TOPIC 1
• Basic Concepts
• Constitutional aspect- Article 39
• Relation between Competition Policy and Competition Law
• Objectives of Competition Law
• History and Development of Competition Law
- Liberalization and Globalization
- Raghavan Committee Report
• Difference between MRTP Act and Competition Act
• Salient Features of Competition Act- Reference to EU and US Laws (UK Law)
• The Competition (Amendment) Bill, 2012; The Competition (Amendment) Bill, 2020
• Draft National Competition Policy, 2011
• Cases- Brahm Dutt v. Union of India AIR 2005 SC 730
CCI v. Steel Authority of India (2010) 10 SCC 744
Mahindra Electric Mobility Ltd. v. CCI, 2019 SCC OnLine Del 8032
BASIC CONCEPTS:
• What is Competition?
• What is Competition Law?- Competition Act, 2002+ Rules+
Regulations+ Orders/judgments
• What is Competition Policy?- Competitive Nature of the
Market- LPG
• Goals of Competition
• Types of Competition
• Objectives of Competition Law
• Relation between Competition Policy and Competition Law
WHAT IS COMPETITION?
To succeed- market sense- market share, revenue, profit, dominance, loyal customers.
Adversarial situation (Rivalry) where certain parties have common goal.
What is Competition?
• Not defined in the act
• English Parlance- as an activity or conditions of striving to gain or win
something by defeating or establishing superiority over others.
• Market Place- process of rivalry to attract more customers or enhance profit.
Competing for quality, price and resources, fair trade and efficient resource
allocation.
• Samuel Jackson- Dictionary of English Language- Competition to be a noun
meaning the act of endeavoruing to gain what another endeavours to gain at
the same time, rivalry, contest.
• Prof JM Clark- Competition is the kind of market pressure which must be
exerted to penalise the laggards and to reward the enterprising and in this
way to promote economic progress.
• World Bank- A situation in the market in which firms or sellers
independently strive for the buyers patronage in order to achieve a particular
business objective for instance profits, sales or market shares.
• UK Competition Commission- Process of rivalry between the firms seeking to
win customers business over time.
• Economics- Process or state where there are many sellers and buyers and the
price of the commodity is determined by the forces of demand and supply.
The market or the prices of the commodity are not controlled by one person
or group.
The Parliamentary Standing Committee on Home Affairs in its 93 rd
Report on the Competition Bill, 2001
Competition is an evasive term and is understood differently in different
contexts. Competition is basically an economic rivalry amongst economic
enterprises to control greater market power. It is a situation where the
market remains open to potential new enterprises and those enterprises
operate under the pressure of competition.
GOALS OF COMPETITION:
Economic Goal; Social Goal and Political Goal (Integration of Market).
• Enhance Efficiency in the market
- Allocative Efficiency
- Productive Efficiency
- Dynamic Efficiency (Reward- IPR)
• Promoting Consumer Welfare (Lower prices, Better quality goods- better
choice).
• Avoidance of concentration of economic power.
• Protection of smaller firms. (Let the big fish not eat all the small fishes).
TYPES OF COMPETITION:
• Direct Competition
• Substitute or Indirect Competition
• Budget Competition (Share of wallet).
TYPES OF COMPETITION/MARKET
PERFECT MONOPOLISTIC OLIGOPOLY/ MONOPOLY
COMPETITION COMPETITION DUOPOLY
No. of Competitors (Seller) Many Few to Many Very Few/ No direct
Exactly Two competition
Sellers
Ease of Entry and Exit from Easy Somewhat difficult. Difficult Regulated by
Industry Government
Similarity of Goods offered by Same Similar Similar No directly
Competing Firm competing
product
Individual Firms Control over Set by market Some Some Considerable (in
Price true monopoly)
Little (in
regulated)
Example Fish Market Restaurants, Automobile Railways
Clothing, Hair Manufacturer,
Salons Airlines, Soft
Drinks
MONOPSONY: Many sellers but only one buyer. Example- Defence.
COMPETITION LAW
• Enactment which can be enforced in the court of law.
• Law to regulate the behaviour of enterprises in the market
- To ensure competition in the market.
- Restrict unfair competition in the market.
- Consumer Welfare.
-Prohibiting anti-competitive agreements. (Section 3)
-Prohibition on abuse of dominant position. (4)
-Regulation of mergers, amalgamation- cause a detrimental effect. (5
and 6)
COMPETITION POLICY
• Measures, executive policies, guidelines and approach by the government to
the competition issues in the relevant market.
• Government measures that directly affect the behaviour of enterprises and
structure of industry.
COMPETITION LAW & COMPETITION POLICY
• Competition Policy is the main frame of which Competition Law is the ancillary
support.
• Policy is the main structure of which competition law is one of the component which
can legally enforce the issues arising out of the competition policy.
• CP provides guidance whereas CL sets forth binding prohibitions.
• The Tariff Commission of the Republic of Philippines-
“Competition law refers to the framework of rules and regulations designed to foster the
competitive environment in a national economy. It consist of measures intended to
promote a more competitive environment as well as enactments designed to prevent a
reduction in competition.”
“Competition policy on the other hand refers to all laws, government policies and
regulations aimed at establishing competition and maintaining the same. It includes
measures intended to promote, advance and ensure competitive market conditions by the
removal of control, as well as to redress anti-competitive results of public and private
restrictive practice.”
COMPETITION LAW & COMPETITION POLICY
• High Level Committee on Competition Policy and Law, 2000- there are two elements
of policy-
-Putting in place a set of policies that enhances competition in local and national
markets.
-Competition Law
• CP describes the way in which government take measures to promote competitive
market structure and behaviour.
• CP encompasses within itself a system of CL. The law will seek to implement the
policy by ensuring that firms operating in the market place do not act in a way that
harms competition.
COMPETITION POLICY
Promoting Competition and Sustaining Competition
• Industrial Policy (Exit barriers (Labour and Bankruptcy Laws),
Location of industries guidelines, public sector, restriction on capacity,
reservations for small scale industry).
• Trade Policy (Liberalization in Trade, reducing tariff, removal of
quotas)
• Privatization/Disinvestment
• Economic Regulation (Restructuring of industrial sectors)- Telecom
OBJECTIVES OF COMPETITION LAW
• Achieve highest sustainable level of economic growth, entrepreneurship,
employment.
• Highest standards of living for citizens.
• Protect economic rights for just, equitable, inclusive and sustainable
economic and social development.
• Promote economic democracy and support good governance.
• Preserve competition process- protect competition and encourage
competition in market so as to optimise efficiency and maximise consumer
welfare.
• Promote, build and sustain a strong competition culture within the country
by creating awareness, imparting training and capacity building of
stakeholders.
OBJECTIVES OF COMPETITION LAW
• Encourage adherence to competition principles.
• Ensure competition in regulated sector- to ensure institutional coherence for
synergized relationship between and among the sectoral regulators and
competition regulator. (TRAI-CCI)
• Strive for a single national market.
• Ensure that consumer enjoy greater benefits in terms of wider choices, best
quality of goods and services and competitive prices.
PRINCIPLES OF COMPETITION POLICY
• Effective prevention of anti-competitive conduct.
• Institutional separation between policy making, operations and regulation.
• Fair market process.
• Competitive neutrality- ‘level playing field’.
• Fair pricing and inclusionary behaviour.
• Third party access to essential facilities- FRAND Licensing-IPR
• National, regional and international cooperation.
• Public policies and programme to work towards promotion of competition in
the market place.
HISTORY/EVOLUTION OF COMPETITION LAW
• Invented neither by technicians of commercial law (though they became its
first specialist) nor by economists themselves (although they supplied its most
solid background).
• Desired by politicians (in the USA) and scholars (in EU) as an answer to a
crucial problem of democracy.
“PRIVATE POWER vis-à-vis PUBLIC POWER”
• USA- Anti-Trust Laws
- Sherman Antitrust Act, 1890 (Interstate Commerce Act 1887)- regulated railroad
industry- rates to be reasonable and just. US v. Trans-Missouri Freight Association Case,
1897
Standard Oil Company of New Jersey v. US (1911)- Agreements in restraint of trade and
monopolization- Horizontal agreements
- Clayton Act, 1914 – Vertical Agreements (Exclusive dealing agreements, tying
arrangements + Combinations (mergers and acquisitions that tend to affect competition or
- Federal Trade Commission Act, 1914 (Established FTC- DOJ- Enforcement of
Anti-Trust Laws)
- Robinson Patman Act, 1936 (Amendment in Clayton Act- Anti-Price
Discrimination Act- to protect small scale retailers- existence was threatened from large
scale chainstores- receiving high discount for buying the goods- bigger procurement.) –
Morton Salt v FTC (1948)
- Celler Kefauver Act, 1950- amended Clayton Act- assets+ vertical combinations
(A- Raw Material Manufacturer- B, C, D, E- Competitors- Manufacturing- Raw Material
from A)
- Hart-Scott-Rodino Antitrust Improvements Act, 1976 (Giving DOJ and FTC the
power to review merger of firms above a certain size threshold.
(Pre-Merger Action- Post-Merger Action)
• European Union- Regulated at 2 levels- National Level and Community Level.
-The Treaty Establishing the European Coal and Steel Community (ECSC
Treaty), 1951
Ensure access to essential production inputs like coal and steel for all European Countries-
diminish the power of Germany.
Perspectives regarding the benefits of free competition- reliance was placed on USA antitrust
laws.
• Anti-competitive agreements- art. 65- section 3(3) Proviso
• Abuse of Dominant Position- art. 66(7)- Predatory Pricing
• Concentration & Mergers- art. 66
- The European Economic Community (EEC) Treaty, 1957 (Rome Treaty)- European
Community
-art. 85- exemption in relation to agreements which bring forth some improvement and
art. 86-
merger regulation provision was not there in this treaty – state aids.
- The Treaty for the Functioning of the European Union- art. 101- anti-competitive
agreements art. 102- abuse of dominant position. Art. 107- state aids.
United Kingdom
-Common Law-Undue restraint of trade- parties to the agreement- doctrine has
no application to abuse of economic power/dominant position- declare the agreement of
void- enforced. 1948-
- Competition Act, 1998- anti-competitive agreements + abuse of Dominant
Position
- Enterprise Act, 2002- mergers
- Enterprise and Regulatory Reform Act, 2013- Office of Fair trading _
Competition Commission- Competition and Markets Authority.
EVOLUTION OF COMPETITION LAW IN INDIA
• Independent India- Socialism- Industrialization (state intervention + import
substitution)- Rapid Industrial Development- Equitable distribution of wealth.
• Constitution DPSP- art. 39(b) + art. 39(c) {ownership and control of the material
resources are so distributed as best to subserve the common good + operation of the
economic system does not result in concentration of wealth}
• Hazari Committee Report on Industrial Licensing Procedure, 1955- states have been
biased in granting license only to wealthy and influential entrepreneurs- uneven growth
of industries.
• Mahalanobis Committee Report on Distribution and Levels of Income, 1964 (Industrial
Licensing cannot be blamed for the growth in concentration of economic power- big
business houses emerged because of planned economy)
• Monopolies Inquiry Commission Report of Das Gupta, 1965
- High concentration of economic power in over 85% of industrial items.
- Dominant position allowed firms to manipulate prices and output.
- Big business houses were at an advantage in securing licenses.
- Evidence of Predatory Pricing.
- Many industries have only one supplier having large market share
- Pvt. Players were creating entry barriers.
Legislative Policy-
Need not strike at concentration of economic power rather it should do so only when it
become problematic to the best production or to fair distribution.
Constant watch by an independent body.
Monopolistic conditions should be discouraged.
MTP and RTP should be curbed.
Drafting of a bill.
• Hazari Committee Report on Industrial Planning and Licensing Policy, 1967
- “First come, first serve basis”
- Proper follow up.
• Industrial Licensing Policy Inquiry Committee Report, 1969
- no specific instructions to the authorities to prevent concentration of economic
power
- procedure that was followed nurtured the growth of large industrial groups.
- MRTP Bill be passed- effective legislative regime
• MRTP Act, 1969- December 1969 and came into force in June 1970 and the MRTP
Commission in August 1970.
• MRTP ACT- Preamble –
An Act to provide that the operation of the economic system does not result in the
concentration of economic power to the common detriment, for the control of monopolies,
for the prohibition of monopolistic and restrictive trade practices and for matters connected
therewith or incidental thereto.
Four Principles:
- Social Justice with economic growth
- Welfare State
- Regulating concentration of economic power
- Controlling MTP and RTP
• Sachar Committee Report, 1978- In June, 1977 the govt. appointed High Powered Expert
Committee- to report the required changes-
- Widening scope of MRTP Act to include Unfair Trade Practices.
- Withdrawal of Exemption for public enterprises.
- Enhancement of MRTP Commission powers
• 1984 Amendment- Included UTPs within the ambit of MRTP Act.
• 1991 Amendment- Removed the need for government approval to establish new undertakings
or the expansion of existing undertakings- deleted the exemption granted to govt.
undertakings.
• Reasons for failure of MRTP Act:
- Absence of proper and adequate definitions.
- MRTP Commission was poorly resourced.
- Era of LPG.
- International Economic Development.
- Shifting focus from curbing monopolies to promoting competition.
- Inadequate- big rigging, cartels, collusion, abuse of dominant position.
• Ministry of Commerce- set up an Expert Group on Interaction between Trade and
Competition Policy in Oct, 1997- 1999- recommended appropriate competition law to
protect fair competition and to check anti-competitive practices.
• 1999- Budget Speech- Yashwant Sinha, Finance Minister
“The MRTP Act has become obsolete in certain areas in the light to international
economic development relating to competition laws. Therefore the requirement is to shift
focus from curbing monopolies to promoting competition.”
• In 1999 the GOI appointed a High Level Committee on Competition Policy and Law
(Raghavan Committee)- submitted its report in May 2000- advised a new competition
law.
- Setting up of CCI
- Focus of law- Anti-competitive agreements, abuse of dominant position and
combinations.
• Competition Act, 2002 enacted in December 2002 and received presidential assent in
January 2003. Provisions of Competition Act was enforced in phases.
st
MRTP Act, 1969
• Preamble
• Definitions (Section 2) – 2(d), 2(i), 2(o)
• Other Sections- Section 5, 10, 12, 12B, 27, 31, 32, 33, 35, 37, 36A
Reference or its own knowledge-MTP-
“Every MTP is deemed to be prejudicial to public interest” (Burden of Proof)
“Shall be presumed to have AAEC”- 3(3) of CA- rebuttal presumption
“Causes or is likely to cause AAEC”- 3(4) of CA (Burden- Informant, CCI)
Rule Per se and Rule of Reason
MRTP ACT, 1969 COMPETITION ACT, 2002
Based on Pre-Reform Scenario Based on Post-Reform Scenario
Size is a factor. (Premised on size) Structure is a factor (Premised on conduct)
Registration of agreements compulsory There is no such requirement.
No regulation on combinations Combination is regulated beyond a
particular threshold.
Frowns upon dominance Frowns upon abuse of dominance
UTP UTP omitted
Reactive and Rigid Proactive and flexible
No competition advocacy role Competition advocacy (Section 49)
No extra territorial application Extra territorial application (Section 32)
Little administrative and financial autonomy Relatively more autonomy
Complex in arrangement and language Simple in arrangement and language- easily
comprehensible
Important definitions missing Definitions are mentioned
