Competition Law

Introduction
• 42nd Amendment introduction of term “socialist”
• Socialist implies social and economic equality
• D.S. Nakara v UOI – SC observed that the principle objective of socialist
state is to wipe out the inequality in economic conditions, status and
standard of Life
• A-38 and A 39 – Elimination of concentration of wealth and distribution of
Resources
• A 39(b) the ownership and control of material resources of the community
are so distributed as best to sub serve the common goods
• A 39(c) the operation of economic system does not result in the
concentration of wealth and means of production to the common
detriment
A 38 and A 39
• Central Inland Water Transport Corporation v Brajo Nath Ganguly – SC held that
A 38 and 39 of the constitution embody the jurisprudence doctrine of
“distributive justice”
• State of Tamil Nadu v Abu Kavar Bai – court upheld the validity of a law enacted
for the nationalization of transport services meant for the purpose of
distribution or preventing concentration of wealth
• State of Karnataka v Ranganatha Reddy – SC with regard to A 39 (b) of the
constitution one of the principle aims of socialism is the distribution of the
material resources of the community in such a way as to subserve the common
good.
• Reliance Natural resources Ltd v Reliance industries Ltd – Obligation on the state
to ensure that the distribution of material resources of the community does not
result in heightening of inequalities amongst the people and amongst the regions
• After independence Indian government aimed at achieving socialist
pattern of society which promotes equitable distribution of wealth
and economic powers
• MIC – Monopolies Inquiry Committee in 1964 was appointed to
investigate the extent and effect of concentration of power in the
private sector and to suggest necessary legislative or other measures
in the light of the findings
• MRTP Act 1969 was passed to check the concentration of economic
power, control the growth of monopolies and prevent various trade
practices detrimental to public interest
• After 1991 the MRTP act became obsolete as there was no provision
to control mergers and acquisition.
• The GOI appointed committee under SVS Raghavan to assess the
relevance of MRTP Act and to suggest competition law in India
• Then Competition Act 2002 was enacted
Competition
• Competition means struggle or contention for superiority
• In the corporate world – it is a process whereby the economic
enterprise compete with each other to secure customers for their
product
• It is a process of rivalry among the producers to enhance the profit
and to attract more customers or to get the patronage of consumers
• In pursuit to out do the rival enterprise some producer or
manufacturer either adopt fair means or indulge in unfair practices –
Which can be checked by the competition law
Competition law
• It is a law designed to protect the businesses and consumers from
anti-competitive behavior of the producers.
• It aims at encouraging competition and at protecting markets against
the anti-competitive practices by the enterprises
• Encourages enterprises to be innovative and bring new products and
services
• Widens the choice of product at a best possible price
• Better products, lower price, wider choice and greater efficiency
Competition Law
• It seeks to increase the efficiency, enhance consumer welfare, ensure
fair trading and prevent abuse of market power
• The three areas of enforcement under competition law are
1. Anti-competitive agreements
2. Abuse of Dominance
3. Mergers which have potential for anti-competitive effect
• Aim of competition law is to protect consumer welfare as well as the
economic freedom of market players
Competition Law and Competition Policy
• Competition Policy includes sectoral regulatory laws and the various government
policies that enhance competition and consumer welfare
• Where as competition law is quite narrower in its scope
• Competition policies are all government policies that affect the functioning of
markets
1. Trade Policy
2. Industrial Policy
3. Disinvestment Policy
4. FDI Policy Competition Law
5. Fiscal Policy
6. IPR Policy
7. Labour Policy
Competition Policy – a broad concept that
Seeks to harmonies all government policies
• WTO defines competition policy as “the full range of measures that
may be used to promote competitive market structures and behavior,
including but not limited to a comprehensive competition law dealing
with anti-competitive practice of enterprises”
• Competition law is Species and Competition Policy is the genus
• Competition Policy promotes efficiency and maximize consumer/
social welfare
• It helps promote creation of business environment which improves
static and dynamic efficiencies leads to efficient resource allocation
and in which abuse of market power is prevented/curbed
National Competition Policy
• The Raghavan Committee observed there is a need that “competition
law must emerge out of a National Competition Policy, which must be
evolved to serve the basic goals of economic mircoform by building a
competitive market economy
• Government formulates a National Competition Policy with a view to
achieve highest sustainable levels of economic growth,
entrepreneurship, employment higher standards of living for the
citizens, economic and social development, promote economic
democracy and support good governance towards ensuring inclusive
growth
Objectives of NCP
1. Preserve competition process and encourage competition in the
domestic market so as to optimize efficiency
2. Promote innovation and maximum welfare
3. Promote, build and sustain strong competition culture within the country
4. Achieve harmonization in policies, laws and procedures regarding
competition dimensions at all levels of governance
5. Ensure competition in regulated sectors
6. Establish an institution mechanism for synergized relationship between
the competition commission and Sectoral regulators
7. Strive for single national market
Principles of National Competition Policy NCP
1. There should be effective control of anti-competitive conduct which
undermines competition in markets in India
2. There should be competitive neutrality or level playing field among all
players, whether these are private enterprises, public enterprises or
government departments engaged in non-sovereign commercial activity
3. The producer should be rule bound, transparent, fair and non
discriminatory
4. There should be institutional separation between policy making
operations and regulations
5. Where a separate regulatory arrangement is set up it should be
consistent with the principles of competition
6. Third party access to essential facilities on fair terms should be available