EVOLUTION OF COMPETITION LAW IN INDIA

Dr.K.Karunakaran Professor

COMPETITION LAW OF INDIA

MONOPOLIES AND RESTRICTIVE TRADE PRACTICES ACT,1969

BROUGHT INTO FORCE IN 1970

ROOTS OF THE MRTP ACT

A The Roots CONSTITUTION OF INDIA - DIRECTIVE PRINCIPLES OF STATE POLICY B 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

MAHALANOBIS COMMITTEE REPORT ON

DISTRIBUTION AND LEVELS OF INCOME, 1964

MONOPOLIES INQUIRY COMMISSION

REPORT OF DAS GUPTA, 1965

OBJECTIVES OF THE MRTP ACT

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

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.

RESTRICTIVE TRADE PRACTICES

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

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 CONTEST PRODUCT SAFETY STANDARDS
HOARDING OR DESTRUCTION OF GOODS
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MONOPOLISTIC TRADE PRACTICES

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

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1991 AMENDMENTS TO MRTP ACT

SIZE CONCEPT GIVEN UP CURBS ON GROWTH OF MONOPOLY COMPANIES DELETED MERGER CONTROL REMOVED MORE EMPHASIS ON PROHIBITION OF RTPs, UTPs AND MTPs BIG, NO MORE UGLY

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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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NEED FOR A NEW WINE

NEED FOR A NEW LAW HAS ITS ORIGIN IN FINANCE MINISTERS BUDGET SPEECH IN FEBRUARY,1999 : THE MRTP ACT HAS BECOME OBSOLETE IN CERTAIN AREAS IN THE LIGHT OF TERNATIONAL ECONOMIC DEVELOPMENTS RELATING TO COMPETITION LAWS. WE NEED TO SHIFT OUR FOCUS FROM CURBING MONOPOLIES TOPROMOTING COMPETITION. THE GOVERNMENT HAS DECIDED TO APPOINT A COMMITTEE TO EXAMINE THIS RANGE OF ISSUES AND PROPOSE A MODERN COMPETITION LAW SUITABLE FOR OUR CONDITIONS.
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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

EXPERTS, REPRESENTATIVES OF INDUSTRY AND CONSUMERS, ECONOMISTS, CHARTERED ACCOUNTANT, LAWYERS 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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OLD WINE OR NEW WINE ?

MRTP ACT
1.
BASED ON PRE-1991 control regime 2. PREMISED ON SIZE 3. PROCEDURE ORIENTED 4. NO TEETH (REFORMATORY) 5. OFFENCES DEFINED IMPLICITLY (CARTELS, BID-RIGGING ETC.) 6. FROWNS ON DOMINANCE (25% OF MARKET SHARE) 7. UNFAIR TRADE PRACTICES COVERED 8. RULE OF LAW APPROACH 9. NO COMPETITION ADVOCACY ROLE FOR MRTPC 7.UNFAIR TRADE PRACTICES OMITTED 8. RULE OF REASON APPROACH 9. CCI HAS COMPETITION ADVOCACY ROLE
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NEW LAW
1. BASED ON POST-1991 reforms

2. PREMISED ON CONDUCT
3. RESULT ORIENTED 4. CAN BITE (PUNITIVE ) 5. OFFENCES DEFINED EXPLICITLY 6. FROWNS ON ABUSE OF DOMINANCE

FOUR COMPARTMENTS

ANTI-COMPETITION AGREEMENTS ABUSE OF DOMINANCE

MERGERS, AMALGAMATIONS, ACQUISITIONS

AND TAKE-OVERS
COMPETITION ADVOCACY

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ANTI - COMPETITION AGREEENTS

HORIZONTAL RESTRAINTS :
CARTELS {FIXING PURCHASE OR SALE PRICES (EXPORT CARTELS EXEMPTED) } BID-RIGGING (COLLUSIVE TENDERING) SHARING MARKETS BY TERRITORY, TYPE ETC. LIMITING PRODUCTION, SUPPLY, TECHNICAL DEVELOPMENT

VERTICAL RESTRAINTS
TIE-IN ARRANGEMENTS
EXCLUSIVE SUPPLIES

EXCLUSIVE DISTRIBUTION
REFUSAL TO DEAL

RESALE PRICE MAINTENANCE

ADJUDICATION BY RULE OF REASON
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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 (INCLUDING PREDATORY PRICES) /DISCRIMINATORY PURCHASE OR SALE PRICES

LIMITS PRODUCTION,MARKETS OR TECHNICAL DEVELOPMENT

DENIES MARKET ACCESS CONCLUDES CONNECTION CONTRACTS SUBJECT TO OBLIGATIONS HAVING NO

WITH THE SUBJECT OF THE CONTRACTS. USES DOMINANCE TO MOVE INTO OR PROTECT OTHER MARKETS RELEVANT MARKET = GEOGRAPHIC MARKET RELEVANT PRODUCT MARKET + RELEVANT
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COMBINATIONS MERGERS/AMALGAMATIONS
PEJORATIVE EFFECTS
1. 2. 3. 4. 5. REDUCTION IN NUMBER OF PLAYERS ACQUISITION OF ENORMOUS ECONOMIC STRENGTH DISCOURAGEMENT OF NEW ENTRANTS DICTATION OF PRICES DOMINANCE

REGULATION FROM 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 POLICIES 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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