COMPETITION LAW

Q] what do you mean by Market? Discuss different types of markets

and their importance
 Introduction – In Competition Act 2002 to provide a view of the
economic development of the country, for the establishment of a
commission
1. to prevent practices having an adverse effect on
competition
2. to promote statin competition in the market.
3. to protect the interest of the consumers and to ensure
freedom of the trade carried on by other participants in
markets, in India and
4. to matter connected
MARKET –
The word market was derived from the Latin word ‘Mercantus’ which
means trading or place of transaction as the word marketing has been
farmed from the market.
It is the mechanism by which buyers and sellers meet directly or
indirectly for the exchange of goods and services in terms of monetary
value.
TYPES OF MARKETS –
The market is classified on a different basis. Based on geographical
1. Local market – supplies and wants or needs of local people.
2. Regional market – not limited to certain places but expands
regional level.
3. National market – refers to the market that is limited within
geographical areas of any country.
 4. International market – it is known as a global market
produced in one country and sold in two or more countries
of the world.
Based on subject matters of sales.
1. Commodity market
2. Service market
3. Financial market
Based on competition law
1. Perfect competition –
perfect competition occurs when there is a large number of
buyers and sellers. All the sellers in the market are smaller in
competition with each other. They sell similar products lack
price influence over the commodities and are free to enter or
exit the market. There is no one big seller with any significant
influence on the market. So, all the firms in such a market are
price-takers.
There are certain assumptions when discussing the perfect
competition. This is the reason a perfect competition market is
a theoretical concept.
These assumptions are as follows –
a) The products on the market are homogenous i.e. they are
completely identical
b) All firms only have the motive of profit maximization
c) There is free entry and exit from the market
d) And there is no concept of consumer preference.
IMPORTANT –
Competition law ensures no single firm can influence the
market, leading to fair prices and efficient resource
allocation.
2. Monopolistic competition –
this is a more realistic scenario that occurs in the real world. In
monopolistic competition, there are still a larger number of
buyers and sellers. But they do not sell homogenous products.
The products are similar but all the sellers sell slightly
differentiated products.
Now consumers have a preference for choosing one product
over another. The seller can also change a marginally higher
price since they may enjoy some market power. So, the seller
becomes the price settler to a certain extent.
EXAMPLE – the mobile phone is monopolistic competition the
products are similar but slightly different features, colors, etc.

IMPORTANCE – encourages innovation and diversity but

regulatory bodies need to ensure that differentiation doesn't
lead to unfair practices or barriers to entry.

3. Oligopoly –
an oligopoly market consists of a small number of large
companies that sell differentiated or identical products. Since
there are few players in the market, their competitive strategies
are dependent on each other.
In an oligopoly, there are only a few firms in the market. While
there is no clarity about the no of firms 3-5 dominant firms are
considered the norms. So as in the case of oligopoly, the buyers
are far greater than the sellers.
The firms in this case compete with one another to collaborate,
they use their market influence to set the price and in turn,
maximize their profit. So, the consumers become the price-
 takers in an oligopoly there are various barriers to entry in the
market, and now firms find it difficult to establish.

IMPORTANT – focuses on preventing collusion and ensuring

competitive practice among the few dominant players to
protect consumer interest.

4. Monopoly -
In a monopoly type of market structure, there is only one seller,
so a single firm will control the entire market. It can set any
price it wishes since it has all the market power. Consumers do
not have any alternative and must pay the price set by the
seller.
Monopolies are extremely undesirable. Here the consumer
loses all their power and market forces become irrelevant.
However, a pure monopoly is very rare in reality.

Q] History and development of competition law in India.

 Introduction – the history and development of competition law in

India is closely tied to the country’s economic development and
policy shifts.
HISTORY AND DEVELOPMENT
1. Before India gained independence in 1947, there was no formal
competition law. The economy was largely colonial and
controlled by the British with limited industrial activity and little
focus on competition or market regulation.
2. But after independence, India adopted a socialist economic
model with significant government control over the economy.
The focus was on planned development, import substitution,
 and state-ownership offer key industries. This led to the growth
of monopolies and concentration of economic power.
3. After the introduction of the MRP Act – in response to the
need to reduce monopolistic practices and prevent the
concentration of economic power, the Monopolistic and
Restrictive Trade Practice Act was enacted in 1969. The MRTP
Act aimed to
A] prevent concentration of economic power.
B] prohibit monopolistic, restrictive, and unfair trade practices.

4. The MRTP Act was more focused on controlling rather than

promoting competition. It was seen as overly regulatory and
restrictive, hindering business operations and growth.

DEVELOPMENT OF COMPETITION LAW

5. In 1991, India underwent significant economic reforms, moving

towards market-oriented companies. Liberalization,
privatization, and globalization became key policies. These
changes need a modern competition law to promote and
protect competition in the evolving market economy.
6. In 1999, the government constituted the Raghavan committed
to examining the existing competition law framework and
suggesting improvement. The committee submitted a
recommendation draft that repealed the MRTP Act and
introduced the competition law, the new Act ‘The Competition
2002’.
7. The Competition Act 2002-
After the enactment of the Competition Act based on the
Raghavan committee recommendation, the Competition Act
 was enacted in 2002 replacing the MRTP Act. The new law aims
to promote and sustain competition, protect consumers, and
interests, and ensure freedom of trade.

Key features of the Competition Act –

1. Establishment of Competition Commission of India -
The Act establishes the CCI as the regulatory authority to
enforce Competition law.
2. Prohibition of Anti- Competition agreement –
The Act prohibits agreements that have an appreciable
adverse effect on Competition, including cartels and bid-
rigging
3. Abuse of dominant position –
The Act prohibits abuse of dominant position by enterprises.
4. Regulation of combinations –
The Act regulates mergers, acquisitions, and amalgamation
to ensure they do not harm Competition.

CONCLUSION –
The development of Competition law in India has evolved
from a focus on reducing monopolistic practice under the
MRTP Act to promoting and sustaining Competition under
the Competition Act 2002.
CCI plays a crucial role in enforcing Competition law and
ensuring a fair and competitive market environment.

Q. the silent features of the MRTP Act 1969

 The Monopolies and Restrictive Trade Practices Act (MRTP Act) of
1969 was enacted to prevent the concentration of economic
 power, control monopolies, and prohibit restrictive trade practices
in India. Here are the salient features of the MRTP Act:

1. Prevention of Concentration of Economic Power

The MRTP Act aimed to prevent the concentration of economic
power to the detriment of the common interest. This included
measures to curb the growth of monopolistic enterprises and ensure
that economic power is not concentrated in the hands of a few.

2. Control of Monopolies
The Act defined monopolistic trade practices and sought to control
them. Monopolistic trade practices refer to practices that have or are
likely to have the effect of maintaining prices at an unreasonable
level, unreasonably limiting technical development or the supply of
goods, or preventing or reducing competition in the market.

3. Prohibition of Restrictive Trade Practices

Restrictive trade practices were practices that restricted, distorted, or
prevented competition in any manner. This included agreements
among enterprises to:
- Fix prices.
- Limit production or supply.
- Allocate markets or customers.
- Bid rigging and collusive bidding.
4. Unfair Trade Practices
The MRTP Act introduced the concept of unfair trade practices.
These included:
- False or misleading advertisements.
- Falsely representing goods or services.
- Falsely representing the sponsorship, approval, performance,
characteristics, accessories, uses, or benefits of goods or services.
- Offering gifts or prizes with the intention of not providing them as
offered.

5. Monopolies and Restrictive Trade Practices Commission (MRTPC)

The Act established the Monopolies and Restrictive Trade Practices
Commission (MRTPC) to inquire into and adjudicate complaints
related to monopolistic, restrictive, and unfair trade practices. The
MRTPC had the power to:
- Conduct inquiries on their own or based on complaints.
- Issue orders to cease such practices.
- Direct the division of an enterprise in cases of concentration of
economic power.

6. Regulation of Mergers, Amalgamations, and Acquisitions

The MRTP Act required prior approval from the Central Government
for mergers, amalgamations, and acquisitions involving large
enterprises. This was to ensure that such combinations did not lead
to the concentration of economic power or restrict competition.
7. Investigation and Adjudication Powers
The MRTPC had the authority to investigate complaints, conduct
inquiries, and issue necessary orders. It could also order the division
of an enterprise if it found that it had resulted in or was likely to
result in the concentration of economic power.

8. Penalties and Enforcement

The Act provided for penalties for contravention of its provisions.
This included fines and imprisonment for individuals and penalties
for enterprises found guilty of engaging in monopolistic or restrictive
trade practices.

9. Consumer Protection
The MRTP Act also had provisions for protecting consumer interests
by prohibiting unfair trade practices. Consumers could file complaints
with the MRTPC regarding false advertisements, misleading claims,
and other unfair practices.

10. Periodic Review and Amendments

The Act allowed for periodic review and amendments to address
evolving market conditions and economic policies. This ensured that
the MRTP Act remained relevant and effective in controlling
monopolistic and restrictive practices.
Criticisms and Limitations
While the MRTP Act was a significant step towards regulating
monopolies and restrictive practices, it had several limitations:
- It was considered overly regulatory and cumbersome for
businesses.
- It focused more on curbing monopolies rather than promoting
competition.
- Enforcement mechanisms were often seen as inefficient and slow.
- It did not address new economic realities emerging from
globalization and liberalization.

Repeal and Replacement

In light of the changing economic landscape and the need for a more
modern and effective competition law, the MRTP Act was repealed
and replaced by the Competition Act, of 2002. The new law aimed to
promote competition, protect consumer interests, and ensure
freedom of trade in the market.

In summary, the MRTP Act of 1969 was a foundational legislation for

regulating monopolies and restrictive trade practices in India. It laid
the groundwork for modern competition law, although its limitations
eventually led to its replacement by the Competition Act, of 2002.
Q. what is the relation between competition policy and competition
law
 It has been noted, supra, that competition policy is a subset of
competition, and that its (competition policy’s) subset is
 competition law. The former covers a whole array of executive
policies and even approaches, whereas the latter is a piece of
legislative enactment having the character of enforceability in a
court of law. Government-made decisions by way of executive
policies and executive guidelines are seen often to impact the
market by way of regulating and facilitating the activities of the
various players therein without the promulgation of a law or
without the requirement of having to secure the approval of the
legislature before applying the same.
In policies, which do not have the cover of law, there is always the
danger of discrimination, abuse of discretion, and non-rule-based
decisions. While one could appreciate the difficulties involved in
covering and supporting every executive-made competition policy
by legislative enactment, it is desirable that there is a codification
of the principles in the competition law which should act as an
umbrella framework for making executive policies.

Relationship Between Competition Policy and Competition Law

1. Complementary Roles: Competition law provides the legal tools

and enforcement mechanisms to achieve the goals outlined in the
competition policy.
2. Policy Implementation: Competition policy sets the agenda and
objectives for a competitive market, while competition law
provides the means to implement these objectives.
3. Legal Framework: Competition law forms the backbone of
competition policy, ensuring that the principles of competition are
upheld through enforceable rules.
4. Government Oversight: Government agencies, such as antitrust
authorities or competition commissions, are typically responsible
for both developing competition policy and enforcing competition
law.
5. Market Health: Together, competition policy and competition law
work to maintain market health by preventing monopolies,
promoting innovation, and protecting consumers.

Q. Raghavan committee report

Background and Establishment

The Raghavan Committee was established by the Government of
India in 1999, chaired by S.V.S. Raghavan. Its primary objective
was to study and recommend the need for a comprehensive
competition law and policy framework in India. This initiative
arose from the recognition that India needed to address market
distortions and promote a competitive economic environment
conducive to growth and consumer welfare
Key Recommendations and Report
The Raghavan Committee submitted its report in May 2000, which
laid the groundwork for significant reforms in India's competition
policy. Here are the key recommendations:
1. Establishment of the Competition Commission of India (CCI):
- The committee proposed the formation of an independent
regulatory body, the CCI, to oversee and enforce competition
laws. This body was designed to ensure fair competition in the
market, prevent anti-competitive practices, and protect consumer
interests.
- The CCI was granted wide-ranging powers to investigate and
penalize anti-competitive behaviors such as cartels, abuse of
dominant positions, and other practices that could distort the
market.
2. Comprehensive Legal Framework:
- The committee emphasized the need for a comprehensive
legal framework that included provisions for reviewing mergers
and acquisitions. This was to prevent excessive market
concentration and ensure that such corporate activities did not
harm competition.
- The framework was also to address issues like predatory
pricing and other practices that could potentially harm market
fairness and consumer welfare.
3. Role of Market Regulation:
- The Raghavan Committee stressed the importance of
regulating market activities to promote innovation, efficiency, and
economic growth. It highlighted that a lack of competition law
had allowed a few large players to dominate various sectors,
stifling competition and innovation.
- The committee recommended that the CCI be empowered to
undertake rigorous economic analysis to base its decisions on
sound economic principles, ensuring transparency and fairness in
its operations.
4. Implementation and Enforcement:
- The committee underscored the need for robust enforcement
mechanisms to ensure that the new competition laws would be
effective. It called for the CCI to be equipped with adequate
resources and expertise to carry out its mandate effectively.
- It also suggested measures to ensure the independence of the
CCI, protecting it from undue political and commercial influences.
Impact and Significance
The recommendations of the Raghavan Committee led to the
enactment of the Competition Act, 2002, which replaced the
Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act).
This new legislation aimed to modernize India's competition
policy framework in line with global best practices. The
establishment of the CCI in 2003 marked a significant step
towards promoting a competitive market environment in India.
Role of the Competition Commission of India (CCI)
Since its inception, the CCI has played a pivotal role in regulating
competition in various sectors of the Indian economy. Some key
functions and achievements include:
1. Investigations and Penalties:
- The CCI has conducted numerous investigations into anti-
competitive practices. It has imposed penalties on companies
found guilty of activities such as price-fixing, cartelization, and
abuse of dominant positions. For example, it has fined cement
companies for cartel behavior and penalized tech giants for anti-
competitive practices.
2. Merger and Acquisition Review:
- The CCI reviews mergers and acquisitions to prevent undue
market concentration. This helps maintain a competitive market
structure and prevents the emergence of monopolies.
3. Advocacy and Awareness:
- The CCI engages in competition advocacy, raising awareness
among businesses, consumers, and policymakers about the
importance of competition laws and fair market practices.
4. Legal Challenges and Reforms:
- The CCI has faced challenges such as delays in investigations
and criticisms regarding the transparency of its decision-making
processes. However, it continues to evolve and improve its
practices to ensure more effective enforcement of competition
law.
Conclusion
The Raghavan Committee's work was instrumental in
transforming India's approach to competition policy. By
establishing the CCI and providing a robust legal framework, it laid
the foundation for a more competitive and dynamic economic
environment. The continued efforts of the CCI are crucial for
maintaining fair competition, fostering innovation, and protecting
consumer welfare in India.
Q. Sachar committee report
Background of the Sachar Committee
The Sachar Committee, led by Justice Rajinder Sachar, was
established to review and propose amendments to the
Monopolies and Restrictive Trade Practices (MRTP) Act, 1969. The
committee's primary focus was to address the inadequacies of the
existing competition law framework in India and to ensure it was
robust enough to tackle the changing economic environment,
especially in light of economic liberalization and globalization.
Key Recommendations and Amendments
1. Introduction of Section 36A - Unfair Trade Practices:
- One of the most significant contributions of the Sachar
Committee was the introduction of Section 36A in the MRTP Act
through the 1984 amendment. This section specifically dealt with
Unfair Trade Practices (UTPs), which included deceptive
advertising, false representation of products, and misleading
claims about goods and services.
- The amendment aimed to protect consumers from businesses
that engaged in dishonest practices to promote their products or
services. This was a major step towards enhancing consumer
rights and ensuring fair competition in the market.
2. Strengthening Consumer Protection:
- By focusing on UTPs, the Sachar Committee underscored the
importance of consumer protection within the ambit of
competition law. This marked a shift from merely regulating
monopolistic practices to actively safeguarding consumer interests
against unfair business practices.
- The committee recommended stringent measures against false
advertising, deceptive marketing, and other practices that could
mislead consumers. This not only helped in building consumer
trust but also promoted healthy competition by ensuring that all
market players adhered to fair practices.
3. Broadened Scope of the MRTP Act:
- The committee's recommendations led to a significant
expansion of the MRTP Act's scope. Previously, the act primarily
focused on monopolistic and restrictive trade practices. The
inclusion of UTPs broadened the regulatory framework, allowing
the MRTP Commission to take action against a wider array of anti-
competitive behaviors.
- This broadening of scope was crucial for adapting to the
evolving economic landscape, where businesses employed more
sophisticated and varied methods to gain undue advantage in the
market.
4. Impact on Subsequent Legislation:
- The work of the Sachar Committee paved the way for more
comprehensive reforms in India's competition law. Although the
MRTP Act was a significant piece of legislation, it had several
limitations, particularly in dealing with the complexities of a
liberalized economy.
- The insights and recommendations from the Sachar Committee
influenced the drafting of the Competition Act, 2002, which
eventually replaced the MRTP Act. The new act provided a more
effective framework for promoting competition, regulating
mergers and acquisitions, and preventing abuse of dominance.
5. Economic Liberalization and Legal Reforms:
- The Sachar Committee’s efforts were timely, as they coincided
with India’s broader economic liberalization policies of the early
1990s. The liberalization required a more dynamic and responsive
legal framework to deal with the influx of new market players and
the intensifying competition.
- The committee recognized that the existing MRTP Act was
insufficient for addressing these new challenges and thus
recommended reforms that would make the law more relevant
and effective in a liberalized economy.
Conclusion
The Sachar Committee played a crucial role in shaping the
trajectory of competition law in India. By introducing significant
amendments such as Section 36A to the MRTP Act and
emphasizing consumer protection, the committee laid the
foundation for a more comprehensive and effective regulatory
framework. These reforms not only addressed the immediate
issues of unfair trade practices but also set the stage for the
development of the Competition Act, 2002, which continues to
govern competition law in India today.
The committee's recommendations ensured that the Indian
competition law framework could adapt to the changing economic
landscape, promoting fair competition and protecting consumer
interests. The legacy of the Sachar Committee is evident in the
robust regulatory mechanisms and consumer protections that
characterize India's current competition law environment.