GREETINGS

TO
CHARTERED ACCOUNTANTS FOR

ICAIS POST QUALIFICATION COURSE

VIDEO CONFERENCE FROM HYDERABAD 25 AUGUST 2005
Copyright - Dr. S. Chakravarthy 1

COMPETITION ACT, 2002

THE NEW INDIAN COMPETITION LAW

Dr. S. CHAKRAVARTHY (Profession : Civil Servant)

Formerly, Member, Monopolies and Restrictive Trade Practices Commission, Member, High Level Committee on Competition Policy and Law And Member of Committee for Drafting the Law. Presently, Adviser/Consultant Competition Policy and Law

HYDERABAD, INDIA
Copyright - Dr. S. Chakravarthy 2

GENIE TRAPPED - LID CLOSED

COMPETITION AMBIENCE YET TO FLOWER INDIAS POLICY MAKERS COMPETITION GENIE

Copyright - Dr. S. Chakravarthy

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

Copyright - Dr. S. Chakravarthy

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

Copyright - Dr. S. Chakravarthy

EXTANT COMPETITION LAW OF INDIA

MONOPOLIES AND RESTRICTIVE

TRADE PRACTICES ACT,1969
BROUGHT INTO FORCE IN 1970

Copyright - Dr. S. Chakravarthy

FOUR COMPARTMENTS

ANTI-COMPETITION AGREEMENTS ABUSE OF DOMINANCE

MERGERS, AMALGAMATIONS, ACQUISITIONS AND TAKE-OVERS

FOSTERING COMPETITION

Copyright - Dr. S. Chakravarthy

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, TECHNICAL DEVELOPMENT

VERTICAL RESTRAINTS :
TIE-IN ARRANGEMENTS
EXCLUSIVE SUPPLIES EXCLUSIVE DISTRIBUTION REFUSAL TO DEAL RESALE PRICE MAINTENANCE

SUPPLY,

ADJUDICATION BY RULE OF REASON

THE ABOVE ARE PER SE ILLEGAL.

Copyright - Dr. S. Chakravarthy

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

Copyright - Dr. S. Chakravarthy

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 ON 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 COMMISSION OF INDIA

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

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EXTRA TERRITORIAL REACH

THE COMPETITION ACT, 2002 EXTENDS THE CCIs REACH BEYOND THE INDIAN SOIL THE EXTRA TERRITORIAL REACH IS BASED ON EFFECTS DOCTRINE.
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CONCERNS ARTICULATED
1. THE NEW LAW IS DRACONIAN.

2. COMBINATION(MERGERS) REGULATION WILL IMPEDE INDIA FROM

BECOMING GLOBALLY COMPETITIVE. 3. JOINT VENTURES SHOULD NOT BE REGULATED. 4. POSSIBLE INJURY TO DOMESTIC INDUSTRIES PARTICULARLY THE

SMALL SCALE SECTOR.

5. CCI WILL BECOME A SUPER REGULATOR AS OTHER REGULATORY AUTHORITIES ARE SUBJECT TO COMPETITION LAW. 6. THE GROUP CONCEPT IN COMBINATION REGULATION IS REGRESSIVE 7. THE NEW LAW SUPERSEDES ALL OTHER LAWS AND THUS CCI BECOMES A BEHEMOTH.
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WHO PRESSURISED 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
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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)

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OLD WINE OR NEW WINE ?

MRTP ACT
8. COVERS UNFAIR TRADE PRACTICES (INDIVIDUAL CONSUMER INTEREST) 9. POLITICAL APPOINTMENTS OF CHAIRPERSON/MEMBERS

NEW LAW
8. UNFAIR TRADE PRACTICES

EXCLUDED (COVERED UNDER CONSUMER PROTECTION ACT)

9. APPOINTMENTS BY A COLLEGIUM

10. NO COMPETITION ADVOCACY

ROLE 11. REACTIVE

10. CCI HAS COMPETITION ADVOCACY ROLE

11. PROACTIVE

NO LAW IS BETTER THAN A POORLY ADMINISTERED LAW

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ONE WOULD LIKE TO AVOID THE DANGER OF HOLLOW PURISM THAT HAS MADE SO MUCH OF MODERN ECONOMICS UNFIT FOR ACTUAL USE
AMARTYA SEN
INDIAN NOBEL LAUREATE
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GENIE RELEASED - LID OPENED

COMPETITION AMBIENCE INDIAS POLICY MAKERS COMPETITION GENIE

Copyright - Dr. S. Chakravarthy

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THANK YOU

FOR YOUR
KIND ATTENTION
Copy right Dr. S. Chakravarthy