7/30/2019 Mrtp and Competition Act- India

1/17

Bangkok.

Contents

Where are we today?

How did we get here?

MRTP Act, 1969 New Economic Policy 1991 Amendments to

MRTP Act

Competition Act 2002

Competition Policy 2006-07?

7/30/2019 Mrtp and Competition Act- India

2/17

7Up2 Meeting, June 27-28, 2006,Bangkok.

Indias Competition Regime today:

New Competition Law:

The Competition Act , 2002

The CompetitionCommission of India (CCI);

The Competition Appellate Tribunal (CAT)

New Competition Policy:

Advisory Committee to prepare draft NationalCompetition Policy (December 2005)

Working group on Competition Policy at thePlanning Commission (for 11th Five Year Plan)

7/30/2019 Mrtp and Competition Act- India

3/17

7Up2 Meeting, June 27-28, 2006,Bangkok.

EVOLUTION- How We Got Here - 1

Constitution of India, Art. 39 (c)theoperation of the economic system doesnot result in the concentration of wealth

and means of production to the commondetriment

1947- 1969: Regimented and strict systemof government controls

1969: Monopolies and Restrictive TradePractices Act (MRTP Act) legislated

7/30/2019 Mrtp and Competition Act- India

4/17

7Up2 Meeting, June 27-28, 2006,Bangkok.

Monopolies and Restrictive TradePractices Act , 1969

OBJECTIVES:

Prevention of concentration of economicpower in a few hands

Control and regulation of monopolies incertain sectors

Prevention of unfair trade practices Prevention of restrictive trade practices

7/30/2019 Mrtp and Competition Act- India

5/17

7Up2 Meeting, June 27-28, 2006,Bangkok.

THE MRTP COMMISSION

A Quasi-Judicial Authority (Chairman (SC/HCJudge) and 2-8 members)

Assisted by Dir Gen of Investigation MRTPC vested with powers of a Civil Court:

cease and desist orders; injunction; awardcompensation, etc.

Can make recommendations to CentralGovernment on functioning of enterprises, when

such functioning was detrimental to public interest Suo Motoaction possible, though not used

7/30/2019 Mrtp and Competition Act- India

6/17

7Up2 Meeting, June 27-28, 2006,Bangkok.

EVOLUTION- How We Got Here - 2

1991: Widespread economic reforms in IndiaAimed at Liberalisation, Privatisation andGlobalisation

Changes felt necessary in MRTP Act Concentration of economic power to the

common detriment and control of monopoliesde-emphasised

Pre-entry restrictions (prior approval ofgovernment), expanding existing undertaking,M&As, takeovers deleted from Act

7/30/2019 Mrtp and Competition Act- India

7/17

7Up2 Meeting, June 27-28, 2006,Bangkok.

EVOLUTION- How We Got Here - 3

1999: Expert Group on interaction betweenTrade and Competition Policy recommendednew competition law to promote fair

competition and control (eliminate) anti-competitive practices in the market

2000: GoI High Level Committee on CompetitionLaw and Policy provided a draft Competition law.

2002:The Competition Act legislated

7/30/2019 Mrtp and Competition Act- India

8/17

7Up2 Meeting, June 27-28, 2006,Bangkok.

THE COMPETITION ACT, 2002What and how

WHAT?

Main Focus areas of the Act : Prohibition of Anti Competitive Agreements

Prohibition of Abuse of Dominance

Regulation of Combinations

Competition Advocacy

HOW?Through establishment of a Competition

Commission of India (CCI) and CompetitionAppellate Tribunal (CAT)

7/30/2019 Mrtp and Competition Act- India

9/17

7Up2 Meeting, June 27-28, 2006,Bangkok.

FOCUS AREAS OF 2002 ACT - 1

A. PROHIBITION OF ANTI-COMPETITIVEAGREEMENTS

All Anti-competitive agreements are void, i.e.,agreements which could restrict competition, vertical

or horizontal Rule of Reason to be applied for determining legality

of an agreement

Certain agreements between same or similarenterprises regarding prices or quantities, on bidding,or to share or divide markets are per seillegal

Leniency provision for whistleblowers in a cartel (ifdisclosure is before prosecution)

7/30/2019 Mrtp and Competition Act- India

10/17

7Up2 Meeting, June 27-28, 2006,Bangkok.

FOCUS AREAS OF 2002 ACT - 1

EXCEPTIONS: Export cartels (problem is somewhere else!) Agreements permitted in law Agreements under IPR (not unreasonable restrictions

like patent pooling, price-fixing etc.)

RULE OF REASON TO BE APPLIED (factors): Creation of entry barriers Driving existing competitors out of the market Accrual of benefits to consumers Improvements in goods and services Increase in Technical development

7/30/2019 Mrtp and Competition Act- India

11/17

7Up2 Meeting, June 27-28, 2006,Bangkok.

FOCUS AREAS OF 2002 ACT - 2

B. PROHIBITION OF ABUSE OFDOMINANT POSITION:

Mere dominance is not an offence, abuse ofdominance is prohibited

Important shift from size / structure tobehaviour / conduct

Instances of unfair, discriminatory or predatorypricing; restricting quantities, markets or

technical development, etc. will qualify

7/30/2019 Mrtp and Competition Act- India

12/17

7Up2 Meeting, June 27-28, 2006,Bangkok.

FOCUS AREAS OF 2002 ACT - 3

C. REGULATION OF COMBINATIONS: Includes M&As, Amalgamations, Acquisitions of control -

all above a certain high level threshold (Rs.1000 croreaggregate value of assets or Rs.3000 crore turnover ofcombining parties)

Thresholds deliberately high to allow small Indiancompanies to combine to become active internationalplayers

Combinations that cause or are likely to cause anadverse effect on competition are under focus (e.g.,horizontal mergers between competitors; vertical mergerby dominant player with firm in adjacent market, etc.)

Pre-notification voluntary

7/30/2019 Mrtp and Competition Act- India

13/17

7Up2 Meeting, June 27-28, 2006,Bangkok.

FOCUS AREAS OF 2002 ACT - 4

D. COMPETITION ADVOCACY: CCI to create culture of competition Empowered to participate in formulation of

countrys economic policies Create awareness and training on competition

issues Establishment of Competition Fund for above Recently asked to develop Consultation Paper on

National Competition Policy (to harmonisevarious government policies)

7/30/2019 Mrtp and Competition Act- India

14/17

7Up2 Meeting, June 27-28, 2006,Bangkok.

COMPETITION COMMISSIONOF INDIA (CCI)

Adjudicative wing distinct from Investigative andProsecution wing

Allows appointment of economists, lawyers,

other professionals as investigators (departurefrom practice of appointing retd. bureaucrats)

UTPs removed from the purview of Act and allpending cases transferred to the Consumer

Protection Act, 1986 (CPA) Phased introduction of Act competition

advocacy (Y1); Anti-Competitive Practices andAbuse of Dominance (Y2); Combinations (Y3)

7/30/2019 Mrtp and Competition Act- India

15/17

7Up2 Meeting, June 27-28, 2006,Bangkok.

COMPETITION APPELLATE TRIBUNAL(CAT)

Established after intervention by Supreme Courtof Indiato retain judicial powers within the

judicial system

CAT to hear and dispose appeals against anydirection issued or decision made or orderpassed by CCI

7/30/2019 Mrtp and Competition Act- India

16/17

7Up2 Meeting, June 27-28, 2006,Bangkok.

EVOLUTION- How We Got Here - 4

2004: UPA government elected despite IndiaShining belief

NCMP commits to greater effort towards

increasing competition and a competitiveenvironment broad basing development

2005: GoI asks CCI to develop consultationpaper on National Competition Policy

2005: CCI establishes Advisory Committee todevelop draft National Competition Policy

2006: Planning Commission establishes WorkingGroup on Competition Policy (for 11th Plan

2007-12)

7/30/2019 Mrtp and Competition Act- India

17/17

7Up2 Meeting, June 27-28, 2006,Bangkok.

Competition in India the road map

Shift from size / structure focus to conduct

Shift from discouraging dominance to discouragingabuse of dominance

Includes combinations (previously ignored) Includes strong component on competition advocacy

Replaces Rule of Law approach with Rule of Reasonapproach

New Competition law to deliver above Decision to locate Competition law within broader

Competition Policy that harmonises various policies