February 15, 2019

Competition Law

AUTHORED BY: TUSHAR DATTA

AMITY LAW SCHOOL, NOIDA

Competition Law

“Every successful competitive practice has victims. The more successful a new method of making and distributing a product, the more victims, the deeper the victims’ injury”

(Judge Frank Easterbrook, “The Limits of Antitrust”)

Enlargement of the competition in both internal and external is going to benefit the particulars interprets are capable of taking advantage of the new opportunities. However, individuals not having the necessary resources or proper skills may not be able to do the same. We must embrace some cooperative measures at the level of the national and international both regarding the equitable management in the enlargement of global interdependence of nations.

Competition is an elusive term, and depending on the surrounding or context it’s understanding also differs¹. This might be the main and only reason for not mentioning the definition of the competition in Competiton Act 2002. Competition means variance or scuffle for the supremacy and in the trading world, this means competing for the customers and various businesses in the marketplace². This can be determined as a first stage where uncertainty rises about certain terms ‘competition law’ and competition policy.

A common hypothesis, competition law include all those rules that are deliberate to protect the flow of competition in order to increase the consumer welfare³. The main goal and motive of competition law are to advance the competition further through command over the restrictive business practices. It is been presumed that competitive nature of various films will intensify the whole efficiency of the economy.

As competition laws differ from nation to nation, there are few basic provisions supporting almost all of the competition law regimes⁴. These are categorized Into three parts. First, include of agreements or joint practices between the free and independent competitors that will perform the work to reduce the competition among them. The second category of anti-competitive practices originates from the attainment of a dominant position In a market by one enterprise. The third category of regulated anti-competitive conducts applies to the mergers and acquisitions.⁵

Nonetheless, it is crucial to note that taking on of the competition law has periodically pre dated the appropriation of the discernible policy.

1. Nintey Third report on the Competition Bill, 2001

2. Merger Refrences: Competition Commission Guidelines

3. Competition law policy: Preventing market abuses ( journal)

4. Competition Law rules: Coordination and convergence 4

5. Note of muchlinski; 9

HISTORICAL REVIEW

Restrictive trade practices act and the monopolies became outdated in some established areas as in the shadow of the International economic developments in the relation of the competition laws. Indian government at that time shifted their focal point from restraining the monopolies towards the advancement of the competition. To make that happen government decided to assign a committee which will scrutinize the existing issues and will provide with a classic and modern competition law satisfactory with our circumstances.6

The resolution to come up with the new competition policy was declared by the union finance minister on Feb 1999. This was taken into the consideration by the constitution of a most top level committee composing with the various specialists under the chairmanship of S.V.S. Raghavan to inspect the particular provisions of the MRTP act and to bring up the new improved classic and modern competition law in the context of liberalization of the Indian economy.India embraced a well-organised model of the economic advancement after its independence. Traces what British rule left in India still had a huge impact on the policy substructure of the government and thus the order of the controls cramped the freedom of entry into the industry and guided to the supremacy of the economic power in the hands of the few people and business circle.7

Around 1951 the Hazari committee took the responsibility and conducted the first research in this area. The research was about the licensing procedure of the industry under Industried development Act 19518. October 1960, the month when government decided to appoint Mahalanobis committee on the basis of the distribution of the income and the status of the living. Around 1964 MIC was introduced and announced the conditions of the very high level of the concentration of the economic power in over 80% of the industries at that time.This resulted in the drafting of the new bill regarding the control over the monopolies and restrictive trade practices.9

The new and classical MRTP act drew pressure on the Sherman and Clayton act of the US.10

6. Budget Speech (1999-2000)

7. Evolution of competition policy and law in India –S. Chakravarty

8. The hazari committee highlighted that the industrial policy had been defeated by the big businesses.

9. Evolution of competition policy and law in India – Chakravarthy

10. Chakravarthy MRTP act transformation into competition act

MRTP – THE FORERUNNER

The MRTP act is considered as abide competition law of India. MRTP act came on December 196911. The primary goal sought to be attained by it’s sanction were: 1) Prevention of the application of the economic power to the common impairment; 2) interdiction of the monopolistic trade practices (MRTP’s); 3) interdiction of the restrictive trade practices; 4) interdiction of unfair trade practices (UTP’s).

With the successive developments in the Indian economy, there were used to be nine amendments in the MRTP before it was ultimately rescinded by the Act. Of the above-mentioned amendments of 1984 and 1991, both of them are noteworthy. 1984 Amendment didn’t include any provisions regarding the protection of the consumers against the deceptive or false advertisements. It became obligatory to provide protection to the consumers from the deceptive practices going on within the industries to swindle them12.So, accordingly, the Sachar committee exhorted that a distinct chapter is added to the MRTP Act interpreting the several UTP’s so that the various consumers, traders and others in the surviving market could accessible recognize the various practices which are prohibited. The Raghavan committee concluded that the MRTP Act was finite in its glide and couldn’t attain the full needs of the competition law in the present ruthless environment.The main factor behind the failure of the MRTP Act was the imperfection of the resource.

CREATION OF THE COMMITTEES ON COMPETITION POLICY

The economic environment, which guided to the solidification of the Act was distinguished by the various factors, the vital ones being the duty cast on India by the agreements of the World Trade Organisation and the arrival of the biggest multinational companies resulting to India’s course in liberalizing trade. The government also contended that the MRTP act was approved to accommodate the application of the economic power and wasn’t the ideal technique to manage the problems relating to the conservation and protection of the competition, particularly in this brand new business milieu. This drastically change ended up setting up a top level committee regarding the competition policy and law around 1999.

Expert Group Report Initiated by Ministry Of Commerce (1999)

Before the commencement of the top level committee the ministry of the commerce, had to form a group filled with experts, headed by the S. Chakravarthy to analyze the relation between the trade and the competition policy.

11. Came into force in 1970

12 Ministry of Law, Government of India REPORT BY THE EXPERT COMMITTEE

EXPERT COMMITTEE

The expert group confronted competition affairs qua mergers, acquisitions, amalgamations, foreign investments, subsidies etc. The communal string that was highlighted in the expert group reports was regarding the appointment of the regulatory agency to abolish the anti-competitive practices.

Top level committee on competition policy (1999)

The government of India in October authorized a high-level committee regarding the competition policy and law to counsel a classic and modern competition law for the country keeping in mind the international developments and to recommend the legislative structure which may necessitate a brand new law or amendments regarding to the MRTP Act. The committee represented its competition policy to the government in May 2000. The competition Law was drafted and put it in front of the government in November 2000.

Active Group on Competition Policy (2007)

A working group was formed by the planning commission on Competition policy in the relation of forming the 11-year plan around 200613. Their conditions of the source were as follows:

To endorse, taking the best international practices, classic set of comprehensive policy instruments to successfully produce a society of competition to intensify the competition in the domestic markets.

To endorse a different kind of methods to intensify the part of the competition in the government way of policymaking at the level of the state and the center.

Council on National Competition Policy (2011)

The MCA formed a committee to formulate the national competition policy. The conditions of the committee were as follows:

Formulation of National Competition Policy
Planning for the competition support with the government.
Any matter in relation to the competition problems.

A National Competition Policy was drafted by the above-mentioned committee and ultimately posted on the website, summoning advice from the stakeholders. The result of the work done by the committee, in particular, advice for the changes which are necessary to bring in the act, the recommended substructure of consistency between several government policies and competition policy.

13. Order in 2006 by Shri Vinod Dhall order no. I & M-3(32)/2006

CHANGES IN THE CCI 2007 AMENDMENT

Setting up the roots of competition system in India has turned out to be a real tough task than originally predicted14. The Competition Bill received the assent of the president on Jan 2003. The various provisions initiated the CCI and the other related provisions to the competition advocacy were reported on June 12, 2003.

The power which is bestowed upon it under the act the Central Government accepted the CCI having their headquarters at New Delhi. According to the discussion that took place in the parliament regarding the Bill, the Act has to execute in a particular manner, as follows:

1st Year- Competition advocacy and teaching the officers of the CCI

2nd Year- Provisions in relation to the abuse of dominant position and anti-competitive practices to be enacted.

3rd Year-Provisions in the relation of the combinations.

A brief opinion in the committee claimed that launching the Act at this moment will weaken the Indian negotiations power at WTO i.e their bargaining power. Thus it was contended that there was no hurry for getting the permission for passing the bill and that the MRTP Act could be satisfyingly amended to meet the asked requirements of the current circumstances or time.

FUNCTIONS OF THE CCI

Sec 18 provides the ideals functions of the CCI like:

To abolish the practices which will lead to the adverse effect on the Competition.
To upgrade and uphold competition.
Protection of the interests of the various consumers.
Surety of the freedom of the trade.

The major purpose of the CCI is to play a mobile role in the advancement of the Competition in the various markets of the India. Regardless of this vast instruction, the focus of the CCI remains in the particular areas under the act:

BARRING THE ANTI-COMPETITIVE AGREEMENTS

Section 3 of the act expresses that agreements entered into by any enterprise or person in respect of any goods or services which may result in the appreciable adverse effect on competition within India shall be declared void.

14. Anurag K Agarwal; Competition Law in India

1. Cartels and Horizontal Agreements

Agreements between the competitors are considered as horizontal agreements. In other words, two or more enterprises entered into an agreement that is on the similar production chain and in the same market.

Cartel by the Act is been defined including producers or association of producers, sellers who by agreement amongst themselves give an attempt to control the trade prices of the goods and services.

2. Vertical Agreements

Agreements made by enterprises that both are in a different level of the chain of production and not working in the same market. Overall the vertical agreements are regarded more clement than the horizontal agreements as most likely the horizontal agreements tend to decrease the competition as compared to an agreement between the buyers and the seller relation.

Though it will be important to note that the following Act pursued the US law on the vertical agreements matter.15

3. CCI orders

CCI in spite of receiving instructions from the provisions of the Act on various events, had to shut down the various cases under sec 26(2) on prime facie level and several after acquiring the scrutinize information because of the complexion information and the evidence available.

BARRING THE ABUSE OF DOMINANT POSITION

It is a well defined and acknowledged principle of present-day competition law that maintaining a dominant position or a monopoly is generally not contended as an illegal or abusive. Various provisions supervising the abuse of dominant position indicates the real improvement from MRTP Act to Competition Law. The above mentioned Act directs that none of the enterprise or groups of an enterprise shall not take advantage of their position, in other words, shall not abuse the dominant position and furnish with the conditions in which the behavior of the dominant firm would be considered as a violation of sec-4 of the Act.

MANAGING COMBINATIONS

The powers of the CCI to manage the combinations perfectly has been a talking point in the various businesses and corporate law since the establishment of the act.

15. The MRTP Act authorized for the registrable agreements in relation to the restrictive trade practices under sec-33, and while deciding the cases MRTP act dependend upon the US.

PROMOTION OF THE COMPETITION ADVOCACY

The Competition Advocacy consists of the two major factors. The first one indicates the duty or role of the competition agencies as an adviser to the government concerning the principles that incriminate the competition policy. The second is the supporter for the growth of public understanding and acquiring of the competition principles.16

One of the distinctive attributes of this act is that it symmetrically provides for the advancement of the competition advocacy. Competition advocacy is been acknowledged as a necessary asset in the advancement of the competition culture in our country17 and it is has been admitted that there consist a direct relation between the competition advocacy and implementation of the competition.

CONSULTIVE ROLES

Competition authorities all over the world also play a vital role as consultor on competition related problems to the government18. The act provide a procedure wherein while constructing a policy related to the competition, the central and the state government may make a testimonial to the CCI regarding the feasible impact of such policy on the competition. The CCI though shall give their viewpoint within 60 days of the testimonial. The viewpoint though won’t be irrevocable upon the referee. No power of suo moto to the CCI is given to analyzing any economic policy which is handed over by the working group.

CRITICAL ISSUES

DEVELOPMENTAL PROBLEMS

Every new born agency which comes extant has and always suffers developmental problems in the starting days. The CCI was also being through the same situation due to the changes in the organisational structure and less number of people in the staff.

Incomplete cases from MRTP

Resultant to the discussion of the MRTPC the cases other than the UPTs which were undecided in the front of DGIR were given to the CCI to deal with it in whichever manner they feel like to.

16. Competition Law and policy in Brazil ( a peer reveiew)

17. Competition Act 2002 Sec- 49(3)

18. How does your Competition Agency Measures up – William E Kovacic

Operational Challenges

The CCI is authorized to develop its own system to dismiss its functions in application to the council of the principal of natural justice and other various provisions of the Act and rules regulations produced by the Central Government19. Accordingly, the CCI has regulated certain management or regulation to supervise its own procedures.

PROTECTION OF THE INTEREST OF THE CONSUMERS

The planning commission intreprets that advancement of the consumer welfare is the collective goal of the consumer protection and competition policy. There is strong collectiveness between the competition policy and law on the one side and policy for consumer protection and law on the other.

KEEPING UP WITH THE PACE OF DEVELOPING COMPETITION LAW JURISPRUDENCE

As this Act was new to India so it took time to settle in the environment. Though the decision in the SAIL20 by the supreme court took care half of the questions, uncertainty still remains regarding few questions in the field of law.

It is fascinating that the CCI is high dominating body taking the matters under the act and then eventually to the Supreme Court.

CONCLUSION

The advantage that is been seen through a competition law can only be achieved with operative and strong imposition. Weak imposition of the competition law can be as notable a hindrance to consumer interest to as the complete non-appearance of such a law21.

In conclusion, over the last decade, a notable path was covered by the Indian competition policy. Though this is just, however, the start is, the rest is still to come to reach out for the goals.

19. Competition Act 2002 sec-36

20. CCI V SAIL

21. The Need and Rationale for and the objectives of the Competition Policy- S. Chakarvarthy