Legal and Political Environment

Unit- 2 part 2
 Topics
• Competition Act
• FEMA
• RTI
• IPR
• Political system in India
Competition Act, 2002
 What is Competition Act, 2002
• to “promote and sustain competition…to protect the interests of
consumers and to ensure freedom of trade.”
• Regulates anti-competitive agreements
• Regulates abuse of dominant position
• Regulates combinations
• Repeals MRTP, 1969
• Has extra-territorial reach
• Covers both goods and provision of services
• The main purpose of competition policy and law is to ensure fair
competition in the market economy including prevention of abuse of
market dominance.
Background
 Quiz
Which act was replaced with the introduction of the
Competition Act 2002?

A. FERA
B. MRTP
C. POTA
D. None of these
 Four Dimensions of the Act

 Anti-competitive Agreements [Sec. 3]

 Abuse of Dominance [Sec. 4]
 Combinations, include acquisition of shares,
voting rights, assets/control, mergers,
amalgamations and takeovers
 Competition Advocacy - maximum impact with
least intervention

9
 Anti-competitive Agreements [Sec. 3]

• Any agreement with respect to production, supply,

distribution, storage, acquisition or control of
goods/provision of services which is anti-competitive is
prohibited and void.
 Types of Agreements
• Vertical agreements
• Horizontal agreements
• Joint venture agreements
are an exception to
horizontal agreements,
• Export agreements and
agreements to protect
intellectual property are
allowed
 Anti-competitive Agreements

These are agreements which cause or are likely to cause an

appreciable adverse effect on competition within India:
• Horizontal Agreements:

• These are between and among competitors who are at the same stage
of production, supply, distribution, etc.
• These are presumed to be illegal
• Examples: Cartels, bid rigging, collusive bidding, sharing of markets,
predatory pricing…etc.
 Cartels: agreement between competing firms to control
prices or exclude entry of a new competitor in a market.

 Bid Rigging: scheme in which businesses collude so that a

competing business can secure a contract for goods or
services at a pre-determined price.
• Market sharing: occurs when competitors agree to divide
or allocate customers, suppliers or territories among
themselves rather than allowing competitive market forces
to work.

• Collusive Bidding: agreements by contractors or suppliers

in a particular trade or area to cooperate to defeat the
competitive bidding process in order to inflate prices to
artificially high levels.
 Vertical Agreements:
• Vertical Agreements are between parties at different stages of
production, supply, distribution, etc.

• These are not presumed illegal; are subject to rule of reason.

Examples: tie-in arrangements, exclusive supply/distribution

agreements, refusal to deal.
 Dominance
• A dominant position is a position of strength enjoyed
by an enterprise in the relevant market in India,
which enables it to:
– Operate independently of competitive forces
– Impact its competitors, consumers, relevant market in its
favour
Factors for determining dominant position

• Market share,
• Size and resources of the
enterprise/competitors,
• Economic power of enterprise,
• Vertical integration,
• Dependence of consumers etc.
 Abuse of Dominance [Sec. 4]
• Not dominance but its abuse is prohibited.
• Abuse occurs when an enterprise uses its dominant
position in the relevant market in an exclusionary and/or
exploitative manner.
 Types of Abuses
• Exploitative Abuses– i.e., conduct which results in exploitation of others
in the value chain, for e.g.,
 imposition of unfair or discriminatory conditions
 imposition of unfair or discriminatory prices e.g., predatory pricing.

• Exclusionary Abuses – conduct which interferes with the competitive

process, for e.g.,
 Making conclusion of contract subject to acceptance of supplementary obligations
 Denial of market access
 Limiting production of goods, provision of services; scientific development;
 Using dominance in one relevant market to enter into or protect other relevant
market.
 Combination
• A Combination is an acquisition of one or more
enterprises by one or more persons, merger or
amalgamation of enterprises, if it meets the prescribed
monetary thresholds
 Competition Advocacy
• Competition advocacy, as mentioned in Section 49 of the
Competition Act, 2002, refers to initiatives that raise public
awareness about the importance of a competitive industry
 Competition Commission of India
• Competition Act is administered by CCI
• Combinations above the defined monetary thresholds require
filing and prior approval of the CCI before they can be made
effective.
• CCI has powers to investigate combinations and modify/reject
them.
• Any transaction found to be likely to cause or to have caused
anti-competition in the relevant market in India can be declared
as void and of no effect by the CCI.
Penalties
 Right to
Information
Act, 2005
 What is RTI Act?

• Provides a legal framework of citizens’ democratic right

to access to information under the control of public
authorities;

• To promote transparency and accountability in the

functioning of every public authority.
• RTI Act came into effect on 12th October 2005.
 Who is a Public Authority?
Under Section 2(h) “Public Authority” means any
authority or body or institution established or constituted:
By or under the constitution;
By any other law made by Parliament;
By any other law made by State Legislature;
By notification issued or order made by the appropriate
Government and includes any
– body owned, controlled or substantially financed,
– non - Government organization substantially financed directly or
indirectly by funds provided by the appropriate Government;
 What does ‘information’ mean ?

Records
Documents
Memos
Opinions & advices
Press releases
Circulars, orders & logbooks
Contracts
Reports, papers, samples & models
Information relating to internal security, relations with foreign
countries, intellectual property rights (IPR), cabinet
discussions are exempted from RTI.
 Need for RTI Act
• Because it helps to:
– Promote openness, transparency and accountability in the
working of every public authority.
– Reduce Corruption
– Prevent administrative arbitrariness
– Bride the gap between providers and recipient of public
services
– Make citizens part of decision making
– Make administrative responsive
– Strengthen the foundations of democracy
 Procedure for requesting information

Apply in writing or through electronic means in English or Hindi

or in the official language of the area, to the Public Information
Officer [PIO], specifying the particulars of the information sought
for.
Reason for seeking information are not required to be given;
Pay fees as may be prescribed.
 FEES AND CHARGES
Application fee Rs. 10/- .
If information is required in electronic media – floppy/CD, etc
additional charges will be applicable.
Photocopy charges of Rs. 2/- per page.
Inspection charges of relevant files, documents and records –
* No fee for first hour of inspection.
* Rs. 5/- for every subsequent hour or fraction thereof.
 FEES AND CHARGES Cont…

Processing expenses incurred by the Public Information officer to

be intimated in writing.
Applicant can seek review of the decision on fees charged by the
PIO by applying to the appropriate Appellate Authority;

No fees from people living below the poverty line.

Free of cost if the PIO fails to comply within the time limit as
prescribed under the RTI Act.
 Time limits to get the information

30 days if application is filed with the PIO.

35 days in case it is filed with the Assistant PIO.

48 hours in case the matter to which the information pertains

affects the life and liberty of an individual.
 Coverage
RTI Act came into effect on 12th October 2005.

Covers central, state and local governments and all bodies

owned, controlled or substantially financed by the respective
Governments; Section 2(h)
Non-government organization substantially financed directly or
indirectly by funds provided by the appropriate government.
Section 2 (e)
Executive, judiciary and legislature
Includes information relating to private body which can be
accessed by under any other law for the time being in force.
Section 2 (f)
 EXEMPTIONS FROM DISCLOSURE OF
INFORMATION
(a) National security
(b) Contempt of court
(c) Parliamentary privilege
(d) Trade secrecy
(e) Fiduciary relationship
(f) Foreign government
(g) Safety of informer in law enforcement
(h) Investigation
(i) Cabinet papers
(j) Privacy
(K) Copyright - disclosure which would involve an infringement of
copyright subsisting in a person other than the State may be rejected.
[Section 9]
 Appeal
• First appeal with senior in the Department.

• Second appeal with Information Commission.

• An independent Information Commission at the central and state

level to be an appellate authority and to oversee the functioning of
the Act. Has various powers under the RTI Act.
 Penalties
• The penalty levied under the RTI Act at the rate of Rs.
250/- a day, up to a maximum of Rs. 25,000/-, is
recovered from the salary of officials.
 Recent Amendments
• The RTI amendment Bill 2013 removes political parties from the ambit of the
definition of public authorities and hence from the purview of the RTI Act.
• The draft provision 2017 which provides for closure of case in case of death
of applicant can lead to more attacks on the lives of whistle-blowers.
• The proposed RTI Amendment Act 2018 is aimed at giving the Centre the
power to fix the tenures and salaries of state and central information
commissioners, which are statutorily protected under the RTI Act.
• The Act proposes to replace the fixed 5-year tenure with as much prescribed
by the government.
 Quiz
• Are Below Poverty Line‘ (BPL) Persons exempt from
paying fee?

A) Yes
B) No
• The officer designated by the public authorities in all
administrative units or offices under it to provide
information to the citizens requesting for information
under the Act is know as

(a) Appellate Authority

(b) Chief Information Commissioner (CIC)
(c) Public Information Officer (PIO)
(d) Assistant Public Information Officer
• If the applicant had to submit the RTI application to
the APIO, he should be provided information within__
days from the date of receipt of application by the
APIO
a) 45
b) 90
c) 35
d) 30
• If the information sought pertains to life & liberty of a
person, it should be provided within____ from the
time of receipt of application.

a) 24 hours
b) 48 hours
c) 60 hours
d) 72 hours
• Fiduciary Relationship is relationship based upon___
A. Contract
B. Money
C. Blood Relationship
D. Trust
 FEMA
Foreign Exchange Management Act,
1999
 FEMA
• Replaced FERA, 1973
• Passed in 1999
• Come into force on 1 June 2000.
• Applicable to whole India
• Objective:
• To consolidate and amend the law relating to foreign
exchange with the objective of facilitating external trade
and payments for promoting the orderly development and
maintenance of foreign exchange market in India.
 The Main Features of the FEMA
• It classified the foreign exchange transactions in two categories,
viz. capital account and current account transactions.
• It provides power to the Reserve Bank for specifying, in ,
consultation with the central government, the classes of capital
account transactions and limits to which exchange is admissible
for such transactions.
• All current a/c transactions are permitted unless otherwise
prohibited.
• All capital a/c transactions are prohibited unless otherwise
permitted.
• Transactions involving current account for external trade no
longer required RBI’s permission.
• The transactions should be made only through an authorised
person.
• It is consistent with full current account convertibility and contains
provisions for progressive liberalisation of capital account
transactions.
• It is more transparent in its application as it lays down the areas
requiring specific permissions of the Reserve Bank/Government
of India on acquisition/holding of foreign exchange.
• Residents of India will be permitted to carry out transactions in
foreign exchange, foreign security or to own or hold immovable
property abroad if the currency, security or property was
owned or acquired when he/she was living outside India, or
when it was inherited by him/her from someone living outside
India.

• This act is a civil law and the contraventions of the Act provide for
arrest only in exceptional cases.
 Dealing in foreign exchange (Sec. 3)
• Rules or regulations made thereunder, or with the general or special
permission of the Reserve Bank, no person shall—
(a) deal in or transfer any foreign exchange or foreign security to any
person not being an authorised person;
(b) make any payment to or for the credit of any person resident outside
India in any manner;
(c) receive otherwise through an authorised person, any payment by order
or on behalf of any person resident outside India in any manner.
 Holding of foreign exchange (Sec. 4)
• No person resident in India shall acquire, hold, own, possess or
transfer any foreign exchange, foreign security or any
immovable property situated outside India.
 Current A/C Transactions (Sec. 5)

• Meaning: A transaction other than Capital account

transaction and includes……
- payment due in connection with foreign trade, other current
business, services…
- interest on loans and net income from investments;
- remittances for living expenses of parents, spouse and
children residing abroad; and
- expenses in connection with foreign travel, education and
medical care of parents, spouse and children.
 Capital A/C Transactions (Sec. 6)
• Transactions which alter the assets or liabilities of PRI (person
resident in India) or PROI (person resident outside in India)
• Example : If an Indian Co. opens a branch in New York
• PRI- who resides in India for more than 182 days
• Should be taken from the view of alter in BoP
• Example: import of machinery
– Long term liability (credit of more than 12 months)
How to determine the residential status of a person
 Mechanism under FEMA
Passed by the
Parliament –
the Legislature

Current Account by the

Act – FEMA Government

Rules –
Current A/C
AP Dir Circulars
Notifications to APs

Regulations-
Notified in the Capital A/C
Gazette – by the
All aspect of Forex
Executive
transactions
Capital Account by by the RBI
the RBI
 Export of goods and services (Sec. 7)
• Every exporter of goods shall—
– (a) furnish to the Reserve Bank or to such other authority a
declaration in such form and in such manner as may be specified,
containing true and correct material particulars, including the amount
representing the full export value or, if the full export value of the
goods is not ascertainable at the time of export, the value which the
exporter, having regard to the prevailing market conditions, expects to
receive on the sale of the goods in a market outside India;
 Realisation and repatriation of foreign
exchange (Sec 8)
• Puts the responsibility of repatriation on the persons resident in
India who have any amount of foreign exchange due or accrued in
their favor to get same realized & repatriated to India within the
specified period or as prescribed by RBI
 Quiz1
• Foreign exchange transactions involve monetary
transactions
A. among residents of the same country
B. between residents of two countries only
C. between residents of two or more countries
D. among residents of at least three countries
 Quiz2
• All the offences under the FEMA are considered as which
of the following type?
A. Civil Offence
B. Criminal Offence
C. Both Civil & Criminal offence
D. None of the above
 Quiz4
Who is an Authorized Dealer?
a. any person specifically authorized by the RBI u/s 10(1) of FERA, 1973, to
deal in foreign exchange or foreign securities
b. any person specifically authorized by the RBI u/s 10(1) of FEMA, 1999, to
deal in foreign products or foreign items
c. any person specifically authorized by the RBI u/s 10(1) of FEMA, 1999, to
deal in foreign exchange or foreign securities
d. any person specifically authorized by the RBI u/s 10(1) of RBI Act, 1999, to
deal in foreign exchange or foreign securities
Intellectual Property Rights (IPR)
 Introduction
• Intellectual property rights (IPR) are the rights given to persons
over the creations of their minds: inventions, literary and artistic
works, and symbols, names and images used in commerce. They
usually give the creator an exclusive right over the use of his/her
creation for a certain period of time.
• These rights are outlined in Article 27 of the Universal
Declaration of Human Rights, which provides for the right to
benefit from the protection of moral and material interests
resulting from authorship of scientific, literary or artistic
productions.
• The importance of intellectual property was first recognized in:
• Paris Convention for the Protection of Industrial Property
(1883) and
• Berne Convention for the Protection of Literary and Artistic
Works (1886).
• Both treaties are administered by the World Intellectual Property
Organization (WIPO).
 Types of IPR
(i) Copyright and rights
related to copyright:
• The rights of authors of literary and
artistic works (such as books and
other writings, musical compositions,
paintings, sculpture, computer
programs and films) are protected by
copyright, for a minimum period of
50 years after the death of the
author.
(ii) Industrial property:
• Trade Marks
• Patents
• Geographical Indications (GIs)
• Industrial Designs
 Trade Marks
• Any sign, or any combination
of signs capable of
distinguishing the goods or
services of one undertaking
from those of other
undertakings.
• Trade Marks Act, 1999
 Patents
• Meet the three tests
– Being new
– Involving an inventive step and
– Being capable of industrial application.
• Exclusions (prevention of
commercial exploitation)
– To protect public order or morality,
– Human, animal, plant life or health.
– To avoid serious prejudice to the
environment.
 Geographical Indications
• To prevent the use of any means in the
designation or presentation of a good that
indicates or suggests that the good in
question originates in a geographical area
other than the true place of origin in a
manner which misleads the public as to
the geographical origin of the good.
• A geographical indication (GI) is a sign
used on products that have a specific
geographical origin and possess
qualities or a reputation that are due to
that origin.
 Industrial Designs
• Industrial designs refer to
creative activity which result in
the ornamental or formal
appearance of a product.

• Design Right
– a novel or original design that is
accorded to the proprietor of a
validly registered design.
 Industrial designs and trade secrets
• Other types of industrial property are protected primarily to stimulate
innovation, design and the creation of technology. In this category fall
inventions (protected by patents), industrial designs and trade secrets.
• Example of trade secret: Coca-Cola recipe
 Quiz1
• What protects the intellectual property created by
artists?
A. copyright
B. geographical indications
C. patents
D. registered designs
E. trademarks
 Quiz2
• What protects the intellectual property created by
inventors?
A. copyright
B. geographical indications
C. patents
D. registered designs
E. trademarks
 Quiz3
• Which of these is a geographical indication?
A. BMW
B. Champagne
C. Hogwarts
D. Playstation
E. World Wide Web
 Quiz4
• What does a trademark protect?
A. an invention
B. a work of art
C. logos, names and brands
D. the look, shape and feel of a product
E. a secret formula
 Quiz5
• What protects the intellectual property created by
designers?
A. copyright
B. geographical indications
C. patents
D. registered designs
E. trademarks
Political system in India
 Introduction
• The political environment includes factors such as the
characteristics and policies of the political parties, the nature
of the Constitution and government system and the
government environment encompassing the economic and
business policies and regulations.
• These factors may vary very considerably between different
nations, between different provinces of the same nation and also
over time.
Functions and Economic Roles of Government
 Political System in India
• All political parties have their own constituencies and respective
agendas, which they apply from time to time to pressurise the
government.
• But the greatest pressure group that the Manmohan Singh
government has to face is the Left Front, which supports the
government from outside too.
• The Rise of Aam Aadmi Party
• Report of BJP Government.