Members Ankit Poonia Ankit Sharma

Ankita Agarwal Ankita Ahuja

Ankita Bhargava Anuradha Randar

Anusha Anshul Singh Katiyar Apoorva Bhadwiya

Anmol Sharma

GROUP II

Submitted to:

Ms. Neha Dixit

Competition Policy and Law in India

3

EXTANT COMPETITION LAW OF INDIA

MONOPOLIES AND RESTRICTIVE

TRADE PRACTICES ACT,1969

BROUGHT INTO FORCE IN 1970

The Monopolies And Restrictive Trade Practices Act, 1969 is an important piece of economic legislation designed to ensure that the operation of the economic system does not result in the concentration of economic power to the common detriment.

The act came into force from 1st June, 1970, and has been amended in 1991.

INTRODUCTION

OBJECTIVESTo ensure that the operation of the economic

system does not result in the concentration of economic power in hands of few,

To provide for the control of monopolies, andTo prohibit monopolistic and restrictive trade

practices.

It means in order to maximize profit and to increase market power, certain business firms unreasonably charge high prices to prevent competition in the production & distribution of goods by adopting unfair trade practices.

It is a trade practice which represents the abuse of the market power by charging unreasonably high prices.

MONOPOLISTIC TRADE PRACTICES

Regulation of production and fixing the term of sale.

Prohibiting any action that restricts competition.

Fixing standards for goods produced.

REGULATION OF MTPs

A trade practice which restricts or reduces competition may be termed as Restrictive Trade Practices and it harm the consumer interest.

Because of their adverse effect on the consumer and public interest, they are sought to be regulated in almost every country of the world.

RESTRICTIVE TRADE PRACTICES

The practice shall not be repeated.

The agreement shall be void and shall stand modified in such a manner as may be specified in the order.

REGULATION OF RTPs

Unfair trade practice means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair or deceptive practice.

UNFAIR TRADE PRACTICES

The practice shall not be repeated.

Any agreement relating to such an UTP shall be void or shall stand modified in such a manner as may be directed by the commission.

REGULATION OF UTPs

The MRTP Act was severely criticized because of its growth defeating provisions.

Therefore, the High Level Committee on Competition Policy and Law has recommended that a new law called the Indian Competition Act may be enacted and the MRTP Act may be repealed.

Evolution of Competition Policy and Law

What is competition?

Competition

Literary meaning: a contestable situation where people fight for superiority.

In market economy, competition is a process whereby firms fight against each other for securing consumers for their products

An Act(enacted in December, 2002) to provide, keeping in view of the economic development of the country, for the establishment of a Commission:

to prevent practices having adverse effect on competition,

to promote and sustain competition in markets, to protect the interests of consumers

to ensure freedom of trade carried on by other participants in markets, in India, and for matters connected therewith or incidental thereto.

What is Competition Policy

Competition Policy /Law

Competition policy => government measures directly affecting both Firm Behavior and Industrial structure.

A competition policy should include both:

i) Economic policies adopted by Government, that enhance competition in local and national markets, and

ii) Competition law designed to stop anti-competitive business practices.

Why do we need a competition policy?

A fair deal in the market place with:

The best possible choice of quality

The lowest possible prices, and

Adequate supplies of commodities.

Benefits to Consumers

A safeguard against practices that could drive companies out of

business. Lower entry barriers to promote entrepreneurship and growth of

SMEs. Efficient allocation and utilization of resources ensures more

output and employment. Control of international unfair competition and restrictive

business practices, such as international cartels

Benefits to Efficient Producers

Components of competition policy

Competition Policy

Competition Law

Government Policies

Private Actions

Deregulation and

Privatization

Trade Policy

Industrial Policy

Regulations Governing Capital and FDI

ConsumerPolicy

Competition law is the enactment of that policy and achieves its objectives in three ways:

(1) prohibiting anti-competition agreements and practices that harm free trade and competition;

(2) preventing abuse of dominant position and anti-

competitive practices that lead to such a dominant position;

(3) regulating mergers and acquisitions.

Competition Law

Competition Law (National)

Anti-Competitive Agreements Between

Firms ( Collusion)

Abuse of a Dominant

Market Position

Regulation of Mergers to Prevent Tactics to Gain

Excessive Dominance in a Market

Applies to:•Import cartels•Price fixing•Market sharing•Bid rigging•Limiting production•Refusal to buy or supply•Tie-in arrangements•Exclusive-dealing •Resale price maintenance•Territorial allocation

• Predatory pricing

• Price discrimination

• Excessive pricing

• Abuse of intellectual property monopoly

•Total unification of the companies involved

•Buying of sufficient shares in a company so as to have a say in policy formulation

Interface of

Foreign Direct Investment

According to Ruman, “Foreign direct investment is the ownership and control of foreign assets. In pratice, FDI usually involves the ownership, whole or partial of a company in a foreign country. This is called foreign subsidiary. This ongoing company.”

Foreign Direct Investment

Types of FDI

Direct Investment

Portfolio Investment

FDI brings CapitalNew technology and methodsIncreasing the skills of labour poolExpand various networks export expansionForeign exchange earningIncrease the domestic economySignificant growth Competitive market structure

Benefits of FDI

FDI interferes in the national politicsMore focus on high profit areas rather than to

the priority sectorsUndermine national interestsForeign investors sometimes engage in unfair

and unethical trade practices.

Limitations of FDI

Home countryOutward FDI encouragement

Risk reduction policies (financing, insurance, tax incentives)

Outward FDI restrictionsNational security, BOP

Host countryInward FDI encouragement

Investment incentivesJob creation incentives

Inward FDI restrictionsOwnership extent restrictions (national security;

local nationals can safeguard host country’s interests

Government Policy and FDI

Synergy between Government Action and Competition

Assess all laws and government policies on the touchstone of competition

All government policies should have an explicit statement about the likely impact of the policy on competition

Governments at the union and the state level should frame and implement policies by acknowledging the market process

Government should evolve a system of ‘competition audit’ which could be applied to all existing and future policies

To Conclude

THANK YOU