INDIA S NEW COMPETITION REGIME

:
Competition in a large emerging economy
Bharath Jairaj Citizen consumer and civic Action Group Chennai, India www.cag.org.in

1969 New Economic Policy 1991 Amendments to MRTP Act Competition Act 2002 Competition Policy 2006-07? 2006- 7Up2 Meeting. 2006. June 27-28. . 27Bangkok.Contents  Where are we today?  How did we get here? MRTP Act.

2002  The Competition Commission of India (CCI).India s Competition Regime today:  New Competition Law: The Competition Act . 27Bangkok. . June 27-28. 2006.  The Competition Appellate Tribunal (CAT)  New Competition Policy: Advisory Committee to prepare draft National Competition Policy (December 2005) Working group on Competition Policy at the Planning Commission (for 11th Five Year Plan) 7Up2 Meeting.

2006.How We Got Here . 39 (c) the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment  1947. 27Bangkok. Art.1 EVOLUTION Constitution of India.EVOLUTION.1969: Regimented and strict system 1947of government controls  1969: Monopolies and Restrictive Trade Practices Act (MRTP Act) legislated 7Up2 Meeting. . June 27-28.

1969 OBJECTIVES:  Prevention of concentration of economic power in a few hands  Control and regulation of monopolies in certain sectors  Prevention of unfair trade practices  Prevention of restrictive trade practices 7Up2 Meeting. 27Bangkok. June 27-28. .Monopolies and Restrictive Trade Practices Act . 2006.

Can make recommendations to Central Government on functioning of enterprises. award compensation. when such functioning was detrimental to public interest Suo Moto action possible. though not used 7Up2 Meeting. 2006.THE MRTP COMMISSION      A Quasi-Judicial Authority (Chairman (SC/HC QuasiJudge) and 2-8 members) 2Assisted by Dir Gen of Investigation MRTPC vested with powers of a Civil Court: cease and desist orders. injunction. . etc. 27Bangkok. June 27-28.

M&A s.How We Got Here . 27Bangkok. 2006. expanding existing undertaking. June 27-28.2 EVOLUTION    1991: Widespread economic reforms in India Aimed at Liberalisation. takeovers deleted from Act 7Up2 Meeting. Privatisation and Globalisation Changes felt necessary in MRTP Act Concentration of economic power to the common detriment and control of monopolies dede-emphasised PrePre-entry restrictions (prior approval of government).EVOLUTION. .

June 27-28.3 EVOLUTION   1999: Expert Group on interaction between Trade and Competition Policy recommended new competition law to promote fair competition and control (eliminate) antianticompetitive practices in the market 2000: GoI High Level Committee on Competition Law and Policy provided a draft Competition law. .EVOLUTION. 2002:The Competition Act legislated 7Up2 Meeting. 2006. 27Bangkok.How We Got Here .

THE COMPETITION ACT. . 2006. 2002 What and how WHAT? Main Focus areas of the Act : Prohibition of Anti Competitive Agreements  Prohibition of Abuse of Dominance  Regulation of Combinations  Competition Advocacy  HOW? Through establishment of a Competition Commission of India (CCI) and Competition Appellate Tribunal (CAT) 7Up2 Meeting. 27Bangkok. June 27-28.

    .1 A. 2006. June 27-28. vertical or horizontal Rule of Reason to be applied for determining legality of an agreement Certain agreements between same or similar enterprises regarding prices or quantities.e. i.. on bidding. Antiagreements which could restrict competition. 27Bangkok. PROHIBITION OF ANTI-COMPETITIVE ANTIAGREEMENTS All Anti-competitive agreements are void. or to share or divide markets are per se illegal Leniency provision for whistleblowers in a cartel (if disclosure is before prosecution) 7Up2 Meeting.FOCUS AREAS OF 2002 ACT .

. June 27-28.) priceRULE OF REASON TO BE APPLIED (factors):  Creation of entry barriers  Driving existing competitors out of the market  Accrual of benefits to consumers  Improvements in goods and services  Increase in Technical development 7Up2 Meeting. price-fixing etc. 27Bangkok.FOCUS AREAS OF 2002 ACT . 2006.1 EXCEPTIONS:  Export cartels (problem is somewhere else!)  Agreements permitted in law  Agreements under IPR (not unreasonable restrictions like patent pooling.

etc. markets or technical development. PROHIBITION OF ABUSE OF DOMINANT POSITION: Mere dominance is not an offence.FOCUS AREAS OF 2002 ACT . restricting quantities. abuse of dominance is prohibited Important shift from size / structure to behaviour / conduct Instances of unfair. 2006. June 27-28. will qualify    7Up2 Meeting. 27Bangkok. . discriminatory or predatory pricing.2 B.

27Bangkok. vertical merger by dominant player with firm in adjacent market. Acquisitions of control all above a certain high level threshold (Rs.) PrePre-notification voluntary 7Up2 Meeting. June 27-28. Amalgamations. .3000 crore turnover of combining parties) Thresholds deliberately high to allow small Indian companies to combine to become active international players Combinations that cause or are likely to cause an adverse effect on competition are under focus (e.3     C.FOCUS AREAS OF 2002 ACT .g. REGULATION OF COMBINATIONS: Includes M&A s. horizontal mergers between competitors. 2006.1000 crore aggregate value of assets or Rs.. etc.

2006. .FOCUS AREAS OF 2002 ACT . COMPETITION ADVOCACY: CCI to create culture of competition Empowered to participate in formulation of country s economic policies Create awareness and training on competition issues Establishment of Competition Fund for above Recently asked to develop Consultation Paper on National Competition Policy (to harmonise various government policies) 7Up2 Meeting.4      D. June 27-28. 27Bangkok.

COMPETITION COMMISSION OF INDIA (CCI)     Adjudicative wing distinct from Investigative and Prosecution wing Allows appointment of economists. 1986 (CPA) Phased introduction of Act competition advocacy (Y1). bureaucrats) UTPs removed from the purview of Act and all pending cases transferred to the Consumer Protection Act. 27Bangkok. Combinations (Y3) 7Up2 Meeting. . June 27-28. Anti-Competitive Practices and AntiAbuse of Dominance (Y2). 2006. lawyers. other professionals as investigators (departure from practice of appointing retd.

. June 27-28. 2006.COMPETITION APPELLATE TRIBUNAL (CAT)   Established after intervention by Supreme Court of India to retain judicial powers within the judicial system CAT to hear and dispose appeals against any direction issued or decision made or order passed by CCI 7Up2 Meeting. 27Bangkok.

4 EVOLUTION     2004: UPA government elected despite India Shining belief NCMP commits to greater effort towards increasing competition and a competitive environment broad basing development 2005: GoI asks CCI to develop consultation paper on National Competition Policy 2005: CCI establishes Advisory Committee to develop draft National Competition Policy 2006: Planning Commission establishes Working Group on Competition Policy (for 11th Plan 7Up2 Meeting. June 27-28. 2720072007-12) Bangkok. . 2006.How We Got Here .EVOLUTION.

. 2006.Competition in India        the road map Shift from size / structure focus to conduct Shift from discouraging dominance to discouraging abuse of dominance Includes combinations (previously ignored) Includes strong component on competition advocacy Replaces Rule of Law approach with Rule of Reason approach New Competition law to deliver above Decision to locate Competition law within broader Competition Policy that harmonises various policies 7Up2 Meeting. 27Bangkok. June 27-28.

.Thank you! 7Up2 Meeting. 27Bangkok. June 27-28. 2006.

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