
supply curve, a representation of a product's quantity. Since a competitive market
means the producer must be willing to sell a product according to what the market
pays, supply curves adjust to keep the producer's costs relative to its sales.
In a perfectly competitive market, multiple influences decide market prices and,
therefore, market supply. In this structure, competitive market producers are price-
takers who accept the market price since independent price changes can cause a sales
loss.
Example: Agriculture is a price-taker industry whose price-taker farmers sell their
harvest for the price the market is willing to pay. One year, wheat may sell for $6 a
bushel and the following year, bumper crops increase supply and reduce demand so
the price lowers to $5 per bushel. The farmer then determines how much to grow
based on projected sales.

KEY CHARACTERISTICS OF COMPETITIVE MARKETS:

1. Many Buyers and Sellers:

A competitive market is typified by the presence of a large number of buyers and
sellers. This abundance ensures that individual participants have limited influence
over the market, preventing monopolistic tendencies.
1. Homogeneous Products:
Products in a competitive market are either identical or very similar. This homogeneity
allows consumers to make choices primarily based on price, as differentiation among
products is minimal.
2. Low Barriers to Entry and Exit:
A hallmark of competitive markets is the ease with which new firms can enter and
existing firms can exit. Low barriers promote healthy competition, allowing for the
efficient reallocation of resources to more productive endeavors.
3. Price Determined by Supply and Demand:
Prices in competitive markets are determined organically through the interplay of
supply and demand forces. No single participant can unilaterally set or manipulate
prices, ensuring a fair reflection of market conditions.
4. Perfect Information:
Participants in competitive markets have access to perfect information regarding
prices, quality, and other relevant factors. This transparency empowers buyers and
sellers to make informed decisions.

ADVANTAGES OF COMPETITIVE MARKETS:

1. Efficient Resource Allocation:

Competitive markets reward firms that efficiently meet consumer demand. This
ensures that resources are allocated to their most productive uses, enhancing overall
economic efficiency.
2. Innovation and Technological Progress:
The drive to outperform competitors motivates firms to innovate continually. In
competitive markets, this results in the development of new technologies, improved
products, and enhanced operational processes.
3. Lower Prices for Consumers:
The intense competition compels sellers to keep prices competitive. Consumers
benefit from a wide range of options at affordable prices, fostering consumer welfare.
4. Higher Quality Products and Services:
Firms in competitive markets prioritize quality to attract and retain customers. This
continuous pursuit of excellence raises the overall quality of products and services in
the market.
5. Consumer Empowerment:
The multitude of choices available in competitive markets empowers consumers. They
can select products or services that best align with their preferences, influencing
market trends.

6. Economic Growth and Productivity:

By promoting efficiency and productivity improvements, competitive markets
contribute to overall economic growth. Firms are incentivized to streamline operations
and invest in innovation.

REAL-WORLD EXAMPLES:

1. Smartphone Industry:
Companies like Apple, Samsung, and Xiaomi compete vigorously. This competition
results in constant innovation, lower prices, and a wide array of features for
consumers.
2. Agricultural Markets:
Competitive agricultural markets allow farmers to adapt to changing consumer
preferences, ensuring a diverse range of products and efficient resource allocation.

CHALLENGES AND CRITICISMS:

1. Market Failures:
Critics argue that in certain situations, markets may fail due to externalities, imperfect
information, or the concentration of market power.
2. Income Inequality:
Some contend that intense competition may exacerbate income inequality if certain
firms dominate the market, leaving others struggling.

CONCLUSION:
In conclusion, competitive markets are the engines driving economic vitality. They
stimulate innovation, efficiency, and consumer choice, contributing to overall
economic growth and societal welfare. Understanding the nuances of competitive
markets is essential for policymakers, businesses, and consumers alike as they
navigate the complexities of the modern economic landscape.
Ques 2. Trace the origin and development of competition law.

TITLE: EVOLUTION OF COMPETITION LAW: A HISTORICAL PERSPECTIVE

Introduction:
Competition law, also known as antitrust law, has a rich history that spans over a
century. Originating from concerns over monopolistic practices, competition law has
evolved into a crucial regulatory framework in the global economic landscape. This
article traces the historical development of competition law, starting with its roots in
the late 19th century.

I. Antitrust Movement in the United States (Late 19th Century):

The roots of competition law can be traced to the late 19th century in the United
States, a period marked by rapid industrialization and the rise of powerful corporate
entities. The concentration of economic power in the hands of a few, exemplified by
giants like Standard Oil and American Tobacco, raised concerns about the impact on
competition and consumer welfare.

II. Sherman Antitrust Act (1890):

In response to these concerns, the U.S. government enacted the Sherman Antitrust Act
in 1890. This landmark legislation aimed to curb anticompetitive practices by
declaring illegal any contracts, combinations, or conspiracies in restraint of trade and
any attempts to monopolize markets. The Sherman Act laid the foundation for
competition law by addressing issues of market concentration and unfair business
practices.

III. Clayton Act (1914) and the Federal Trade Commission (FTC):
As industrialization progressed, so did the sophistication of anticompetitive practices.
In 1914, the U.S. government enacted the Clayton Act to strengthen and complement
the Sherman Antitrust Act. The Clayton Act addressed specific issues such as price
discrimination and exclusive dealing, and it introduced provisions to regulate mergers
and acquisitions. Additionally, the act led to the establishment of the Federal Trade
Commission (FTC) as an enforcement agency to investigate unfair methods of
competition.

IV. European Antitrust Laws (Post-World War II):

In Europe, the development of competition law took a slightly different trajectory.
Post-World War II, the Treaty of Rome in 1957 laid the groundwork for the European
Economic Community (EEC). Competition policy became a fundamental aspect of the
EEC, emphasizing the prevention of anticompetitive practices and the promotion of a
common market with free movement of goods and services.

V. Merger Control and Global Expansion:

The latter half of the 20th century witnessed the global expansion of competition law.
As businesses operated on an increasingly international scale, concerns arose about
the impact of mergers and acquisitions on competition. Many jurisdictions, including
the U.S. and the European Union, introduced specific merger control regulations to
scrutinize and regulate corporate consolidation.

VI. WTO and Globalization (1995):

The establishment of the World Trade Organization (WTO) in 1995 marked a
significant step in integrating competition policy into international trade discussions.
While the inclusion of competition law in the WTO faced challenges, it underscored
the recognition of the link between competition and international trade.

VII. Technological Challenges (Digital Age):

The advent of the digital age brought new challenges to competition law. Issues
related to antitrust in the tech industry, data privacy, and platform dominance became
focal points. Jurisdictions worldwide, including the European Union with its General
Data Protection Regulation (GDPR), have adapted competition laws to address these
contemporary challenges.

VIII. Competition Law in Developing Economies:

In recent decades, developing economies have recognized the importance of
competition law in promoting economic development. Many countries have enacted
or strengthened their competition laws to foster fair competition, attract investments,
and protect consumers.

IX. Multinational Cooperation:

Given the global nature of business, there has been an increasing emphasis on
international cooperation among competition authorities. Organizations like the
International Competition Network (ICN) facilitate dialogue and collaboration among
competition agencies from different jurisdictions.

X. Continued Evolution:
The development of competition law is an ongoing process, adapting to technological
advancements, changing economic landscapes, and emerging global challenges.
Continuous efforts are made to strike a balance between fostering innovation and
preventing anticompetitive practices.

Conclusion:
In conclusion, the evolution of competition law reflects the changing dynamics of
economies, trade, and the need for effective regulation to ensure fair competition.
From its roots in the late 19th century antitrust movement to becoming a global
regulatory framework, competition law has played a crucial role in shaping the
economic landscape and promoting competition for the benefit of consumers and
businesses alike. As we navigate the complexities of the modern world, competition
law continues to evolve to address new challenges and foster a competitive and
innovative global marketplace.
 CASE STUDY
Case: Competition Commission of India v. State of Mizoram
Citation:
Bench: Sanjay Kishan Kaul and M.M. Sundresh, JJ.
The parties of these cases are:
Appellant: Competition Commission Of India
Respondent 1: State of Mizoram
Respondent 2: Director Institutional Finance and State Lottery.
Respondent 3: Director General of CCI.
Respondent 4: The informant, filled out the complaint.
Respondent 5: private companies, Distributor of lottery tickets.
Respondent 6: Partnership firm.
Sections involved: Sections 3 and 4 read with Section 19(1)(a) of the Competition Act
(2002)
Facts of the case: The State of Mizoram had issued an Expression of Interest (EoI)
inviting bids for the appointment of lottery distributors and selling agents for State
lotteries regulated by the Mizoram Lotteries (Regulation) Rules, 2011 framed under
the Lotteries (Regulation) Act, 1998.
The EoI was for appointment of lottery distributors/selling agents to organise,
promote, conduct, and market the Mizoram State Lottery through both conventional
paper type and online system. The EoI specified that the minimum rate fixed by the
Government of India is Rs.5 lakh per draw for Bumper and Rs. 10,000 per draw for
others – bids less than these rates would be summarily rejected. In pursuance of the
EoI, five bids were received of which four which quoted identical amount of Rs.
10,000, were selected. The State had also asked the successful bidders to furnish a
security and deposit amount
The Respondent No. 4 made a complaint to the CCI under Sections 3 & 4 read with
Section 19(1)(a) of the Competition Act alleging that the State of Mizoram abused its
dominant position as administrator of State lotteries, by requiring distributors to
furnish exorbitant sums of money towards security, advance payment, and prize pool
even before the lotteries were held.
Respondent No. 4 alleged that the bidders had cartelised and entered into an
agreement that had an appreciable adverse effect on competition in the lottery
business in Mizoram. There was bid-rigging and a collusive bidding process which
violated Section 3(1) read with Section 3(3) of the Competition Act, and also caused
grave financial loss to the State of Mizoram.
The CCI’s Director General (DG) found prima facie evidence on cartelisation and big
rigging against the bidder companies, but the case against State was dropped by the
DG.
The State of Mizoram moved to the High Court by filing a writ petition challenging
the adverse remarks made against it by the CCI. The High Court by an interim order
halted the CCI final orders. The High Court opined, was applicable to legitimate trade
and goods, and was promulgated to ensure competition in markets that are res
commercium.
Thus, lottery activity being in the nature of res extra commercium could not be
covered by the Competition Act and consequently the CCI did not have jurisdiction to
entertain the complaint of respondent no. 4, the High Court ruled. The CCI moved to
the Supreme Court in appeal against the order.

Issues involved:
1. Whether the distribution of lotteries amounts to "Service".
2. CCI's Jurisdiction to entertain issues relating to lotteries

Important arguments:
Petitioner’s argument: What is relevant to note is that the DG did make some
observations against respondent No.2 and the State of Mizoram to the effect that they
ought to have been more vigilant in stopping unfair trade practices and their lapses
raised suspicions of favouritism and collusion. The bidding committee had received
the complaint of respondent No. 4 on 18.05.2012 when the Committee recommended
that the successful bidders be appointed as selling agents. Thus, the DG opined that
the Committee allowed rigging to happen and respondent No.2 was also instrumental
in calling all four bidders together for the renegotiation of bid prices on 22.05.2012.
The DG, thus, opined that it was a case of collusive bidding but the case against
respondent No.1 under Section 4 of the Competition Act was dropped.
Respondent’s argument: Learned counsel for the State sought to contend that they had
never prayed for quashing of the proceedings against the private parties. They only
restricted their prayer against the continuation of proceedings against the State,
something which we have already failed to appreciate and, once again, fail to
appreciate. The last submission of the State of Mizoram was, once again, surprising –
that it was a victim of cartelisation and would continue to cooperate with the CCI. If it
was so, then the proceedings should have been permitted to continue before the CCI
and the State ought to have given appropriate assistance as is sought to be volunteered
now. Lastly it was contended that lottery business is res extra commercium and strictly
regulated by State. Therefore, it could not have (2006) 5 SCC 603.

Order passed:
Finding the conduct of the State "very non-appreciable" and intervention by the High
Court "extremely premature", the Bench stated that the State ought to have cooperated
with the CCI and the High Court ought to have waited for the CCI to conclude but on
the other hand what had happened was that the CCI proceedings had been brought to a
standstill while the High Court opined based on some aspects which may or may not
arise.
The Bench remarked, A simple aspect of anti-competitive practices and cartelisation
had got dragged on for almost ten years in what appears to be a misapplication by the
High Court of the interplay of the two Acts, i.e., the Competition Act and the
Regulation Act.
Hence, holding that the proceedings before the CCI ought to have been permitted to
conclude with the right available to the affected parties to avail of the appellate
remedy under Section 538 of the Competition Act, the Bench set aside the impugned
judgment and directed to close the proceedings in the case filed by the State while the
proceedings against the other parties were directed to continue. In short, the court held
that:
CCI contended that it is concerned about potential bid rigging in the tender process,
cited the case of CCI v Bharti Airtel to highlight that CCI can find out whether a
particular agreement has an appreciable adverse effect and definition of services
should be read with the widest amplitude.
Respondent No. 1 sought deletion from the array of parties as the CCI opined that
there was no fault on its part and sought to aid. Respondent No.5 argued that the
lottery does not fall under the defection of goods and lottery business is res extra
commercium.
Court opined that based on the report of CCI and DG not to proceed against
Respondent No.1, the State could have closed the proceedings at that stage itself
instead of approaching the High Court.
The definition of 'Service 'under the Act means "service of any description", which is
to be made available to potential users and there was no need for the Hon'ble High
Court to have proceeded in the matter was highlighted by the Court.
In the event the tendering process has an anti-competition element, CCI can
investigate the same and affected parties can avail the remedy of appeal under Section
53B of the Competition Act.