7319546 Competetion Act

8/18/2019 7319546 Competetion Act

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NEED FOR

COMPETITION ACT

IN GLOBAL ERA

PGP (O6-O8)/FW

SECTION – A-2

PRESENTED BY

RICHA AWASTHI -42 ROHIT SHRIDHAR - 44

SAURABH LODARIA - 46 SHANKAR PARMESWARAN - 48

SHILPA LULLA -! SHRUTI KORLIMARLA -2

"IKRAM M -4 "ARUN BA#A# -6

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MUNIRA #ARWALA -8 HITESH PATEL -6!

ACKNOWLEDGEMENT

This is with great pleasure that we take this

opportunity to work on our project of NEED FOR

COMPETITION ACT IN GLOBAL ERA, which has

not only allowed us to know the basic

fundamentals but has also laid down for us a

platform to understand the application end of the

subject(topic). Also, we would like to thank our

mentor Prof. Anant Amdekar who has been our

inspiration throughout for his support and regular

guidance which has also beneted us to hae a

thorough understanding of law and its implications.

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TABLE OF CONTENTS

SR$ NO$ PARTICULARS PAGE NO$

1. Prefatory Items 1-3

1.1 Topic and team members 11.2 Acknowledgement 2

1.3 Table of Contents 3

2. Introduction

3. !"TP ACT #

. $eed for Competition Act 1%

&. 'imitation of !"TP Act 12

(. Competition act ) *.+ conte,t 1&

#. Competition act ) +out Africa conte,t 2%

. /b0ecties of Competition Act 21

. Composition of Commission 3%

1%. Amendments 33

11. Adantages of Competition Act 3

12. +ortcomings of Competition Act 3&

13. Case +tudy ) 4T +A5A"A 3(

1. Case +tudy ) '6T 7"A+I! 3#

1&. Case +tudy ) $4T+CAP4 6!IC"/+/8T

%

1(. Comparison 1

1#. Critical Comments 21. Conclusion &

1. 9ibliograpy

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GLOBAL COMPETITION AND COMPETITION ACT

4conomic reforms in India were supposed to user in a market-oriented economy in contrast to

te regime of licenses and controls tat caracteri:ed te economy in te past. Te fulcrum of amarket economy is competition. 5oweer; te ability of competition and te market economy to

enance consumer welfare and to allocate resources optimally inges on te proper functioning

of markets. 9ot in teory and practice te ill effects of improperly functioning markets ae

been igligted.


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new trade enironment sweeping te globe. Te business sectors of most industriali:ed countries

ae tus internationali:ed teir actiities; resulting in an intricate web of linked actiities

around te world.

Today@s knowledge-based economy; altoug still in its infancy; is proing to be fast-paced and

spurred by product; tecnology and organi:ational innoation. Anecdotal eidence is all around

us> product lifecycles are becoming sorter and sorter all te time new; largely computer-

assisted tecnologies resulting from te digital microprocessing reolution are proliferating in all

aspects of business from te factory giants to te local corner store and lean production

tecniBues; wic promote speciali:ation in core competency actiities wile outsourcing from

strategic allies; are reorgani:ing te marketplace.

Te goernment policy responses to tese deelopments; in te form of trade liberali:ation

efforts and te deregulation and priati:ation of utilities; ae made te Canadian economy more

competitie.

For example, the Canada-United States Free Trade Agreement (FTA) has played a significant

role in raising the productivity and competitiveness of the Canadian manufacturing sector over

the past decade y forcing industry to rationali!e plants and operations and to exploit economies

of scale further" #nnovations in telecommunications and energy technologies and systems haveeliminated any general notion of $natural monopoly,$ and resulted in deregulation and open

competition %here once only government or regulated private monopolies dominated the

commercial landscape"

Tese new business models e,ert new pressures on te business sector and are beginning to

reeal new stresses and fracture points in te competition policy framework. 8or instance;

greater cross-border trade may also mean more international anticompetitie conduct. As a result;

competition autorities must respond by furter cooperating wit one anoter.

A knowledge-based; innoation-drien economy is a dynamic economy; one tat is caracteri:ed

by numerous new products; tecnologies and production processes; and een new industries.

9arriers to entry into te more mature industries can be knocked down and competition can

sometimes flouris were it as neer been seen before. !arket dominance also appears to be

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more sort-lied tan in any preious time. 5oweer; across all industries tecnological cange

is apparently driing down te costs of production wit te result tat te typical firm@s cost

structure more freBuently e,ibits substantial increasing returns to scale. Allegations of predatory

beaiour are likely to mount in tis new economic enironment and te related proisions of

te Competition Act will come under increased pressure and scrutiny.

Innoatie products will often be accompanied by an intellectual property rigt and tere is an

interface tere tat must be looked at more closely>

Te policy and enforcement interfaces between intellectual property and competition policies are

comple, oweer; clear borderlines must be drawn between competitie and anticompetitie

conduct. Tese economic deelopments also pose new callenges to te competition autority.

C&*..&' 0'1 C&*..&' P&,% I'.*3,0

Te interplay between competition; on te one and; and competition policy and law; on te

oter and; is interesting. itnesses made it clear from te outset tat> ?Competition is a means

to an end. Te reason we ae competition is to delier te best products at te best prices for te

people wo buy tem. As a result; ?te best protection for consumers is a free and open market;

wit as few barriers to new competitors coming in as possible; weter tey@re regulatory;

ownersip; trade; wateer types of barriers?. 5oweer; unfettered competition alone is not

enoug. A complementary competition policy is reBuired in circumstances were; owing to

tecnological or regulatory barriers; competition will not automatically and immediately flouris.

ile competition and competition policy are complementary; tey are not perfect substitutes

wen regulatory barriers interene.

5oweer; competition policy can be at best partially correctie. In tis case; ?competition law

alone is not sufficient to ensure te itality of te competitie process. D /ccasionally

competition law can offset some of te negatie effects of tese types of restrictions. !ore

freBuently; oweer; it cannot. Indeed; trying to twist competition law so as to accommodate an

anticompetitie regulatory enironment is likely to compromise and een corrupt competition

law. 9ad regulation begets bad competition law.

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MONOPOLOSTIC AND RESTRICTI"E TRADE PRACTICE (MRTP)

Te !onopolies and "estrictie Practices Act; 1(; wic; loosely speaking; was te first

competition law of te country. Te !"TP Act represents an era of aggressie goernment

interentionist policy reflected unambiguously in controls; licensing; permits and promotion of

public sector. Te dawn of liberali:ation in 11; following a financial crisis; rendered some

laws inconsistent wit new economic policies. /ne of tem was !"TP Act.

!"TP Act; wic came into force on 1 une 1#%; was te first substantie legislation aimed at

regulating free and unfettered trade. Te main ob0ectie of enacting te !"TP Act was to ensure

tat te economic system does not result in te concentration of economic power to te common

detriment; for te control of monopolies and for te proibition of monopolistic and restrictie

trade practices.

Te !"TP Act regulated tree types of trade practices; wic amper competition in India or are

pre0udicial to public interest; namely

1E !onopolistic trade practices

2E "estrictie trade practices

3E *nfair trade practices

1E Monopolistic Trade Practices (MTPs)

!TP is defined under section 2FiE of !"TP Act as a trade practice wic as or is likely toae te effect of>

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!aintaining te prices of goods or carges for te serices at an unreasonable leel by

limiting; reducing or oterwise controlling te production; supply or distribution of goods

or te supply of any serices or in any oter manner

*nreasonably preenting or lessening competition in te production; supply or

distribution of any goods or in te supply of any serices

'imiting tecnical deelopment or capital inestment to te common detriment or

allowing te Buality of any goods produced; supplied or distributed; or any serices

rendered; in India to deteriorate

Increasing unreasonably>

- te cost of production of any goods or

- carges for te proision; or maintenance of any serices

Increasing unreasonably>

- te prices at wic goods are; or may be; sold or re-sold; or te carges at wic te

serices are; or may be; proided or

- te profits wic are; or may be; deried by te production; supply or

distributionFincluding te sale or purcaseE of any goods or in te proision or maintenance of

any goods or by te proision of any serices>

Preenting or lessening competition in te production; supply or distribution of any

goods or in te proision or maintenance of any serices by te adoption of unfair

metods or unfair or deceptie practices.

4,ample for !TPs>

In te *+ !icrosoft was using its monopoly in operating system to secure monopoly in te

internet e,plorer market. !icrosoft is supplying its internet browser wit indows . Tis

destroyed te market of $etscape 9rowser. An Antitrust case was launced against !icrosoft

wic it lost and te court as ordered diision of te company in one dealing in operating

systems and te oter in applications.


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2E Restrictive Trade Practices (RTPs)

A restrictie trade practice is generally one wic as te effect of preenting; distorting or

restricting competition. In particular; a practice wic tends to obstruct te flow of capital or

resources into te stream of production is an "TP. 'ikewise; manipulation of prices; conditions

of deliery or flow of supply in te market wic may ae te effect of imposing on te

consumer un0ustified costs or restrictions are regarded as restrictie trade practices. 9ut

competition is not always a necessary toucstone on wic a trade practice is 0udged if it is a

"TP. Certain common types of restrictie trade practices enumerated in te Act wic do not

ae an element of competition and are deemed legally to be pre0udicial to public interest.

4,amples of "TP are>

aE


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NEED OF COMPETITION ACT IN INDIA

Te globali:ed and liberali:ed Indian economy is witnessing cut-troat competition. To

proide institutional support to ealty and fair competition; tere is a reBuirement of

better regulatory and ad0udicatory mecanism. To tis effect; India as enacted te new

competition law wic sall replace te earlier law. Tis is a sift from curbing monopolies to

encouraging competition. Te design of te new law cares out a ery important role for

te Competition Commission of India FCCIE. Te task as been diided in tree pases. Tis

article sets out to e,plain te intricate relationsip of competition law and 0udiciary in India by

e,amining te e,perience CCI ad so far. Te article ten goes on to e,amine te role of

lawyers. Te article ten considers te time frame for te implementation of te tree

pases and proides realistic suggestions to ae a successful setting of competition regimein India.

I'.3&1%.&'

In te pursuit of globali:ation; India as responded by opening up its economy; remoing

controls and resorting to liberali:ation. Te natural corollary of tis is tat te Indian

market sould be geared to face competition from witin te country; and outside. To

take care of te needs of te trading; industry and business associations; te Central

7oernment decided to enact a law on competition. 8inance !inister; Cidambaram

F2%%3E igligted te need to ae a strong legal system and said HA world class legal

system is absolutely essential to support an economy tat aims to be world class. India needs to

take a ard look at its commercial laws and te system of dispensing 0ustice in commercial

matters. it tis :eal te 7oernment went aead and enacted te Competition Act; 2%%2.

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T5* E03,*3 ,0 0'1 .5* '**1 7&3 %50'*

It would be interesting to turn te pages of istory and see ow te earlier law; wic is

still in force; was enacted. In 1(; wen te Indian democracy was in its nascent stage J

barely 1# years old J te 7oernment of India appointed te !onopolies InBuiry Commission

to inBuire into te e,tent and effect of concentration of economic power in priate ands

and te prealence of monopolistic and restrictie trade practices in important sectors of

economic actiity oter tan agriculture. Te Commission submitted its report alongwit

Te !onopolies and "estrictie Trade Practices 9ill; 1(&; wic was later passed by bot

te 5ouses of Parliament and receied te assent of te President on


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An Act to proide; keeping in iew of te economic deelopment of te country; for te

establisment of a Commission to preent practices aing aderse effect on competition; to

promote and sustain competition in markets; to protect te interests of consumers and to ensure

freedom of trade carried on by oter participants in markets; in India; and for matters connected

terewit or incidental tereto. It e,tends to te wole of India e,cept te +tate of ammu and

=asmir

THE FRAMEWORK OF THE COMPETITION BILL IN INDIA:

Te preamble of te Competition bill states tat it is a law to foster and maintain competition in

te Indian !arket to sere consumer interest wile protecting te freedom of economic action of

arious market participants and to preent practices wic affect competition; and to establis a

commission terefore.

Tis law replaces te age-old !"TP act. Te !"TP act ad two parts; one; te restriction of

monopoly; and te oter te curtailing of restrictie trade practices. ile te restriction of

monopoly implied tat no firm could e,pand beyond a certain limit of inestments; and artificial

efforts at raising prices or restricting supply in a market in suc a way so as to get a price aboe

te one tat market would be prepared to pay under normal circumstances.

Tus te empasis of competition bill is more on consumer freedom and freedom of economic

actiities rater tan control and elimination of monopolies te different capters deal wit te

lengt and breadt of tis law.

L.0.&' &7 MRTP A%.- ;


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In 1%; te goernment; wit an Industrial Policy statement gae many concessions to

companies falling under !"TP Act- an important concession was raising limit for !"TP

companies from "s 2% crore to "s 1%% crore at one stroke

In :

Te policy of te goernment rigt since Independence; as been to pursue industrial growt

witout concentration of industries in te ands of a few. 5oweer; te legislation to control

concentration of industries was enacted in 1(; nearly 2% years after launcing planned

economic deelopment. itin 3- years; te entusiasm of goernment diluted as can be seen

from te rela,ations granted for e,pansion and growt of large companiesGbusiness ouses on a

ariety of grounds suc as priority industries; location in backward areas; e,ports etc. In te

1#%s especially; goernment as seen te conflict between ob0ecties of rapid growt and

preention of concentration of economic power in priate ands; and goernment as openly

gien priority to growt ob0ectie.

) F0,*1 .& %&+*3 0,, A*%.:

it liberali:ation; came T/ agreements; relation to 8oreign Inestment; Intellectual Property

"igts; subsidies; anti-dumping measures. !"TP Act does not coer tese aspects. 5ence tere

was a need of a new law coering all tese aspects.

4) L0% &7 A03*'* 0?&. .5* A%.:

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Te Proisions relating to unfair trade practices are coered by consumer protection Act; 1(;

wic is igly publici:ed. 5ence people in general; are more aware of it tan te !"TP

commission wic is situated only in $ew


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country; eiter troug direct sales or by way of e,ports. Te estimated cost imposed by te

cartel; on India; was about *+M2&mn; oer te 1%s. To find out more about tis; C*T+

decided to start a case. As a first step in tis direction; all te releant information on te cases;

accumulated by seeral autorities around te world; was collected from te internet and ten

documented. Tis information included details of te company; details of te inestigation; te

0udgement and te balance seets of some of tese companies during te releant period. 'etters

were written to te C4/s of tese companies in India asking tem to gie a written undertaking

to te effect tat tey did not engage in any suc anti competitie practice in India. "esponses

were receied from 5offman 'a "oce and 9A+8 India 'td.;stating tat tey ae not engaged

in suc practices but no response came from "one Poulenc 'td; wic incidentally; was te

approer in te *+ inestigation and ad escaped punisment. 9eing a consumer organisation;

C*T+ ad limited ability and ence it passed te collected information to te


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In *+ competition law is e,pressed in te form of antitrust law. Te istoric goal of te antitrust

laws in te *.+ is to protect economic freedom and opportunity by promoting competition in te

marketplace. Competition in a free market benefits American consumers troug lower prices;

better Buality and greater coice. Competition proides businesses te opportunity to compete on

price and Buality; in an open market and on a leel playing field; unampered by anticompetitie

restraints. Competition also tests and ardens American companies at ome; te better to succeed

abroad.

ANTITRUST ENFORCEMENT AND THE CONSUMER IN THE U$S

Te first set of competition FantitrustE laws were enacted among te western industriali:ed

countries towards te end of te last century. Te pioneers were Canada F1E and te *nited

+tates F1%E. It is interesting to obsere tat a undred years later; seeral deeloping and

transition market economies are embracing competition laws. +ince 1% alone; at least 3% suc

countries ae adopted new laws; or ae substantially reised teir e,isting laws. Tese include

irtually all of te former communist-centrally planned economies in Central and 4astern

4urope; and te 8ormer +oiet *nion. +eeral oter countries are in te process of following

suit.

Antitrust laws protect competition. 8ree and open competition benefits consumers by ensuring

lower prices and new and better products. In a freely competitie market; eac competing

business generally will try to attract consumers by cutting its prices and increasing te Buality of

its products or serices. Competition and te profit opportunities it brings also stimulate

businesses to find new; innoatie and more efficient metods of production.

Consumer@s benefit from competition troug lower prices and better products and serices.

Companies tat fail to understand or react to consumer needs may soon find temseles losing

out in te competitie battle.

en competitors agree to fi, prices; rig bids or allocate Fdiide upE customers; consumers lose

te benefits of competition. Te prices tat result wen competitors agree in tese ways are

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artificially ig suc prices do not accurately reflect cost and terefore distort te allocation of

societyNs resources. Te result is a loss not only to *.+. consumers and ta,payers; but also to te

*.+. economy.

en te competitie system is operating effectiely; tere is no need for goernment intrusion.

Te law recogni:es tat certain arrangements between firms -- suc as competitors cooperating

to perform 0oint researc and deelopment pro0ects -- may benefit consumers by allowing te

firms tat ae reaced te agreement to compete more effectiely against oter firms. Te law

does not condemn all agreements between companies; only tose tat treaten to raise prices to

consumers or to deprie tem of new and better products.

Tus; according to te Antitrust law wen competing firms get togeter to fi, prices; to rig bids;

to diide business between temseles or to make oter anticompetitie arrangements tat

proide no benefits to consumers; te goernment will act promptly to protect te interests of

American consumers.

Te *.+ goernment takes a number of actions to promote a competitie enironment>

;$B3*0' &'&&,*> "elying on te +erman Act; te goernment may sue to break up a

corporation tat as attained a monopoly or near monopoly in an industry. In 111; te

goernment broke up +tandard /il of $ew ersey Fwic controlled oer % percent of te

refining and sales of petroleum productsE into 3% independent corporations. In 12; AT 6 T;

after being sued by te goernment agreed to be broken into 23 independent local telepone

companies. Tese operating companies became seen regional pone companies offering local

telepone serice. Te long-distance serice; estern 4lectric and 9ell 'aboratories were

retained in te corporation tat kept te name AT 6 T. /ter suits by te goernment ae been

less successful. Te courts refused to breakup *.+. +teel in 12%. Te goernment also was

unsuccessful in breaking up I9! in 12.

2$ P3*+*'.' &'&&,* 73& 03'> Te goernment seeks to keep corporations wit

economic power from engaging in practices tat are designed to minimi:e or eliminate

competition. +uc practices include bundling and tying arrangements; price discrimination; and

price fi,ing. In te 1%s; a number of legal suits against suc practices ae been brougt

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oweer; winning suc cases in court is difficult. $intendo of America; te dominant ideo-game

maker; successfully defended an antitrust action brougt by Atari Corporation. !icrosoft agreed

to sare information about its indows operating system wit software deelopers and to stop

reBuiring PC manufacturers to pay license fees for indows on all units sipped Fweter or not

indows was installedE. Te 1 suits brougt by te ustice


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into it Fmaker of Ouicken financial softwareE; on te basis of economic eidence tat reduced

competition would result.

4$P3*+*'.' %&,,&'> 8irms need not be monopolies to e,ercise monopoly power. 8irms can

form cartels and collaborate to reduce output and increase price. +uc cartels ae te same

effect on social welfare as do monopolies; and suc beaior is illegal. Price fi,ing Fin wic

corporations 0ointly decide wat price to setE also is illegal. In 12#; te court found tat te

maker of toilets as acted illegally wen tey met to fi, prices and limit Buantities. !ore difficult

is te problem of price fi,ing wen tere is no e,plicit agreement to do so. 4en absent an

agreement; te court may find ?conscious parallelism;? tat is; a situation in wic all producers

act in te same way at te same time wile being aware tat oter producers are doing likewise.

In te 1%s; te goernment successfully callenged te practice of Iy 'eague uniersities

meeting and e,canging information on planned tuition increases; faculty salaries; and financial

aid polices. In 1(; te giant agribusiness firm Arcer

was born in opposition to te great wae of mergers and consolidations at te close of te

nineteent century. Te original pilosopy of te trustbusters was tat market dominance and

monopoly was bad in and of temseles. *ntil te 1(%s; te goernment preented te merger

of two 'os Angel@s grocery cains tat sared 0ust percent of te local marketE. 5oweer; by

te 1#%s; and 1%s; te Cicago +cool approac ad assumed dominance in te antitrust

arena. According to tis scool; te forces of free market competition are far more effectie at

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limiting monopolies tan goernment regulators. Absent proibitie barriers to entry; a firm@s

market power would only be temporary. 5ig profits would attract new entrants attenuating te

monopolist@s power. 8ollowing tis approac; te "eagan and 9us administrations used teir

antitrust powers sparingly

COMPETITION POLICY – SOUTH AFRICAN CONTET

In certain cases; markets are not usually competitie> tey are often dominated by big suppliers

wo use teir seer market power to determine te forms of te market tis as aderse and

detrimental conseBuences on te consumers. !arket can be defined as eiter a product market or

a geograpic market. !arket power can be abused in te product market as well as te

geograpic market. 9ecause of imperfect competition in te market; national goernments

around te world interene in te market economy by drafting and implementing competition

policy. +ome of te reasons and ob0ecties for goernment interentions are>

1. To respond to market failures.

2. To limit abuse of market power

3. To presere and stimulates te operations of competitie market

. In certain situation; to limit foreign participation of foreign capital in order to create and

cultiate domestic industry

Tere are two types of goernment interention. Te first type is beaioral and te second;

structural>

1. .ehavioral intervention is wen te goernment troug a public autority attempts to

transform te beaior of one firm or group of firms troug effectie regulation of teir

actiities. 4,amples of tis are interconnection deals; price regulation or te proibition

of collusie practices.

2. Structural intervention focuses on te market structure of te industry. 4,amples are te

interention to preent a merger of two ma0or telecom companies a network operator

may be reBuired to separate its operations into distinct corporate entities.

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Two of te ways to do tis is to set up an economy wide competition regulator andGor create an

industry specific regulator tat implements policies and manages competition in a particular

sector. An economy wide competition autority uses competition law to regulate all sectors in an

economy or country. A sector-specific regulator regulates one sector of te economy. ile some

countries suc as $ew ealand as long ad economy-wide competition law wit no sector

specific regulator; oters like +out Africa as te two structures> a telecommunications

regulator and a competition commission.

OB#ECTI"ES OF THE COMPETITION ACT

/b0ects to be acieed 6 +alient 8eatures of te $ew Competition "egime>

Te Competition Act as been designed as an omnibus code to deal wit matters relating to te

e,istence and regulation of competition and monopolies. Its ob0ects are lofty; and include te

promotion and sustenance of competition in markets;

protection of consumer interests and ensuring freedom of trade of oter participants in te

market; all against te backdrop of te economic deelopment of te country. 5oweer; te

Competition Act is surprisingly; compact; composed of only (( sections. Te legislation is

procedure-intensie; and is structured in an uncomplicated manner. Te raison detre of te

Competition Act is to create an enironment conducie to competition. Te arious /b0ecties of

te Act are as follows

I. To ceck anti-competitie practices

II. To proibit abuse of dominance

III. "egulation of combinations.

IQ. To proide for te establisment of Competition Commission of India FCCIE; a Buasi-0udicial

body to perform below mentioned duties>

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• Preent practices aing aderse impact on competition

• Promote and sustain competition in te market

•

Protect consumer interests at large

• 4nsure freedom of trade carried on by oter participants in te market

• 'ook into matters connected terewit or incidental tereto.

IR A$TI-C/!P4TITIQ4 A7"44!4$T+ >

A scan of te competition laws in te world will sow tat tey make a distinction between

ori:ontal and ertical agreements between firms. Te former; namely te ori:ontal agreements

are tose among competitors and te latter; namely te ertical agreements are tose relating to

an actual or potential relationsip of purcasing or selling to eac oter. . !ost competition laws

iew ertical agreements generally more leniently tan ori:ontal agreements as ori:ontal

agreements are more likely to reduce competition tan agreements between firms in a purcaser -

seller relationsip. 8or e,ample an agreement made between enterprises dealing in te same

product or products. +uc ori:ontal agreements; lead to unreasonable restrictions of competition

and are terefore presumed to ae an appreciable aderse effect on competition.

Te following diagram elps in understanding te sceme proided under section 3 of te

Competition Act; 2%%2.

+ection 3 of te Act; states tat>

F1E $o enterprise or association of enterprises or person or association of persons sall

enter into any agreement in respect of production; supply; distribution; storage; acBuisition or

control of goods or proision of serices; wic causes or is likely to cause anS appreciable

aderse effect on competition witin India.S

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F2E Any agreement entered into in contraention of te proisions sall be oid.

F3E Any agreement entered into between enterprises or associations of enterprises or persons of

associations of persons or between any person and enterprise or practice carried on; or decision

taken by; any association of enterprises or association of persons; including cartels; engaged in

Identical or +imilar Trade of goods or proision of serices; wicH

FaE directly or indirectly determines purcase or sale prices

FbE limits or controls production; supply; markets; tecnical deelopment; inestment of

proision of serices

FcE sares te market or source of production or proision of serices by way of allocation

of geograpical area of market; or type of goods or serices; or number of customers in te

market or any oter similar way

dE directly or indirectly results in bid rigging or collusie bidding; sall be presumed to ae

an appreciable aderse effect on competition.

9id "igging or Collusie 9idding>

It is an illegal agreement between two or more competitors. It is a form of price fi,ing and

market allocation and inoles an agreement in wic one party of a group of bidders will be

designated to win te bid.

4.g. 7oernment construction contracts.

C03.*,0.&' 0'1 503' &7 .*33.&3*:

Te aderse effects of cartels or collusie agreements ary in degree depending on te nature of

te companies inoled. It is te ard core cartels tat are te cause of immediate concern for te

goernment. Agreements for saring of markets or sources of productionGsupply by territory;

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type; si:e of customer or any oter way are also offensie. It includes an association of

producers; distributors; sellers; traders; or serices proiders wo; by agreement amongst

temseles; limit; control or attempt to control te production; distribution; sale of price of; or;

trade in goods or proision of serices.

Proided tat noting contained in tis sub-section sall apply to any agreement entered into by

way of 0oint entures if suc agreement increases efficiency in production; supply; distribution;

storage; acBuisition or control of goods or proision of serices.

4g > Case on


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FcE Te Trade and !ercandise !arks Act; 1& F3 of 1&E or te Trade !arks

Act; 1

FdE Te 7eograpical Indications of 7oods F"egistration and ProtectionE Act; 1

FeE Te


26/50

if an enterprise.H-

FaE


27/50

suc transactions inoling entities e,isting andGor establised oerseas. 5erein again lies te

key to understanding te Competition Act. Te intent of te legislation is not to preent te

e,istence of a monopoly across te board. Tere is a realisation in policy-making circles tat in

certain industries; te nature of teir operations and economies of scale indeed dictate te

creation of a monopoly in order to be able to operate and remain iable and profitable. Tis is in

significant contrast to te pilosopy; wic propelled te operation and application of te

!"TP Act; te trigger for wic was te e,istence or impending creation of a monopoly

situation in a sector of industry

Te Act mandates tat $o person or enterprise sall enter into a combination wic causes or is

likely to cause an appreciable aderse effect on competition witin te releant market in India

and suc a combination sall be oid.. Te Act as made te pre-notification of combinationsoluntary for te parties concerned. 5oweer; if te parties to te combination coose not to

notify te CCI; as it is not mandatory to notify; tey run te risk of a post-combination action by

te CCI; if it is discoered subseBuently; tat te combination as an appreciable aderse effect

on competition. Tere is a rider tat te CCI sall not initiate an inBuiry into a combination after

te e,piry of one year from te date on wic te combination as taken effect. Combination tat

e,ceeds te tresold limits specified in te Act in terms of assets or turnoer; wic causes or is

likely to cause an appreciable aderse impact on competition witin te releant market in India;

can be scrutini:ed by te Commission

AcBuisition; merger or amalgamation would become KCombination@ wen>

$ature of Combination 7roup +tatus Criterion Qalue

FaE AcBuisition by

enterprises

$o 7roup Assets

In India orld

oer

"s. 1;%%% Cr.

*+M&%% million

FbEAcBuisition by

indiiduals

Turn oer In India orld

oer

"s. 3;%%% Cr.

*+M1&%% million

U!ergersG amalgamation 7roup Assets In India orld "s. ;%%% Cr.

2#


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/er *+ M 2 9illion

Turn oer In India orld

oer

"s. 12;%%% Cr.

*+M ( 9illion

T53*5&,1 ,. tat would inite te scrutiny are specified below>

8or acBuisition>

• Combined assets of te firm more tan "s 3;%%% crore Ftese limits are *+ M &%% millions

in case one of te firms is situated outside IndiaE.

• Te limits are more tan "s ;%%% crore or 12;%%% crore and *+ M 2 billion and ( billion

in case acBuirer is a group in India or outside India respectiely.

8or mergers>

• Assets of te mergedGamalgamated entity more tan "s 1;%%% crore or turnoer more tan

"s 3;%%% crore Ftese limits are *+ M &%% millions and 1;&%% millions in case one of te

firms is situated outside IndiaE.

• Tese limits are more tan "s ;%%% crore or "s 12;%%% crore and *+ M 2 billions and (

billions in case mergedGamalgamated entity belongs to a group in India or outside India

respectiely.

8urter; suc combination; wic causes or is likely to cause ?appreciable aderse impact? on

competition; would be treated as oid.

A .* is proided under te Act werein at te option of te person or enterprise proposing to

enter into a combination may gie '&.%* .& .5* C&*..&' C&&' &7 I'10 of suc

intention proiding details of te combination. Te Commission after due deliberation; would

gie its opinion on te proposed combination to approac te Commission for tis purpose.

5oweer; public financial institutions; foreign institutional inestors; banks or enture capital

funds wic are contemplating sare subscription financing or acBuisition pursuant to any

2


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specific stipulation in a loan agreement or inestor agreement are not reBuired to approac te

CCI for tis purpose.

C&*..&' A1+&%0% :

Peraps one of te most crucial components of te Act is competition adocacy$ Competition

adocacy creates a culture of competition.

Intention is to elp eole competition law troug reiew of policy; promotion of competition

adocacy; creating awareness and imparting training about competition issues. 8or tis purpose

In line wit te 5ig 'eel CommitteeNs recommendation; te Act e,tends te mandate of te

Competition Commission of India beyond merely enforcing te law F5ig 'eel Committee;

2%%%E.

Te "egulatory Autority under te Act; namely; Competition Commission of India FCCIE; is

enabled to participate in te formulation of te countryNs economic policies and to participate in

te reiewing of laws related to competition at te instance of te Central 7oernment. Te

Central 7oernment can make a reference to te CCI for its opinion on te possible effect of a

policy under formulation or of an e,isting law related to competition. Te Commission will

terefore be assuming te role of competition adocate; acting pro-actiely to bring about

7oernment policies tat lower barriers to entry; tat promote deregulation and trade

liberalisation and tat promote competition in te market place.

I" COMPETITION COMMI""ION OF INDIA#

Te ape, body under te Competition Act wic as been ested wit te responsibility of

eliminating practices aing an aderse effect on competition; promoting and sustaining

competition; protecting te interest of te consumers; and ensuring freedom of trade carried on

by oter participants in India; is known as te Competition Commission of India FCCIE --- te

successor to te !"TP Commission. CCI; entrusted wit eliminating proibited practices; is a

body corporate and independent entity possessing a common seal wit te power to enter into

contracts and to sue in its name.Te CCI is not merely a law enforcement agency; but would be

actiely inoled in te formulation of te country@s economic policies; adise te goernment

2


30/50

on competition policy; take suitable measures for te promotion of competition adocacy and

create awareness and imparting training about competition issues.

C&&.&' &7 C&&'

• Te Commission sall consist of a Cairperson and not less tan two and not more tan ten

oter !embers to be appointed by te Central 7oernment> Proided tat te Central

7oernment sall appoint te Cairperson and a !ember during te first year of te

establisment of te Commission.

• Te Cairperson and eery oter !ember sall be a person of ability; integrity and standing

and wo; as been; or is Bualified to be; a 0udge of a 5ig Court or; as special knowledge

of; and professional e,perience of not less tan fifteen years in international trade;

economics; business; commerce; law; finance; accountancy; management; industry; public

affairs; administration or in any oter matter wic; in te opinion of te Central

7oernment; may be useful to te Commission.

• Te Cairperson and oter !embers sall be wole-time !embers.

#31%.&'

An enBuiry or complaint could be initiated or filed before te 9enc of CCI if witin te local

limits of its 0urisdiction te respondentVs actually or oluntarily resides; carries on business or

works for personal gain; or were te cause of action wolly or in part arises.

CCI 50 ?**' +*.*1 .5 .5* &*3 &7 0 %+, %&3. '%,1' .5&* 3&+1*1 '1*3

*%.&' 24! 0'1 24!A &7 .5* C&0'* A%.9 ;


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oter eBuialent autority will not ae any 0urisdiction to entertain any suit or proceeding or

proide in0unction wit regard to any matter wic would ordinarily fall witin te ambit of CCI.

E%,&' 73& #31%.&':

- "easonable "igts under IP"s; etc. protected under Competition Act.

- Agreements e,clusiely for e,ports e,empted

A%. .0' ,0%* &.1* I'10:

CCI as te power to enBuire into unfair agreements or abuse of dominant position or

combinations taking place outside India but aing aderse effect on competition in India; proided tat any of te below mentioned circumstances e,ists>

• An agreement as been e,ecuted outside India

• Any contracting party resides outside India

• Any enterprise abusing dominant position is outside India

• A combination as been establised outside India

• A party to a combination is located abroad.

• Any oter matter or practice or action arising out of suc agreement or dominant position or

combination is outside India.

To deal wit cross border issues; CCI is empowered to enter into any !emorandum of

*nderstanding or arrangement wit any foreign agency of any foreign country wit te prior

approal of Central 7oernment.

P&*3 &7 CCI:

Te CCI will ae te following powers>

To issue ?Cease and

• To grant suc interim relief as would be necessary in eac case.

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• To award compensation.

• To impose fines on te guilty.

• To order diision of dominant undertaking.

•Power to order de-merger.

• Power to order costs for friolous complaints

In addition to te ad0udication function; te CCI will ae te roles of adocacy; inestigation;

prosecution and merger control.

Te +tatutory "egulatory Autorities can make reference to CCI for adice.

Te proposed 'aw proides for te post of


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POST-DECISIONAL OPTIONS:

Te aggrieed person may apply to CCI for 3*+* &7 .5* &31*3 witin tirty days from te date

of te order; proided tat te below mentioned conditions are fulfilled>

• An appeal is allowed by tis Act

• $o appeal as been preferred

Proision as been made for an 0*0, 00'. 0' &31*3 or decision of CCI by any aggrieed

persons. An application for tis purpose as to be made to te +upreme Court witin si,ty days

from te date of communication of te decision or order.

A*'1*'. ' .5* C&*..&' A%. :

In !arc tis year te goernment put forward te Competition FAmendmentE 9ill 2%%(;

wic as been referred to te parliamentary standing committee on finance. Te bill

proposes to amend no less tan 2 of te (1 sections of te Competition Act; replacing 13 and

deleting & sections in teir entirety; and introducing about 21 new sections. Tese canges not

only attempt to address te +upreme Court@s ob0ections; but also modify seeral of te

substantie proisions of te act dealing wit anti-competitie practices.

P3&&0, &7 .5* 0*'1*'.

1. A cange proposed in +ection 12 increases from one year to two years te cooling-

offS period for wic te cairman and members of te CCI are debarred from

accepting employment wit any FpriateE enterprise tat as been party to any

proceedings before it.

2. Amendments to +ections 1 and 2( allow te CCI to act on information receied; not

0ust a formal complaint.

3. Tere is a statement added to +ection 32; e,plicitly allowing te CCI to pass orders

against acts of firms outside India tat adersely affect competition in India. Te

original prasing seemed to suggest tat te CCI could only inBuire into suc acts.

. Te bill also proposes to delete te ill adised clause tat allowed te CCI to issue

temporary in0unctions to restrain any party from importing goods.

33


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&. Te CCI as not been gien powers of searc and sei:ure; wic are crucial in

obtaining eidence in cartel cases in 4urope and te *+; and are een aailable in

+ection 12F&E of te outgoing !"TP Act.

(. +ection 21 of te act is to be amended so tat wen te CCI is asked by a statutoryautority to gie its opinion on any decision tat migt infringe te Competition Act;

te autority is now reBuired to record its response to te CCI opinion.

#. +ection ; wic allowed te central goernment to seek te CCI@s opinion on

formulating a policy on competition; is now to be e,tended to state goernments.

Anoter measure is in te transition arrangements for dealing wit cases pending before te

!"TP CommissionF!"TPCE. Te Competition Act originally enisaged teir immediate

transfer to te CCI. Te new bill sensibly proposes to gie te !"TPC two years to clear te

backlog; so te CCI can concentrate on te Competition Act. 9ut no cange is proposed in te

clauses transferring ongoing inestigations for tese !"TP cases to te CCI

A11.&'0, 3&&0,

1. 4stablisment of a Competition Appellate Tribunal FCATE to ear appeals against te

orders of te CCI and ad0udicate compensation claims arising out of te finding of te

CCI or orders of te tribunal.

2. Age limit of cair person and oter members restricted to (& years.

AD"ANTAGES OF THE COMPETITION ACT:

1E Te foremost ob0ectie of te act is to create an enironment conducie to

competition. Te act does not condemn or oppose te e,istence of a monopoly in te

releant market.

2E Te operation of te act is not confined to transactions strictly witin te boundaries

of India but also suc transactions inoling entities e,i,ting or establised oerseas.

3E 4,plicit definitions and criteria ae been specified in order to access weter a

practice as an appreciable aderse effect on competition.

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E It is te intention of our legislators tat proisions of te act in its e,tant form sould

not be considered to be immutable and uncangeable.Te intention is promotion of

competition adocacy;creating awareness and imparting training about competition

issues.

SHORTCOMINGS OF THE COMPETITION ACT:

1E It is a body to wic te appeals lie and not an inestigatie agency tat proactiely

goes and seeks out industrial monopolistic practice. As te e,ecutie body is

contemplated at present; it is likely to be a aen for senior bureaucrats; businessmen

and tecnocrats en0oying positions of sinecure.

2E Tere is a lack of mandatory proision compelling persons or entities weter public

or priate to approac te commission tat is compounded by te corresponding

logistical limitations of te commission to be able to take cogni:ance on its own

motion of eery malpractice in te economy.

3E Te IP" laws ae oerriding powers oer te Competition Act in matters related tocompetition abuses.

E Te act proides for e,emptions to mergers and abuse of dominance on grounds like

Keconomic deelopment@ and Kpublic interest@ and in te absence of any clear

definitionGcriteria te releant proisions would be open to arying interpretations.

&E Te proisions in conte,t of te autonomy of te CCI mainly aim at keeping a ceck

on CCI@s functioning by limiting its independence.

3&


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CA"E "TD$

;) %ET "A&ARA

Mer'er it Air "aara

/n anuary 1; 2%%( et Airways announced tat it was to buy Air +aara for M&%%

million in an all-cas deal. 4eryting; including +aaraNs assets and infrastructure; would

belong to et Airways. Tis deal would ae been te biggest in IndiaNs aiation istory and te

resulting airline te countryNs largest; ad it gone troug.

!arket reaction to te deal was mi,ed; wit many analysts suggesting tat et Airways

was paying too muc for Air +aara. Te deadline for te deal to be completed was une 21;

2%%(; but in te days before tis; te cances of te takeoer being completed began to look

sakier. et Airways claimed tat a final sticking point was te goernmentNs delay in approing

et cairman $ares 7oyalNs appointment to te Air +aara board. Air +aara countered tat et

Airways ad engineered tis impasse by delaying te reBuest for suc approal; as a way of e,tricating temseles from a deal tey now regretted. et was said to be willing to go aead wit

te deal only if te originally agreed price was lowered by 2%-2&W on te basis of Air +aaraNs

mounting debts; an option wic was firmly re0ected by Air +aara. 8inally bot sides confirmed

tat te deal was off. 8ollowing te failure of te deals; te companies ae now filed lawsuits

seeking damages from eac oter.

3(

http://en.wikipedia.org/wiki/January_19http://en.wikipedia.org/wiki/2006http://en.wikipedia.org/wiki/2006http://en.wikipedia.org/wiki/Air_Saharahttp://en.wikipedia.org/wiki/Naresh_Goyalhttp://en.wikipedia.org/wiki/2006http://en.wikipedia.org/wiki/Air_Saharahttp://en.wikipedia.org/wiki/Naresh_Goyalhttp://en.wikipedia.org/wiki/January_19


37/50

LT AND (G30) BIRLAT5* T0*-O+*3

Te takeoer of '6T sares was a complicated process inoling '6T demerging its cement

business into *ltra Tec Cemco and 7rasim making an open offer for it. Te stakes were

transferred between employee and family trusts in a di::ying 3-layered sare transaction; ending

wit 7rasim olding te ma0ority stake. All sections of sareolders -- 8Is and small

sareolders -- participated in te open offer.

A D77*3*'. P*3*%.+* &' .5* D*0,

A little more tan tree years ago management consulting firm 9oston Consulting 7roup adised

tat te "s. ;%%%-crore F"s. %-billionE engineering company '6T sould e,it cement. 9C7Ns

prescription is being followed and te "s. 2;2%% crore F"s. 22 billionE deals were finally sealed .

7rasim will own &1.& per cent stake in '6TNs 1(.& million tonne cement business; wic is to be

ied into a new company.

'6TNs 1(. million tonne capacity is now being combined into 7rasimNs own 1.& million

tonne capacity. Tere are serious financial implications.

Te "s. ;%%%-odd crore F"s.% billionE acBuisition costs Fincluding te "s. 1;(% crore debt

liabilityE will start yielding respectable returns only after tree years.

Te cement acBuisition now catapults =umarmangalam 9irla to top of te eap in te

countryNs 31 million tonne per annum FtpaE combined cement capacity. 5e is also te seent

largest cement producer in te world.

atNs more; 7rasim now becomes te worldNs largest cement producer in a single

geograpy. +o wat was initially a pure financial inestment wit 1%.& per cent of '6T in

$oember 2%%1-- wen it bougt out "eliance IndustriesN stake in te company -- became a

rallying point to get full management control.

9y te first week of anuary; 7rasim came back to te table wit an ?alternatie proposal?. It

entailed 7rasim swapping its 1& per cent stake in te parent '6T wit te % per cent stake eld

by te financial institutions in te cement company. Tus; it would be left wit a clean;

3#


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indisputable && per cent stake in te cement company wile making an onourable e,it from te

core company.

F.3* &7 U,.30T*%5 C**'.:

*ltraTecNs distribution network is ery widely spread out in te country wit oer &;&%%

dealers and 3%;%%% retailers. *ltraTec en0oys a leadersip position in all of te markets tat it

seres. Te Company as enlisted te support of all of its business associates. Tis includes

dealers; stockiest; retailers; builders and engineers among oters.

9etween *ltraTec and 7rasim; te Aditya 9irla 7roupNs cement capacity is in e,cess of 31

million tpa; of wic 1# million tpa capacity comes from *ltraTec. Tis makes te Aditya 9irla

7roup te eigt largest cement player in te world.

Te 7roup now as 11 composite plants; seen split grinding units; four bulk terminals

Finclusie of one in +ri 'ankaE; and eigt ready mi, concrete plants. Tis accords te 7roup a

strong national presence in te cement sector; wit a leadersip position in seeral states.

India as enormous potential for growt; gien te lower per capita consumption of only 11%

kilos against te global aerage of 2(% kilos at present. Te per capita consumption of cement in

India is peraps te lowest in +out 4ast Asia. In Tailand it is 23 kilos; Cina H 2 kilos;

!alaysia H &2 kilos; and in +out =orea H &1 kilos. India tus offers a tremendous growt

opportunity gien its lower per capita consumption.

Te sareolding pattern of *TCC is &1 per cent wit 7rasim; 12 per cent wit financial

institutions; 11.& per cent wit '6T and te remaining wit institutional and retail sareolders.

Te transaction as created alue for 7rasim and '6T stakeolders; te sare prices of '6T

and 7rasim since te une 2%%3 announcement of te intention of de-merger; ae out-performed

te 9+4 +ense, and tere as been an oerwelming response to te open offer.

7rasim Industries is India@s largest cement maker wit a capacity to make about 33 million

tonnes a year; a sade larger tan its nearest rial; te 5olcim-7u0arat Ambu0a-ACC combine;

wic makes about 31 million tonnes. !r. 9irla also outlined an ambitious e,pansion

programme for *ltraTec. Te company@s cape, plans include an e,penditure of around "s

1;2 crore to be spent oer te ne,t tree years. /f tis; "s crore is for captie power plants

in 7u0arat and Catisgar. Te company also wants to tap te growing cement market in

soutern India and is sceduled to inest "s 1;2# crore for a -million tonne plant in Andra

Prades. Tis also includes 1.3 million-tonne split grinding unit and a (-! power plant.

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Te goernment@s initiaties on infrastructure deelopment and te boom in te ousing

sector are ma0or growt driers for te cement industry. Te Indian cement sector is te world@s

second-largest after Cina.In te medium term; te demand and supply situation is e,pected to

be in a state of balance; before te ne,t cycle of new capacity enters te market.

3


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NETSCAPE "/S MICROSOFT

$etscape Communications; a diision of A/' Time arner; filed suit against !icrosoft claiming

tat te software giantNs business practices crused te onetime upstartNs Internet browser.

Te lawsuit alleges tat; beginning in 1&; !icrosoft armed $etscape in a series of illegal acts

aimed at promoting !icrosoftNs Internet 4,plorer browser at te e,pense of $etscape $aigator;

te eb browser by $etscape many credit wit aing been te catalyst for consumer adoption

of te Internet. Te suit seeks in0unctie relief sufficient to preent furter antitrust in0ury to

$etscape and an award of treble damages to be determined at trial.

In $oember 1; udge Tomas Penfield ackson ad also found tat wile !icrosoft ad

improperly used its dominance of te PC operating system market to grab a (% percent sare of

te browser market.

?$etscapeNs lawsuit is a sort of an e,tension of te findings entered by te

it lost browser licensing reenues it lost browser market sare tat would ae led to oter

significant sources of reenues; including portal reenues and reenues from its enterprise

software and products businesses its marketing and distribution costs were significantly

increased it lost goodwill and going concern alue and it lost te profits tat would ae e,isted

if !icrosoft ad not acted illegally to preent $etscapeNs browser tecnology from proiding a

competitie alternatie to !icrosoftNs monopoly operating system as a deelopment platform

COMPARISON BETWEEN MRTP ACT9;


41/50

S$N& MRTP A%.9 ;


42/50

C3.%0, %&*'. &' .5* C&*..&' A%.

Toug te Act substantially coers all aspects; it still leaes ample scope for improements.Assimilation of CCI as a corporate body and at te same time describing it as a Tribunal makes it

of a somewat ybrid caracter. Toug as a corporate body it can sue and be sued; as a Buasi-

0udicial body it cannot; generally do so. Te position as to be clarified.

Tere are two proisions in te Act wic substantially defeat its independence. +ection &%

proides for grants by te Central 7oernment to CCI. Te Act proides tat te salaries of te

staff and oter e,penses sall be met by te Competition 8und. 5ere lies te catc. +uc a

proision takes away te independence and autonomy of CCI by including grants by te Central

7oernment as a part of te constitution of te Competition 8und. Tus; CCI as to circuitously

depend on te Central 7oernment for meeting its infrastructural and oter e,penses. 8urter;

CCI is bound to follow any policy directions gien by te Central 7oernment. And; +ection &(

empowers te Central 7oernment to supersede CCI by issuing a notification and giing reasons

for te same. CCI being a Buasi-0udicial body would be appointed by te e,ecutie and suc

power to supersede would seerely affect te independent functioning of te Commission. /n

one and; it is said tat CCI is a Buasi-0udicial body and on te oter and; te Act mandates tat

its decisions are not final. 4en te !"TP Act neer ad any suc proision.

+ome of te market analysts ae appreended tat implementation of te Act in its present form

will be noting less tan a declaration to kill our national companies. Te Act talks of

competition but; at te national leel; it is a competition between a mouse and a cat. Te Act is

opening te entire country to te world for competition. Te Act does not retain any specific

proisions to protect te interests of te domestic industry; wic is e,posed to international

competition unlike te *+ law. Tere +ection 2%1 of te Trade Act; 1# of te *+ as been

applied to increase imports regardless of weter teir importation is te result of any unfair

competition. Te only concern under +ection 2%1 is %hether the imports are a sustantial cause

of serious in/ury to a US industry te specific trading practices of te foreign seller; fair or

unfair; are irreleant. If te reBuisite in0ury and causation are establised; and relief ordered and

accepted by te President; tat relief operates against all imports i.e. from all foreign producers

in all countries.

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+imilarly; Title QII of te Trade Agreements Act of 1# and +ection 33# of te Tariff Act of

13% apply broadly to unfair metods of competition and unfair actsS in *+ import trade; but in

practice it as been applied essentially to e,clude imports tat infringe on *+ patent rigts or

iolate oter intellectual property rigts; suc as trademarks and copyrigts. 'ooked in tis

perspectie it is felt tat te legislature must incorporate proisions to safeguard te domestic

industries against te fierce global economic competition.

Cartels; particularly te ard-core cartels ae a grae and aderse effect on te economy and

consumers; and as tey are difficult to detect and proe; te proisions sould be as deterrent as

possible. It is suggested tat to make te law more preentie; te Act sould incorporate

criminal proceedings against te persons inoled at te appropriate criminal court in case te

cartel is proed. Te *= recently amended its competition law to include personal criminal

liability. Te releant law of te *+ also incorporates suc penal proisions and e,perience as

sown tat tey ae ad a considerable deterrent effect.

8urter; te Act fails to proide a stick and carrotS approac in te form of eay fines and

criminal proceedings against te iolators coupled wit te promise of leniency for te wistle-

blower wic as been proed to be ery effectie in uncoering and prosecuting ard-core

cartels in many countries including te *+ and 4*.

Article % of T"IP+ proides for control of anticompetitie practices in contractual licences. It

says tat T"IP+ does not preent countries from specifying in teir legislation licensing practices

or conditions tat may in practice constitute an abuse of intellectual property rigts FIP"sSE

aing an aderse effect on competition in te releant market. +imilarly; Article 31 of T"IP+

allows granting of compulsory licences in anticompetitie situations. A good competition law

cannot afford to be silent in addressing IP"s in tis fast-canging global economic enironment.

9ut te Indian law ide +ection 3F&E of te Act e,cludes licensing agreementsS wit respect to

IP"s from te puriew of regulating anticompetitie agreements. /ften it as been e,perienced

tat IP" relationsip between two firms end up in cartels or anticompetitie conducts. CCI is

reBuired to keep an eye on suc relationsips as a part of its proactie role. +o; unless tere is

some proision wit respect to IP" in te Act; CCI may tend to ignore suc relationsips as te

same does not lie under its 0urisdiction.

Te Act regulates only tose mergers and acBuisitions wic Bualify under te definition of

combinationS under +ection &. In practice; tere may come up a situation were a merger may

3


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not come under te definition of combinationS under +ection &; largely because of te

bencmarks prescribed terein; yet it may gie rise to grae anticompetitie practices. Tis

situation as to be aoided.

8urter; mergers of companies are being goerned by te 5ig Courts and te +ecurities and

4,cange 9oard of India; and now te same would be witin te puriew of CCI. It is felt tat

tis may gie rise to a peculiar situation were tere may be oerlapping of powers of tree

distinct forums wit regard to mergers.

+ection 1F3E of te Act lays si, factors for determining weter an agreement as an

appreciable aderse effect on competitionS.Xet te language of te sub-section tends to create

confusion wile interpreting te same. Clauses FaE to FcE of +ection 1F3E are te grounds wic

te Commission may consider wile establising appreciable aderse effectS; wereas clauses

Fd E to F f E proide te defences and e,emptions wic may be releant to negate te presence of

appreciable aderse effectS. Te intent would ae been clearer ad separate sections on bot

tese aspects been proided.

Te Act confers an option on any statutory body to make a reference to CCI wit respect to a

decision wic te statutory autority as taken or proposes to take; is or is likely to be contrary

to any of te proisions of te Act. 5oweer; for making suc a reference te condition

precedent is raising of te same issue by any party before it. It is suggested tat apart from issue

being raised by any party; any statutory autority also on its own sould ae been allowed to

make suc a reference.

8urter; CCI sould also ae been empowered; on approal by te Central 7oernment; to

inBuire and inestigate on its own in any sector being regulated by a statutory autority; if it feels

tat an anticompetitie situation as arisen or is likely to arise.

8inally; +ection 32 autorises CCI only to inBuireS for acts taking place outside India but

aing an effect on competition in India. It is suggested tat CCI sould ae also been gien

powers to pass appropriate ordersS apart from inBuiring in suc matters. Te Act sould also

ae incorporated proisions conferring necessary powers to te Commission seeking

cooperation from autorities in oter countries in inestigation and implementation of its orders

wit respect to cross-border anticompetitie practices.


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CONCLUSION

All of us can agree on te benefits of adopting and enforcing a transparent and nondiscriminatory

competition law. 8irst; at te domestic leel; te enforcement of competition rules preents

monopoli:ation; as well as collusie and e,clusionary practices tat enable firms wit market

power to unfairly confiscate te benefits of economic actiity tat sould accrue to consumers

and competitors.

+econd; at te international leel; istory demonstrates tat cross border cartels tend to operate in

countries witout competition laws to enance teir immunity from prosecution tey likewise

tend to aoid countries tat ae actiely enforced competition laws. I also doubt tat oter

anticompetitie actors ae any Bualms about foisting te costs of teir conduct on consumers in

countries tat lack a competition law. Adopting a competition law is tus an important means for

protecting oneNs own consumers from te cross-border anticompetitie practices of firms.

Tird; competition autorities can be agents of market-opening cange in teir countries troug

teir role as competition adocates. +eeral competition autorities in 'atin and +out America

ae recently contributed greatly to eliminating restrictie regulations in sectors tat were

preiously not open to competition; troug adocacy on bealf of priati:ation or deregulation.e too continue to adocate aggressiely on bealf of competition principles wit te federal

electricity regulator; te arious state public utility commissions; te federal communications

agency and entities tat elp to sape intellectual property policy.

9ut promoting competition in any country is a callenge; precisely because te benefits of

competition are long term and are distributed broadly among all consumers; wereas te benefits

of protection are immediate and concentrated on a few recipients. Tus; powerful and well

organi:ed lobbies tend to be Buite effectie in preenting te emergence of competition. Xet 0ust

were tese lobbies may be most powerful -- in smaller; deeloping markets wit narrow

economic bases and concentrated industrial sectors -- is were anticompetitie practices are most

likely to flouris and were te need is greatest to promote competition troug priati:ation;

deregulation and te adoption of a competition law.

&


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Te Indian legislature deseres accolades for te introduction tis muc-needed piece of

legislation. In retrospect; te igligt of te Act is its intent; wic not only proibits

anticompetitie agreements; wic are detrimental to te consumers and te market; but also

proibits any agreement tat is likely to cause an appreciable aderse effect on competition.

In a deeloping economy like India were economic power is not fairly distributed; tis new

competition policy is e,pected to play te dual role of raising te power; witin reasonable

bounds; of underpriileged economic agents to become iable participants in te process of

competition on te one and; and of establising te rules of fair and free competition on te

oter.

If tese two ob0ecties are not met; unfettered competition will simply elp a andful of

priileged big firms to monopoli:e domestic markets tat are usually protected troug import

restrictions. Tis will ten gie rise to public dissatisfaction.

+econdly; fair and freeS competition is an essential reBuirement for sustained economic growt.

itout fairness; freedom alone may not aciee te desirable outcomes e,pected from

competition; especially in deeloping economies were unfair elements can be e,acerbated by

competition.

India is likely to emerge as te second largest market in te world in te not so distant future. In

tis scenario te CCI will be e,pected to play a balanced role; protecting bot consumers@

interests and te interests of te businessmen. Te CCI will also ae an important task of

collaborating wit te arious sectoral regulators and erein competition adocacy will play and

important role.

Te CCI as te power to>

•

Issue cease and desist orders

• 7rant interim relief

• Award compensation

(


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• Impose fines and

• /rder diision of dominant undertakings


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Te efficacy of te act will be seen in its implementation. 9ut is te Competition Act truly

reflectie of te canging economic milieu of our countryZ In an economic situation; wic can

be best described as a mi,ed economy only time will tell weter te Competition Act addresses

te ground realities tat e,ist today. 5oweer; te new Act is definitely a step in te rigt

direction by armoni:ing te competition policy wit international trade and policy.

The purpose of competition policy and competition la% 0 is to protect competition and economic

efficiency, not to protect competitors" #t1s to protect the efficiency of the process, not the existence or the

viaility of individual companies"

Competition la% is essentially a ac-up" #f the maret runs eautifully, the Commissioner should e

asleep" 0 The reality is the maret does not %or on a perfectly good self-sustaining asis and there are

competitors %ho %ill see to fix prices" There are competitors %ho %ill exercise their maret po%er in

%ays that are unacceptale to society and %e simply have to hit them 0 and say $no"$

----- Competition commission of #ndia


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BIBILIOGRAPHY

Books

Corporate Law -- By Taxman

Corporate Laws and Secretarial Practice -- By G.K.Kapoor

Websites

www.competition-commission-india.nic.in

www.laws4india.com

www.ftc.gov.in

www.nctadxi.org

www.mti.gov.sg

www.!lonnet.com

www.iima"d.ernet.in

www.c!dd.ws.ed

www.oft.gov.#

http://www.competition-commission-india.nic.in/http://www.laws4india.com/http://www.ftc.gov.in/http://www.unctadxi.org/http://www.mti.gov.sg/http://www.blonnet.com/http://www.iimahd.ernet.in/http://www.cbdd.wsu.edu/http://www.oft.gov.uk/http://www.competition-commission-india.nic.in/http://www.laws4india.com/http://www.ftc.gov.in/http://www.unctadxi.org/http://www.mti.gov.sg/http://www.blonnet.com/http://www.iimahd.ernet.in/http://www.cbdd.wsu.edu/http://www.oft.gov.uk/


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7319546 Competetion Act

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