Competition: meaning and benefits Competition is a situation in market, in which sellers independently strive for buyers patronage to achieve

business objectives. Competition and liberalization, together unleash the entrepreneurial forces in the economy. Competition offers wide array of choices to consumers at reasonable prices, stimulates innovation and productivity, and leads to optimum allocation of resources. Abuse of market and need for new law In an open market economy, some enterprises may undermine the market by resorting to anti-competitive practices for short-term gains. These practices can completely nullify the benefits of competition. It is for this reason that, while countries across the globe are increasingly embracing market economy, they are also re-inforcing their economies through the enactment of competition law and setting up competition regulatory authority. In line with the international trend and to cope up with the changing realities India, consequently, enacted the Competition Act, 2002 (hereinafter referred to as "the Act"). Designed as an omnibus code to deal with matters relating to the existence and regulation of competition and monopolies, the Act is intended to supersede and replace the MRTP Act. It is procedure intensive and is structured in an uncomplicated manner that renders it more flexible and compliance-oriented. Though the Act is not exclusivist and operates in tandem with other laws, the provisions shall have effect notwithstanding anything inconsistent therewith contained in any other law. Three stage transition The Act provides for three-staged transition, spanning the first three years from the date of notification of the Act, wherein the Competition Commission of India (hereinafter, referred to as "CCI") would replace the MRTP Commission. First year At the onset of first year, MRTP Commission will cease to exist and CCI would assume the role of an advisory body. The pending cases in the MRTP Commission relating to unfair trade practices would be transferred to the concerned consumer courts under the Consumer Protection Act, 1986. The pending cases relating to monopolistic and restrictive trade practices have to be taken up for adjudication by CCI.

Second year During the second year, CCI would scrutinize the anti-competitive practices.

Third year During the third year, CCI would begin regulating the mergers and acquisitions that will have adverse impact on competition.

Departure from the MRTP Act

In a significant departure from the letter and spirit of the MRTP Act, the Act hinges on the "Effect Theory" and does not categorically decry or condemn the existence of a monopoly in the relevant market, rather the use of the monopoly status such that it operates to the detriment of the potential and actual competitors is sought to be curbed. The earlier legislation, considered draconian in the changed scenario, was based on size as a factor, while the new law is based on structure as a factor, aimed at bringing relief to the players in the market. The Act empowers CCI to impose penalty on delinquent enterprises, whereas in the MRTP Act there were no provisions regarding such enterprises MRTP Act could only pass "cease and desist" orders and did not have any other powers to prevent or punish while the new law contains punitive provisions. MRTP Act was applicable to Private and Public sector undertakings only, whereas, the new Act extends its reach to governmental departments engaged in business activities. As regards agreements, compulsory registration has been done away with. The most path-breaking chapter in the Act has been the emphasis on Competition Advocacy that was not at all contemplated by the MRTP Act.

OBJECTS TO BE ACHIEVED I. To check anti-competitive practices II. To prohibit abuse of dominance III. Regulation of combinations. IV. To provide for the establishment of CCI, a quasi-judicial body to perform below mentioned duties: Prevent practices having adverse impact on competition Promote and sustain competition in the market Protect consumer interests at large Ensure freedom of trade carried on by other participants in the market Look into matters connected therewith or incidental thereto.

1. ANTI-COMPETITIVE AGREEMENTS The departure is reflected in section 3 of the Act, which states that enterprises, persons or associations of enterprises or persons, including cartels, shall not enter into agreements in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which cause or are likely to cause an "appreciable adverse impact" on competition in India. Such agreements would consequently be considered void.

The species of agreement which would be considered to have an appreciable adverse impact" would be those agreements which: Directly or indirectly determine sale or purchase prices; Limit or control production, supply, markets, technical development, investment or provision of services; Share the market or source of production or provision of services by allocation of inter alia geographical area of market, nature of goods or number of customers or any other similar way Directly or indirectly result in bid rigging or collusive bidding.

Further, the agreements, which are entered into in respect of various intellectual property rights and which recognize the proprietary rights of one party over the other in respect of trademarks, patents, copyrights, geographical indicators, industrial designs and semi conductors have been withdrawn from the purview of "anti competitive agreements". The inherently monopolistic rights created in favour of bona fide holders of various forms of intellectual property have been treated as sacrosanct. 2. ABUSE OF DOMINANT POSITION Section 4 of the Act enjoins, "no enterprise shall abuse its dominant position". Dominant position is the position of strength enjoyed by an enterprise in the relevant market, which enables it to operate independently of competitive forces prevailing market, or affect its competitors or consumers or the relevant market in its favour. There shall be an abuse of dominant position if an enterprise indulges into the below mentioned activities: Directly or indirectly imposing discriminatory conditions in the purchase or sale of goods or service, or setting prices in the purchase or sale (including predatory pricing) of goods or services; Limiting or restricting the production of goods or provision of services or market therefore; or limiting technical or scientific development relating to goods or services to the prejudice of customers; Indulging in practice or practices resulting in the denial of market access Making conclusion of contracts subject to acceptance by other parties of supplementary obligations, which has no connection with the subject of such contract; Utilization of the dominant position in one relevant market to enter into, or protect, another relevant market.

3. COMBINATIONS The Act is designed to regulate the operation and activities of "combinations", a term, which contemplates acquisition, mergers or amalgamations. Combination that exceeds the threshold limits specified in the Act in terms of assets or turnover, which causes or is likely to cause an appreciable adverse impact on competition within the relevant market in India, can be scrutinized by the Commission. Threshold limits that would invite the scrutiny are specified below:

For acquisition: Combined assets of the firm more than Rs 3,000 crore (these limits are US $ 500 millions in case one of the firms is situated outside India). The limits are more than Rs 4,000 crore or 12,000 crore and US $ 2 billion and 6 billion in case acquirer is a group in India or outside India respectively.

For mergers: Assets of the merged/amalgamated entity more than Rs 1,000 crore or turnover more than Rs 3,000 crore (these limits are US $ 500 millions and 1,500 millions in case one of the firms is situated outside India). These limits are more than Rs 4,000 crore or Rs 12,000 crore and US $ 2 billions and 6 billions in case merged/amalgamated entity belongs to a group in India or outside India respectively.

Further, such combination, which causes or is likely to cause "appreciable adverse impact" on competition, would be treated as void. A system is provided under the Act wherein at the option of the person or enterprise proposing to enter into a combination may give notice to the Competition Commission of India of such intention providing details of the combination. The Commission after due deliberation, would give its opinion on the proposed combination to approach the Commission for this purpose. However, public financial institutions, foreign institutional investors, banks or venture capital funds which are contemplating share subscription financing or acquisition pursuant to any specific stipulation in a loan agreement or investor agreement are not required to approach the CCI for this purpose. 4. COMPETITION COMMISSION OF INDIA CCI, entrusted with eliminating prohibited practices, is a body corporate and independent entity possessing a common seal with the power to enter into contracts and to sue in its name. It is to consist of a chairperson, who is to be assisted by a minimum of two, and a maximum of ten, other members. Acts taking place outside India CCI has the power to enquire into unfair agreements or abuse of dominant position or combinations taking place outside India but having adverse effect on competition in India, provided that any of the below mentioned circumstances exists: An agreement has been executed outside India Any contracting party resides outside India Any enterprise abusing dominant position is outside India A combination has been established outside India A party to a combination is located abroad.

Any other matter or practice or action arising out of such agreement or dominant position or combination is outside India.

To deal with cross border issues, CCI is empowered to enter into any Memorandum of Understanding or arrangement with any foreign agency of any foreign country with the prior approval of Central Government. Benches Emerging markets are nations with social or business activity in the process of rapid growth and industrialization. The economies ofChina and India are considered to be the largest. [1] According to The Economist many people find the term outdated, but no new term has yet to gain much traction.[2] Emerging market hedge fund capital reached a record new level in the first quarter of 2011 of $121 billion.[3] The seven largest emerging and developing economies by either nominal GDP or GDP (PPP) are China, Brazil, Russia, India,Mexico, Indonesia, and Turkey. Julien Vercueil[10] recently proposed an pragmatic definition of the "emerging economies", as distinguished from "emerging markets" coined by an approach heavily influenced by financial criteria. According to his definition, an emerging economy displays the following characteristics : 1. Intermediate income : its PPP per capita income is comprised between 10% and 75% of the average EU per capita income. 2. Catching-up growth : during at least the last decade, it has experienced a brisk economic growth that has narrowed the income gap with advanced economies. 3. Institutional transformations and economic opening : during the same period, it has undertaken profound institutional transformations which contributed to integrate it more deeply into the world economy. Hence, emerging economies appears to be a by-product of the current globalization. In economics, a recession is a business cycle contraction, a general slowdown in economic activity.[1] [2] Macroeconomic indicators such as GDP, employment, investment spending, capacity utilization, household income, business profits, and inflation fall, while bankruptcies and the unemployment rate rise. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be triggered by various events, such as a financial crisis, an external trade shock, an adverse supply shock or the bursting of an economic bubble. Governments usually respond to recessions by adopting expansionary macroeconomic policies, such as increasing money supply, increasing government spending and decreasing taxation.

Impacts
[edit]Unemployment Unemployment is particularly high during a recession. Many economists working within the neoclassical paradigm argue that there is anatural rate of unemployment which, when subtracted from the actual rate of unemployment, can be used to calculate the negative GDPgap during a recession. In other words, unemployment will never reach 0 percent and thus is not a negative indicator of the health of an economy unless it is above the "natural rate," in which case it corresponds directly to a loss in gross domestic product, or GDP.[42]

The examples and perspective in this article deal primarily with the United Kingdom and do not represent a worldwide view of the subject. Please improve this article and discuss the issue on the talk page. (August
2011)

The full impact of a recession on employment may not be felt for several quarters. Research in Britain shows that low-skilled, low-educated workers and the young are most vulnerable to unemployment[43] in a downturn. After recessions in Britain in the 1980s and 1990s, it took five years for unemployment to fall back to its original levels.[44] Many companies often expect employment discrimination claims to rise during a recession.[45] [edit]Business Productivity tends to fall in the early stages of a recession, then rises again as weaker firms close. The variation in profitability between firms rises sharply. Recessions have also provided opportunities for anticompetitive mergers, with a negative impact on the wider economy: the suspension of competition policy in the United States in the 1930s may have extended the Great Depression.[44] [edit]Social

effects

The living standards of people dependent on wages and salaries are more affected by recessions than those who rely on fixed incomesor welfare benefits. The loss of a job is known to have a negative impact on the stability of families, and individuals' health and well-being.[44] Some economists have jokingly defined a recession like this: If your neighbor gets laid off, it's a recession. If you get laid off, it's a depression. Economists officially define a recession as two consecutive quarters of negative growth in gross domestic product (GDP). The National Bureau of Economic Research cites "a significant decline in economic activity spread across the economy, lasting more than a few months" as the hallmark of a recession. Both definitions are accurate because they indicate the same economic results: a loss of jobs, a decline in real income, a slowdown in industrial production and manufacturing and a slump in consumer spending - spending that drives more than two-thirds of the U.S. economy. In the article we'll explain how the impact of these broad-spectrum slowdowns on both large and small businesses can be very damaging, and in some instances, catastrophic. Some businesses may be affected only moderately, or not at all, if the recession is mild and brief. If the recession lingers and the downturn is widespread, all big businesses - firms publicly traded on major stock exchanges - may ultimately be hurt. (Read about classic examples of economic downturn in Stagflation, 1970s Style and What Caused The Great Depression?)

How a Recession Impacts Large Businesses Let's take an unnamed Fortune 1000 manufacturer as a typical big business suffering the effects of a recession. What happens to this firm will likely happen to other big businesses as the recession runs its course. As sales revenues and profits decline, the manufacturer will cut back on hiring new employees, or freeze hiring entirely. In an effort to cut costs and improve the bottom line, the manufacturer may stop buying new equipment, curtail research and development and stop new product rollouts (a factor in the growth of revenue and market share). Expenditures for marketing and advertising may also be reduced. These cost-cutting efforts will impact other businesses, both big and small, which provide the goods and services used by the big manufacturer. Falling Stocks and Slumping Dividends As declining revenues show up on its quarterly earnings report, the manufacturer's stock price may decline. Dividends may also slump, or disappear entirely. Shareholders may become upset. They and the board of directors (B of D) may call for a new CEO and/or an entirely new senior management team. The manufacturer's advertising agency may be dumped and a new agency hired. The internal advertising and marketing departments may also face a personnel shakeup. When the manufacturer's stock falls and the dividends decline or stop, institutional investors who hold that stock may sell and reinvest the proceeds into better-performing stocks. This will further depress the company's stock price. (Learn how understanding the business cycle and your own investment style can help you cope with an economic decline in Recession: What Does It Mean To Investors? and Recession-Proof Your Portfolio.) The sell-off and business decline will also impact employer contributions to profit-sharing plans or 401(k) plans if the company has such programs in place. Credit Impairment and Bankruptcy Also impacted by the recession is the accounts receivable (AR). The customers of the company that owe it money may pay slowly, late, partially or not at all. Then, with reduced revenues, the affected company will pay its own bills more slowly, late, or in smaller increments than the originalcredit agreement required. Late or delinquent payments will reduce the valuation of the corporation's debt, bonds and ability to obtain financing. The

company's ability to service its debt (pay interest on the money it has borrowed) may also be impaired, eventuating in defaults on bonds and other debt, further damaging the firm's credit rating and preventing further borrowing. (Debt Reckoning can teach you how a company's debt is an indicator of financial health.) Debt will have to be restructured and/or refinanced, meaning new terms will have to be agreed upon by creditors. If the company's debts cannot be serviced and cannot be repaid as agreed upon in the lending contract, then bankruptcy may ensue. The company will then be protected from its creditors as it undergoes reorganization, or it may go out of business completely. (For related reading, see An Overview Of Corporate Bankruptcy, Profit From Corporate Bankruptcy Proceedings and Taking Advantage Of Corporate Decline.) Employee Lay-offs and Benefit Reductions The business may cut employees, and more work will have to be done by fewer people. Productivity per employee may increase, but morale may suffer as hours become longer, work becomes harder, wage increases are stopped and fear of further layoffs persists. (Read about how employment statistics influence corporate confidence in Surveying The Employment Report.) As the recession increases in severity and length, management and labor may meet and agree to mutual concessions, both to save the company and to save jobs. The concessions may include wage reductions and reduced benefits. If the company is a manufacturer, it may be forced to close plants and discontinue poorly performing brands. Automobile manufacturers, for example, have done this in previous recessions. Cuts to Quality of Goods and Services Secondary aspects of the goods and services produced by the recession-impacted manufacturer may also suffer. In an attempt to further cut costs to improve its bottom line, the company may compromise the quality, and thus the desirability, of its products. This may manifest itself in a variety of ways and is a common reaction of many big businesses in a steep recession. (Learn about the importance of production levels in Understanding Supply-Side Economics.) Airlines, for example, may lower maintenance standards. They may install more seats per plane, further cramping the already squeezed-in passenger. Routes to marginally profitable or money-losing destinations may be cut, inconveniencing customers and damaging the

economies of the cancelled destinations. Giant food purveyors may offer less product, for the same price, in the same size package in which the larger amount was previously sold. Quality may also be reduced. Coffee, for example, may be cut with lesser-quality beans, compromising flavor and driving away costconscious consumers with little brand loyalty who have noticed the change. (Read about the importance of standing out from the competition in Competitive Advantage Counts.) Reduced Consumer Access As firms impacted by the recession spend less money on advertising and marketing, big advertising agencies which bill millions of dollars per year will feel the squeeze. In turn, the decline in advertising expenditures will whittle away at the bottom lines of giant media companies in every division, be it print, broadcast or online. (Read about successful marketing strategies in Advertising, Crocodiles And Moats.) As the effects of a recession ripple through the economy, consumer confidence declines, perpetuating the recession as consumer spending drops. (To learn more, read Economic Indicators: Consumer Confidence Index (CCI).) A Recession's Impact on Small Businesses The impact of a recession on small businesses that have annual sales substantially less than the Fortune 1000 and that are not public companies is similar to large businesses. Without major cash reserves and large capital assets as collateral, however, and with more difficulty securing additional financing in trying economic times, smaller businesses may have a harder time surviving a recession. Bankruptcies among smaller businesses may therefore occur at a higher rate than among larger firms. The bankruptcy or dissolution of a small business that serves a community - a franchised convenience store, for example - can create hardships not only for the small business owners, but for residents of the neighborhood. (Learn how businesses can safeguard their assets in Asset Protection For The Business Owner.) In the wake of such bankruptcies or dissolutions, the entrepreneurial spirit which inspired someone to go into such a business may take a hit, discouraging, at least for a while, any risky business ventures. Too many bankruptcies may also discourage banks, venture capitalists and other lenders from making loans for startups until the economy turns around.

(Read Six Steps To A Better Business Budget to learn about an easy but essential process that helps owners keep their small businesses afloat.) Recessions Don't Last Forever Recessions come and go and some are more severe and last longer than others. But history shows that recessions invariably end, and when they do, an economic recovery follows. For related reading, see The Federal Reserve's Fight Against Recession.

Read more: http://www.investopedia.com/articles/economics/08/recession-affectingbusiness.asp#ixzz2NoXfH3xgANTICIPATE THE FUTURE! Many economists see a recession starting
around mid-2013 or sooner, so prepare now to PRO-ACT: 1)Improve cash-flow with better and earlier measures and actions; 2)Pro-act to cut discretionary costs plus identify cheaper approaches; 3)Identify and pursue actively What Causes Sales on a programmed basis; 4)Find new sources of income and cash. And, if the economy actually improves instead of recesses, your anticipatory focus in these key areas will improve your business even more! In each area: dow

Employ job descriptions. Implementing clear-cut employee job descriptions, Koch says, will lead to better productivity and time management, evoking a sense of duty and making it less likely that employees waste the company's time and money with frivolous tasks. Unfortunately, "most small businesses don't have job descriptions," Koch says. "Workers tend to just do whatever needs to be done, and often there is an overlap or gaps in work. Everyone needs to be clear about their responsibilities and be held accountable." Create business goals. Mary Ann O'Brien, owner of OBI Creative, a small creative marketing agency bringing in over $1 million per year, benefits greatly from TAB's Strategic Leadership Business plan, a tactical map that helps determine the company's goals step-by-step. "The TAB board is great because I have others whom I can bounce things off of, who can help in times that are uncharted," O'Brien says. If the services of a business consultant are too pricey for your small business, consider drafting your own business goals to refocus the direction of your company. Encourage internal dialogue. One of the biggest responsibilities for any company is generating ideas for bringing in more business during economic hardships. Calling on the diverse perspectives of all employees, not just the sales team, O'Brien came up with an ongoing sales challenge to produce fresh ideas. "I set up three teams and challenged them to come up with a prospective client list," she says. The winning team would receive extra time off and a bonus. To fuel the discussion, O'Brien asked the question: Which companies make the best sense in targeting? The winning team researched a few high-potential clients (a list too large might cause distractions) and made it a priority to obtain a meeting schedule with them. As a result, O'Brien's company received new and interesting sales targets, won an account and gained meetings with other possible clients. Plan a free focus group. Rather than spending money on a professional group, Cella Quinn, owner of Cella Quinn Investment Services, created a group among current clients and other savvy businesswomen to assess marketing techniques. "I invite eight to 12 people and ask questions like, 'How can I do a better job at marketing to women?'" Quinn says.

Write a white paper. Complementary education can be a good marketing tool for small-business owners to offer prospective customers. One example is a white paper, a short paper that is educational and relevant to the industry. Owners choose a narrow topic pertaining to their business and allow customers to download the information from their website after providing contact information. "This way, your company gets info on the prospect and the prospect gets info from your company. This is the perfect win-win situation," Koch explains. Advertise quickly and easily. Leaving short, nonintrusive messages on the home voice mail can help drive business. Quinn uses Automatic Response Technologies (ART) to update existing clients on investment news. ART recommends that small-business owners record their own marketing messages; recipients are less interested in what the professional announcer has to say than the real voice. The average length of a recorded marketing message is about two to three minutes. The key to success, O'Brien says, is to "figure out the fastest way to get your message across." The ART marketing strategy "saves time," Quinn says, and everyone knows time is money. Reduce unnecessary spending. Companies should look at cutting the nonessentials. "I cut down on the things that aren't critical to our success, like expensive Gevalia coffee in the break room," O'Brien says. Reschedule employee vacations. For companies, "people are the biggest expense," Koch says, and companies should "rethink employee vacations" by encouraging workers to take time off during the slow season rather than the busy season. This will "offset expenses when the company has less income," Koch says, and help maintain the company's income and save workers their jobs.