Competition Policy of India

C O M P E T I T I O N.
is a dynamic concept is an amalgam of factors that stimulate economic rivalry is a tool to mount market pressure to penalise laggards and to reward the enterprising

COMPETITION POLICY - GOALS

preservation and promotion of the competitive process efficiency in production and allocation of goods and services innovation and adjustment to technological change sustained economic growth

tition
POLICY - GOALS COMPETITION POLICY - GOALS

EXTANT COMPETITION LAW OF INDIA

MONOPOLIES AND RESTRICTIVE TRADE PRACTICES ACT,1969 brought into
force in 1970

FOUR COMPARTMENTS
anti-competition agreements abuse of dominance mergers, amalgamations, acquisitions and take-overs fostering competition

ANTI - COMPETITION AGREEMENTS

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 the above are per se illegal.

 vertical restraints : tie-in arrangements exclusive supplies

exclusive distribution
refusal to deal resale price maintenance adjudication by rule of reason

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 /discriminatory purchase or sale prices (including predatory prices) limits production, markets or technical development denies market access concludes contracts subject to obligations having no connection with the subject of the contracts. uses dominance to move into or protect other markets

relevant market = relevant product market + relevant geographic market

COMBINATIONS
MERGERS/AMALGAMATIONS
pejorative effects reduction in number of players acquisition of enormous economic strength discouragement of new entrants dictation of prices dominance

REGULATION ON COMPETITION PERSPECTIVE

competition law to have surveillance over combinations beyond a threshold limit (Assets > Rs.1000 Crores or Turnover > Rs.3000 Crores ) Notification of combination voluntary and not mandatory. CCI mandated to decide within 90 working days else deemed approval

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

EXEMPTIONS
government by notification may exempt from the competition law a any class of enterprises in the interest of national security/public interest.

b. any practice/agreement arising out of international treaty/agreement c. any enterprise performing a sovereign function on behalf of government
different provisions from different dates if, need be.

COMPETITION COMMISSION OF INDIA

COMPRISES :

CHAIRPERSON
MEMBERS (Max. Ten) SELECTION BY A COLLEGIUM THIS IS TO MINIMISE POLITICISATION OF APPOINTMENTS

DEPOLITICISATION AND CASTING NET WIDE

rationale for the collegium approach is to minimise politicisation of appointments chairperson need not be from the judiciary

chairperson and members from fields judiciary, economics, law, international trade, business, commerce, industry, finance, accoutancy, management, public affairs, and administration
every bench will have a judicial member

THE NEW LAW AND IPRs

section 3(5) of the competition act, 2002 excludes all IPRS from its applicability intellectual property right carries with it a bundle of rights in the interest of creativity and innovation any condition or obligation outside the bundle of rights cannot be countenanced if it trenches competition the act has therefore brought under its surveillance unreasonable practices that may accompany the exploitation of IPRS

EXTRA TERRITORIAL REACH

The competition act, 2002 extends the CCI reach beyond the Indian soil the extra territorial reach is based on effects doctrine.

who Pressurized India to have a new competition law?

some comment that WTO has pressurised India to enact a new competition law some others believe that world bank, IMF and ADB have insisted on a new law for India there are some who believe that some potential investors (FDI) want India to have a new effective competition law to protect their interests there are some who believe that some patent holders want India to have provisions in the competition law to protect their interests

none of the above comments and beliefs is true or has any basis India has exercised its sovereign right to have a new modern competition law

OLD WINE OR NEW WINE ?

MRTP ACT
1.
BASED ON PRE-1991 LPG 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. A LARGE NO. OF PER SE OFFENCES

NEW LAW
1. BASED ON POST-1991 LPG 2. PREMISED ON BEHAVIOUR/ CONDUCT 3. RESULT ORIENTED 4. CAN BITE (PUNITIVE ) 5. OFFENCES DEFINED EXPLICITLY 6. FROWNS ON ABUSE OF DOMINANCE (NO PERCENTAGE OF MARKET SHARE)

(AGAINST PRINCIPLES OF NATURAL JUSTICE)

7. JUST FOUR ARE PER SE OFFENCES

(REST BY RULE OF REASON)

OLD WINE OR NEW WINE ?

MRTP ACT
8.

NEW LAW
8. UNFAIR TRADE PRACTICES

covers unfair trade practices (individual consumer interest) 9. political appointments of chairperson/members 10. no competition advocacy role 11. reactive

EXCLUDED (COVERED UNDER CONSUMER PROTECTION ACT)

9. APPOINTMENTS BY A COLLEGIUM

10. CCI HAS COMPETITION ADVOCACY ROLE 11. PROACTIVE

NO LAW IS BETTER THAN A POORLY ADMINISTERED LAW