History and evolution of competition law in India

INTRODUCTION

Competition means economic rivalry between entities or companies, to draw the highest
number of consumers and earn the most profit. Competition law is also called in some countries
as Antitrust law.The objective of all competiton laws, around the world is to ensure an
environment where all companies compete fairly. The first act introduced in India for regulation
of competition was Monopolies and Restrictive Trade Practices Act, 1969. When the Act was
found to be inadequate , a new act called the Competition Act, 2002 was introduced.
Case
2)
3)Aamir Khan Production v/s Union of India[1], the issue was whether IP can be dealt by the
Competition Commission of India (CCI), the Bombay High Court held that CCI can deal with IPR
related matters if it is in direct contravention of the provisions of the Competition Act, 2002.

COMPETITION COMMISSION OF INDIA AND COMPETITION APPELLATE TRIBUNAL:

It is the highest body established under the Competition Act, 2002 and is vested with the
responsibility of implementation of the provisions of the Act, elimination of restrictive trade
practices and for the protection of the welfare of the public.

The validity of the Competition Commission of India (CCI) was challenged in Brahm Dutt V.
Union of India the Central government substantially amended the Act. The CCI was reduced to
the position of a Market Regulator and an Expert body performing Adversary and Regulatory
functions. The Competition Appellate Tribunal (COMPAT) was introduced for executing
adjudicatory functions and empowered to hear any appeals against any counsel or directions
made by the Competition Commission of India.

CONCLUSION
The act had some inadequacies and then there were the economic reforms of 1991 and signing
of two important agreements of WTO- the GATT and the TRIPS. The enactment of a new act
became all the more essential and hence the Competition Act, 2002 was enacted.
While the MRTP Act was reformatory in nature, the 2002 Act was punitive in nature.
The salient features of the Competition Act, 2002 are anti-competitve agreements, abuse of
dominant position and regulation of combinations.
There was substantial amendment in the Act in 2007, by which the Competition Appellate
Tribunal (COMPAT) was introduced. The act has been successful Hence, free and fair
competition is essential for creating and maintaining an environment conducive to business and
a prosperous country.

2)Salient feature of mrtp act

INTRODUCTION

Competition means economic rivalry between entities or companies, to draw the highest
number of consumers and earn the most profit. Competition law is also called in some countries
as Antitrust law.The first act introduced in India for regulation of competition was Monopolies
and Restrictive Trade Practices Act, 1969. When the Act was found to be inadequate , a new
act called the Competition Act, 2002 was introduced.

MONOPOLIES AND RESTRICTIVE TRADE PRACTICES ACT, 1969:

HISTORY:

In the 1960s three committees – one chaired by Mr. Hazari, another by Professor Mahalanobis
and ‘The Monopolies Inquiry Commission (MIC)’ chaired by Mr. Das Gupta, came to the
conclusion that there was a disproportionate amount of wealth with a few people.
A bill was drafted by the Monopolies Inquiry Commission which later became Monopolies and
Restrictive Trade Practices Act, 1969,(hereafter MRTP) enacted from 1st June, 1970.

ABOUT THE ACT:

Monopolies and Restrictive Trade Practices Act, 1969 is the first legislation in India with regard
to competition law. It was based on socialistic philosophy which is an important element of
Directive Principles of State Policy. The objective of the Act was to control monopolies, i.e.,
avoid the concentration of power in the hands of a few people to the common detriment. The
Act was reformative in nature and a firm’s market domination was determined by its size.
SHORTCOMINGS OF THE ACT:

The Act did not define certain important restrictive trade practices such as abuse of cartels,
collusion, abuse of dominance and price fixing, bid rigging, etc.

The government sector was given protection and preference in terms of pricing and supply, the
government discriminated between the private and public sector, hence they were not on the
same level in the competition.

The economic reforms in 1991, LPG-Liberalisation, Privatization and Globalisation made it all
the more necessary for a new competition law. India after agreeing to General Agreement on
Tariffs and Trade (GATT) and Trade Related Aspects of Intellectual Property Rights
(TRIPS)-important agreements of the World Trade Organization, which allowed international
companies to enter domestic markets, resulted in further reduction of utility and effectiveness of
MRTP Act. The Act did not provide sufficient remedy to the complainants, as it did not provide
for penalties for breach of law.
SALIENT FEATURES:

ANTI-COMPETITIVE AGREEMENTS:

Section 3 of the Competition Act, 2002 deals with anti-competitive agreements. Anti-competitive
agreements are agreements entered into by enterprises or by persons with respect to
production, , supply, distribution, storage, acquisition or control of goods or provision of services
which have chances of causing a significant amount of harmful effect. Anybody who is involved
directly or indirectly in bid rigging or collusive bidding which has a substantial effect on the
competition in India shall come under the provisions of this Act.
Bid rigging, defined in section 3 of the Competition Act, 2002 is a horizontal agreement, in which
an agreement has been promised to one, and several parties bid for the sake of appearance,
this affects competition

Collusive bidding is done through an agreement between contractors or suppliers to cooperate

and inflate prices to artificially high levels. It is done with the intention of illegally evading the
rules set down for free and competitive bidding.

If any agreement of the following:- tie-in arrangement, exclusive supply agreement, exclusive
distribution agreement, refusal to deal, resale price maintenance, all of such agreements shall
come under the Act, if they have a substantial effect on the competition in India.

2. ABUSE OF DOMINANT POSITION:

Section 4 of the Competition Act, 2002 deals with abuse of dominant position. It is not illegal for
an entity to have dominant position, but it is the abuse of the position which attracts the
provisions of the Act. If an entity imposes an unfair condition or unfair price in sale or purchase,
or restricts the production

Dominant position, defined in the section 4 of the Act. means a position of strength, which
enables an entity to operate independently of circumstances prevailing in the relevant market
and also affect its competitors, consumers and the market itself.

3. COMBINATION AND REGULATION OF COMBINATIONS:

Section 5 and 6 of the Competition Act, 2002 deal with regulation of combinations.
Combinations covers under its ambit acquisition, mergers, joint ventures, takeovers or
amalgamations. These sections seek to regulate the operation and activities of combinations.
The act does not allow any combinations which result in substantial adverse effect on
competition in India and the combination shall be deemed void.

CASE LAWS:

In Aamir Khan Production v/s Union of India[1], the issue was whether IP can be dealt by the
Competition Commission of India (CCI), the Bombay High Court held that CCI can deal with IPR
related matters if it is in direct contravention of the provisions of the Competition Act, 2002.

The validity of the Competition Commission of India (CCI) was challenged in Brahm Dutt V.
Union of IndiaThe CCI was reduced to the position of a Market Regulator and an Expert body
performing Adversary and Regulatory functions. The Competition Appellate Tribunal (COMPAT)
was introduced for executing adjudicatory functions and empowered to hear any appeals
against any counsel or directions made by the Competition Commission of India.

CONCLUSION
The act had some inadequacies and then there were the economic reforms of 1991 and signing
of two important agreements of WTO- the GATT and the TRIPS. The enactment of a new act
became all the more essential and hence the Competition Act, 2002 was enacted.
While the MRTP Act was reformatory in nature, the 2002 Act was punitive in nature.
The salient features of the Competition Act, 2002 are anti-competitive agreements, abuse of
dominant position and regulation of combinations.
There was substantial amendment in the Act in 2007, by which the Competition Appellate
Tribunal (COMPAT) was introduced. The act has been successful Hence, free and fair
competition is essential for creating and maintaining an environment conducive to business and
a prosperous country.

3)repealed mrtp act and formation of competition act

INTRODUCTION

Competition means economic rivalry between entities or companies, to draw the highest
number of consumers and earn the most profit. Competition law is also called in some countries
as Antitrust law.The first act introduced in India for regulation of competition was Monopolies
and Restrictive Trade Practices Act, 1969. When the Act was found to be inadequate , a new
act called the Competition Act, 2002 was introduced.

MONOPOLIES AND RESTRICTIVE TRADE PRACTICES ACT, 1969:

HISTORY:

In the 1960s three committees – one chaired by Mr. Hazari, another by Professor Mahalanobis
and ‘The Monopolies Inquiry Commission (MIC)’ chaired by Mr. Das Gupta, came to the
conclusion that there was a disproportionate amount of wealth with a few people.A bill was
drafted by the Monopolies Inquiry Commission which later became Monopolies and Restrictive
Trade Practices Act, 1969,(hereafter MRTP) enacted from 1st June, 1970.

ABOUT THE ACT:

Monopolies and Restrictive Trade Practices Act, 1969 is the first legislation in India with regard
to competition law. It was based on socialistic philosophy which is an important element of
Directive Principles of State Policy. The objective of the Act was to control monopolies, i.e.,
avoid the concentration of power in the hands of a few people to the common detrimental . The
Act was reformative in nature and a firm’s market domination was determined by its size.

SHORTCOMINGS OF THE ACT:

The Act did not define certain important restrictive trade practices such as abuse of cartels,
collusion, abuse of dominance and price fixing, bid rigging, etc.
The government sector was given protection and preference in terms of pricing and supply, the
government discriminated between the private and public sector, hence they were not on the
same level in the competition.

The economic reforms in 1991, LPG-Liberalisation, Privatization and Globalisation made it all
the more necessary for a new competition law. India after agreeing to General Agreement on
Tariffs and Trade (GATT) and Trade Related Aspects of Intellectual Property Rights
(TRIPS)-important agreements of the World Trade Organization, which allowed international
companies to enter domestic markets, resulted in further reduction of utility and effectiveness of
MRTP Act.

The Act did not provide sufficient remedy to the complainants, as it did not provide for penalties
for breach of law.

COMPETITION ACT, 2002:

HISTORY:

Raghavan Committee in 1999 recommended that a new legislation should be framed for
competition law for the country, because although the MRTP Act had provisions relating to
anti-competitive practices, it was found to be inadequate in comparison to other countries, for
encouraging competition in the industry and also for reduction of anti-competitive practices.

About the Act:

The object of this Act is to create an environment that promotes competition and safeguard the
independence to do business.
The Act states in its Objects and Reasons that because of globalization, India has opened up its
economy to the world, removed restrictions and controls and liberalized the economy.
The preamble provides for the establishment of a Commission to prevent practices having
adverse effect on competition and also promotion of competition in markets.
The aim is to protect the interest of the public.
The domination of a firm is decided on the basis of firm’s structure. The act is punitive in
character. It seeks to promote competition.
CASE LAWS:

In Aamir Khan Production v/s Union of India[1], the issue was whether IP can be dealt by the
Competition Commission of India (CCI), the Bombay High Court held that CCI can deal with IPR
related matters if it is in direct contravention of the provisions of the Competition Act, 2002.

The validity of the Competition Commission of India (CCI) was challenged in Brahm Dutt V.
Union of IndiaThe CCI was reduced to position of a Market Regulator and an Expert body
performing Adversary and Regulatory functions. The Competition Appellate Tribunal (COMPAT)
was introduced for executing adjudicatory functions and empowered to hear any appeals
against any counsel or directions made by the Competition Commission of India.

CONCLUSION
The act had some inadequacies and then there were the economic reforms of 1991 and signing
of two important agreements of WTO- the GATT and the TRIPS. The enactment of a new act
became all the more essential and hence the Competition Act, 2002 was enacted.
While the MRTP Act was reformatory in nature, the 2002 Act was punitive in nature.
The salient features of the Competition Act, 2002 are anti-competitive agreements, abuse of
dominant position and regulation of combinations.
There was substantial amendment in the Act in 2007, by which the Competition Appellate
Tribunal (COMPAT) was introduced. The act has been successful Hence, free and fair
competition is essential for creating and maintaining an environment conducive to business and
a prosperous country.

4)interplay between ipr and competition law

Introduction

1)The connection between competition law

and Intellectual Property Rights (IPR) is the contemporary issue . As competition law deals with
an efficient mechanism to counter anti-competitive agreements, regulating mergers and
acquisitions, restricting the use of dominant position

On the contrary Intellectual Property Rights tries to strike a balance between the rights of the
owner and social interest. It helps the owner of the intangible property get exclusive right and
commercial value for his intellectual creation.

2)As IPR give exclusive rights and monopoly to which competition policy disagree. On the one
hand it is important to boost the spirits of the inventor

and on the other hand, competitiveness in the market should also be controlled. However, they
are also complementary in certain areas. IPR provides a chance for technological innovation,
which in turn creates more products and results in the dynamic growth of the product, which is
considered one of the aims of the competition policy.

Two mechanism

Economic operation of a country is operated through two mechanisms

i.e. free market and regulated market. The reason behind adopting the two different
mechanisms is for better working of the country market.

Free Market System: – Manufacture identify how much product should be produced what will be
the capital invested for invention or innovation

The government has no role in it .It rejects the monopolistic behaviour of the producers.
In this, there is a direct relationship between service provider or producer or manufacturer and
consumer. So through this system, the manufacturer takes unfair advantage of the consumer
easily for the profit and interest causes an unbalance in the country's economy or market.

Regulated Market System:- Business, trade (buying and selling) are governed through different
regulatory bodies and they are controlled by the state. It is done to prevent unfair trade practices
and to prevent a monopoly. There are a check and balance for monitoring the activities of the
suppliers through different legislation.

Criticism-When an excessive restriction is imposed on the economy as it will prejudice the

economy rigid as there will be no or minimum flexibility in operation. Where there will be less
flexibility than heir will be less invention or innovation, as a result of the consumer fils to get
what they want actually etc.

It can be said by analysing both the mechanism that the countries require the regulated mark as
well as a free market since both of them have their advantages and disadvantages and going
with the operation of Competition law and IP invention is indispensable , price needs to be
stable,

so that the supplier along with the buyer is able to fulfil their needs the economy should not be a
rigid one but open with the regulating bodies to keep it under control.

A market without any regulating bodies will cause an unbalanced situation and once it goes out
of control it is difficult to restore.

Objective

It is generally seen that IPR and competition law have conflicting

The main objective of permitting license in IPR is to encourage competition among the
prospective innovators and concurrently restrict the competition in several ways and after a
specified period, the rights go to the public domain ending the competition.

The primary objective of competition law is to stop the abusive practices in the market, stipulate
and encourage competition in the market and make sure that customers get the proper product
at an affordable price with improved quality.

Preventive Measures
Two methods have been used to prevent the abuse in IPRs:-

Compulsory licensing (a contract which is involuntary between a willing buyer and an unwilling
seller is enforced by the government.)
Parallel imports (goods brought into another country once they have been placed in the market
elsewhere without the permission of a patent or copyright holder.)

Under Article 31 of the TRIPS Agreement provides for the grant of compulsory licenses, under
the following situation:-

1)In the interest of public health

2)In case of national emergency
3)Anti-competitive practices

Secondly, there are many inferences regarding the interlink between competition policy and IPR
that requires to be taken into account.Authorities regulating competition policy should consider
each case relating to IPRs with reason approach.

However abuse of dominance laws could be applied to IPRs and suitable remedies taken, this
will reduce high potential cost regarding reducing incentives to innovate.

Comparison between IPR and Competition Law

1)The correlation between IP rights and Competition Law seems to be contradictory to each
other but in actuality, it is not
2) but it assists the person to invest in a dynamic competition by restraining the rigid
competition.

3) It gives benefits to the holder to make exclusive use of his product within a particular period.
4) During such a particular period the patent owners have monopoly power and are in a position
to dominate. Such dominance will not lead to infringement of antitrust law.

5)To understand the problem arising while applying an IPR and competition law, it is necessary
to look into the Indian laws about competition and how it has been structured to eliminate such
problems.

Indian Competition Act about Competition and IPR policy

1)Section 3 of the Indian Competition Act specifies that:-

“No enterprise or association of an enterprise is allowed to make any agreement about

production, distribution, supply, acquisition, storage, controls of goods or provision of services,
which will have a significant adverse impact on competition within India”.

In general, it means that it restrains the enterprise or group of the enterprise to enter into any
agreement relating to any activities which will hurt competition. It is limited to India.

2)Section 3(5): It talks about the exception. It talks that competition law does not affect IPR
rights.
But if we study Section 3(5) with Section 4 then we find that it also restrains the IP holders from
abusing its dominant position and

if they misuse its dominating position then competition law will come into the picture.

From this, we can conclude that they are supplementary to each other rather than contradicting
it.

As India is a developing country and it is still developing as if we talk concerning IPR regulation
and Competition.

Case:- Aamir Khan Production Private Limited vs The Director-General

The Bombay High Court states that the Competition Commission of India has jurisdiction to look
into the matter of competition and IPR.

Valle Peruman and others Versus Godfrey Phillips India Limited

The court also further observed that a trademark owner has the right to use his trademark in a
reasonable manner subject to the conditions imposed at the time of granting a patent.

Haridas case

Conclusion

These both laws are contradicting in nature but they are not as we find from both the laws are
supplementary to each other and one comes into the picture when one is misused.

Competition law tries to offer wide varieties to the customer and it brings the balance between
the right of the manufacturer and the customers by maximizing profit with a quality product at
affordable prices.

IPR also allows the manufacturer to get the reward for the sole creation of the product which in
turn will help the public at large.
The monopoly position offered by the IPR is prima facie not violating the competition policies
but misuse of the position can be violating the policies.