ANTI - COMPETITIVE AGREEMENTS UNDER THE COMPETITION ACT, 2002

CHAPTER-IV

ANTI-COMPETITIVE AGREMMENTS UNDER TliE

COMPETITION ACT, 2002

4.1 INTRODUCTION:

This Chapter focuses on the analyscs of Anti-competitive Agrcaiienls under

the Competition Act, 2002 in all thcir tiimcnsions. 'The rcseorcller has madc

commensurate focus on the nature and meaning of Anti-Compctitivc A~~comcnts atid

how they impact adversely the cotnpclitivc process at the rni~rket nnd tlie consumer.

Further, a comparative analysis of how such tratle pructiccs were dcull under the

earlier Indian competition law arid the present ('ornpstition Act, 2002 was irlso

adequately highlighted with rcfercncc to tlic provisions of hoth tlic cnactlncrits in tlic

light of the decideil casc law. The study also tilakes considcruhlc lbcus on dccitlctl

case law absolutely based on the legal rcginic crcalcd uridcr the MHP A("1'-1900. A

comparative study of US. UK atid EU on the suhjcct under (bcus has i\lso hccn madc

for drawing salutary I~?;sons. Further, the in~cr f~cc hctwccn compctilion and

Intellectual Property Rights and the pc)ssthlc pcrtcnlial ;was of cotitlicl in hetween

than and thc resulting solutions for avcrtirig such conflict have also hccn

comprehensively addrcss~ul.

One of the principal aims of the ('ornpctition Act, 2002 as tlcclaretl in its

prcamble is to prevent practices having advcrsc cffcct 011 co~npctilion.' A duty has

also been cast on the Comptition ('ommlssron to ellnitnate practices havtng atlvcrsc

effect on competition and which further ranfi)rccs the objcctivcs scl out in the

preamblc.2 Though a pcrfcctly compct~live markct would dcfinitcly take care of' the

' The Preamble to the C'ompetct~an Act, 2002 dcclarru that 11 I% 'An Act to prov~dc. kcep~ny In vlcw of the cconomlc dctclopment of the country for the c+tdbll+hmcnt of a commlrxlon to prcvint prac.tlccrc hating adrcnt: e&ct on competltlon lo promote atui uu\tam cornpetstlon In market*, to protcct thc mtereut.i of consumers and to encure frccdom of tradc ~ a r r ~ c d on by olhn panlclpanth 111 market$ In

India. and for mattm connected t h e with or ~nodm~al thcrctci'. '. Section I R of the C'ompetit~on Act. 2002.

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welfare and well being of consumers yet the attaining of such market is just a utopia

like the consumer sovereignty. There is a preponderance of evidence suaesting that

markets are vulnerable to manipulations and maneuverings of manufoctunm and

sellers, aimed at profiteering to the detriment of the consumer Pmducts nnd services

are of wide variety, many of them are complex and the consumer has iniperfect

product knowledge. The supplier often has an entrenched position in thc niarket vis-h-

vis the buyer, who has either a little or no hrugaining power In the mnrket. Besides

this, the desire of suppliers of goods and stwices to maintain their profits at prc-

determined levels may motivate them to resort to various legally nssa~lohlc lrnde

practices to the detriment of competition atid the interest of consumers.

Consumer, theretbre, needs and deserves legal protection i~goi~ i~ t cerlaln tradc

practices that have adverse c f k t of preventing, distort~ng, restricting i~nd suppressing

cornpetition. Competition law, alniost c\crywhcre, proh~hits tlirec kinds of aclivitics.

namely, anti-competitive agcemcnts, abuse of dominance and iaiti-cornpct~tivc

mergers. 3

4.2 RESTRICTIVE TRADE PHAC'I'ICES 1JNI)ER 'I'lIE MRTP A<:'l', 1969

A perusal of the MKI'I' Act, 1069 will show ~hat there is ncithcr definition nor

even a mention of ccrlain offending trade practices which are restrictive in nillure and

character. The Act hardly contailid any provisions to dcal with abuse of tlomina~ice,

cartels, collusion and price fixing, bid rigging, boycotts ii11d refusal to dcal and

predatory pricing. Further, the Act is ill-equipped lo (leal with cross hortlcr onti-

compctitivc tradc practices arising outsiilc Intlia but having pernicious cl'kcts on the

Indian economy in the wake of increasing globalization. The Act did contain a

definition of restrictive tradc bcsides cnu~nurating solnc cxarnplcs ol'

- ' Vlnod I)hall, 2IMJ7. Kcy Conrrpt\ In C trnlpelitlnn I aw. in Vinod 1)hall (etlh) I he ( ompctrlion I nw loday, Oxford U n i v m t y I'rcqs. Ncw 1)elhl. I' I' I to 35 ' S 2(0) of the MRY I A L ~ , 1969 &fined a rntrlcttrc tradc practtcc ah a trade practlce wh~ch has tw

may hate the effect ofprcventinp, d~h~on~ng, or rcutrlctlng compclillon in any manner and in particular (I) uhich lend9 to ohtruct the flow o f ~ a p ~ t e l or rcwurceq Into the vlreilm of prcduct~on. or (11) wh~rh tends to bring nbout mantpulallon of prlcc or condlllcmu of dcl~vtry or to rllc~l the flow of \uppIte% Itr

the market relating to good., or W I ~ C P rn xuch manner a\ to trnpow unjwlified contu or rmlrictroln on consumers

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agreements relating to restrictive trade practices, requiring compulsory registrations

but these provisions have been found to be deficient to meet the changing economic

scenario in lndia caused due to the onset of mnomic reforms post 1991. The Act also

didn't contain any provisions to addrrtss competition concerns that may surface owing

10 putting in place and opention of the rules based International Trade mgimc under

the aegis of W T 0 and of which lndia is a founding member.

In'the light of this, the expert group6 recommmdcul that thm: is a nerd fbr an

appropriate conlpetition law to protect fair compctition and c o n t ~ ~ ~ l , if riot eliminate

anti-compditive practices in the trade a ~ d market.

4.3 ANTI-COI\.IPETlTIVE AGHEEMEN'I'S UNDER 'TI1 E COMPETITION

ACT, 2002

Anti-Competitive Agrcsmcnts under the ('ompctitioti Act. 2002 arc it1 111s

nature of Restrictive Trade practise.; undmr the extant MK'I'I' Act, 1969.~ 1:irrlis cntcr

into agreements, which may have thc potential of' restricting, tlistorting, supprcssitig,

reducing, or lessening compctition. A scan of' the conipctitioti laws across the world

will cicmonstratc that they invariably makc a tlistinction bctwceti "tlorizontal" an0

"Vertical" agreements between finns. Vie Ilorirontal i1grecmcnts arc those arnong

competitors in the same chain of' production while the vcrticirl agrectlierits arc

bctwcwn ditt'crcnt parties in the supply chain. Most compctition Ii~ws vicw Vmrfisal

agrcenicnts generally more lctiictitly than horizo~it;~l egrccmctits, zrs tlis latcr in all

probabilities would havc more scvcrc and sarious advcrsc cflkcts on compctition.

The avowed legislative intcnt behind inserting thc provisions rclating to Anli-

Competitive agrecrncnts into the Competiiion Act, 2002' is to foster compctition fix

promoting the interests and welfare ofcotisumcrs.

S 33 of the MR IF Act. I969 enumerated agrccmenl* p f l a l n t n y lo rcrlr~tttvc tradc p r d ~ l l ~ c h t h a ~ arc subject to compulurry rcglstrauon Ihew Agrccmcntr ucrc requrred lo hc rcg~stcrrd w ~ t h I ) I ~ C L ~ ( I I Cicncral w~thln rlxty day\ from IIIC date of r u ~ h agrccn~cnlr ' 1 he Report of the t l ~ p h I c\cl Comm~ttcc on Compclltlon I'nl~cy and (ompettt~on I aw ' Supra note 4 & 5 "I ppmtlslnns perlatnlng lo An11 Compcttttvc agrermcntu havc urme Into h r ~ e w ~ ~ h cflc~t from 20 5 . 2 0 ~

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The Competition Act, 2002 contains a g a d prohibition of any ageanent in

respect of production, supply, distribution, storage, acquisition or control of goods or

provision of services, which causes or is likely to cause on appreciable adverse etTect

on competition within India by explicitly u~nstnring such a g ~ ~ r n e n t s as mti-

competitive in nature and character! Any agreement in crmtrovention of the general

prohibition i s declared by the Act as null and void.'"

The Act also enutnemtes certain kinds of anti-compctitivc ugeemaits." It

deals with certain actions or decisions made by a group of persotis or ussociatio~is in

the form of an understanding, arrrtngenlent or ageenlent c~thcr fbmlal or 111thrma1,

including cartelst2 aid hrthcr enumerates ccrtaln vertical rcstririns on trade 111 un

illustrative mm~ner." What are prohlbitcxl are Ihc agrec~iicntst4 or urmnganents to

control and dominate trade and commerce In a commodtty, couplc~l wtth the power

and intent to elinilnate compctltors to a substantial extent. What mattcrs u~idcr thc Acl

is not the form or the spc~ific means but u~idouhtedly tlic iliipact and clSect of such

means would be rninutcly assessed pnor to iirrlvllig at the conclus~on: whctlicr an

agreement 1s or is not an antl-competit~vc one.

Thc Anti- competitive ageemcnts undcr the Cbiipclition Act itre bifurcated

into two catcgrics:

(a) Horizontal Agreements and

(b) Vertical Agreements

, . l hcse agreements are bctwccn competitors operating at Ihc same lcvcl in thc

economic process, i.c, cntcrpriscs cngagcd irntl operating in hroatlly siimc ;rctivity.

" 5ectlon 3(l) ot the Compct~tt~e Act. 2(X)2 I" Sect~on 3(2) of the Con~pel~l~vc Act 2002 " qecuon 3(3)&(4) of the C'ompctltrve Act. 2WJ2 " Ib~d. Sec 3 0 ) " Ibld. Scc 3(4) " 5 Z(b) of the Compct~t~on Act, 2002. defina an agreement ar, lnclurllny any arrangement or undmtandtng or actlon tn conccn 0) whether tlr not \ u ~ h mdngcmenl, undmtnnd~ng or action 18

fnnnal or In unttng or (11) whethcr or ml v u ~ h drrangemcnt undcntandlng o r nclion tr ~ntended to be enforced by legal procecdtngr

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These are the agreements between producers or between whole sellers or between

retailers, dealing in similar kinds of products.ts

These agreements on: construed as presumed anti-con~pctitive a p m e n t s .

Hence, these agreements we subject to per se rule and therefixe, they nrc

presumed to have appreciable adverse cffect on competition.

Any agreement entered into between e11terprisc.s or association of enterprises

or persons or associations of persons or betwcen iiny ptmon and entcrprisc or pructice

carried on or decision taken by, my association of cnterpriscs or ussocizilion of

persons, including cartels engagd in identical or sirn~lur trade ot'gujtls or provision

of services, which :-

i. Directly or indirectly determines purchasc or salt price

ii. Limits o r cont~ols production, supply, markcts, tcchnicnl dcvclopment,

investment or Provision of scrviccs . . . III. Shares the rnarkct :tor source of' production or provision of scrviccs by wuy of

allocation of geographical area of market, (x type of gc~xls or serviccs or

number ofcustomers in the rnarkct or any otlicr sit~lilar way

iv. Directly or indirectly rcsults in bid riWinglh or collusive bidding shall be

presumed to have acivcrsc clt'cct cm conipctitio~~ I I

However, exemptions liave been givcri to join1 ventures ilgrcvmalts promoting

ttlicicncy in production, supply, distribution clc, export arrilngcmcnts and ra~sonahlc

restrictions lbrming part of protection or exploitation of inlcllectual pntpctty rights."

AGREEMENT CARHIES WIDEST MEANING ANT) AMP1,I'I'IJI)E

In ordcr to conslrtule an ayrcemont, a conccrlcd actlon on the pod of

enterprises is a sin() qua noti 'Ihrough the partrcv to an agrccrncnt tlo not have :my

". I-hcsc are agrcmmts bcrwccn the pcrwns opcrallng at the varrlr Icvcl 111' thc cuonomlc pnecxH and heref fore. they are cnvrrd into be~wcen ~ h c compc~iton. '". tlxplanation to S. 3(3) pruv~dcs 'bid rigg~ng' Incan any agrccmctll brtwcm cn~crpriw~ or persons r c f d lo in section 3(3) npapcd in identical or s~nrilar production or trad~ny ol'gtxnln or provirion of services. whtch has the effect of climinaling or reducing ct~mpct~tion ftrr hids or a d v m l y all'ccting or manipulating the process for hidding. 1 7 . Supra note I I . ''. Supra note 9.

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intention to a t e any legally enforceable mutual duties and obligations, yet it shall

be considered as an agreement under the Competition Act, 2002. Further, no written

proof of such agreement is necessary as mere informal understanding or m g e m e n t

would also be construed as an agreement. Hence, the legislative intent and desire is

quite apparent so as to give a vast and sweeping coverage for concerted and

collaborative anti-competitive practices.'p Even oral or written or formal or illformal

understanding would fall within the brood ambit of 'agreement' through the partics to

such agreement do not have any intention to cnforce i t by legal proceed in^,

In Registrar of Restrictive Trade Agrmlcnts 1: W.H Sniith and sons,?" the

court observed, pcwple who combine togethcr to kccy, up prices d o not shout from the

house taps. They keep it quiet. 'They make thcir own amgcmoi t s in cellar, whcrc no

one can see. Thcy will not put anything into writing not cven into wor(1s. A nod or

wink will do. Parliament as well is awnre of ibis. So i t iaclutlcul not only an

"agreements" properly so call~ul but any "iirriingenicnt" however informill

APPRECIABLE ADVERSE EFFECT ON CORIPE'TI'TION Sl lAl , l , HE

PRESUMED

The entire concept of apprwiable advcrsc cfkct on coltipelition is made

subjective as i t may vary from case to case." Thc agrmncnls cnumcratcd in Section

3(3) are popularly known as horizontal agecrncnts and they shall be prcsulnd to

have appreciahlc advcrsc effcct on competition while this presumption shill1 no! apply

in regard to the vcrtical agrenrtent~.'~ lhus, the lcgislrtive intcnt is to view horizontal

agreements more scriovsly ~han v~rtical ilgrecnictits. Accortling to Scu'tion 4 of the

Indian Evidence ~ c t " whcrevur it is directetl !hat the court shiill prcsunlc a hct, it

shall rcgard such fact as. provcd, unless unt~l the contrary is proved. 'lhus 11 is quite

''. I inns entering into cartels mostly rndulgc In concenrd and collah)ratrw rcstr~c~ivc rradc pracrlccr by entering inlo informal agrccmrntc and in fact. 11 id vcry diliicult to provc and cs~ahlish such agreemenls as the panics to such agreements smvc vcry hiird to lcavc no trace ol'cuidencc. '". (1960) BAI l EK 721. " The term appreciable adverse cfl'cc~ on compctlilon uscd in 5.3 ( I ) has not ken dclinca~cd in thc pt. -' AgreemenL~ envisaged In S. 3 (3) arc trcated as Ilorimntal In niltun: whrlc rllone cnvrwgcd in S. 3(4) are regarded as vcrtlcal rn character. Ilnwcvrr, the ('trmprt~t~~m AcI. 2002 dtrnn't rpec~licully use the tcrms Ilorin)ntal& Vcnical ayrecnlenls. '' The section provider. that whcncver 11 ir dircctcd by thc Acl that thc ('our( shall prcnumc a fact, 11 s l~ t l regard such fact as provcd, unltsx and unltl it ir drsprovcd.

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clear that the presumption as to appreciable adverse effed on competition in regard to

the Horizontal agreements envisaged in Section 313) is rebuttable but the burden to

rebut the same would lie upon the person charged with the commission of such trade

practices. Hence, it is quite apparent that they are not 'deemed' anti-competitive

practices as there is a clear distinction between presumed and deemed restrictive trade

practices. Coufl has to assume that the 'deemed practice' is a factunl position and

apply law accordingly. In case of 'presumed practice' the disputnnt can prove that the

impugned trade practices are not anti-competitive practices but the onus of proof lit!

on him. Court has to assume that the 'deemed position' is 'real 1n)sition' and upply

law accordingly. Defendant annot pmve that thcy are not really anti-competitive

practices. In case of 'presumed prnctice', defendant can prove that they arc. not anti-

competitive practices, but burden of prcwf is on him.

4.3.2 VER'TICAL AGREEMENT

There is another category of agreements which may be h ~ l by the prohibition

against Anti-compet~tive agreements, if thcy cause or is likely 1 0 cause an appri~iirblc

adverse effect on compctltlon " is. , thosc agrcerncnts that arc to he judgal by "Rule

of Reason as against rule of pcJr sc" und the burdcn of proof lies on the

invcstigatoriprosccutor. 'Ihey arc --

i) Tie-in agrccmcnts. This includes ilny agrci~ncnt requiring i~ purchaser 01'

goods, as a condition of such purchase, to purchase. some othcr gootls;

ii) Exclusive supply agrcemcnt. 'This includc3 any agcurmcnt restricting in any

manner the purchaser in the course of his tradc from acquiring or otherwise

dealing in any goods other those of the scllir or ;ay othcr pcrson;

iii) Exclusive distribution agreement. This includcs any agrcan~nt to limit,

rcstrict or withhold the output or supply of any goods or allocatc any arca or

market for the disposal or sale of the gwds;

iv) Rcfusal to dcal. These would include any agrecrncnt which restricts or is

likcly to restrict by any mcthod the pLvsons or classcs of' persons to w1n)m

goods are sold or from whom goods arc bough!;

' Compe~ition ACI. 2002. Section 3(4). 77

v) Resale pnce maintenance. This includes my agreement to sell goods o n a

condition that the prices t o he charged o n the re-sale by the purchaser shall be

the prices stipulated b y the seller unless it i s clearly stated that prices loww

than those prices may b e charged.''

It m a y be noted here that all the five concepts arc: carried forwnrd in

Competition Act, 2002 from its predecessor i.e. Monopolies and Restrictive Trude

Practices kut, 1969. However. the major difference is that under M o n o p ~ l i c s and

Restrictive Trade Practices Act, 1969, the practices wm categorizrd us 'Rcstrictivc

Trade Practices' and any enterprise indulging in such practices was subjcxtrul to

actions under Monopolies and Restrictive 'Trade Practices Act, 19BO. whereas under

Competition Act, 2002 such practices will fall under the prohibitory legit1 friuncwork

only when they cause o r likely to cause appreciable adverse cl'titct o n cotnpetitioti.

Thus, a n in-built flexibility is providcd to foster exploitation of market potential by

the et~tcrprises or persons i.c if any one indulges into any o f t l i e fivc uctic~ns ant1 this

action does not adversely aFf'ed cotnpctition in the market, o n e will he o\~tsicte thc

rigours o f Anti-competitive priicticcs. 'The effect o n Anti-C'otnpctitive ayrcctncnt is

that they arc ~ i o d . ' ~

T h e matrix of Agccmenls is provided as below."

". Ihid, I'xplanation to SectionJ(4) 16 . ('ompctittot~ Act. 2002; Scctton 3(2): Void agrccmcata nrcans thal they arc nul l and void No lcgul actton can arise out of such void agrcctncntr. Murcovcr whcrc CCI has initia!cd inquiry into Anti ('onlpctitivc Agrccn~cntu and t t tr Suund that such agrccrncnt has apprcciahlc advmc cllect on compct~~ic~n; the ('('I cat1 paas all c1r nny trf ~ I I C fullowing orders under wctlon 27. 1 . Impose upon each producer, xllcr, distrthulor. trader or wrvite provider includcd in that cartel, n penalty equivalent to thrcc timcs of thc arnount of profits made uul of such agrccrncnt or thc cancl or tcn pcrccnt ofthc avcragc of the lurnovcr ofthe cancl for the lnnt prucccding thrcc finnoc~al years, whichcvcr is higher; 2.Award con~pensation lo partic* tn accc~rdancc with the provt\lona contarncd tn sccllon 34; 5 . Direct that the agrcemcntx shall stand d i l i c d to tl~c cxlcnt and tn thc manncr as rnay hc ripciticd In the order by {he ccirnmissitm; 4.Dirca the mtcrpriscs concerned to abide by such othcr or order* ns ihr ccimmirsitm may puss and cnnlply with the dirccr~ons. ~ncluding payment ol'co~ts . ~l 'any: 5. Pass such 0th- ordcr as the commlasion rnay dccm lit. ". kurcc: Yatnck A . MC Nutt. Law. "l'conornica and Artitrust: 'l'uwardu a New I'crylectivc ", I N cd, 2005. p. 330.

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4.4 BENCHMARKS MIR ASSESSING APPRECIABLE ADVERSE

EFFECT ON COMPETITION

While determining whether an agreement has an appreciable adverse impact

on competition or not. the Competition Commission of India- the nodal agency,

established under the Act has to look into the following factors prior to aniving at its

conclusion.

a) 'Creation of barriers to new entrants in the market;

b) Driving existing competitors out of the markct;

c) Foreclosure of competition by hindering entry into the markct;

d) Accrual of benefits to consumers;

e) Itnprove~ncnts in prcduction or distribution of gixds or provision of

services;

f) Promotion of technical, scientific and ecnnonrtc dcvclopmcnt hy Incans of

production or distribution ofgcj:ds.'n

The first three factors pertain to negotive clTccts on cottipetition while the

remaining three relate to beneficial or positive etlivts. 'Thus, in a~ialyzing whether an

agreement has an appreciable adverse effcct on competition, both the harmtirl and

beneficial cfkcts as envisagal in section 10 (3) of the Conipctition Act, 2062 are to

be considered. 'Baniers to new entrants' can he created through an agrccrncnt among

existing play~rs to sct unconscionably high standards. Pushing existing compditors

out of the markct could happen, if an enterprise enters itito an exclusive supply

agreemcnt with distributors by coinpelling the latcr to ccasc their tratlc with otha

suppliers as a mandatory condition for the continuous enforceability of tlic

distribution ship agrccmcnt. (lompetiticm may bc fort~loscd when an c n t ~ ~ r i s c cntcrs

into a long term agrctimcnt with a supplier of raw nlatcriul or components by

imposing a condition that no supply of raw material should be inadc lo anyone ~XCLT~

with the explicit asselit of the enterprisc. Accrual to consumers tilay be in the fbrm of

lower prices, enhanccd quality,2' efTcctivc allcr sales service, cfficicncy in dclivcry of

services, affording safety to consurnus dc . Promotion of tcwhnical, scientific and

economic developmcnl may emanate from agrccmcnts gcmilnc to rcscuh and

". Section 19(3) of lhe Cornpctil~on Act, 2002. 3. lbid,

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development or specialization in p ~ u c t i o n . The approach to determine the

appreciable adverse effect on competition is akin to the rule of mason that is common

in the competition laws of most countries.

Black's law dictionary defines the mle of muon in antitrust law as a 'judicial

doctrine holding that a trade practice violates the Shrman Act only if the practice is

an unreasonable restraint of trade, based on cxonomic factors."

In the US, the mle of reason is applied in a more specific way. The principal

question to be examined bcfore arriving at a defiliite conclusion would he: what is the

impact of the agreements in increasing market share or power in u rnnnncr ininlicol to

consumers' interest and welfare'?

In Ihta-Dtgittt~~ri,tg (Tclro) rs. Rcgtrrrar ofXes~rirti\tc Trrxi~ ,4grt~c.rrrrvtr, " lllc

TELCO had agreement with its dealers. Sonle of the clauses ill tlic said ngrecment

werc: ( I) Dealer will not directly scll the TATA lrucks outsidc the tcmtory assigticd

to him. (2) Dealer will milinlain organization for sulc and service within his territory

to the satisfaction of7'ELCO. (3) Ilcalcr will riot sell, directly or indircutly, trucks of

other manuthcturcr.

l'hc Apex Court aRcr consitlcring the fjcts 21nd circu~tlstanccs of the casc

observed that any agrccmcnt restrains and hilids persons or place or prices. Any such

agreement would not be 'pc~r sv' bad. l'hc question is whc~hcr the rcstruint i s such as

to regulate and tlicrchy promote compctition or supprcsscs cnmpctition. I t will hc bad,

if i t destroys competition. t{~mcc: (a) hcts peculiar to the husincss (b) condition

before arid after restraint and (c) probable cfrects of rcstraint, huvc to bc considcrcd.

The rules laid down by thc Suprcmc Court arc p)pularly known as thc 'rulc (.$

reason '.

TELCO stated that thcy had to eiisurc cquiteblc distribution of trucks so that

the trucks reach even remote plac~! like Nagaland, 'l'ripura L ~ C . Othcrwisc, thc trucks

will be conccntratcd in large mciro-ccntcrs only, whcrc drmand is heavy. Prompt end

efficient after salcs scrvicc is vital fix the truck USLT, Dcalcr has to maintain slock of

spares and good service facilities with adcquate equipment and trained mechanics.

Black's Isw D~ctonery. 7' cd P I033 " (1977) 2 SCC. 55

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This would cost Rs. 5 lakhs. The dealer would not be able to maintain those facilities

if he is not sure of busin= from that area. Consumer interest demands that he gets

good after sales senice. Sales tax rates vnry from Statc to State. If there is no

territorial restriction, business will be concentrated in the States w h m sales tax rate is

lower. After sales services need specialization which would not be pc~ssible if the

dealer deals in trucks of other makes. Thus, ultimately, consumers will sutTer. If

territorial restrictions are removed, consumers in remote areas would suffer md in

fact, ~ o m ' ~ t i t i o n would suffcr as in remote area, Telco trucks would not be availiihle.

Supreme Court accepted these contentions and dcclarcd that restrictions imposed by

TELCO do not amount to restriclive tmde practicc. It was held that thc rcstrictians

ensure cquiiable distribution of vehicles and cfticient ah-sa les service to consumers

and therefore, they are construed as rcasonablc in nature.

Aparl from the gcncral the Cornpetition Act, 2002 ussunics that

ccrtain agreements as having apprcciahlc advcrsc cffcct on compctition. Ilorizontal

Agreements are presumctl to liuve apprcciahlc advcrsc eili"ct on compctition in which

case thc burden of proof shifts on tlic cnterprisc or perso11 ugainst which rhc clrurgc is

lev~lcd.~ '

In rc Tatit Iron & Stcel ~.irnitcd,'~ arid Indian Tube ('onipony L.imit~uf, the

Commission held that dumping goods on distributors and prcssurixiny them lo lit1

morc than the minimum quantity stipulated in thc distribution agrccmcnt, hnd lllc

cfrect of distorting competition and tlicrcfbrc, the provision of' section 2(0) of thc

Monopolies and Restrictive l'radc I'racliccs Act, 1969 woultl be attmctc(1. In this case

the Commission also held that the tradc practice of linkage o f discriminatory

discounts with off take has to be tcstcd by rule of reuson. 'fhcrcforc, when vicwcul on

the basis of the facts of the case in the light of the definition of rcstrictivc tradc

practice as given in se~tion 2(0) of the MR'TP Act, 1900, it did not Icad to distortion

of compctition to any material degree and was wvcred hy the gatcways ill section

38(1) (b) and (h) of thc MRTP Act, 1960 rcild with the balancing clausc in scction 38

( I ) of the MRTP Act. Tlic benefit of the said gateway was made available as (i) ihc

" Sectron 3( 1 ) of the ('ompcltt~cm Act. 2002 " The Raghavan Commrttcs. ohwncd In para 4 3 R that the preulrmptlon otrtlng t h n ~ xuch hor~mnral agreement\ and mernbenhtp of cartel.; Icad to unrcaronahlc rc*lrlLtlcvnn on ~ornpclltton and may thercfnrc, prcvumd lo habe apprcc~ablc advcne effect on cornpctltlon Ihe rule c~rpcr uc- illrgallly IJ rooted In the provluronu of the UT la* RTP Fnqu~ry No 39 1984. cnder 23/91 1987

8 1

range of variation in discount was limited, and (ii) such of the distributors who lifted

high quantities and got higher discounts had to incur heavier burden in tams of

financial obligations compared to small distributors.

4.5 TO WHOM DOES THE PROVlSlON OF ANTI-COMPETITIVE

AGREEMENTS APPLY?

As is made clear, the provisions of Anti-competitive ayrrcmcnts apply to any

enterprise or person. 'Enterprise and 'person' are clearly detind under Conlpctitioli

Act, 2002.'' Enierprises engaged in sovereign functions relating to Atomic asrgy,

Space research, Defense and Currency ore excluded front thc punlicw of thc Act.

Therefore, none of thc trade practices adoptcd and pusual by thcsc cnterprisa can he

impeached under the Act though such practices are anti-competitive in nnturc as ihcsc

thcy are explicitly given irnmunity from the operation of the conipctilion law." All

the com~nercial activities of thc Union and Stut~s and their statutory bodies urc within

the ambit of the Act and therefore, thcy arc amcnable lo the jurisdiction of the

Competition Commission.

3'. I he Compct~t~on Act, 2002. 5. ? (11) definm the term 'mtcrpnsc' "mterpncc" meanr n p m n or o department of the (iovcrnment, who or wh~ch IS, or has been. er~yaped in ally activ~ty, relating to tile production, storage, supply, distribulion. acquisitinn crr control o f articlcs or g d s , clr the pruv~~iios of services, o f any kind , or in invcstmcnl, or in thc businc~l o f acquiring, hc~ldlng, undcnvr~ting or dealing with shares, debcnturcs crr other securitlrs of any athcr hirly corpomtc, c~thrr dircctly or through one or more of its units or divlston$ or subsid~uriec. whether such unit or division or suhaidiary is located at the sanle place wherc the enterprire 1s Incatat or at a dilkrcnt plnucu, hut clocc not lncludr any activity o f the (;ovcrnment rclntablc to the sovereign flnclirrnx of t l r (iovrrnn~cnt i~icluding all activities camled on by the dcpartments of the ('entral (iovcrnmcnt dealtnp with ntnmlt energy, currency, clefence and spacc. Explanation I'or the purpom o f th13 clause.-- (a) "activ~ty" includes profess~on or occupstion; (b) "article" includes a new article and "service" ~ncludrs A ncw m i c c ; (c) "Unll" or "division", in rclat~on lo an cnlerprtse, ~ncludcli ( i ) a plant or hctory eslahlishcd Ibr the prcduction. ~t~rmyc, supply. dintrihutian. acquisition or control nfany article or gmdu: (11) "gods" mcana as defined in the Sale ol(i(nKlr Act. 1950 U of 1930) itnd include+ (A) Prodtlcts rnnnc~facturcd, procmscd nr mined; (B) I)ebcntures. stocks and sharer afier allotment; (C) I n relation to good.% supplied. distributed or conlrolled in India. gtwdr imported inttr India; The term person is defined in 2 (I) ax follows " P m n " tncludcs an individual: a ll indu und~vided family; a company: a firm. an asm~~ati tm of pcrwnn or a body of indrviduals. whe~hcr incorporated or MI^. in India or outside India; any corptrralitm cstabliahcd by or under any Cenwal. State or I'rovlnclal Act or a (iovernmcnt company a. dclined III wctlon 617 ol'rhe Compan~es Act. 1956 (I of 195fi); any body co~prrate incorpnratcd h ar under the lawa o f a country outside India. A coapnative society rcyiclcrcd under any law rclat~ng to cmpcrativc w ~ c t i m ; A I ~ r a l autfmnty: Every arl~fictal jundlcal pcrwn. not falling wlth~n any o f the prcweding sub-clauxch: ". Ibid.

82

Further, the Competition Act, 2002 also excludes certain agnemmts from the

purview of the Anti-compehtive agreements.'' The scheme of the Competition Act,

2002 specifically excludes exclusive export m g e m c n t s md this comes in line with

the India's export promotion objectives. The objective of the Competition Act, 2002

is not to impede or hamper any economic development process and an the amtnuy to

foster and promote it. The Competition Act, 2002 however lays down two exceptions

to the applicability of the provisions relating to Anti-competitive a g m n l t s :

1. lntellcctual Property Protection with Reasonable conditions: 'i3e

Competition Act, 2002 n~c>gnizcs that the bundle of rights that are suhsumd

in Intellectual property Rights should not be disturhcul in the i~itcrests of

creativity and intcllectuallinnovativc power of the human mind. Further, the

Act seeks to prottvt under section 3(5) (i) only the lPRs that tire rcgister~yi in

India and not any othcr IPR subject to jurisdiction of any othcr rcgimc. 'Ihe

Competition Act, 2002 does not pcnnit any tctrrc~i~sottohl~ conciiirion fonning a

part of protection or exploitation of intcllc~tual pmpcrty rights. Although

'rcasonahlc conditions' have ticither been rlcfincvl nor expl~inc~l in the

Conipetition Act, 2002, hut unreasonable conrlitions perlaining to IIIKs,, by

implication shall 611 within the purview of tmti-a)mpetitivc ageemelits

detined in section 3 of thc Act. Sonic unreosonsble conditions that may

accompany Intellectual Property Rights liccnscs that arc likely to limit

cc~mpetition, and attract the provisions ofthe Competitions Act. 2002 includc

Patent pooling . . I ic-in arrangc~~ients

Prohrhittng liccnsces to use competing tccl~nology

An agec~ncnt to continuo pilylng royalty even a l l ~ r the putenl has expircd,

and fixing the prices at which licenses should scll.

37 , Competition Act. 2002; Section. 3 ( 5 ) Norhiny conrained in .wcticln 3 shall rcsfricl.

(i) the right of any person to rcsrrain any mli~ngc'mcn~ I I ~ , or lo irnpc1.w reawnnble condi~ic~nn, an may be necessary for prorcctlng any of hi$ riyllrr which hrvc been ca may hc conlined upon hlm undcr .-- (a) the C'clpyright Act. 1957: (b) the patcnls Act. 1970; (c) the Trade and Mcr rhd i se Marl* Act. 1958 err rhr 1 rade Marks Acr. 1999; (d) the (i~vgraphical Ind~cal~ons of ( i t d x ( Rcg~flrai~on and I'n~(cction) Act, 1999: (el h e Designs Act. 2000: (0 the Semi-cducfor Intcgraced Clrcuia Iayoul I h l ~ n Act. 2o(X):

83

Similarly, licensing arrangements likely to affect adversely the prices,

quantities, quality of variety of goods and services will fall within the contours

of the Indian Competition law as long as they are not reasonable with

reference to the bundle of rights that go with the IPRs.

However, the Competition Act, 2002 is tacit on the medics , if unreusonahlc

conditions accompany IPR licenses and limit competition. Compulsory

licensing md parallel imports an: t~vlGkey rcmcdies of gent inzportnncc: and a

competition law cannot remain silent in this regard. The researcher is of thc

considered opinion that Colnpetltion law is a useful toed to chixk anti-

competitive practices like licensing agrccmcnts and rcstrain marketing and

product development. Hence, the Competition Co~nrnission of' India should he

empowered to deal with cases of abuse of IPlis.

2. Export C:artcls: Export cartcls ;ire outsidc the purview of the Competition

Act, 2002. A justification of this excmplion is that most countries do not

desire any shackles in their export dii~rts, ns the probleni lics clsewhcrc.

4.6 REGULATION OF CARTEIS :

According to Adam Smith (1770), "l'twple of the some tradc seldom nlmt

togcthcr, even for merriment and diversion but the conversation ends in o conspirucy

against the public, or in some corilriva~icc to riiis~ prices. I t is impssihle indeed to

prevcnt such meetings, by any law which citlier could be cxccutd, or would bc

consistent with liberty or justice. But though the Ii~w cannot hindc~ pcoplc of the

same tradc from sometimc~ assc~nbling together, i t ought to do nothing to facilitate

such assemblies; much less to rendc~ thcm ncccssary". 18

Cartels' are inclutfed in thc catcgxy of agccmcnls, which arc presulnd to

have apprcciable advcrse efrect on competition. A Cartel I S a horizontal agrwmcnt to

fix pnces, allocate customcm or ~ c ~ r i t o n c ~ , restrict output or rig bids. A ('artel IS

regarded as the most pcmicious and cgreglous form of violation of compctitton law

Smlth, Adam (1776). "Wealth of Natlclnr". W Strahan and I C d c l l Puhl~~hcr . I ondon, I+cxck I , Chapter-X. Part 11. p 152

84

since it unequivocally damages competition and causes loss to tho counhy and to

consumers. Cartels pose a great t h t to competition and ultimately tend lo destroy

free trade. In the European Union, Maria Monti, the former Commissioner for

Competition, once described cartels as cancers on the open market economy and the

Supreme Court in the US has referred to cnrtels as the supreme evil of antitru~t.~"n

the US, in particular it is customary to hear cartels described as nothing other than

theft. Owing to the seriousness of cartels they arc subjwl to the p r sc rtdc in many

jurisdiction^.^^ Accordingly, a m e 1 is considered to be inh~wntly atti-competitive

and injurious to the public without any need to detenninc whether it has octuolly

injured competition. Il is usually n civil offence but in mmiy jurisdictions it is treated

as a criminal offence subject to prison tcnn for the individuals involvcd in thc crime.

This is the case for exmplc in the US, Canada. Japan, lcclund, Korea, Norway, the

Slovak Republic, Gcn~lany and since rc~cntly in the Unitcd ~ingdorn." 'l'hc harm

caused by cartelizatiori is greater in the developing world as compur~ul to dcvcloprd

nations, because the formal lack cff'cctivr! u,mpctiti\lc regimes.'* Further, thc affcctwi

consumers born tlic dcvclopd world arc not able to legillly claim utiy compcnsnlion

from the intcniatior~al prosecution."

Cartels are broadly div~dcd into privatc mid public In nature. In lhc public

cartel a govcmmcnl 1s tnvolvcci to cnforc'c the cartel agreement, and thc yovcrnmcnl's

soverctgnty shields such cartels from legal i~~ l tons . Contrariwtse, privatc citrfcls arc

subject to legal liabiltty under the antttntst laws tiow found in nearly cvcry riution of

the world. In fact, privatc intcrnattonal cartels arc found to havc ra is~d priccs

'*. K~chard Wlrisb, Contnd crf C'arlcls and other Anti-C‘ompeul~ve Agrrcments. In VIIMM! I)hnll Icdr) The Conrpetitlcm Isw Tiday. Oxford Ilnlvers~ly I'rcss, Ncw Ilelhr. P.41, '". Black's l a w [)ic1ionar~(7'~ I d n ) . dellnra~es flc 'pcr sc rulc' na the Judlcial priac~ple that a trade practice violates the Sherman Act simply ~f the practlcc 1s a restraint of lrudr, rqardlms of whether it actually harms anyone. 'I. Secttun 190 of the UK's 1:nterprix Act. 2002 prov~dc* that a pcrwn guilty of a canel ollkncc undcr S. 188 is liable on conviction on ~nd~ctmcnl. to ~mpriwnmenl for a term no1 cxceedirg live yearn or 10 ii line or b t h : on summary convicl~on. lo ~npiarnnicn t Tcrr a I t ! not exceding n ~ x monlha or to fine mlt exceeding the xututory maximum o r lo both. ". Mchta. S. i'raderp (2000). "Caflcl~ratir~n. Hlue (:ollar Corruption: Swp lor ~lransparency. ht~p www cur~-cc1~~Mr ler -S~~-can~1t7a i1onbIw accevrcd 23 (ktober 2009. " lbid

85

between 15 and 40 -tU and are estimated to have inflicted billions of dollars of

overcharges per year on customm in developing economies?'

A single international cartel, which lasted ten years in the vitamins industry,

was estimated to have inflicted nearly two and three quarter billion dollm of

overcharges on vitamins imports by 90 countries. Moreover, the same study found

that jurisdictions in Asia, Latin America, and Western Europe wit.. active cartel

enforcement regimes tended to sufTer much smaller overcharges than those

jurisdictions that do not.4b

Thus, it is quite apparent that cartels have scriclus odvcrse efTccts on the

economy as well as on the interests of consumers.

4.6.1. FACTORS CONDlJClVE TO FORRIA'TION OF CARTELS

Economic theory points to ccrtnili conditions that are conducive to the

formation of cartels. l'hcse inclucit homogctleity of the product, high concet\tmtion in

the market, and high entry harriers. Othcr facilitating conditions include o lr~rge

number of buyers, relative equality of production costs amongst firms nnd relatively

stable or predictable demand conditions. Wcuk compctitic~n regimes coupllrl with

slack cnforcemcnt also cmboldcn intlivitluirls operating nt tile hclm of' nlrairs of'

busincss cntitics 10 indulge in cartelizalion

4.6.2 INTRICACIES IN BUSTlNC CARTEI,S

Firms that participate in cartels arc usually fully aware ol'thc unlawfulncss of

their conduct. Thcy know. theroforc, that they should iivoid the crcition of

incriminating documents that would hc discovcrcd by a competition authority when

conducting surprise inspections and raids. 'They will oflcn arrangc to mect in

" 1 cvcnrtcit~ and Suzlow (2(X)I), lavrnstein. M C' , and V Y Suulow , "l'rtvatc lntcrntrtic~nal C'RI?CIK and The 1:fTc~t on tkvcloplng ('nuntrier." Baskgrour~d I'apcr to ~ h r Il'orlrl I)ci~r,/oprnc~nl Hcporr 2001, Washington. D.C.. 2001 4 s

, Evenctl and Fcrrarint (2002). livcnat. S.I.. and 1). kcnann~. Haokgrcnud paper for the (ilobul Econc~mic P~n.cpwi.s-2003. World Bank. 2002. 46 , CClarkc and Evenett (2002), Clarke. I. L., and S. J. 1:vmctl.. ''The I)ctcrrcnt I:flcccr ofNatlcma1 Anti-Canel Laws: Ev~dcncc fmm the Inlmallonal V1Iamcn.u Cartel", svatlable at: hnp:r~ww.comprti~ion-rcgulalim org.ulconf'crcncc~cvcnc~~.pdt'. fAcces.ucd 07 Scplcmber 2010)

jurisdictions where they an unlikely to be scrutinized by the competition authorities

and further they may use code names and resort to other to avoid detaction.

Even in the case of expl~cit agreement the parties to such agnement are likely to be

highly secretive and mostly it would be a result of a covert meeting. Hence, it

becomes very difficult for the competition authority to compile evidence that will

satisfy a court to the required standard of proof that there has bcen illegal bchaviour

of cartelization. However, the experience of the dcvelopd countries proves that the

leniency and whistle blowing progrnrnmes have b m found to be salutary in busting

cartels. Unfortunately, the Indian Competition Act, 2002 doesn't contain my

provision extending prot~~tion to whistle ~ ~ O W L ~ S though it contains leniency

provisions and which is undcniahly a drawback.

4.6.3 REGULATION OF CARTELS UNDER T H E MRTP ACT, 1969

' l l ~ r e is worldwide recognition and consensus that Cnnels hr~rm consumers

and damage economies." In India too, cartels have bcen alleged in various smtnw,

namely cement, steel, tyrcs, trucking, ctc. India is illso believed to bc a victim of

overseas cartel in soda ash, bulk vitiunirrs, petrcll clc. The Monopolies Restrictivc n~id

Trade Practices Act, 1960 wiis found to he scvcrcly tlcficicnt in dealing with dnmrstic

as well as moss border ciirtels originating outside ttie shorcs of India hut having

adverse effects on the domestic economy. The Act even did not contain any cxplicil

definition ofthc t~mi 'cartel' and which evidently tlcmonstrutcs ahscncc of lcgislativc

will behind the enactment to combat cartclization.

The Apex Court in Hari Uas Exports v . All India Float <;lass Mfrs,

Association & ('o:' O ~ S L T V C ~ that the L'('om~~c~lilio~f IUH* in lhc /i,rm (fMR7'1' us il

.srands rodu.v cfocl.~ nor cqnfuiti ar!v pro\+ision. whic+l~ rutr g i w if jrtrisdirrion to intctfiw

mrrulv n,irh cur~cl~formation. l.'ortnu/ion q/' curfcl vc.hic.h rc~kcr pluce olmi(le India is

oir~sidc rhc ~ r r r i ~ o r i u l jrtrisdicrion qffhc~ MHU"'

47 , Hard ('ore (hrlcl Th~rd Keport nn the ~rnplerncntat~on uf thc I O O X rccommcndatlnn st 01:1'1) 2006

Estimates in the Univd Statm Suyycat that wme hard cow carlclu can rcault in price increarrm of up to 60 w 70 percent. Bavd on a review of a larye number nf carlclr. it is crtimatcd t h a ~ thc avcrayc ovcrchargc IS somewhere In the 20-30 percent r a n 6 with hlghcr ovcrchargclr for inlcrna~ional cancln than for d o m t l c cartels. ". A 1 R. 2000. (51')2728.

87

The rario laid down by the Apex court hed totally crippled the Monopolies

and Restrictive Trade Practices Commission from taking even any semblance of

preventive action against cross border anti-competitive practices which will have

adverse consequences on the Indian economy as well as on the cansumer welfan.

The Supreme Court fiuther held that die rwding of the Section. 1(2), Section 2

(c) and Section 14 of the MR'TP Act, 1969, togethrr mi Icovr: na manner of doubt

that the MRTP Act has no extra tenitorial operation nnd the MRTP Commission cnn

exercise jurisdiction over goods when thcy arc actually imported into lndia."

The business houses are affcctcul most by cartels us the cost of pmuring

inputs is enhanctvl or choice is ntstrict~xi making them urimmpctitivc, unviohlc or be

satistied with less pmti~s. It is in these backdrops that "Cnrtcls" are considerrxf ns

most serious competition infringements and supreme cvil of antitrust. 'l'hc 1998

OECD Rwommcndation proclainled that ('artels arc "thc most rigomus violutions of

Conipetition Law". Furtbcr, developing countrics arc afl'cctcd more either duc to

abscncc of competition regime or inadcquotc capacity to dclcct, discovcr und

prosccutc tlorncstic as well iIS overscas cortcl. (I1

About the object of fhnning cartels tlic Suprcvnc Court of India has givcn an

insightful judgment in Union of India r: llindustan I)cvclopn~cnt ~'or~oratlon:' as

"it nntounls lo an trr~(uir trc~rle pruc,ticnc rt~hic.11 i s 1101 itr lho ptrhlic in(erest". Pridccp S .

Mehta (2009), a noted conipctition law expert has riglltly obsc~vcd that t l~c MR'TP

Act, 1960 and its implementation thus far show i t is inefli~tivc In dealing with 52 cartels.

4') , The feeblc ccrmpctitinn rcginle cstahl~shcd undcr the Monopc~lics and Rcrtrictlvc 'l'mdc Practlcca,

1969 has been ev~drntly hund to hc vtslhle from the kt thnt the MKII ' ('ommisxictn had miwrehly failed in ~uccessfully pmsccurtng any of rhc internatlr~nal cunclr that hrd hccn opcrativr in Itdre to thc detriment of lndlan consumers tl~ouph thehe carlclv have h e n succcr~fully hustcd 4nJ prowcutcd in tl~c Developed counlnc< 'O C R Hhatla, "Cornbattng I arlcl In M d r k c t ~ IV+UIT arul I hallcngc* , http ~ w w w ICSI cducvJuly200h Anltleo ~ o r n b a ~ l n ~ ' ~ 2 0 ~ ' a ~ r l % 2 0 1 n % ~ a r k c 1 ~ ~ ~ 2 ( ~ ) ~ 0 2 O l ~ ~ u r ~ " 0 2 0 a n d " n ( 1 ~ ~1allengcu%2Ohy%2(K1"/~2OK%2O Hhatla4df. (accewd on March 14,20VY X I npm " (19931 3 SCC 499 '"chta. F Pradcep (ZWr)). "Whm econclmy rlou.c, cancllratlcm grow. Iiux~ncux I Inc, 2 R April,

avatlahlc at. http 'www thch~nduhu\~ncuultnc rom~2OW04 2~~ulr~nc~2~HIV(M2X5O4iXlWHf.htm accessed 05 Septenlber 2010

4.6.4 CARTEL REGULATION UNDER THE COMPETITION Am, 2002

The tam 'Cartel' is explicitly defined in the Competition Act, 2002 as:

"Cartel includes an association of prodrrmrs, sellers, distributors, traders or

senrice provaders who. ly agreement amongst themselr~e.~, limit, control or attempr lo

conrrol rhe production. distribution, sale or price oJ: or, trade in g d or provision of

sentice'' "

The three ingrc*dients to constitute 'Cartr-1' are:

i) an agreemerrt lc-hich inrlrtdes arrnngcment or rmrlerstunding whether

forn~al or in/i,rmal;

ii) ugrcPrnrcrrts is anaorrgst proliuc(.rs, s~~lkv-s, distributors, traders, or

semirp providc*rs i. c, pc~rties \rho clrc nrjyigcd in idertricul or similar

trade (?/ goocls or prorision c?fsiv.ri(.o. (rtrd

ii i ) ugrremcnt uittrs at Ilrnitrr~g, co~l/tollrng or ut/c,mpt N) corrtrol the

~)rorl~lrction. d~strihurion, sale or price (!/, or trade in goods or

prohrction qf si~nicrs.

An obvious question arises iIs to why a '('artel' is presumed to llavc

"Appreciable Advcrsc Effecl on Competition." In case of cartcl, a)mpctitors a p e not

to compete on price, product, customers etc., and I'ufllicr, lliey agrcc to collude to the

detriment of consumers. Simply and plailily stutctl, any competition luw sccks to

promote, maintain and sustairi competition i n market, wliich is bcnign and h~neficial

to various stakeholders in society. Thus, it is quite ohvious lliat in the case of a

Cartel, direct cv~~ipetitnrs agree to forego conipetition antl opt for collusion, rcsultiny

in thc deprivation of benefits of compclition to the consumers antl rivol business

houses. The parties to the cartcl tnakc i t as sccrctivc and opaque as p)ssihlc XI aas to

ensurc that it is not dctcctcd by thc law enforcing i~uthoritics. Thcrcfbre, it hccomcs

vcry difscult, if no1 impossible to bust a cartel. All tlicse compulsions sccm tu have

persuaded the law makm to prc3~nhc that 'Cartel' is prcsutncd to have 'apprcciahlc

adverse efT~vt on wmpctition'

- ". Tk Competition Act. 2002: Sectton 2(c)

89

The Competition Act, 2002 contains leniency provisions, which provide for a

reduced penalty on a participant in a cartel, who makes a MI and true d i sc lo~ure .~

The logic behind the leniency provisions is that a cartel is a hard nut to crack

and such provisions would be helpful in motivating at least some parties to break

away From cartel by letting the lid off From it. The leniency provisions have k c n

found to be quite effective in the United States of America in letting lid on cartels md

therefore, have been adopted in niost of the countries having cwmpetition regimes.

The European Commission has also adoptcd aid endorstxi the effrcncy ofthe mie.

The principal reason for this, that niore oRcn than not, curlels do not have a fonnal or

a writtcn Hence, vcry onen it becomes highly intricate li)r the law

enforcing authorities to sct.un. vital intbnnation about the existence of u cartel.

Leniency programtnc by itself would not be much hclphl in busting curtcls unless

and until i t is coupled witli iticcntives to thc persons spilling beans on urtels and

protection to whistle blowers. Furth~r, to crcatc dctcrrcnt cflict nguinst curtclizalion

the individuals participating in c i~r t~ l s rnust be prostwutctl a~itl punished by treating

the very act of overt and covert participatioa in cartcl as cr crimini~l oflencc crituiling

imprisonment apart from disqualification tio~n Iitilding niiinogeriol positions in

corporate bodics for a protractal period. 'Flie Competition Act. 2002 sadly docsn't

54 . Sectlon 46 of the C'ompetition Act. 2002 u% r~ncndcd by the ( 'olnpt~t lon (Att~mdn~rnt) Act. 2007 provides that the C'omnt~ssioa may, il' i t I r suttrlicd that any prtxiucer scllcr, distnhutor, cruder crr service provider ~ncludcd in any cmrl, which IS allrjird to have vtolatcd sectutirtn 5 , has lrtadc a full and true disclosure in rcspect o f llle allcyed v~olalions and such dlwloburc IS vital, imptrxc upon nuch producer, seller. distnhutor, tradcr or ~ w r c c pri~vidcr a lcsvcr pcnalty as 11 may dccnt lit, tl~an livablc under this Act or the rules clr the rcyulations: I'rovtdcd that lesser p l t y shall not hc i m p o ~ d by the C'ontrnisslc~n tn cnwn whcrc the repon of investigation dircctcd u d c r section 26 h u bcrn rcccivctl hrforc rt t i~k~ng of such diwloaurc. I'rovided liurthcr that penalty shall be impused by the Comnitshlon cmly In respect of a prrtduccr, wcllcr, distnhutor. trader t~ ww~ce. provider includcd tn the cancl, wlu) has medc the full. truc end vital disclosures under his wcticln. Provided also that lesser pmalty shall MI^ be ~ m p ~ w d by thc ('ct~t~m~ssion IT the pcrrln twklng thc disclosure d t w twt continuc to cocvratc with tllc ('omnt~xston 1111 tllc completion c l C the prtrccdingn before the Conlmtsslon. Provided also tha~ the Commission may. ~f it la satisfied that ruch prci~lucer. wllcr. dtrtr~hutor, wader or servtce provider included in the cartel had ~n the coursc I I ~ prwcedtngr,

(a) nor complied wtth the cond~tion tm which thc levxr penally was ~ m y o ~ d by tltc ('ommiwion; tfl

(b) had givcn falw e\*idmce; or

(c) the disclmurc made IS not vital. and thercupun such prtduca. ~ l l e r , distributor, tradcr or sewice provldcr may hc trted for thc olrcncc with respect to which the Ic~mpcnal ty *,a% i m p w i l and shall alu) hc liahle to the Impowttlon of' ynalty to whlch such pcmn has been liablc, had learn pcnalty not hccn impowd

, Pradecp S. Mcha (cd). Towardx A Functional compctltion policy for India. I* ed. 2005. P.55. 90

contain any of these provisions and theref- one may be tempt.4 to say that the Ad

is not that much harsh on cartels.

4.6.5 CASE LAW ON CARTEL

United States v. Trenton Potteries Co. tt 11;" :

This was one of the early a s e s that was decided by the US Supreme Court.

The complaint, under the Sherman Act, was that the respondents, mntmlling 82

percent of the business of manufacturing and distributing in the 1JS vitrcous pottery of

the type described, combined to fix pricc.; and to litnit sala in interstate commerce to

jobhen. One of the arguments on behalf of the respondents was that when: the prices

fixed were reasonable, the practice could not be decmcd to bc an unrasonahle

restraint on commerce. The Court cn~phasized that the rt.asonablnicss or otherwise of

the restraint of commerce was I! distinct, aid the o~ily issue, and the xnsonablcnrss of

the stipulated prices, under an agreement that was shown as an unreasc)nahlc rcstraint

of commerce did not affect the basic issuc, viz, whether an agru~mmt was in restraint

of coaimerce.

Auction ~ o u s e s ~ '

Christiu's and Sotheby's - the well known auction houses, wcrc fbund to bc

involved in a collusive agrccmcnt fixing trading tcnns. The purpose ol' the cartel

agreement was to reducc the licrce competition bctwceri tho two lcad~ng nuction

houses that had dcvclopcd during the 1980s and 1000s. 'l'hc Commiss~on fined

Sotheby's 20.4 m~llion that is h percent of itr worldwide tumovcr.

Vitamins arte el"' Leading producc~s of vitamins including Rochc ACi arid BASF sf G~many ,

Rhone-Poulmc of Francc. Takcda Chemical of' Japan Ibrmcd ;I cartel dividing up thc

'. 273 US392 (1927) ". EC Pms Release I)N: tP~02/15#5 dated. 30!IOl2(Kl2 ('cnnm~~xton rulcn agalnwl collur~vc hchaviour of Chrislie's and Sotleby's ". Bhatia. (i . R. (2008), "Combating Cartel in Markelr: Iqrucs and I'haltcnycr", Competition llrw Rcpor~q. Manupatra. January, v d I , pan. I PA-44, available at: hltp: ;ww.tuthra.com pdf/lW033.PI)F.

world market and price fixing for d i f f m t types of vitamins dtiing the 19909. The

cartel operated for over 10 years. It was prosecuted wilh h e help of RhonoPoulenc,

which defected from catel by letting lid on it and uwpmted with US authorities.

Roche paid fines of US $ 1 billion in the US done. The o v ~ h n r g e s paid by 90

countries imporfing vitamins were estimated to the tune of US $ 2700 million during

the 1990s. The analysis also disclosod that jurisdictions with weak cartel enforcement

regime suffered the more. In terms of monetary loss lndia incurred overcharges of

more than US$ 25 rn~llion."

Lysine cartelM

Lysine is an amino actd that stimulates growth and results rn leaner muscle

development in dogs, poultry arid fish. I t is also m i x 4 with corns und is an input for

feed products. Bctwcen 1992 and 1095, five produccrs belonging to Japan, Korea and

bere controllirig more than 97% of the global cilpucity cngogd in price fixing,

allocation of sales quota and nionrtoring of volunie agn.Lc:meats. ' f i e DoJ utidcutcwk

searches with the cooperat~on of FBI and on the has~s of subpncnucd docummts

together with tape rwording of meeting oftlie conspirators a d d rnakc out u strong

case of colluding on lys~ne priccs around the world fijr thrcc ycan.

Soda ash mrtclbr

In Scplernbcr, 1906, Amerrcan Niiturul Soda Ash Coprutron (ANSAC)

cornpnsrng of six Amcncan produccrs of soda ash attc~nptcd to shrp a consrgment of

soda ash at cartclr~e pncc to lnd~d Uascd on thc ANSAC' rncrnhcr~l~tp sgrcemmt, Be

Monopolies and Rcstncttve rrade Practices ('nmmrsslon held rt ;tu a pnmn hctc cnrlcl

and gantcd tntcnm lrljunctton In excrclse of'ltq powers In tmns of'Scxt~on 14 of the

MRTP Act. The Supreme Court, howevc~, overlumcd thc order of thc Conrmrssion

j9. Despite the fact that lndia had bccn a victim ol'the Vitamins csflcl ycl no action of wmblam wm ever initiated against any of Ihc prrpctsators of ttw cnncl owing to wcak compclrrinn regime citahlinhcd under the Monopollcw and Kcstric~ivc l'radc I'raclice a Act. 1969 and which impcrativcly highlipha UIC importance of an cflsr~ve cnmpr~itivc rcgimc to curt, and cotnhat car~el~. ". Bhatia. 6. R. (?()US), 'Cmbatmg Caricl rn Makrtn: Imes and Challcngcn". Compctiticm law Reports: Manupatfa. January. vnl. I . pan: I. p.A-44, available at: http :'www luthra.canvpdf~~XX:O33 PDf . '' Alkali Manuf ihmm A m i a t i o n of lndla v Ammca Natural Soda Ash Cmpmtion (IY9Rj92 Comp Car 2WMRTPC)

92

inter alia, on the ground that the MRTP Act did not give it .my extra territorial

o p t i o n .

Trucking cartelU

Eliminating competition in the market by fixing the b igh t rates without

liberty to the members of the truck operator u ~ i o n to negotiate fight rates

individually is common in the trucking industry. The M.R.T.P. Commission passed

'Cease & Desist' order against Bharatpur Truck Opentors Union. In the absence of

any penalty provision in thc MRTP Act, 1969, however, no tine could be imposed.

Determination of the existence of u cartel by cogent cvidencc 1s 11 Herculean

The law embodied in thc Competition Act, 2002 in regard lo the curbing of unti

competitive pruct~ces such as cartels, prulstory pnclng, collusivc tendering and

conspiratorial price fixations havc providcd umplc twth to the Competition

Commission and tlic Appellate Authority and hopefully rhcy can curh such practices

ruthlessly.M

Cartels have undoubtedly pcn~icious e f k ~ t s on compdition itnd consumcr

welfare. Thcrcforc, thcrc should bc ctlbctivc and clticacious sanctiotls against thcm to

create deterrtnt effect against such bchaviour, tlowcvcr, the provisions of the

Competition Act, 2002 in rcgard 10 tic curbing of anti -compctitivc pruc~iccs such as

cartels, predatory pricing, collusive tendering and conspiratorirtl price fixations arc

inadequate to curh ant1 combat such Icgi~lly assailublc tradc practiccs. ['riminul

01 . Supra no 31: see also S.S. Kumar "Cartcla and I'ricc Flxatton: Wtrrst 'I'm oI' Anti-C'ompctitive Practices". Fxccutivc ('haticred Secrclary, July 2006. t.01.3, no. p (61 6) . . lhis a bccausc not only thr element of mectlng of mtnd ix mxcnttally mcxwry but elm. as latd down by he Supreme ('c~uti in liaridas Export8 v. All India Float (;la16 Manufaclurr~ AasorIati~n 2002 t"TJ 353 (SC) (MRIP), tlx mcrc Ilrmatit)n of coticl by I I K I T will not y~vc riw to on sclim. Something ttlore Inus1 have to'he pnrvcd to dcmc~nstratc the dctrirncntal effcct thcrctrf. 'l'hew hurdles came in the way of a palpably existent onriel of cernctit manurocturerfi t'cmcnt manulbcturcm' Association with 44 ccmcnt manulrcrwcm wcrc arraigned In an 1:nqulry ~nittatcd by the MRIP Commission against ~ k m . I t was alleged thal thc manuracturcrr had Ec)rmsd a cartcl wltich woa respn~rbtc for Increevny thc pncw of ccmcnl in all pan# of thc country. ltlc ('ornmin#~on imnicdia~cly granlcd an injurrction which. when conlcstcd. had to he rcvctked hecaune thc ssncnlrntptionr relied upon did not rtand proved, Such k i n g the lcvcl 01' cvidcncc nccdcd to unearth and expose a caflcl, one can safely say that far more has to be dtmc In ~ h ~ r dirertion. U. This prohibition of even thow agrecmcttls that have 8% l k i r tlbjrct the rcnlriction or competttion, but have not m a t a l t a d , ir a raltonal urn. It would be an cwld nluation if thc undcmkingr wcrc allowcd to conspire ineffectually In brcak the law and be ctmdcmncd only when they are nuccarful. H'ohat wcrc the caw. many a pncc cartels would 1u1t havc been bmuyht to I x K ) ~ . hconomists p i n 1 out that grcatcr the number of memkn in a carlcl. y n a m in thc prmntb~lrty to chcal, nrc cy. Sligler, A Theory of Oligopoly, journal af Politkal Fxonomy, Vol72. tYM.p.44.

93

~~tion coupled with baning of individuals fnrm assuming directorship and other

managerial positions for taking part in cartels has been found to be very efkctive in

curbing and combating cartelization and the experience of the U.S and other countries

dso conclusively establishes this fact but this salutary lesson has not been

incorporated in the lndian Competition Though leniency programme has been

explicitly recognized unda the Indian Compctitioil lw but lack of incentives to the

persons invoking such provisions may make it less anractive and effective. The Act

also doesn't contain any provision extending pmtwtion tu whistle blowers lind which

is definitely a shortcoming warranting ~ncclrpclrntion of such pmvision nt the arliest.

Cartel busting imperatively dcmarids specialist skills, expertise and dexterity which

differs from the skill rcquired for an invcstigution and pmsccution of the rest of thc

provisions of compct~tion law. In ease of cartels the bcus lics on pmvlng the

existence ofthe arrangement itself rather than dcmiinstrating its Iriipacl on the rnurkct

in cconolnic tcrms. That is the principal reason why the number of Competition

Authorities have set-up special cartel cclls equipped with expertise in organizing

search and raids, interviewing witnesses, covtrt surveillance, besides suwssful

leniency programme. Thc Competition Conim~ssion of India should also contcniplatc

on sim~lar Ilnes. Furthcr, the Colnmi~sion should be cmpowcrcd wilh the poww of

intrusive survc~llance." What IS conspicuausly lucking in Ihc Act is thc provisions

treating hardcore cartel as crimes cntalliny uririiinal prostwutlon and incarc~rtition of

the individuals designing, executing and partic~pating ill such cartels. I:ur~h~r, such

persons must be barred from assuming oflice of directorship of corpornte bodies for a

protracted pcriod to create deterrent effect against the very uct of curtcli~aticm,

Furth~morc, thc Compctltlon Commission of India should be a n n d wit11 nwessary

powers like the power to wbnduct dust to dawn raids, markd survcillancc,

Infrastructural support has to be providuf to the invcstiptors in full strcngti~. The

victims of c ~ c l should be crnpowcrd to claim compcnsarlon frcsti thc pcrpclralors of

such cartelization and such compcnsalion should he home by the individual

responsible for such canel. Protection to the whistlc blowers has to he assured. Apart

"' The Indian Compctilton Act, 2002 merely trearn canel a< a civfl trffcncc and which 1% a clear la~vna in the Act. Ih Intmsivc ~urveill~nce involves the prcficncc of an tndividual tn Ihc rcrr~icntial or hotel accamm&tion (11 inslallntion of device in a vehicle lo ncc what is huppcn~ny within the prcmiwn or "t=hick and these do not conqtilutr element oTtrespann. 'Ik 1JK'r ILnlcrpriw Act, 2()0Z, cmpowcrn the Om wth such power.

fmm this, there should be sustained efforts on the part of the Competition Authority to

generate awareness about the pernicious effects of cartels as it is a prelude to the

strengthening of the private e n f b m e n t of the Competition Law. PI-ivate

enforcement of competition law plays a very pivotal role in not only making the law

more effective but also in empowering the victims of nnti-.competitive agrcemcnts

and market abusive practices to claim compensation from the peqmntars of such

practices. Unfortunately, the Indian Competition law is appnmily locki~~g in this area

and therefore, private enforcement of law should he explicitly recoy~ized under the

Act.

4.6.6 COMPARITIVE LAW:

LAW RELATING T O ANTI-CQMPETITIVE AGREEMENTS IN ELIROPEAN

UNION

Article 81 and 82 of Trciity of Rome is the law regulating Anti comp4itive

agreement in the European Community. EC' 'Treaty pn~hihits agreements hctwan

undertakings that may affect trade hetween mcmhcr Starcs and which liuvc as their

object or effect of prevention, restriction or distortion ol' competition within the

comm~m market and lists the fhllowing as prohibited ns incoapalihlc with the

common markcth7

Price fixing agcmncnls:

1 . Those that limit or contn)l production, ~narkcts, Icchnicill dcvelopnwtit, or

invalmcnt or sharc ~narkcts or sourccs of supply.

2. Agrccmcnts that impose dissimilar conditions to equivalent tronsactitms,

placing trading padies at a disadvantage and

3. Ayreanents that place the othcr party to the contracts untlcr supplcmenlary

obligations conl~ncrcially unrelated to thc subjcct of'tlic contract.

The European C'ommun~ly law mentions exemption p r o v i s ~ o n . h ~ t cxcmpts

ccrtaln categ)ries of agr~wnents. An agreement is cxanplcci ~f it contributes to

improve in the production or distr~hution of gncds, or to pnmiotiny technical or

". Eumpean Hconnmic Community: Art1~k.8 l * Ibid; Micle RI(3)

95

economic progress, while allowing consumas a fair share of the d t i n g bcnefit.

This is subject to the proviso that the agreanent also does not impose unrelated

restrictions on the undertaking concerned and also does not enable the undertaking to

eliminate competrtion in m p w t of a substantial part of the products in question. The

basic principle is that agrxments falling under (a) to (dTq arc automatically void,

unless they are specifically It should be noted that the qualifying

conditions. to be satisfied for claiming exemption arc cumulative. The European

Economic Community hns griintcd a number of 'block exemptions' to agrcments in

various sectors so that i t is unnecessary for individuals to apply for

LAW RELATING TO ANTI-COMPETITIVE AGREEMENTS IN UNITED

KINGDOM:

The pnnaple dotnest~c law relattng to cotnpctitlon i n the llnllcvl Kingdom i s the

Competlt~on Act, 1998, l'hc Entcrpnse Act. 2002 1s cnmplemcntnry lo the

Competition Act. Section 2 of the (JK Competition Act, 1998 deals with anti-

coinpetitive agreements, decisions and conccrtrxi I t prohibits 'ugrmnents

between undertnkitlgs, decision by association of undcrlnkings or coi~ccrtcd parties

that:

a) may affect trade within liK.

b) have as their object or effcvt the prcvcntic,n, restriction or distortion of

competition within the I i ~ , "

The Act grants individual uxc~ipttons,~~ block exemptions7' A purrlllcl

exemption may bc avarlahle whcre the agecnicnts have hccn cxcmptccl under

European Communi ty ~ r c a t y.7"

"ld, Arttcle H I ( ] ) '' Id, Artr~le 8 1(1), Sm M a k r M Ifahhah, EC and 1/11 Comptlition Law I " cd 2(N14 pp 114.1 36 'I Supra n 12, p 50 '' UK Competltron Act, I9'JW. Suk t ron (2) 2 pro\r&x that "sub-nectron (1) rppllen rn purtlculnr to agreement<. dccrslon*, or practlcn whrch (a) dtrcctly or ~ndrrcctly fix purchuu tw wllrng prrccn or any o t k r tradrng condr~rons. (b) I l rn~t or control prtductrtm. m a t h , technical lvekpmmts or mvcqtmenl. \hare markrtx or w r c n of mpply. apply drn~rrnliar condrtlonn 4 0 cqu~valcnt tranaaftlonn wrth 0 t h tradtng part~m" " UK Competltron Act, 1998, Sectton 2(1) " Ik U K'z (bmpeetmn Act, 199X. Sectron 4 " Ib~d. Scctron 6

96

Relationship between UK amt EC Law is that Competition Act, 1998 prohibits

anti-competitive behaviour that affects trade in the UK. Articles 81 and 82 prohibit

Anti-competitive behavior that affects trade in the European Union. Since 1st May

2004, the OFT has had the power to apply and ahrce Articles 81 and 82 in the UK.

When doing this, the OFT must follow the casc law o f the European Court. While

applying the Act, section 60 of the Act requires the OFT to act consistently with EC

~ a w . "

LAW RELATING TO ANTI- COMPETITIVE AGREEMENTS IN UNITED

STATES:

In the Un i td States. Sections 1 and 2 of the Shcrmm Anti Trust Act, IH'M

and Section 2 of the Clayton Act. 1914 arc the key Anti trust provisions. Cli~yton Ad,

1914 also deals with the acquisition of stock or assets of anotl~er.~"Ttrc suhstnncc of

provision in the Sherman Act, 1800'~ is that every contract or w)nspirrtcy, in restraint

of trade or conlmcrcc among srvcral Stntes, or with foreign nutions is dwlurctl lo hc

illegalxo Shcnnan Act, 1800 tlcclard that monopolizing or conspiriag with any other

person or pcrsons, to monopolize any part of trudc or commerce onlong the s e v m l

States, or with forcign nations, is an olli.nccn' ('layton Act prohibits as unluwful any

price discrimination, the efYcct of which tlisorimi~iatio~i tnay he substantially to Iesscn

or tend to crratc a monopoly in ally line trf ~ o m r n c r c c . ~ ~ H o w c v ~ ~ , it is lo he notcd

that much of the US laws rclati~~g to Antitrust is judyc tnadc Iiiw und lhe landmurk

decision had added flesh and hlocH1 to the hoa1.d provisions of' the Irrw. In 2005 and

carly 2006, the ~iv is ion" obtained largc fitic?; in domestic and intemalional pricc-

fixing cases and worked to advance anti-cartel cotrpcration ovcrscrt.u. Since it~dividual

'b Undm f uropan Comn~un~ly Trcaly, Antclc 8 l(3) " ! 1 ! ~ ~ ~ 1 ~ b l c & ~ w J u l y 2 0 l ) ! , A ~ c l r * C S J W L ~ ~ ~ D % . ? ~ ) ~ F Y ~ ~ F Y ~ ~ ~ A ~ ~ ~ c~nrumcx ~ 9 ~ ~ ~ ~ e j ! g ~ 0 ~ ~ ~ h y l I / ~ P ~ ~ d e c p " _ ~ ~ O M ~ t - J pdf, A F C ~ K Q Apr~j 20th. 2000 '' Clayton Acl, 1914, \ecllcm 7 I0 Fhennan ACI, I890 5cctlon I " Q~ecllon I ol the Sherman Ant1 lrust A'!. 1890 provldcn that "every Lontrilrt. ~c~rnh~mt~trn In the form of trust or othenv~w, w ron+iplracy In revtrarnt (if trade ar ccrmmcrce among the wvcrol ntatcn, or wtth fore~gn tlilrrom ru &clad lo be rlkgsl " Sherman A L ~ , 1890. %[ton 2 of the \lmman Act prov~dcn (hat "cvery penan who ~bll mc~nnpo11z.e or attempt lo mnopol17r or ccnnhlnc or complrc with any other prwn or prwnx, lo monopul~~r any pan of the lradr or ctrmmcric a m a y the meral statex, or w11h lorc~gn natlonn, #hall be dccmed guilty of a Irlony " Clay~on Act 1914. %wren 2 '' D~vl~tOn I* rhf main adjudlcatory body m the IJnttcd Strtcn I)~vtq~cin 18 connlttutcd under thc Compet~tmn Iaw o f t k (!nlccd Stata to &a1 w ~ t h the raws of An11 trun1

97

incarmation has a greater detemnt effect than fines alone, h e Division continued to

emphasize prison terms for executives who participate in cartels. The Division also

intensified its advocacy of individual accountability regimes and worked to secure

extradition for antitrust offenses." The Division filed numerous criminal cases in the

past 12 months against both domestic and international cartels, including several cases

that led to record fines and record numbers of prison seiitences for individuals.

CASE STUDY:

Brown Shoe Co.lnc. 11. US:"^ this case Supreme Court pointd out that within the

board prtxluct market, well defincvl sub markets may exist which in rhemselva may

constitute product n~arkets for anti trust purposes. It stated that the boundaries of such

a sub market may bc dctennirl~vl by examining such practical indicia us industry to

public recognition of tllc sub market as a separate econoaic entity, Ihc products

peculiar characteristics and uses, unique production facilities, distinct customlm and

prices, sensitivity to price charges and s~xcializruf vendors. 'lhmugb reaching out to

identify sub- markets is not expressly pmvided under the Indian Act, 'consutnrr

preference' under section lO(7) (c ) of the Shcnntl Act, I RVO would permit, whcrc

necessary, asc~rlailiing a sub markct.

In Ford Motor C'o. v. llnitni ~lales," Ford acquired the asscts of Autolite, an

independent manufacturer of spark plugs and other automotivc parts and a supplirr to

Ford. Ford was a major customer in an oligopolistic industry. I t was hcld that the

acquisition was likely to substantially lessen competition in automotivc spark plug as

the acquisition by the buyer of a substantial share of the total industry output

'foreclosed access to indcpendcnt spark plug manuf;rcturcrs. 'fhc [.IS Supr~mc I'ourt

held that Ford's position of a buyor of' spark plugs as an original quipmcnl

". In the words of the Untvd Statcs Supreme C'oufl. cafleln arc "thc nuprcmc cvtl of anntruut" Scc Vcnmn communtcilt~on v.taw Offrpi vl'C'uflts V.'l'rinko. 540 U.S.39R. 408 (2004) . Prcmuting cancl offenxs continues to be [he highesl pr~tlrity of thc llnllcd Stater I)cpaflmcnr of Jurcticc'x Antrtmt Div~sion. 'The Ant rm~t Division placcx a panlcular cmphaw~a cm comhallng tnfmttmrat caflclx tha~ targct U.S. markc~c because of he breadth and mapnitude of \he ham that they lnfl~ct im U.S. companln and cmumers; http ; w w udo~j.gnv'a1rIpubl1~111~eched2~ I UhH.htnt,(vix~tcd tm March 20. 2006) ". 365 US 320(1%t) ". 405 IJS 562 (1972)

98

manufadura would 'maintain the virtually insunnountable banias to entry to the

aftermarket'.

Standard Oil Company of New Jersey, .v. U. s," The charge was that the

defendants were engaged in conspiring 'to restrain the trade and commerce in

petroleum, commonly called 'cmde 011' and in other products of petroleum. among

the several states and territories of the U.S and the District of Columbia w d with

foreign nattons and to monopolize the said commerce. The nlnspirucy was said to be

for the purpose of fix~ng the price of crude nnd refined o ~ l and the pnxlucts thcmi;

limiting its production, u)ntmlling its transportation and thcrrhy rcstratntng trade and

commerce among the sevrml states and nic~nopoli~ing the said comnicrcc. The

combtnatrt~n was the acquisition hy Standard 011 Cotilpony of New Jersey of the

majority of the stock of a l a r g n u m b o f companies III t11c oil industry. Thc iJS

Supreme Court held that the ownership of the stock of the New Jcrscy Corporat~on

constttut~ul a comh~nation in violation of swtion 1, and an illtempt to creutc u

monopoly or to monopolire under scction 2, bath of the Shcmon Act, and

com~nandd the dissolut~on of the cornhination. the dccrce was clearly appropriate.

Standard Oil Co. of California v. United ~ t a l e s , " ~ t was n case whcrc Standard 011,

like its competitors, had entered into ayrcenlcnts with its retn~lcrs that they woultl huy

all their rcquirerictlts of gasoline arid petrolcum products only fiom thts company.

The U.S Supr~vnc Court held that this rcquiremcnt undc~ thc ngrc~mcnt v~ola td

scctlori 3 of thc Clayton Act, as 11 rcstncted ncccss b r its rctailcrs of othcr chunncls of

procuring pctrol and pctrolcuni products i~nd that th~rcfhrc, compctilion had bccn

tbrccloscd In a substonttal share of the linc of ct~mmrrce.

Natural Gas Pipeline Company and executivcs," ' f ie indiclment, filcd in thc 0 . S .

District Court in Denver, charges that B&l-l Maint~mance & Construction Inc. (H&H)

and two of its exccutivcs of markding and husincss dcvelupmcnt, conspired with each

other and another corporation and individual to submit non-competitive and rigged

bids to BP America Produdion Company. According lo tllc indidmcnt, bdwccn

approximately June 2005 and December 2005, the defendants rigged bids for the

conshuction of pipclines to transport naturai gas h m wells in the Uppa San Juan

Basin in Colorado. In addition, the indictment charges were that one of the executive

tampered witness. On March 13, 2007, Federal Grand Jury indicted a Eunice, N.M.-

based Construction Company and two of its executives 6- articipating in a hid-

rigging conspiracy involving natural gas pipeline cons@ Jn projects in Colorado,

the Department of Justice announced.

4.7 CROSS BORDER ANTI-COMPETITIVE TRADE PRACTICES

'l'here has been increasingly glob1 naturc of the World cconolny and thc

thinning out of national cconomic boundaries. As the World twcjnomy hccn)tnt?; mow

glubalizd, an anti-competitive act of a firm may havc effect not only in t l~c country

where i t is situated hut even in othcr coutitries, where i t has husirress activities. I n

most countries, the legal view taktn is that thu clomcstic competition law capturn

such acts even if the yi l ty ait~rprisc 1s not locatcxl in thc country pmvidui thc anti-

competitive act has an c f k t in the country. This doctrinc is illso refcrr~i to as thc

'effects doctrine' or the principle of extra-tcrritorialily.

The Competition Act, 2002 expl~c~tly recogni~cs this tloctnnc by importing

the same from the +American j~risdiction.~' Economic and industrial globuli~alion haw

brought about increasing ~ntcgat~on of national cconomir7s across thc World. 'l'hus,

anti-competitive practices also will havc incrcasingly glohal dirncnsions. A number of

trends hacc contnbut~rl to the accc1rn:ilcd gloh~lt/atioti of rndustry and tlrc Itrlcgatlon --

ln'. Seclton 32 of ~ h c Compet~tron Act, 2002 a5 amendcd by thc Cclmpctltrtra(Anc~dmet~l) Act. 2007 p ro~~ded hut 1 he Commlsrlon EIuIII, ~ ~ l w ~ l h * l a n d ~ n y that.

(a) an agn~men l rclencd lo in utctlon 3 ha* h e n crltcrcd Into nubldc Id l a , or

(b)' any pany lo F U L ~ dgrccmcnl 1% ou~.wtdc lnd~a or (c) any entcrprlr ahuvrng the dominant pohttlon 1% outalde lrwl~a or (d) a romblnatlon has ukcn place outnldc India, or (c) any party lo comh~natron I* tm~l*t& Ildla. Itr ( f ) any otha matter or practice or acttcm anvlng out ol such aprccmenl or domrnanl poxrtion or

comblnatlon 15 ctutrrdc lndla Hd\e poucr to Inquire In ac~orhnce mth thc pro\l*ltrm contalwd rn wclltmri 19.20. 24.29 and 3 0 of thc Act Into %uch agreement or ahuw of domtnant ponlilon or ~omhlnat~c~n ~f ruch ayrcemcnt of domanant pn-rtlon or combtnalw~n ha* or n l~krly lo Ilavc an appr~crablc advcrw eKwt on competruon In IIK relcbanf market In fndra and pars t w h tlrdcn iuc ~t may kern f i t In auordancr w~th IC provmont of ~hrv ACI

of international economies. For instance, the pwing similarity in available

inhsbucture, distribution channeis, and marketing appmaches has enabled

companies to introduce products and brands to a universal marketplace. Fluid global

capital markets, falling tariff barriers, and technologid innovation have Id to an

increasing ability for global competitors to m c h international markets that w a r once

beyond their grasp and reach.

In addition, technological advancements and c-commerce have enabled firms

to significantly improve the etficicncy of operations, innovations in supply chain

management. and increasing vertical and horizontal integration and industry

concentration.

As countries integrate more and morc into the global i%oaomy, they become

more prone to the Anti-competitive practices operating on a global sale , or

originating outside the shores of t l~c snuritry but having ctkxts on their domestic

economics. Several international cartels crcatcul by producers airtl distributors of

industrialized nations which have biwn exposed in IV90s showat the anti-competitive

effects on a number of countries, harnperiirg growth of donicstic firms in developing

countrics. India-being a part and prirccl of thc global ixonoiiiy is no cxccption to i t .

When competition authorities from highly tlovelopcd cc~untricsihlocks like the

European llnion face difficulties in handling cases with a cross bortlcr dimension, i l is

clear that authorities in developing countrics fbce cvcri greater and morc uphill

problims in taking such cross bordcr a n t i - c o ~ n ~ ~ t i v c tratlc practices.

During the 1990s, thcre was a wave ofmcga mwgcrs, with firms merging with

or acquiring controll~ng stakc~ In, other finns, oRcn in other countrlcs. Large

cornpanics merg and conscyuently thcrr wbcidranec and a\um;tla c ~ ~ d up rn ncw

combinations Moreover, develop~ng countlcs may also be af'fcclod by M~rgcrs and

Acquisitions activities that take place outside their territory, without M y 1 4

presence.91

Mergers and Acquisitions are primarily a domestic Competition Law issue. In

some cases, however, Mergers and Acquisitions affect international trade. An

enterprise may a c q u i ~ o foreign campctitive firm to block the importation of

competing products. If it happens !hex is M impact on intmntional trndc npnrt from

affecting domestic competition.

For example, Gillctte (a U.S. Razor munufucturcr) acquired slocks of Brnun (a

German razor mnnufacturer), a potential co~npctitor of Gillettc. The e t f m c~f this

acquisition wns to control exports of Braun to thc U.S markct. 'lhc 11,s Justice

Department proceedccl against this acquisition and this d m d to he a violation of

Scct~on 7 of the Clayton ~ c t . "

There was a need to Iotjk into the issue of tackling cmss-hmadcr Anti-

competitive practices that aflcct countries. 'The decline of Comniunisni and the

consequent introduction of market refornls in trarisilionol dcvcloping w~numies have

given rise to the cmergcnce of multilateral glubal trade ugrccmetits and rules basd

international trade regime unda the aegis of the W 'r 0. These trends huve triyyenul

significant changes in the structure of entire intlustries. With the cmergcncc of the

glohal marketplacc, governments have promotcd global compctit~on through the

incrcase in international trade, while developing legal systems to ensure industrial

competitivcness. Antitrust laws, or Competition Laws, iis they arc known throughout

much of thc World, arc design4 lo promcrlc compctilion and pwtc~? against mnrkd

concentration to the extcnl that monopoly power may emerge.

Both compctrtlon p j l~cy and the WTO reglmc atni at edabl~shiny and

ma~ntalnlng a free market where the opt~mal allocattcm of cajnomlc resources ts

achteved through the pnce mcch~n~sm and wmpcltlion among enttrpnscs. 'Therefore,

competltlon p l ~ c y and the WTO qhare the Fame object~vc, namely, an mjnomlc

system based on a market economy Indeed, compctttlon policy IS an ~ntegral

'' Kenneth J tlamner. "lhc C~lrbal~ratlrm of l a w inlcrnat~oml Mngcr I<~nlml and ('ompettlan Law In The Un~tcd Su;ter. Ihr lumpean Unlnn. latln Ammca And China, Anltlrunt law". Jaumnl, Vol-l. 1%~-349,2001.p-340 " United Slstcs v. Gilkne Co.. f Supp 713 1 ' 4 ~ Reg Rep

102

principle of the WTO re@me, even though there is no WTO agreement on

Competition policy9' Therefore, the liberalization of trade progresses through trade

negotiations sponsored by the GATTNTO regime, it becomes increasingly necessary

to take measures to take control of Anti-cwmpaitive conduct of private cntmpises

that will counteract the results of libmlization. In the light of this, the introduction of

competition policy onto WTO regime is a n w a ~ i t y of thc effectivmess of the

regimes to he maintained.

Although a comprehensive a v n c n t on competition policy is yet to come

into the WTO regime, there are several provisions in the cxistiny WTO aynvmalts

that deal with competition matters. There nw some Anti-compctit~ve pmctica in

international trade which aKwt countries and they can he hmudly clussitird into four

groups:

1 . Markcl powcr in global or export markcts;

2. Barriers to impofl competrtron;

3. Forcign invcstmcnt; and

4. lntellcctual Propcrty ~ i ~ h t s ~

lntcmational Cancls havc atrraclcd much attc%tion in recent yean.

Competition agencies in the Europcan Union and the llnitcd States have successfully

proswutcd o v c ~ 40 such cartels that opcrat~rl in their jurisdiction during the 1990r,

and slappcd heavy fincs on sevc~al cornpanics involved in such cartcls.

Most countries exempt export cartcls from their antitrust laws, as long a3 thcy

do not havc any Anti-competitive effect on the dom~xric mclrkct. In India, similar

cxceptions exist in borh the outgoing MR'TP Act, 1969 and the new ('ompclition Act,

2002.

" 6.R. Bhntla. "Cros Hordcr Cumpi.crlmn hsucu tn Indta, "Chanmd Srrnctary, Vol-2.2002. p 192. q. M~tnuo MaLgunh~t.. The World Trrdc Orgrniutkro law, PrrrUrr rnd pdky, I' cd. 2003. p.544.

103

4.73. CROSSBORDER PREDATORY PRICING:

Cross-border predatory pricing can also lead to market distortions. Due to

same striking similarities, cross-border predatory pricing is very often equated with

dumping. Therefore, an action is taken under antidumping which is diffetent fimm

that underlying Competition Law bccsuse under anti-dumping law it seeks to pmtcc!

competitors. and not competition. Through, in mast developing countries, due to the

small size of the markets and low levels of the markets contcslnbil~ty, there would be

more convergence between anti-dumping and anti-predation actions. Imni~l ly, until

recently, the main us~m of antidumping laws were dcvclopod u>untrics. On Be anhm

hand, increasingly, developing countries too are taking r(.w>urse to rhesc laws.

4.7.4 BARRIERS TO IMPORT COI11PETITION:

Import carlels fc~rmcd by don~cstic itnporters, or buyers and similar

arrangements (such as boycotts of, or collective refusals to deal with, forciy

compctitors), may be a thrcat to niaintaining competition in n market. In principle, a

national competition law rnay generally he ablc to tacklc such market scccss harriers

to foreign supplies and suppliers, Import cartels, whose functions arc solely to attempt

to cxcrcise monopoly power, in ordc7 to gt a hcttcr pricc from foreign suppliers, may

be viewed more favorably from a national ctlicicncy and welf;drc pcrspecrive, than

such cartels which exc~cise markel powe7 domesticolly. I3ut, i t may he diflicult to

make such a distinction or scpuratc the two typcs of activities.

Another way of local firm's gang-up against forcipr compctitors it by

preventing or h~ndcring market access. For cxamplc, local firills will lobhy thcir

governments to disallow foreign manufncturcrs from rnarkd~ny thcir gocKlr. Other

examplcs are whcn local hrms lobby their govcmmcwts to, cithn irii~iutc unfair anti-

dumping actlon or raise import lariffs ageinsl thc forcip s ~ ~ ~ l i c r s , ~ '

''. If WTO members encourage prtvstc cmform~fy awssmcnt htdm 10 d~scrlmrnak ogrlnst forngn CnterpnscJ. th~s conru~tu!es a vwl r tm of the Agrtemcn(x on ttchnleal B a r n to Tradc (WT) ~gmmnl~ (An-8.1) and In many jwudlclarur, o vn~Iollon of Iklr natronal crmtpetdion low

104

Foreign Direct Investment may increase competition in local mark*

particularly investment of Greenfield type. However, thm is a possibility that

takeovers of domestic firms may take the mnrkets increasingly concentrated, to thc

extent of having one or a smdl numher of dominol~t players. Momver a single

instance of,cross border acqu~sition may seem lo have no effect on competition. But

From a narrow nationnl market perspective, ~t may lead to a lcsseriing of cffmive

competitian in the market, if the ncquirer has been n 111ajor exporter to the cwuntry.

Such acquis~tion may he a imd at regional or global conscrlidnlion by 'MCs.

In most developing countries, it hus heen swn that majority of the FDI

(Foreign Direct Invcstmcnt) comes in through acquisitions, rather thun through fresh

Grecnticld investments.

4.7.6. INTELl.,ECTUAI, PROPERTY RIGH'TS (IPR) :

Intellectual Property Rights mny gcncratc or contribute towc~rcis a position of

market power."' The IP holders typically crigayc in lice~isiny agr~mnents wilh firms in

dificrctlt countries. The territorial nature of propcrly rights, in such agrccmrmls,

means that frequently the national law enablcs then1 to he uscxl by rights holders in

ordcr to prcvcnt parallel imports. In many case%, i t llus also heal ohserved that cartels

wcrc built around patcrit cross licensing schtw~cs.

Thus. many aspects of nicrgirs and acquisitions may have a ailplificant impact

on inttniational tradc. On the 0 t h ~ ~ hand, many M~rgirs and Acquisitions have no

trade effect and belong to thc realm ol'dorr~cstic rcgulation. In atldition, Mcrgtrs and

Acquisitions may be importiat corporate stralcyy and govcrnlncnlul poliby for

industrial rcorgani;rations. Ihcrclbrc, the rcgulation of Mmgm niid Acquisitions is

primariiy the matter of' domestic policy of national ~govcmmcols and municipal laws.

Howevc7, in situations in which the rradc impact of m~rgcr and acquisitions ir clcar,

international review may be warrimred.

The primary purpose of competition law is to maximize h economic wolfare

of consumers by, among other things eliminating bamen; to market entrance and

eliminating the abuse of market dominance by cartel behavior nnd monopolistic

strategies. Althougb these laws were originally designed to govern domestic

economic activity, the "effects test" rcflwttcd the need to =@late econonlic activity

injurious to domestic consumers but originating n: l&ing place outside of national

borders. In' addition, the globalization of business has h l d the lines betwm

domestic and international business, thus creating the need for extru~enitorial

jurisdiction as well as convergence within sqnrate hod~es of c~)nlpctition law. This is

especially true with the significant liberalization of intemotionsl tradc witllin the po t

decade.

One overriding r a w n justifying the ndoption of un intemationul competition

law regime is to reduce the controversy that can urlse bctwocn conflicting rulinys by

overlapping jurisdictions. Anothcr compclliny rmson is to nduce the significonl

public and private cornpliancc costs imposrvl hy duplicativc and ovcrluppirry mergcr

control jurisdicrion. Sincc a single transaction can potcnlially bc exposed to mnny

merger control regimcs, cornpliancc costs can be suhstuntiul in tmns of rncctiny

international pre-merger notification rcquinmcnts and remalying concerns cxprcsscd

by the various independent antitrust cnlbrccmcnt agcncics. In ddition, pvcmmmts

must invest substantial resources in monitoring rnmgrr rctivily, enacting efftclive

legislation, and enforcing p)licit?i, An international My of coniprtition law

governing merger control and an indcpndent enforcema~t ogmcy would bc

significantly mtrrceconomically cfiicicnt."

Clearly, a global standard IS prernuturc and 11 1s qu~%ttonahlc whethw such a

stantlard will ever btwme a real~ty This 1s due to the constant evolution of' antitrust

law 11) meet the needs of the economlc cond~ttons prcvalcmt at any one part~cular time,

which 1s dqxndcnt on the stale of the cvonomy, the sh~fls In tndustnal concatrotton,

the str~ngth of thc pc)ltt~cal democracy, and thc pown of the judteary. Noncthelcss,

as national mnomtes bccomc ~ncrcas~ngly global and as firma sh~R from multi-

domesf~c to mult~nat~onal and eventually glohal In stratclyc firnu, campctltlon lnws

". Rwsll I. Weinvslrb. ''Competing Compct~tton law: Ih We Nmd a Cilnhol S&d, New England law Rcvuw. Vol- 27. 1999. pn6.

106

will nacurdly converge. Although the application of antitrust laws will never escape

national political pressure, the pressure h m the globalization of industry will aeete

increasing pressure for transparency, due proms, and a duc t ion in transaction and

compliance costs, which will lead to the inevitable c o n v e r p n of competition laws

and the increasing possib~lity that a global standard may yet see the light of day.

4.8. CONFLICT OF JURISDICTIONS:

Extratemtonal application of domestic armpetition law has crmttul conflicts

of jurisdictions and tensions among the nations concerned. Although there is a

possibility of such conflicts and tensions with regard to the application of wmpctition

laws of other jurisdiction such as the European Community, Following nre the some

of cases in whlch contlicts ofjurisdiction raised.

The Swiss Watch case"

Thc Swiss governmait h d a policy ofpmmoting t h watch industry a one of

its key industries and, Tor this purpose 011act~4 "'lhe Wutch I.aw", which euthorizdd

agreements among enterprises in the watch industry to cngugc in the control of

productior~ and sale of watches. 1J.S companies joinod the intlustry iiyLt?nunls in

Swiss through their subsidiaries in Swiss. l'he industry ayrcmnentv concluded among

Swiss watch companics within the country within the framework of this includcd

control of watch production in the llriitcd States and cou~itries other thun Swiss.

Tlic US Justicc Departmail initiated an anti-trust law suit againat US and

foragn watch companies, including SWISS watch cornpanics. The Swiss govcmmcnt

reacted to this lawsuit strongly and argued that the I JS govcmm~nt's legal challcnyc

to the industry agreements was an infringnncvt of Swiss fi~vcreignty. 'lhe US Justice

Deparlrnent requcstd that a decrce bc e n t a d which would orda the defidants to

cancel industry agreements controlling production of walchcs "any whac outside

Switztrland." Again the govmmtnt of Switzcrlsnd protwlai that the y(;opc of the

decree was too hroad and threatened that it would bring a pcqition to thc international

Coun of Justice and challtmgc the jurisd~ction of US law.

'. United Statn v. Watrbmrkm of Swilurfand info. Center. 1965 Irndc Car. (CCt.1) pm 71,352 ( S D N.Y. 1965).

107

A compromise was made among the parties to the dispute to the effect that the

scope of decree is limited to the tmjtory of the United States. and an outright conflict

was avoided. This case rcprcscnts clash between US campelition policy and Swiss

industrial policy as well as a clash of legal jurisdictions. OAen a nation promotes

industries through industrial policy. and this may include private measures to control

production and sale of products.

The GEIHoneyweU casew

In this case, the Furopean Cornmun~ty pmh~h~ttd a pn)poscd mmgcr hctwwn

two Amcncan companlcs, GE (Gmeral Electric) and Iloncywcll, wh~ch was to takc

place in the 11s. GE was a Icadrng producer of Jet engines for largc urmmerc~al tlnd

reg~onal aircrafts. Moneywell was ii leading supplier of non-avion~cs pmducts ru well

as engines powcr, corporate jets and cnginc startm, an 1111prtant input 111

manufacture of ~nputs. The IJS Ant1-trust Agencies, the I)cl~"mcn"lcfJust~ce [DOJ]

and Federal Trade Commtss~on, approved th~s mtqer. llowcvcr, the European

Commun~ty consrdcrcul that tli~s lncrgr would create or slrcngllicr~ thc dom~nunt

posltlon of (iE and would severally reduce compctltlcln 111 the ilcrospt~cc tnduslry and

result ult~matcly rn hrgllcr pncc Ibr customers.

GE and floneywcll notiticd their merger agcvmcnt to the 1:uropcan

Commission on 5 Fchruary 2001, and the Comtnission initiated in investigation to sec

if, after the mcrgcr, (.iE would huvc :I dominant position in the markets Ihr jct engines

b r large commercial and large regional aircrafts. Thcrc was a prtrposwl on tlic pnrt of

(;E and Honeywcll to rcstructurc the mcrgcr plan, but thc Commission rejcctd this

proposal. The Commission c~mcludcd Ihal the strong market p)sition of GI,

comhined with its financial strength anti vcrtical intcynltion, assural the clominnncc of

GE in thc relevant markets. For this reason, the commission rcfus~ul to approvc tllc

m crgcr.

A high-rank~ng offiaal of the IJS Justice [Icpartmwt stwtt~l that this merger

would have bnn pro-compcrtit~ve and kncficial to con'iumeru. tic 1% rep)rtcd to have

'a . Case No COMP M . 2220. &d 3 July 2001. 10s

said that this difference in attitude bdwecn the European Commission and authorities

in the US "reflects a significant point ofdivergence".

This recent w e is an important exnmple of extra tenitorial applicntion of the

competition law of E u m p Communities and policy conflict between the US and

EC with regard to the merger control.'*

Efforts have been made in the past scvtrul dc~udcs to clarify wid cstnhlisl~ a

set of principles that would govern cxtralcmtarinl application of compdition luw.

However, until now, t h ~ w arc no firmly cstnhlishcd principlcs of intcnintionul law

that would rffcctivcly rcsc~lve the issucs arising h m cxtratcrritorial application of

competition law. Efkrts will continue to cstahlisli jurisdictional principles. It is mt

certain; howcvcr, that any such attempt will prcnlucc u set of principlcs which wwld

be acceptcti by the majority of nations and wliich would rcsolve which issucs. It

seems that the promotion of intcn~ationi~l coopcration in the field of competition law

and policy will aiitigatc, if not eliminate, the scvcrity of conflictu that muy arise fmtn

the application of donicstic compctition law cxtraterri~orially.

Compctition authoritic?; attcoptcil to libcralisc tradc tlirough uniluttral

application of domcstic compctition I~IWS. At thc sulnc time, a u~tilatcrul

cxtratcmtorial application of C'ornpctition Laws is an impcrf'cct and incomplete wuy

of' coping with intcrnation:rl anti-competitive conduct that extends hcyontl nntianol

boundaries. A better way would he to corislruct an intcn~ationnl programmc Tor a w-

opcmtivc sohcmic through which compctition iluthoritics of trading nations can rally

their efforts to combat anti-compcqitive contlucts which occur in intcmational upma.

This suucsts that the inclusion of compctition policy in a W'fO f'rumcwark nu an

important agcnda itcrn for future W'i'O neg~tiationu for fac~litating consultative and

ccu~rdinated approach among the comity of nations in dealing cfft~tively with anti-

competitive practiccs and avoiding mnllict of Jurisdiction in the applicution of'

domestic Compctition Laws.

'm I)lmrtn G~mkcrc. "A Caw S ~ u d y o f Ihr Al~einplnl (~('Tloncywcll Mngtr", Ifnrveraty of Pennnylvanra Journal af ~ n l m t l c m a l kct~lu~rnr l a w unl 23.2(10?. p-564

109

Chapter - V

ABUSE OF DOMINANT POSITION UNDER COMPETITION ACT, 2002