EVOLUTION OF COMPETITION LAW IN INDIA

EXTANT COMPETITION LAW OF INDIA

MONOPOLIES AND RESTRICTIVE

TRADE PRACTICES ACT,1969
BROUGHT INTO FORCE IN 1970

MRTP ACTS ROOT

A LODE STAR CONSTITUTION OF INDIA - DIRECTIVE PRINCIPLES OF
STATE POLICY

PRINCIPLES SOCIAL JUSTICE WITH ECONOMIC GROWTH

WELFARE STATE REGULATING CONCENTRATION OF ECONOMIC POWER TO THE COMMON DETRIMENT CONTROLLING MONOPOLISTIC, UNFAIR AND RESTRICTIVE TRADE PRACTICES
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THREE STUDIES SHAPE THE MRTP ACT

HAZARI COMMITTEE REPORT ON INDUSTRIAL LICENSING PROCEDURE, 1955 WORKING OF THE LICENSING SYSTEM HAS RESULTED IN DISPROPORTIONATE GROWTH OF SOME BIG HOUSES MAHALANOBIS COMMITTEE REPORT ON DISTRIBUTION AND LEVELS OF INCOME, 1964 TOP 10 % OF THE POPULATION CORNERED 40 % OF INCOME AND BIG BUSINESS HOUSES WERE EMERGING BECAUSE OF PLANNED ECONOMY MODEL MONOPOLIES INQUIRY COMMISSION REPORT OF DAS GUPTA, 1965 THERE WAS CONCENTRATION OF ECONOMIC POWER AND A FEW INDUSTRIAL HOUSES WERE CONTROLLING A LARGE NUMBER OF COMPANIES AND THERE EXISTED LARGE SCALE RTP & MTP.

OBJECTIVES OF THE MRTP ACT



   

PREVENTION OF CONCENTRATION OF ECONOMIC POWER TO THE COMMON DETRIMENT CONTROL OF MONOPOLIES PROHIBITION OF MONOPOLISTIC TRADE PRACTICES (MTP) PROHIBITION OF RESTRICTIVE TRADE PRACTICES (RTP) PROHIBITION OF UNFAIR TRADE PRACTICES (UTP)
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1984 AMENDMENTS TO THE MRTP ACT

 HIGH - POWERED EXPERT COMMITTEE REPORT OF JUSTICE SACHAR  THE REPORT RECOMMENDED THAT A SEPARATE CHAPTER SHOULD BE ADDED TO THE MRTP ACT DEFINING UTPs ESSENTIALLY IN THE INTERESTS OF CONSUMERS.  ADVERTISEMENT AND REPRESENTATION TO CONSUMERS SHOULD NOT BECOME DECEPTIVE BUT SHOULD BE TRANSPARENT.
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RESTRICTIVE TRADE PRACTICES

REFUSAL TO DEAL TIE-UP SALES FULL LINE FORCING EXCLUSIVE DEALINGS PRICE DISCRIMINATION RE-SALE PRICE MAINTENANCE AREA RESTRICTION
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UNFAIR TRADE PRACTICES

MISLEADING ADVERTISEMENT AND FALSE REPRESENTATION  BARGAIN SALE, BAIT AND SWITCH SELLING  OFFERING OF GIFTS OR PRIZES WITH THE INTENTION OF NOT PROVIDING THEM AND CONDUCTING PROMOTIONAL CONTESTS  PRODUCT SAFETY STANDARDS  HOARDING OR DESTRUCTION OF GOODS


MONOPOLISTIC TRADE PRACTICES

1. 2.

3.

4.

UNREASONABLE PRICING PREVENTING OR LESSENING COMPETITION IN SUPPLY/DISTRIBUTION OF GOODS/SERVICES LIMITING TECHNICAL DEVELOPMENT, CAPITAL INVESTMENT OR PRODUCTION/SUPPLY UNREASONABLE PROFITS (PROFITEERING)

1991 REFORMS AND SINCE

RECENT POLICY CHANGES FROM 1991 ONWARDS INCLUDE:
 DEREGULATION AND SIMPLIFICATION OF LICENSING AND  APPROVAL PROCEDURES  EXEMPTION OF A LARGE NUMBER OF INDUSTRIES FROM LICENSES,  APPROVALS AND QUOTAS  NEW ECONOMIC ADJUSTMENT MEASURES  DIVESTITURE AND SALE OF GOVERNMENT ASSETS  GRADUAL DECLINE IN THE INTERVENTIONIST ROLE OF THE PUBLIC  SECTOR  PRIVATISATION  ENCOURAGING COMPETITION

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1991 AMENDMENTS TO MRTP ACT

SIZE CONCEPT GIVEN UP 2. CURBS ON GROWTH OF MONOPOLY COMPANIES DELETED 3. MERGER CONTROL REMOVED 4. MORE EMPHASIS ON PROHIBITION OF RTPs, UTPs AND MTPs IN SUM, BIG BECOMING BIGGER IS NO MORE UGLY
1.
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EXPERIENCE IN THE LAST THREE DECADES

NO MENTION OR DEFINITION OF OFFENCES LIKE (ILLUSTRATIVE)
ABUSE OF DOMINANCE CARTELS, COLLUSION AND PRICE FIXING BID RIGGING BOYCOTTS AND REFUSAL TO DEAL PREDATORY PRICING

LARGE NUMBER OF INTERPRETATIONS & CASE LAWS AFFECTING THE INTENT/SPIRIT OF THE MRTP ACT WTO FALL OUT OBLIGATIONS
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HIGH LEVEL COMMITTEE

GOVERNMENT APPOINTED A HIGH LEVEL COMMITTEE TO ADVISE A MODERN COMPETITION LAW FOR INDIA IN LINE WITH INTERNATIONAL DEVELOPMENTS AND TO SUGGEST A LEGISLATIVE FRAME WORK. THE COMMITTEE INCLUDED COMPETITION EXPERT, REPRESENTATIVES OF INDUSTRY AND CONSUMERS, ECONOMIST, CHARTERED ACCOUNTANT, ADVOCATE ETC.
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TRIGGER FOR METAMORPHOSIS FROM MRTP ACT TO COMPETITION ACT

RECOMMENDATIONS OF EXPERT GROUP RECOMMENDATIONS OF HIGH LEVEL COMMITTEE RECOMMENDATIONS OF STANDING COMMITTEE OF PARLIAMENT UNANIMITY TO REPEAL MRTP ACT AND TO ENACT A NEW LAW APPRECIATION THAT THE MRTP ACT WAS MORE CONCERNED WITH CURBING MONOPOLIES RATHER THAN WITH PROMOTING COMPETITION APPRECIATION THAT PRE-1991 LPG HAS CHANGED TO POST-1991 LPG RECOGNITION THAT INDIAN ENTERPRISES ARE SMALL IN SIZE AND NEED TO GROW TO BECOME GLOBALLY COMPETITIVE

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FOUR COMPARTMENTS

ANTI-COMPETITION AGREEMENTS ABUSE OF DOMINANCE MERGERS, AMALGAMATIONS, ACQUISITIONS AND TAKE-OVERS COMPETITION ADVOCACY

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ANTI - COMPETITION AGREEMENTS

HORIZONTAL RESTRAINTS :
CARTELS {FIXING PURCHASE OR SALE PRICES (EXPORT CARTELS EXEMPTED) }

VERTICAL RESTRAINTS :
 TIE-IN ARRANGEMENTS
 EXCLUSIVE SUPPLIES

 BID-RIGGING (COLLUSIVE TENDERING)

 EXCLUSIVE DISTRIBUTION  REFUSAL TO DEAL  RESALE PRICE MAINTENANCE SUPPLY,  ADJUDICATION BY RULE OF REASON

 SHARING MARKETS BY TERRITORY, TYPE ETC.

 LIMITING PRODUCTION, TECHNICAL DEVELOPMENT

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ABUSE OF DOMINANCE
DOMINANCE NOT LINKED TO ANY ARITHMETIC FIGURE OF MARKET SHARE DOMINANCE MEANS A POSITION OF STRENGTH ENABLING AN ENTERPRISE TO OPERATE INDEPENDENTLY OF COMPETITIVE PRESSURE AND TO APPRECIABLY AFFECT THE RELEVANT MARKET,COMPETITION AND CONSUMERS. ABUSE OF DOMINANCE ARISES IF AN ENTERPRISE IMPOSES UNFAIR /DISCRIMINATORY PURCHASE OR SALE PRICES (INCLUDING PREDATORY PRICES) LIMITS PRODUCTION,MARKETS OR TECHNICAL DEVELOPMENT DENIES MARKET ACCESS CONCLUDES CONTRACTS SUBJECT TO OBLIGATIONS HAVING NO CONNECTION WITH THE SUBJECT OF THE CONTRACTS. USES DOMINANCE TO MOVE INTO OR PROTECT OTHER MARKETS RELEVANT MARKET = RELEVANT PRODUCT MARKET + RELEVANT GEOGRAPHIC MARKET

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COMBINATIONS
MERGERS/AMALGAMATIONS
1. 2. 3. 4. 5. REDUCTION IN NUMBER OF PLAYERS ACQUISITION OF ENORMOUS ECONOMIC STRENGTH DISCOURAGEMENT OF NEW ENTRANTS DICTATION OF PRICES DOMINANCE

REGULATION ON COMPETITION PERSPECTIVE

1. COMPETITION LAW TO HAVE SURVEILLANCE OVER COMBINATIONS BEYOND A THRESHOLD LIMIT (Assets > Rs.1000 Crores or Turnover > Rs.3000 Crores ) 2. NOTIFICATION OF COMBINATIONS VOLUNTARY AND NOT MANDATORY 3. CCI MANDATED TO DECIDE WITHIN 90 WORKING DAYS ELSE DEEMED APPROVAL
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COMPETITION ADVOCACY
THE COMPETITION COMMISSION OF INDIA IS ENABLED TO PARTICIPATE IN THE FORMULATION OF POLICIES AND REVIEWING OF POLICIES RELATING TO COMPETITION AT THE INSTANCE OF THE GOVERNMENT IS REQUIRED TO CREATE COMPETITION CULTURE IS REQUIRED TO ACT AS COMPETITION ADVOCATE

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EXEMPTIONS
GOVERNMENT BY NOTIFICATION MAY EXEMPT FROM THE COMPETITION LAW A B. C. ANY CLASS OF ENTERPRISES IN THE INTEREST OF NATIONAL SECURITY/PUBLIC INTEREST. ANY PRACTICE/AGREEMENT ARISING OUT OF INTERNATIONAL TREATY/AGREEMENT ANY ENTERPRISE PERFORMING A SOVEREIGN FUNCTION ON BEHALF OF GOVERNMENT

DIFFERENT PROVISIONS FROM DIFFERENT DATES IF, NEED BE.

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COMPETITION NEEDS TO BE INCORPORATED IN

INDUSTRIAL POLICY RESERVATIONS FOR SSI TRADE POLICY (TARIFFS, SUBSIDIES ETC) STATE MONOPOLIES POLICY LABOUR POLICY REFORMS POLICY (PRIVATISATION ETC) COMPETITION LAW CAN NOT OPERATE IN A VACUUM UNLESS PRE-REQUISITES OF COMPETITION POLICY ARE ALSO IN PLACE
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IS A COMPETITION LAW REQUIRED AT ALL?

        

WITH GLOBALISATION, THERE IS LIKELY TO BE SIGNIFICANT RESTRUCTURING OF MANUFACTURE, TRADE AND SERVICES DOMESTIC CONSOLIDATION AND ENTRY OF FOREIGN ENTITIES ANTI-COMPETITION PRACTICES MAY SURFACE AS A CONSEQUENCE WTO FALL OUT OBLIGATIONS NEED TO BE ADDRESSED REGULATORY AND ADVOCACY FUNCTIONS NEED TO BE POSITED EXISTING MRTP ACT IS INADEQUATE NEW COMPETITION LAW WILL SUPPLANT MRTP ACT WITHOUT A COP, TRADE TRAFFIC MAY PREJUDICE CONSUMER INTEREST COMPETITION LAW WILL BE A COP AND A FRIEND

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