History of Competition Law in India. Its an Emerging Area in the Field of Law

The establishment of British Rule in India left the Indian economy crippled. India served as a dumping ground for the machine do cloth and some other(a) factory goods from England and was reduced to a mere w lace material supplying colony.After winning Independence against the political aspiration posed by the British Rulers for many years, India, post independence, started its era of contend against economic aspiration, the only difference creation that the threat which India faced was this instant not only restricted to the British restrainrs more all over to the whole valet de chambre which considered India as a dream destination for celebrating the advantages of Globalization and Liberalization. loving Independence gave way to the entrance of many big firms into the Indian merchandise exploring opportunities in various copes and business organisationes.The condition of the Indian market was real unaccented and vulnerable to face the might of these foreign firms , be coiffe India at that time incomplete had the resources nor the skilled workforce to convert, if at all, much(prenominal) resources to compete with these foreign firms. The expert and scientific capabilities were poor, industrialization was hold and lopsided. Agricultural orbit exhibited features of feudal and semi-feudal institutions, imparting into deplorable productivity. In brief, poverty was rampant and unemployment was widespread, both making for low cosmopolitan standard of living.These were the socio-economic settings in which the founding fathers had to chart out a class of nation-building. The Indian presidential term, although did not beget the weapons to wage war against such barbarian competition against the foreign firms but the regime did not fail to rule out the contingent defences to resist the competition posed by the foreign firms to protect its own domestic market. The Monopolies and limiting Trade Practices mask of 1969 rancid out to be the most sought after Defence weapon. The history of the Indian competitive edict goes back to the Monopolies Enquiry focal point.In 1964, when the Indian democracy was in its nascent state b atomic number 18ly 17 years old the government of India name the Monopolies Enquiry Commission to demand into the effect and result of submersion of economic power in secret hands and prevalence of monopolistic and constrictive trade practices in measurable economic activity other than agriculture. The commission submitted its report along with the Monopolies and Restrictive Trade Practices (MRTP) Bill, 1965 and on June 1st The Monopolies and Restrictive Trade Practices lick came into man on 27thDecember, 1969.The preamble to this enactment willd it to beAn Act to volunteer that the operation of the economic system of rules does not result in the tightness of the economic power to the everyday detriment, for the check off of monopolies, for the prohibition of monopolistic and r estrictive trade practices and for matters connected therewith or incidental thereto. Therefore, in common parlance, the MRTP Act, 1969 aimed at preventing economic power concentration in a few hands, the intention behind this was to avoid damage, with the end result protecting consumer pertain and the economic society at large.HISTORY OF THE MRTP ACT, 1969 Post independence, when the arrangement of India, that is, the Blanket-cover regulator, was being enacted and adopted, the most important obliges which provided for recognising the effect of the MRTP Act, and preventing and avoiding damage were denomination 38 and Article 39 of the genius, which was adopted and enacted and came into effect on the 26thday of November, 1949. Article 38 of the Constitution provides for the Directive Principles of State Policy which mandates upon States to secure a social order for the promotion and welf atomic number 18 of the people.This provision recognised the bring to eliminate and minimi se the inequalities in income, which applied not only to the individuals but withal to the groups in different aras. However, the MRTP Act of 1969 owes its existence to the provision provided nether Article 39(c) of the Constitution of India which provided that the States shall strive to securethat the operation of the economic system does not result in the concentration of wealth and means of payoff to the common detriment.The preamble to the MRTP Act rests on this very provision of the Constitution of India. In the case ofState of Biharv. Kameshwar Singh, the Court was of the opinion, that, a law aimed at doing away with the concentration of big blocks of land in the hands of a few individuals would sub-serve the directives laid down in sub-clauses (b) and (c) of Article 39 of the Constitution of India. Taking this judgment into perspective, the preamble to the MRTP Act, 1969 gets reinstated where the aim or the intention f the legislature behind enacting such an Act is to avo id damage by concentration of economic power in the hands of only a few and thereby causing damage. However, the MTRP Act was not a result of just the two provision of the Constitution of India. After enacting the aforementioned articles, the governance of India assumed the responsibility of overall development of the country. It was incidentally that the Government appointed the Mahalanobis Committee on the Distribution of Income and Levels of Living in October 1960.The principal(prenominal) task at hand for this Committee was identifying the pattern of work of large business houses under the planned economy regime and whether there was any concentration of economic power. It was after this Committee that the Monopolies Inquiry Commission (MIC) was set-up in 1964 which describe that there was high concentration of economic power in over 85% of industries in India at that point in time. MONOPLIES INQUIRY counselling (MIC) MIC appointed under Commission of Inquiry Act, 1952 Sc ope of inquiry extent and effect of concentration of economic powers in clannish hands. TOR excluded agriculture sector and universe sector MIC to suggest legislation and other measures to protect innate public interest and also suggest agency for enforcement of the legislation FINDINGS OF THE MIC wayward social effects of economic concentration Government policies one of the main causes of economic concentration Managing agency system New technology home of production Birth of equity culture increase in coat War efforts of India Political largesse MIC used CR3 Studied 100 products 64 products were found having CR3 75% Infant milk food, biscuits, chocolates, tea, coffee Dhoti, saree, shirting Kerosene, coal, oil colour Lantern, stove, fan, lamp, radio, refrigerator, geyser Tooth-paste, razor, blade, cigarettes Vitamins, penicillin Cars, commercial vehicles, tyres Cement, sanitary-wares etc MIC distinguished between industry-wise concentration and countr y-wise concentration monolithic number of industries had either single supplier or one supplier having large share of market. Collusive behaviour in certain sectors creation barrier created by private players Evidence of rapacious pricing some(prenominal) public sector enterprises enjoyed monopoly Many restrictive trade practices (RTP) prevalent hoard Re-sale price maintenance Exclusive dealing Price fixing boycott Price discrimination Big business by its very bigness sometimessucceed in keeping out competitors RECOMMENDATIONS OF MIC Non-legislative recommendation clanting up public sector enterprises in sectors which have little competition Promoting SMEs and Cooperatives to challenge private monopolies Continuation of license system and import restrictions Proposed an autonomous Commission headed by a Judge to implement a reinvigorated law. The proposed commission to have an investigating arm Punitive powers to the Commission Scope of merger control limit ed to merger involving a dominant enterprise (at least 1/3 of share in production/ supply/distribution) All proposals for elaboration by dominant enterprises to be approved by the proposed Commission IPRs to be under the purview of the proposed law. MRTP ACT Made some significant departures from the recommendations of MIC RTP veto MTP Government can refer to MRTPC for inquiry and recommendation M & As powers entirely with the Government Enterprises having Rs. 200 million in assets and dominant enterprises having Rs. 10 million in assets to seek prior approval of primordial Government for expansion or setting up a bracing p mappingtariat MRTPC had limited cultivated Court powers enforcing attendance of witness and calling for documents these powers were not provided to the investigating agency Trial of offences in the domain of CourtsSACHAR COMMISSION Set up in 1997 to consider the working of MRTP Act and recommend prerequisite changes. FINDINGS OF THE SACHAR COMMI SSION Reviewed the working of MRTPC during the period 1970-77 Found that the actual role of MRTPC was limited and mostly advisory The Government had not made use of the expertise few references to MRTPC for opinion RECOMMENDATIONS OF THE SACHAR COMMITTEE I Definition of dominant enterprise to be changed enterprises with ? arket share to be termed dominant Harmonization of explanation of goods in the MRTP Act with the Sale of Goods Act Inter-connected undertakings concept to be introduced to the MRTP Act Government Undertakings to be brought under purview of MRTPC Compulsory reference by the substitution Government on MTPs to MRTPC All M&As to be referred for revalue of MRTPC, if the Central Government so desires. Division of enterprises- MRTPC to pass final orders if the Central Government referred the matter to it. Certain Unfair Trade Practices (UTPs) like lead publicizings to be inserted in the truth index number to compensate against injury Power to grant i nterim requirement Power of contempt Investigating arm to be provided more teeth by powers of conducting down raids and limited Civil Court powers 1984 AMENDMENT TO MRTP ACT Many deviations from the recommendations of the Sachar Committee Concept of deemed il statutoryity to host of trade practices introduced Exclusionary behaviour, tie in sale, re-sale price maintenance, bid rigging, allocation of market, boycott predatory pricing etc. Registration of agreements by dominant enterprises made requisite Mis-representation as well as misleading or disparaging advertisement included Provisions prohibiting UTPs introduced 1991 AMENDMENT TO THE MRTP ACT Provisions dealing with monopolistic enterprises want prior Government approval deleted Government Undertakings, Government Corporations and Government possess Companies brought under the purview of the MRTP Act by notification Granting of injunction without uncover of notice to the effective parties PROVISIONS IN PRESENT MR TP ACT Has legal power in RTP & UTP 14 practices are deemed RTP, but there are gateways in S. 38 MTP if referred or suo moto, but can only recommend to Government M & A were deleted in 1991 Can grant temporary injunction Has powers of contempt For disobedience, MRTPC must complain to criminal court RAGHAVAN COMMITTEE A high level Committee on opposition Policy and Law set up in 1999. TOR inter-alia included recommending a suitable legislation framework which could either be a new law or appropriate amendments to the MRTP Act FINDINGS OF THE RAGHAVAN COMMITTEE Word competition used sparsely in theMRTP Act only twice Absence of precise definition e. g. Cartels Inadequate to deal with implementation of the WTO Agreements No specific powers under the MRTP Act to deal with mergers Inadequate in dealing with anti-competitive practices as in other modern competition law Expedient to have a new Competition Law. Competition Commission of India Duties Competition Act, 2002 not ified in January, 2003 Stated objective (as indicated in Preamble) is to establish the Commission to Eliminate practices having adverse effect on competition Promote and sustain competition Protect consumers interests Ensure license of trade carried on by other participants in markets in India Section 18Preamble of the Competition Act, 2002 States keeping in view the economic development of thecountry, to prevent practices having appreciable adverse effect on competition to promote and sustain competition in trade and industry to protect the interest of consumers to ensure immunity of trade carried on by the participants in markets in India Objectives to be achieved by dint of the establishment of the Competition Commission of India (CCI).The Competition Act, 2002 new wine in a new bottle There is a significant line of business between the repealed MRTP Act and the Competition Act. The intent of the Competition Act is not to prevent the existence of a monopoly across t he board. There is a realization in policy-making circles that in certain industries, the nature of their operations and economies of plate indeed dictate the creation of a monopoly in order to be able to operate and remain viable and profitable. This is in significant line of descent to the philosophy which propelled the operation and application of the MRTP Act.The word monopoly is no longer forbidden in merged and political India. The Act declares that person and enterprise are prohibited from entering into a conclave which causes or is likely to cause an appreciable adverse effect on competition within the relevant market in India. A system is provided under the Act wherein at the option of the person or enterprise proposing to enter into a combination may give notice to the CCI of such intention providing details of the combination. The Commission after overdue deliberation, would give its opinion on the proposed combination.However, entities not required to approach the Commission for this purpose are public financial institutions, FIIs, banks or venture capital funds which are contemplating share subscription, financing or acquisition pursuant to any specific stipulation I a loan agreement or investor agreement. The Act definitely is a new wine in a new bottle. The Competition (Amendment) Bill, 2006 The Competition (Amendment) Bill, 2006, contains comestible designed to address the Supreme Courts concerns.It also proposes to make several other changes in sections of the Act dealing with anti-competitive practices. Some proposed amendments are quite sensible, bandage others (notably a modified leniency programme for firms that provide information about their participation in a cartel) have been inadequately thought out. The amendments designed to placate the Supreme Court will also have some negative consequences. Several palenesses in the original Act remain unaddressed.Finally, the scarcity of the kind of economic expertise required to map t he Acts multifarious technical clauses also remains a matter of concern. Intensive capacity building and a re-assessment of the Act itself are urgently required. Conclusion The quality of governance of the state is being watched very closely by the citizens, investors and the international community. As more freedom is purchasable to businesses to choose from various countries for investment, the competing governments are also conscious about the role of governance in attracting investment.Any perception that the environment is not contributory to competition and the state has been captured by a few big businesses certainly negatively affects the global investment decisions of firms. The same is also true of the stain within different provinces in a country as same considerations are used by the firms in making investment decisions while choosing locations for establishment of an industry. In a market structure where firms face weak competitive pressures and the profits and pric es are predictable the firms have little or no incentive to use resources efficiently.Hence competition is accepted general as the life blood of the market economy. It spurs innovation and higher productivity leading to accelerated economic growth to the consumers it brings the benefit of lower prices, wider choices and give away services. The effect of competition on price and accessibility is best illustrated with an type from Indian telecommunications. Tele-density in India has risen from mere 2. 32 in 1999 to 11. 32 in December 2005-07. Also there has been a dramatic overtake in telecom tariffs from Rs. 6 per minute to Re. 1 per minute with increase competition in this sector. Similarly, consumers have benefited from competition in other sectors such as civil aviation, automobiles, newspapers and consumer electronics. The enactment of the Competition Act is a praiseworthily step towards achieving the twin mantra of open market economy and liberalization in a mixed economic system. The need for reform in the legal system with regard to competition law has been rightly recognized by the legislative bodies in the country.However, the reforms have not been smooth or speedy which has resulted in a stagnation of the legal framework guiding the corporate sector. Further reforms need to be undertaken as fast as possible to ensure that the development of the nation does not take a backseat due to the pending legal reforms. Reforms must provide for good corporate governance, slight of government controls and interference, protection of consumers and public interest, rewarding the merits and all to be achieved as soon as possible because world has also options available other than India.