INDEPENDENCE OF COMPETITION COMMISSION
OF INDIA
INTRODUCTION:
Competition
Commission of India is a body of the Government of India responsible for
enforcing The Competition Act, 2002 throughout India and to prevent activities
that have an adverse effect on competition in India. It was established on 14
October 2003. It became fully functional in May 2009.[1][2]
The
objectives of the Act are sought to be achieved through the Competition
Commission of India (CCI), which has been established by the Central Government
with effect from 14th October 2003. CCI consists of a Chairperson and 6 Members
appointed by the Central Government.
It
is the duty of the Commission to eliminate practices having adverse effect on
competition, promote and sustain competition, protect the interests of
consumers and ensure freedom of trade in the markets of India.
The
Commission is also required to give opinion on competition issues on a
reference received from a statutory authority established under any law and to
undertake competition advocacy, create public awareness and impart training on
competition issues.[3]
EVOLUTION
OF COMPETITION LAW :
While the term
'Renaissance' originally referred to a cultural movement that characterized the
period from around the 14th to 17th centuries, it has also come to refer to an
historic era affecting other aspects of daily life, including that of trade and
competition. During this Renaissance period, particularly from the 16th century
onward, international trade started booming. While much of this trade and the
resultant wealth were illicit, authorities saw the need to regulate trade to
engender a spirit of fairness and free competition. The precursor of modern
patent laws, known as the Statute of Monopolies, was passed by England's
parliament in 1623.[4]
Prior to the Statute of Monopolies, patent laws were subject to abuse by
authorities. History reveals that Elizabeth I was known to have granted patents
for everyday household commodities such as salt and starch, thereby creating
monopolies on necessities. In the following years, various attempts were made
to break monopolies and set laws to encourage competition and free trade.[5] But those with good intentions often found
that traders maintaining monopolies had the kind of wealth that bought
themselves a favoured position with authorities. Other developments that
eventually led to modern competition law included laws relating to restraint of
trade. As the term suggests, restraint of trade prevents parties from setting
up, or engaging in, similar activities in opposition to one another. Modern day competition law is generally
accepted to have had its foundations in the Sherman Act (1890) and the Clayton
Act (1914) – both instituted in the United States.[6] At the time, European countries had various
forms of rules and laws to regulate monopolies and competition, but further
developments, particularly after World War II and the fall of the Berlin wall
in 1990, have elements of the Sherman and Clayton Acts as their foundation.[7] With
the rapid development of international trade going into the 21st century,
competition and anti-trust laws have had to keep pace. It was following WWI
that other countries started to implement competition policies along the lines
of those introduced by the United States. Competition regulators were formed to
ensure that competition and antitrust policies and laws were adhered to.
Following the 2nd World War, the Allies introduced regulations to break up
cartels and monopolies that had formed during the war years. At the time, this was
mainly aimed at Germany and Japan.[8] In the case of Germany, it was feared that
large industry cartels were manipulated in a manner that gave total economic
control of the country to the Nazi regime. With Japan, big business was a
hotbed of nepotism resulting in multi-industry conglomerates that controlled
the Japanese economy. However, the surrender of both Germany and Japan to the
Allied forces at the end of WWII allowed for tighter controls to be enforced,
and these controls were based on the principle of those being used in the U.S.[9] In the U.S., the term 'antitrust' is more
commonly used when referring to laws preventing the formation of cartels, also
referred to as 'business trusts'.[10] Although antitrust laws are generally
separate from consumer protection laws, they do offer consumers a measure of
protection from unscrupulous suppliers who seek to monopolize a market sector.
Mergers and acquisitions undergo a rigorous screening process in line with
antitrust and competition laws before being given the go ahead. Since attaining Independence in 1947, India,
for the better part of half a century thereafter, adopted and followed policies
comprising what are known as Command-and-Control laws, rules, regulations and
executive orders. The competition law of India, namely, the Monopolies and
Restrictive Trade Practices Act, 1969 (MRTP Act) was one such.[11] It was in 1991 that widespread economic
reforms were undertaken and consequently the march from Command-and-Control
economy to an economy based more on free market principles commenced its
stride. As is true of many countries, economic liberalisation has taken root in
India and the need for an effective competition regime has also been
recognised. Competition Law for India was triggered by Articles 38[12]
and 39[13]
of the Constitution of India. These Articles are a part of the Directive
Principles of State Policy. Pegging on the Directive Principles, the first
Indian competition law was enacted in 1969 and was christened the Monopolies
and Restrictive Trade Practices, 1969 (MRTP Act). Articles 38[14]
and 39[15]
of the Constitution of India mandate, inter alia, that the State shall strive
to promote the welfare of the people by securing and protecting as effectively,
as it may, a social order in which justice social, economic and political shall
inform all the institutions of the national life, and the State shall, in
particular, direct its policy towards securing.
1. That the ownership
and control of material resources of the community are so distributed as best
to subserve the common good; and
2. That the operation
of the economic system does not result in the concentration of wealth and means
of production to the common detriment.[16]
In October 1999, the
Government of India appointed a High Level Committee on Competition Policy and
Competition Law to advise a modern competition law for the country in line with
international developments and to suggest a legislative framework, which may
entail a new law or appropriate amendments to the MRTP Act. The Committee
presented its Competition Policy report to the Government in May 2000. The
draft competition law was drafted and presented to the Government in November
2000. After some refinements, following extensive consultations and discussions
with all interested parties, the Parliament passed in December 2002 the new
law, namely, the Competition Act, 2002.[17]
COMPETITION
LAW IN INDIA :
The various provisions
of the Act deal with the establishment, powers and functions as well as
discharge of adjudicatory functions by the Commission. Under the scheme of the
Act, this Commission is vested with inquisitorial, investigative, regulatory,
and adjudicatory and to a limited extent even advisory jurisdiction. Keeping in
view the nature of the controversies arising under the provisions of the Act
and larger public interest, the matters should be dealt with and taken to the
logical end of pronouncement of final orders without any undue delay. In the
event of delay, the very purpose and object of the Act is likely to be
frustrated and the possibility of great damage to the open market and
resultantly, country's economy cannot be ruled out.
Primarily, there are
three main elements which are intended to be controlled by implementation of
the provisions of the Act, which have been specifically dealt with under
Sections 3, 4 and 6 read with Sections 19 and 26 to 29 of the Act. They are
anti- competitive agreements, abuse of dominant position and regulation of
combinations which are likely to have an appreciable adverse effect on
competition.
The objectives of the
Act are sought to be achieved through
the instrumentality of the Competition Commission of India which has been
established by Central Government. Hence the commission is required to take
care of such situation so that there could not be created market failure
thereby causing harm to market. To achieve its objectives, CCI endeavours to do
the following:
1. Make the markets
work for the benefit and welfare of consumers.
2. Ensure fair and
healthy competition in economic activities in the country for faster and
inclusive growth and development of economy.
3. Implement
competition policies with an aim to effectuate the most efficient utilization
of economic resources.
4. Develop and nurture
effective relations and interactions with sectoral regulators to ensure smooth
alignment of sectoral regulatory laws in tandem with the competition law.
5. Effectively carry
out competition advocacy and spread the information on benefits of competition
among all stakeholders to establish and nurture competition culture in
Indian economy.
The Act covers
essentially four areas of competition contained in its substantive provisions namely:
·
Anti-competitive agreements (section 3)
·
Abuse of dominance (section 4)
·
Combination regulation (section 5 and
section 6)
·
Competition advocacy (section 49)
Anti Competitive
Agreements in India: -
The present Act is
quite contemporary to the laws presently in force in the United States of
America as well as in the United Kingdom. In other words, the provisions of the
present Act and Clayton Act, 1914 of the United States of America, The
Competition Act, 1988 and Enterprise Act, 2002 of the United Kingdom have
somewhat similar legislative intent and scheme of enforcement. However, the
provisions of these Acts are not quite pari materia to the Indian legislation.
In United Kingdom, the Office of Fair Trading (OFT) is primarily regulatory and
adjudicatory functions are performed by the Competition Commission and the
Competition Appellate Tribunal. The U.S. Department of Justice Antitrust
Division in United States deals with all jurisdictions in the field. The
competition laws and their enforcement in those two countries are progressive,
applied rigorously and more effectively. The deterrence objective in these
anti-trust legislations is clear from the provisions relating to criminal
sanctions for individual violations, high upper limit for imposition of fines
on corporate entities as well as extradition of individuals found guilty of
formation of cartels. This is so, despite the fact that there are much larger
violations of the provisions in India in comparison to the other two countries,
where at the very threshold, greater numbers of cases invite the attention of
the regulatory/adjudicatory bodies.
(1) No enterprise or association of
enterprises or person or association of persons shall enter into any agreement
in respect of production, supply, distribution, storage, acquisition or control of goods or provision
of services, which causes or is likely to cause an AAEC within India.
(2) Any agreement
entered into in contravention of the provisions contained in subsection (1)
shall be void.
(3) Any agreement
entered into between enterprises or associations of enterprises or persons or
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 similar trade of goods
or provision of services, which–
(a) directly or
indirectly determines purchase or sale prices
(b) limits or controls
production, supply, markets, technical development, investment or provision of
services;
(c) shares the market
or source of production or provision of services by way of allocation of
geographical area of market, or type of goods or services, or number of
customers in the market or any other similar way;
(d) directly or
indirectly results in bid rigging or collusive bidding,
Shall be presumed to
have an appreciable adverse effect on competition:
Provided that nothing
contained in this sub-section shall apply to any agreement entered into by way
of joint ventures if such agreement increases efficiency in production, supply,
distribution, storage, acquisition or control of goods or provision of services.
Explanation.-For the
purposes of this sub-section, ―bid rigging‖ means any agreement, between
enterprises or persons referred to in sub-section (3) engaged in identical or
similar production or trading of goods or provision of services, which has the
effect of eliminating or reducing competition for bids or adversely affecting
or manipulating the process for bidding.
(4) Any agreement
amongst enterprises or persons at different stages or levels of the production
chain in different markets, in respect of production, supply, distribution,
storage, sale or price of, or trade in goods or provision of services,
including —
(a) tie-in arrangement;
(b) exclusive supply
agreement;
(c) exclusive
distribution agreement;
(d) refusal to deal;
(e) resale price
maintenance,
(m) ―practice‖ includes
any practice relating to the carrying on of any trade by a person or an
enterprise
(o) ―price‖, in
relation to the sale of any goods or to the performance of any services,
includes every valuable consideration, whether direct or indirect, or deferred,
and includes any consideration which in effect relates to the sale of any goods
or to the performance of any services although ostensibly relating to any other
matter or thing.
The term
anti-competitive agreements as such has
not been defined by the Act, however, Section 3 prescribes certain practices
which will be anti-competitive and the Act has also provided a wide definition
of agreement under section 2 (b). Section 3(1) is a general prohibition of an
agreement relating to the production, supply, distribution, storage,
acquisition or control of goods or provision of services by enterprises, which
causes or is likely to cause an AAEC
within India.
Section 3(2) simply
declares agreement under section 3(1) void. Section 3(3) deals with certain
specific anti competitive agreements, practices and decisions of those
supplying identical or similar goods or services, acting in concert for example
agreement between manufacturer and manufacturer or supplier and supplier, and
also includes such action by cartels. Section 3(4) deal with restraints imposed
through agreements among enterprises in different stages of production or
supply etc. for example agreement amongst manufacturer and supplier. Section 3
(5) provides for exceptions, it saves the rights of proprietor of any intellectual property right
listed in it to restrain the infringement of any of those rights regardless of
section 3.
Competition laws in all
over the world usually places anti-competitive agreements in two categories
namely – horizontal agreements and
vertical agreements. Horizontal agreements are generally viewed more seriously
than the vertical agreements. Firms enter into agreements, which may have the
potential of restricting competition. A scan of the competition laws in the
world will show that they make a distinction between ―horizontal‖ and
―vertical‖ agreements between firms.
The former, namely the
horizontal agreements are those among competitors and the latter, namely the
vertical agreements are those relating to an actual or potential relationship
of purchasing or selling to each other.
A particularly pernicious type of horizontal agreements is the cartel.
Vertical agreements are pernicious, if they are between firms in a position of
dominance. Most competition laws view
vertical agreements generally more leniently than horizontal agreements, as,
prima facie, horizontal agreements are more likely to reduce competition than
agreements between firms in a purchaser seller relationship. the Act have not
used the term horizontal agreements and vertical agreements, however the
language used in the Act suggests that agreements referred to in section 3(3)
and section 3 (4) are horizontal and vertical agreements respectively. It is to
be noted that section 3(3) and section 3(4) are the main provisions which are
mainly attracted to prove the existence of any anti competitive agreements.
Abuse
of Dominant Position
Section 4 (1) of the
Indian Competition Act states, ―No Enterprise shall abuse its dominant
position‖.[19]
There are primarily
three stages in determining whether an enterprise has abused its dominant
position. The first stage is defining the relevant market. The second is
determining whether the concerned undertaking/enterprise/firm is in a dominant
position/ has a substantial degree of market power/ has monopoly power in that
relevant market. The third stage is the determination of whether the
undertaking in a dominant position/ having substantial market power/monopoly
power has engaged in conducts specifically prohibited by the statute or
amounting to abuse of dominant position/monopoly or attempt to monopolize under
the applicable law.[20]
The Indian Competition
Act, 2002 expressly provides in Section 19 (5) that the Competition Commission
shall have due regard to the relevant product market and the relevant
geographical market in determining whether a market constitutes a relevant
market for the purposes of the Act.[21] The definition of relevant market provided
by Section 2(r) of the Act also states that the relevant market means the
market that may be determined by the Commission with reference to the relevant
product market or the relevant geographical market or with reference to both.
―relevant product market‖ and ―relevant geographic market‖ have been
specifically defined in the Indian Competition Act.[22] Section 2 (t) defines the relevant product
market as a market comprising all those products or services which are regarded
as interchangeable or substitutable by the customer, by reason of the
characteristics of the product or service, the prices and the intended use.[23] Section 2 (s) defines the relevant geographic
market as a market comprising the area in which the conditions of competition
for supply of goods or provision of services are sufficiently homogeneous and
can be distinguished from the conditions prevailing in neighbourhood areas.[24]
The Indian Competition
Act contains a definition of dominant position that takes into account whether
the concerned enterprise is in such a position of economic strength that it can
operate independently of competitive forces or can affect the relevant market
in its favour. Explanation (a) to Section 4 of the Indian Competition Act
defines dominant position as ―dominant position means a position of strength,
enjoyed by an enterprise, in the relevant market in India, which enables it to-[25]
(i) Operate
independently of competitive forces prevailing in the relevant market or (ii) affect its competitors or consumers or
the relevant market in its favour.
the Indian Act states
under Section 19 (4) that the Commission may have regard to certain factors for
determining whether an enterprise is in a dominant position including market
share of the enterprise, size and resources of the enterprise; size and importance
of competitors; economic power of the enterprise including commercial
advantages over competitors, vertical integration of the enterprises or sale or
service network of such enterprise; dependence of consumers on such enterprise,
monopoly or dominant position whether acquired as a result of any statute or by
virtue of being a government company or public sector undertaking or otherwise;
entry barriers including barriers such as regulatory barriers, financial risk,
high capital cost of entry, marketing entry
barriers, technical entry barriers, economies of scale, high cost of
substitutable goods or service for consumers; countervailing buying power;
market structure and size of market; social obligations and social costs;
relative advantage by way of the contribution to the economic development by
the enterprise enjoying a dominant position having or likely to have an
appreciable adverse effect on competition; or any other factor which the
commission may consider relevant for the inquiry.[26]
The market share that a
particular undertaking has in the relevant market is one of the most important
factors to be taken into account to determine whether it is in a dominant
position and under the laws of some jurisdictions, the existence of a market
share of or above a specified level gives rise to a presumption of existence of
a dominant position (although rebuttable)
the Indian Act also
does not define abuse of dominance. According to Section 4 (2) of the Indian
Competition Act, ―There shall be an abuse of dominant position under
sub-section: [27]
(1), if an
enterprise.—-
(a) directly or
indirectly, imposes unfair or discriminatory—
(i) condition in
purchase or sale of goods or service; or
(ii) price in purchase
or sale (including predatory price) of goods or service,
Explanation.— For the
purposes of this clause, the unfair or discriminatory condition in purchase or
sale of goods or service referred to in sub-clause (i) and unfair or
discriminatory price in purchase or sale of goods (including predatory price) or
service referred to in sub clause (ii) shall not include such discriminatory
condition or price which may be adopted to meet the competition; or
(b) limits or
restricts—
(i) production of goods
or provision of services or market therefore; or
(ii) technical or
scientific development relating to goods or services to the prejudice of
consumers; or
(c) indulges in
practice or practices resulting in denial of market access; or
(d) makes conclusion of
contracts subject to acceptance by other parties of supplementary obligations
which, by their nature or according to commercial usage, have no
connection with the subject of such
contracts; or
(e) uses its dominant
position in one relevant market to enter into, or protect, other relevant market‖.
One difference between
the UK Act, EC Law and the Indian Act is that according to the UK and EC laws,
the conducts specified may amount to abuse dominant position whereas
according to the Indian Act the conducts specified shall amount to abuse of dominance‖. While the
Indian Act specifically enumerates ‗practices resulting in denial of market
access‘ and ‗using dominant position in one market to enter into or protect,
other relevant markets‘ as conducts amounting to the abuse of dominance, they
have not been mentioned in the UK and EU laws. ―Applying dissimilar conditions
to equivalent transactions with other trading parties, thereby placing them at
a comparative disadvantage‖, is mentioned in the UK and EU law but has not been
included in the Indian Act.
Combinations:
One of the most
significant provisions of CA, Section 5, which defines 'combination' by
providing threshold limits in terms of assets and turnover is yet to be
notified. There is no clarity as to when it will be made effective. At present,
any acquisition, merger or amalgamation falling within the ambit of the
thresholds constitutes a combination. Section 5 states that:[28]
The acquisition of one
or more enterprises by one or more persons or merger or amalgamation of
enterprises shall be a combination of such enterprises and persons or
enterprises, if-
(a) any acquisition
where-
(i) the parties to the
acquisition, being the acquirer and the enterprise, whose control, shares,
voting rights or assets have been acquired or are being acquired jointly
have,-
(A) either, in India,
the assets of the value of more than rupees one thousand crores or turnover
more than rupees three thousand crores; or (B) in India or outside India, in
aggregate, the assets of the value of more than five hundred million US dollars
or turnover more than fifteen hundred million US dollars; or
(ii) the group, to
which the enterprise whose control, shares, assets or voting rights have been
acquired or are being acquired, would belong after the acquisition, jointly
have or would jointly have,- (A) either in India, the assets of the value of
more than rupees four thousand crores or turnover more than rupees twelve
thousand crores; or (B) in India or outside India, in aggregate, the assets of
the value of more than two billion US dollars or turnover more than six billion
US dollars; or
(b) acquiring of
control by a person over an enterprise when such person has already direct or
indirect control over another enterprise
engaged in production, distribution or trading of a similar or identical
or substitutable goods or provision of a
similar or identical or substitutable service, if-
(i) the enterprise over
which control has been acquired along with the enterprise over which the
acquirer already has direct or indirect control jointly have,-
(A) either in India,
the assets of the value of more than rupees one thousand crores or turnover
more than rupees three thousand crores; or (B) in India or outside India, in
aggregate, the assets of the value of more than five hundred million US dollars
or turnover more than fifteen hundred million US dollars; or
(ii) the group, to
which enterprise whose control has been acquired, or is being acquired, would
belong after the acquisition, jointly have or would jointly have,- (A) either
in India, the assets of the value of more than rupees four thousand crores or
turnover more than rupees twelve thousand crores; or (B) in India or outside
India, in aggregate, the assets of the value of more than two billion US
dollars or turnover more than six billion US dollars; or
(c) any merger or
amalgamation in which-
(i) the enterprise
remaining after merger or the enterprise created as a result of the
amalgamation, as the case may be, have,- (A) either in India, the assets of the
value of more than rupees one thousand crores or turnover more than rupees
three thousand crores; or
(B) in India or outside
India, in aggregate, the assets of the value of more than five hundred million
US dollars or turnover more than fifteen hundred million US dollars; or
(ii) the group, to
which the enterprise remaining after the merger or the enterprise created as a
result of the amalgamation, would belong after the merger or the amalgamation,
as the case may be, have or would have,- (A) either in India, the assets of the
value of more than rupees four thousand crores or turnover more than rupees
twelve thousand crores; or
(B) in India or outside
India, the assets of the value of more than two billion US dollars or turnover
more than six billion US dollars.
Regulation
of Combinations under Section 6
Essentially, a
transaction must satisfy two conditions before Section 6 is triggered:[29]
(i) it must involve
total assets or turnover, with separate criteria for domestic and international
entities; and (ii) it must have a
territorial nexus with India.
Under the originally
enacted CA 2002, the reporting of a combination was optional. However, the act
now mandates notification within 30 days of the decision of the parties' boards
of directors or of execution of any agreement or other document for effecting
the combination. The general industry perception is that a memorandum of
understanding or a letter of intent will qualify as an 'agreement'. However,
these are generally executed to spell out a basic understanding among the
transacting parties and to enable the acquirer to conduct due diligence, based
on which further negotiations are carried out. Going forward, execution of such
a document shall trigger merger filings. This will increase compliance costs at
a premature stage when it is uncertain whether the transaction will close. It
will also add to the bulk of notification applications submitted to the
Competition Commission. It remains to be seen whether the Competition
Commission will have adequate internal capacity to handle and dispose of such
applications efficiently. If it does not have the resources, the delay will
potentially have a cascading effect and affect the ability of parties to close
on time. Therefore, it would be prudent to insert a clause in all future
transaction documents stating that closing will be subject to any prior
regulatory clearance that may be required from the Competition Commission.
ISSUES
RAISED:
The true test of
legality is whether the restraint imposed is such as merely regulates and
perhaps thereby promotes competition or whether it is such as may suppress or
even destroy competition. To determine that question the court must ordinarily
consider the facts peculiar to the business to which the restraint is applied;
its condition before and after the restraint was imposed; the nature of the
restraint and its effect, actual or probable. The history of the restraint, the
evil believed to exist, the reason for adopting the particular remedy, the
purpose or end sought to be attained, are all relevant facts.
In its purest form, the
―per se‖ rule inquires to whether the defendants engaged in a ―contract,
combination or conspiracy‖ and whether the agreement falls into a recognized
―per se‖ category such as price fixing or market division. Once such an
agreement is proved, the anticompetitive effect is presumed under the ―per se‖
rule. At that point, all defenses i.e. attempts to demonstrate ―reasonableness‖,
are precluded. One way to look at the ―per se‖ rule, therefore, is a rule of
evidence, as opposed to one of substantive antitrust law. When sufficient
indicia of anticompetitive potential are present, they can give rise to an
irrebuttable presumption of unreasonableness. The ―per se‖ rule reflects a
judgment that costs of identifying exceptions to the general rule so far
outweigh the costs of occasionally condemning conduct that might upon further
inspection prove to be acceptable, that is it is preferable not to entertain
defenses to the conduct at all. Hence ―per se‖ rules have long been justified
on the ground that certain kinds of conduct are so likely to prove to be
unreasonably anticompetitive that time spent considering defenses would be time
wasted. From the point of view of administrative convenience and judicial
efficacy, the search for the exceptional case- the truly ―reasonable‖ instances
of such conduct-are not worth the cost of investigation. Finally, it was argued
that ―per se‖ rules provided unambiguous guidance to courts and the business
community.
Section 3 (3)
undertakes presumption through the words ―shall be presumed to have AAEC‖. On
one side where certain jurisdictions have expressly criminalised cartels and
applied the per se rule with regard to bid, rigging, price fixing etc the
question remains whether this can be done with regard to anti competitive
practices in India where rule of reason is enforced.
Section 4 CA talks
about abuse of dominance position. In contrast the Sherman Act talks about
monopolization and the attempt to monopolize. Attempt to monopolize is
difficult to prove as intention plays a primal part. Where developed countries
are treating such anti- competitive behaviour as a felony, the question remains
can the same be applied to India. For this, certain legislations like the
Competion Act, Indian Penal Code, Evidence Act etc. Have to be harmonised
successfully.
Sectoral overlaps may
happen in case of conflict between CCI & other regulators. For e.g. - under
the Electricity Act, 2003, the power is with the Central Electricity Regulatory
Commission to issue directions to a licensee or generating company if it enters
into any agreement or abuse of their dominant position or enter into a
combination, likely to cause an adverse effect on competition in electricity
industry.this has been an ongoing debate since the advent of the Competition
Act. However the question still remains unanswered.
The Combination
Regulations do not provide for an ability to withdraw a filing, once made,
should the conditions affecting the combination change. Considering that the
time involved in getting a clearance from CCI may span up to 7 months, there is
likelihood that the information submitted along with the forms may become
outdated or irrelevant at the time of actual grant of clearance. There also
remains possibility of change in market conditions /circumstances requiring
parties to the combination withdraw their application. Thus, when due to
external factors a combination does not come under the purview of the
Competition act any further can it be possible that it could be allowed to
withdraw its application. The law remains silent on that.
CONCLUSION
Competition Law is a
complex mixture of a country's law, economics and administrative action
intended to favour competition in the economy. Since competition is seen as
critical to economic development, competition law seeks to protect this
competitiveness in the economy. The underlying theory behind competition law is
the positive effect of competition in an economy's market, acting as a
safeguard against misuse of economic power. The link between competition law
and economic development emphasized over and over again seems rather undeniable
and the need for competition law seems like the order of the day. The operation
of competition law by prevention of anti-competitive agreements, prohibiting
abuse of dominant position by firms and regulation of combinations which might
adversely affect competition in the economy, thus seems crucial for India. It
is therefore keeping that in mind that the Indian Parliament enacted the
Competition Act, 2002. The preamble and the statement of objects and reasons of
the Act, also evidence that the broad economic development objectives were a
consideration to adopting the Act.
During the past years,
the number of jurisdictions with a competition law has exploded from
approximately 25, of which few were seriously enforced, to some 100 today. With
economic activity increasingly transcending national borders, and jurisdictions
applying competition laws to firms and conduct outside their borders, achieving
at least a reasonable degree of coherence and convergence in the application of
competition laws is important for both competition agencies and firms.
Even though the Indian
competition law is modelled along the lines of EC law, the Commission is in no
way bound to interpret similar provisions in the Indian law in the manner interpreted
under the EC law. The Commission on the other hand is bound by the Preamble of
the Act to interpret it in a fashion that promotes economic development of the
country. This is because the conditions that exist in India are remarkably
different than those that exist in the EC and to come to the level where there
can be talk of similar interpretation of laws in the two jurisdictions, similar
development level would necessarily be a condition precedent. A few amendments
that could be added to Competition Act can be as follows:
Abbreviated rule of
reason can be developed especially with regard to cartel cases
Outer limit of 210
days is given to the CCI under the CA 2002. However the CCI aims at clearing at
notices within 180 days. This may lead to unnecessary delays and back logs.
Threshold limits for triggering CA are very high especially with regard to a
country like India where small industries are prevalent. Hence, it should be
taken into consideration that there might be many small enterprises entering
into mergers which may have AAEC but may not trigger the combination
regulations under section 5.
Leniency provisions
have been prevalent in India since the beginning of the act but there has been
no instance of anyone coming to claim them. The penalties under the act should
be hiked in this case so that a deterrent effect is created and leniency
provisions are made attractive.
While the basic
principles of competition law remain the same the objectives or the results
cannot be the same for all jurisdictions. In essence, a progressive realisation
of competition policy goals would be the answer to an effective competition law
regime in developing countries. While the implementation of competition law
even at the early stages of economic development is not bad per se its blind
implementation following the path of the developed countries can kill its very
objectives. Thus, competition law is a complex creation of law- makers which
the Indian Government and the Competition Commission should take time to
understand in light of the special needs and requirements of the Indian economy
and implement it accordingly.
[1] "CCI
formation". CCI. Retrieved 4 January 2013.
[2] "CCI
through the eyes of the media: Doing well!".MoneyControl.com. 18 September
2012. Retrieved 4 January 2013.
[3]
www.cci.gov.in
[5] Scott, Andrew (2009) The evolution of competition
law and policy in the United Kingdom. LSE law, society and economy working
papers, 09-2009, accessed at www.eprints.lse.ac.uk
[6]
www.ftc.gov
[7]
ibid
[8]
Supra n.6
[9] Eleanor M. Fox, ―US & EU Competition Law:
A Comparision‖ accessed at www.iie.com
[10]
Supra n.7
[11] Pradeep
S. Mehta, ―Competition & Regulation in India‖, accessed at
ww.cuts-ccier.org
[12] 38. State to secure a social order for the
promotion of welfare of the people.- (1) The State shall strive to promote the
welfare of the people by securing and protecting as effectively as it may a
social order in which justice, social, economic and political, shall inform all
the institutions of the national life. (2) The State shall, in particular,
strive to minimize the inequalities in income, and endeavor to eliminate
inequalities in status, facilities and opportunities, not only amongst
individuals but also amongst groups of people residing in different areas or
engaged in different vocations.
[13] 39. Certain principles of policy to be
followed by the State:- The State shall, in particular, direct its policy
towards securing- (a) that the citizens, men and women equally, have the right
to an adequate means to livelihood; (b) that the ownership and control of the
material resources of the community are so distributed as best to subserve the
common good; (c) that the operation of the economic system does not result in
the concentration of wealth and means of production to the common detriment;
(d) that there is equal pay for equal work for both men and women; (e) that the
health and strength of workers, men and women, and the tender age of children
are not abused and that citizens are not forced by economic necessity to enter
avocations unsuited to their age or strength; (f) That children are given
opportunities and facilities to develop in a healthy manner and in conditions
of freedom and dignity and that childhood and youth are protected against
exploitation and against moral and material abandonment.
[14]
Supra n.12
[15]
Supra n.13
[16]
www.advocatekhoj.com
[17] Vijay
Kumar Singh, ―Competition Law & Policy in India: The Journey in a Decade‖,
accessed at www.nujslawreview.org
[18]
CA,2002
[19]
Supra n.18
[20]
www.oft.gov
[21]
ibid
[22]
Supra n.18
[23]
ibid
[24]
ibid
[25]
www.competitionbureau.gc.ca
[26]
Supra n.18
[27]
ibid
[28]
Supra n.18
[29] www.indiacorplaw.blogspot.com
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