Competitive Environment

Text

Francis Cherunilam (12th revised edition)

Chapter 20: Competition policy and law
 Reference
Bedi, Suresh
Chapter 23: Competitive environment.
Chapter 19: The MRTP Act and the new
competition law
 Competition Defined
Is characterized by inter-firm rivalry.
Competitive strategies, and the degree of
competition is closely related to the number of
firms in the market and the distribution of
market share between them.
 Levels of Competition
Three levels of Competition
1. Direct Competition
2. Indirect Competition
3. Budget Competition
 Competition vs. Contestability
Contestability refers to a market where there is
freedom of entry and exit.
 The Indian Competitive environment
Dereservation
Deliscencing of SSI items FDI

Disinvestments Portfolio
FIRM inv.

New areas
Infr. to pvt. sector Imports
deregulation
 The Competition Act 2002
The MRTP Act has been replaced by the
Competition Act 2002 on the recommendations
of the SVS Raghvan Committee.
It extends to whole of India except the state of
Jammu and Kashmir
Act empowers it to exempt any class of
enterprise from the Act in interest of public or
national security
 Continued---
No civil court has jurisdiction to entertain any
suit or proceeding which the competition
commission established under the act is
empowered to determine.
 Main Provisions of the Act
1. Prohibition of Anti-Competitive Agreements
1. Determining purchase/sale price (directly/indirectly)
2. Limiting/controlling production, supply, markets,
technical development, investment or provision of
services.
3. Sharing the market or source of production or
provision or services by allocating geographical areas.
4. Tie-in arrangements; exclusive supply
arrangements.
 2. Prohibition of Abuse of Dominant
Position
Imposes unfair or discriminatory condition or
price purchase or sale of goods or service
Restricts production of goods or services or
market in respect of these
Indulges in practices which deny market
access to others
 3. Regulation of Mergers and
Acquisitions
The following threshold apply for determining
whether a merger or acquisition becomes a
‘combination’ subject to scrutiny:
1.Enterprise with operations in India:
Rs. 1,000 crore asset value or Rs. 3,000 crore
turnover
-Enterprise with global operations
$ 500 million asset value or $1,500 million
turnover
 Continued---
-Groups of Companies with operations in India
Rs. 4000 crore or Rs. 12000 crore turnover
-Groups of Companies with global operations
$ 2 billion assets value or $ 6 billion turnover

2. Prohibits and voids any combination which

adversely affects the competition
 4. Competition Commission of India

The central government shall establish a

commission to be called the competition
commission of India
The commission shall consist of a chairperson
and not less than 2 and more than 10 other
members to be appointed by Central
Government