Competition Law in India

The UK White Paper on competition published in July 2001 interalia observed that vigorous Competition
is vital to innovation, strong and effective markets, consumer interest and productivity growth in the
economy. Trade and competition are closely
connected. Both trade laws and competition laws have the common objective of achieving economic
efficiency, by improving the business environment for more efficient resource allocation. Thus to
achieve the objective of maximum economic efficiency, the liberal trade policy must be complimented
through a sound competition policy by preventing anti-competitive business practices and unnecessary
government intervention. A good competition policy , along with a sound competition law, should help
in fostering competition, economic efficiency, consumer welfare and freedom of trade, which should
equip the Govts in meeting the challenges of globalization by increasing competition in local and
national markets.
Competition Law In India
After India became a party to the WTO agreement, a perceptible change was
noticed in Indias foreign trade policy which had
been earlier highly restrictive. Recognizing the important linkages between trade
and economic growth, the Government of India, in the early 90s took step to
integrate the Indian economy with the global economy. Thus, finally enhancing its
thrust on globalization and opened up its economy removing controls and
resorting to liberalization. Consequently, India enacted its first anti-competitive
legislation in 1969, known as the Monopolies and Restrictive Trade Practices Act
(MRTP Act), and made it an integral part of the economic life of the country.
Finding the ambit of MRTP Act inadequate for fostering competition in the market
and eliminating anti-competitive practices in the national and international trade,
the Government of India in October 1999 appointed a high level committee on
Competition Policy and Law (the Raghavan Committee) to advise on the
competition law
consonant with international developments. Acting on the report of the
committee, the Government enacted the new Competition Act, 2002 which has
replaced the earlier MRTP Act, 1969.
The Genesis of The Competition Act, 2002: The MRTP Act.

The MRTP Act was designed to ensure that the operation of economic system
doesnt result in the concentration of economic power to the common detriment
and to prohibit such monopolistic and restrictive trade practices prejudicial to
public interest. A perusal of the MRTP Act also shows that there was neither a
definition nor a mention of certain offending trade practices which are restrictive
in character. For example, abuse of dominance, cartels, collusion and price fixing,
bid rigging, boycotts and refusal to deal and predatory pricing were not covered
under the Act.
Thus, the MRTP Act has become obsolete in the light of the economic
developments relating more particularly to competition laws and the need was
felt to shift the focus from curbing monopolies to promoting competition. To
address these lacunas the
government drafted a new legislation on the subject which resulted as the
Competition Act, 2002.
Salient Features of the New Competition Regime

The Competition Act has been designed as an omnibus code to deal with matters
relating to the existence and regulation of competition and monopolies. Its
objects are lofty, and include the promotion and sustenance of competition in
markets,
protection of consumer interests and ensuring freedom of trade of other
participants in the market, all against the backdrop of the economic development
of the country. However, the Competition Act is surprisingly. compact, composed
of only 66 sections. The legislation is procedure-intensive, and is structured in an
uncomplicated manner. The raison detre of the Competition Act is to create an
environment conducive to competition. The various salient feature of the Act are
as follows:
Anti-Competitive Agreements
No enterprise or association of enterprises or person or association of persons
shall enter into any agreement in respect of
production, supply, distribution, storage, acquisition or control of goods or
provision of services, which causes or likely to cause an appreciable adverse effect
on competition within India .
Prohibition of abuse of dominant position

The concept of dominant undertaking prevailing in the MRTP Act has been
discarded. Entity having dominant position is not per se bad or illegal, but abuse
of such dominance is illegal . Dominance is said to be abused when there is an
appreciable adverse effect on competition due to the actions of a dominant
undertaking.
Regulation of Combination
The Act is also designed to regulate the operation and activities of Combinations,
a term which contemplates acquisition,
mergers, joint ventures, take overs or amalgamations. The Act mandates that No
person or enterprise shall enter into a combination which causes or is likely to
cause an appreciable adverse effect on competition within the relevant market in
India and such a combination shall be void.
Unfair Trade Practices

The provisions relating to the unfair trade practices as enumerated in Secs. 36 to
36E in the MRTP Act have been omitted and
pending complaints against such trade practices before the MRTP Commission
have been transferred to relevant consumer forum after the commencement of
the Act.
Competition Fund
The Act provides for the establishment of Competition fund, which will be
credited by :
(a) all government grants received by the Commission,
(b) the monies received as costs from parties for proceeding before the
commission,
(c) the fees received under the Act,
(d) the interest accrued on the amounts referred to in clauses (a) to (c).
The Competition Commission of India

The apex body under the Competition Act which has been vested with the
responsibility of eliminating practices having
adverse effect on competition, promoting and sustaining competition, protecting
the interest of the consumers, and ensuring freedom of trade carried on by other
participants in India, is known as the Competition Commission of India (CCI) --- the
successor to the MRTP Commission. The CCI is to consist of a chairman, who is to
be assisted by a minimum of two, and a maximum of ten other members to be
appointed by the Central government . The CCI is not merely a law enforcement
agency, but would be actively involved in the formulation of the countrys
economic policies, advise the government on competition policy, take suitable
measures for the promotion of competition advocacy and create awareness and
imparting training about competition issues.
Extra-territorial Jurisdiction
The mandate of the Competition Commission extends beyond the boundaries of
India. In case any agreement that has been
entered outside India and is anti-competitive in terms of sec. 3 of the Act ; or any
party to such an agreement is outside India; or any enterprise abusing the
dominant position is outside India; or a combination has taken place outside
India; or any other matter or practice or action arising out of such agreement or
dominant position or combination is outside India, if such agreement,
combination or abuse of dominant position has or are likely to have an adverse
effect on competition in the Indian market, the CCI shall have the power to
inquire into such agreement or dominant position or combination if have or are
likely to have an appreciable adverse effect on competition in the relevant market
in India .
Lacunas in the Competition Act, 2002

The Act still manifests certain lacunas. An examination of the powers of the CCI
would suggest that the commission is fully equipped to counter and set right the
vagaries of the market place. However, while seemingly enjoying carte blanche,
there appear to be certain glaring lacunae which would militate against the
efficacy of the provisions of the Competition Act
it would be remembered that the Commission would initiate action upon
complaints of anti-competitive agreements abuse of dominant position either suo
moto, or on the voluntary motion of a person seeking an opinion of the
Commission. Here, two aspects may be kept in mind --- the lack of a mandatory
provision compelling persons or entities, whether public or private, to approach
the Commission and the corresponding logistical limitations of the Commission to
be able to take cognizance
on its own motion of every malpractice in the economy. If there is no inbuilt
principle that statutory authorities and private persons are required to approach
the Commission to determine whether an anti-competitive agreement is in force,
or whether there is an abuse of dominant position or whether a combination is
detrimental to public interest, can we actually rely upon the parties to approach
the Commission of their own accord? The Central Government also enjoys
unbridled power in the matters of policy framing and issues direction on
questions of policy which shall be binding on the CCI . The government also has
the power to supersede the CCI, against which the CCI can make a representation
to the government . Such provisions seriously affect the independence and
efficacy of the CCI. In fact consultation by the Central Government in evolving
competition policy with the CCI should be made mandatory, instead of
discretionary, as contemplated in the Act . Moreover, the Act does not address
the abuses of Intellectual Property Rights, which are monopoly rights for limited
period of time.
Conclusion
Is the Competition Act truly reflective of the changing economic milieu of our
country? In an economic situation, which can be best described as a mixed
economy; only time will tell whether the Competition Act addresses the ground
realities that exist today. However, the Act is definitely a step in the right
direction by harmonizing the competition policy with international trade and
policy.

Competition Law in India

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Competition Law in India

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The UK White Paper on competition published in July 2001 interalia observed that vigorous Competition

The Genesis of The Competition Act, 2002: The MRTP Act.

Salient Features of the New Competition Regime

Prohibition of abuse of dominant position

Unfair Trade Practices

The Competition Commission of India

Lacunas in the Competition Act, 2002

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