Copyright - Dr. S. Chakravarthy1 GREETINGS TO CHARTERED ACCOUNTANTS FOR ICAIS POST QUALIFICATION...

Copyright - Dr. S. Chakravarthy 1

GREETINGS

TO

CHARTERED ACCOUNTANTS

FOR

ICAI’S POST QUALIFICATION COURSE

VIDEO CONFERENCE FROM HYDERABAD

25 AUGUST 2005


COMPETITION ACT, 2002

THE NEW INDIAN COMPETITION LAW

Dr. S. CHAKRAVARTHY

(Profession : Civil Servant)

Formerly, Member, Monopolies and Restrictive Trade Practices Commission, Member, High Level Committee on Competition Policy and Law And Member of Committee for

Drafting the Law.Presently, Adviser/Consultant Competition Policy and Law

HYDERABAD, INDIA


COMPETITION GENIE

COMPETITION AMBIENCE YET TO FLOWER

INDIA’S POLICY MAKERS

GENIE TRAPPED - LID CLOSED


C O M P E T I T I O N…….

• IS A DYNAMIC CONCEPT

• IS AN AMALGAM OF FACTORS THAT STIMULATE ECONOMIC RIVALRY

• IS A TOOL TO MOUNT MARKET PRESSURE TO PENALISE LAGGARDS AND TO REWARD THE ENTERPRISING


COMPETITION POLICY - GOALS

PRESERVATION AND PROMOTION OF THECOMPETITIVE PROCESS

EFFICIENCY IN PRODUCTION ANDALLOCATION OF GOODS AND SERVICES

INNOVATION AND ADJUSTMENT TOTECHNOLOGICAL CHANGE

SUSTAINED ECONOMIC GROWTH


EXTANT COMPETITION LAW OF INDIA

MONOPOLIES AND RESTRICTIVE

TRADE PRACTICES ACT,1969

BROUGHT INTO FORCE IN 1970


FOUR COMPARTMENTSFOUR COMPARTMENTS

ANTI-COMPETITION AGREEMENTS

ABUSE OF DOMINANCE

MERGERS, AMALGAMATIONS, ACQUISITIONS AND TAKE-OVERS

FOSTERING COMPETITION


ANTI - COMPETITION AGREEMENTS HORIZONTAL RESTRAINTS : :

CARTELS {FIXING PURCHASE OR SALE PRICES (EXPORT CARTELS EXEMPTED) }

BID-RIGGING (COLLUSIVE TENDERING)

SHARING MARKETS BY TERRITORY, TYPE ETC.

LIMITING PRODUCTION, SUPPLY, TECHNICAL DEVELOPMENT

THE ABOVE ARE “PER SE” ILLEGAL.

VERTICAL RESTRAINTS : :

TIE-IN ARRANGEMENTS

EXCLUSIVE SUPPLIES

EXCLUSIVE DISTRIBUTION

REFUSAL TO DEAL

RESALE PRICE MAINTENANCE

ADJUDICATION BY RULE OF REASON


ABUSE OF DOMINANCE

DOMINANCE NOT LINKED TO ANY ARITHMETIC FIGURE OF MARKET SHARE

DOMINANCE MEANS A POSITION OF STRENGTH ENABLING AN ENTERPRISE TO OPERATE INDEPENDENTLY OF COMPETITIVE PRESSURE AND TO APPRECIABLY AFFECT THE RELEVANT MARKET,COMPETITION AND CONSUMERS.

ABUSE OF DOMINANCE ARISES IF AN ENTERPRISE

• IMPOSES UNFAIR /DISCRIMINATORY PURCHASE OR SALE PRICES (INCLUDING

PREDATORY PRICES)

• LIMITS PRODUCTION,MARKETS OR TECHNICAL DEVELOPMENT

• DENIES MARKET ACCESS

• CONCLUDES CONTRACTS SUBJECT TO OBLIGATIONS HAVING NO CONNECTION

WITH THE SUBJECT OF THE CONTRACTS.

• USES DOMINANCE TO MOVE INTO OR PROTECT OTHER MARKETS

RELEVANT MARKET = RELEVANT PRODUCT MARKET + RELEVANT GEOGRAPHIC RELEVANT MARKET = RELEVANT PRODUCT MARKET + RELEVANT GEOGRAPHIC MARKETMARKET


COMBINATIONS MERGERS/AMALGAMATIONS

1. REDUCTION IN NUMBER OF PLAYERS

2. ACQUISITION OF ENORMOUS ECONOMIC STRENGTH

3. DISCOURAGEMENT OF NEW ENTRANTS

PEJORATIVE EFFECTS

4. DICTATION OF PRICES

5. DOMINANCE

1. COMPETITION LAW TO HAVE SURVEILLANCE OVER COMBINATIONS BEYOND A THRESHOLD LIMIT (Assets > Rs.1000 Crores or Turnover > Rs.3000 Crores )

2. NOTIFICATION OF COMBINATIONS VOLUNTARY AND NOT MANDATORY

3. CCI MANDATED TO DECIDE WITHIN 90 WORKING DAYS ELSE DEEMED APPROVAL

REGULATION ON COMPETITION PERSPECTIVE


COMPETITION ADVOCACY

THE COMPETITION COMMISSION OF INDIA IS ENABLED TO PARTICIPATE IN THE

FORMULATION OF POLICIES AND REVIEWING OF POLICIES RELATING TO COMPETITION AT THE INSTANCE OF THE GOVERNMENT

IS REQUIRED TO CREATE COMPETITION CULTURE

IS REQUIRED TO ACT AS COMPETITION ADVOCATE


EXEMPTIONSEXEMPTIONS

GOVERNMENT BY NOTIFICATION MAY EXEMPT FROM THE GOVERNMENT BY NOTIFICATION MAY EXEMPT FROM THE COMPETITION LAW COMPETITION LAW

A ANY CLASS OF ENTERPRISES IN THE INTEREST OF NATIONAL SECURITY/PUBLIC INTEREST.

B. ANY PRACTICE/AGREEMENT ARISING OUT OF INTERNATIONAL TREATY/AGREEMENT

C. ANY ENTERPRISE PERFORMING A SOVEREIGN FUNCTION ON BEHALF OF GOVERNMENT

DIFFERENT PROVISIONS FROM DIFFERENT DATES IF, NEED BE.DIFFERENT PROVISIONS FROM DIFFERENT DATES IF, NEED BE.


COMPETITION COMMISSION OF INDIA

COMPRISES COMPRISES ::

• CHAIRPERSON

• MEMBERS (Max. Ten)

SELECTION BY A COLLEGIUMSELECTION BY A COLLEGIUM

THIS IS TO MINIMISE THIS IS TO MINIMISE POLITICISATION OF APPOINTMENTSPOLITICISATION OF APPOINTMENTS


DEPOLITICISATION AND CASTING NET WIDE

RATIONALE FOR THE COLLEGIUM APPROACH IS TO MINIMISE POLITICISATION OF APPOINTMENTS

CHAIRPERSON NEED NOT BE FROM THE JUDICIARY

CHAIRPERSON AND MEMBERS FROM FIELDS – JUDICIARY, ECONOMICS, LAW, INTERNATIONAL TRADE, BUSINESS, COMMERCE, INDUSTRY, FINANCE, ACCOUTANCY, MANAGEMENT, PUBLIC AFFAIRS, AND ADMINISTRATION

EVERY BENCH WILL HAVE A JUDICIAL MEMBER


THE NEW LAW AND IPRs

SECTION 3(5) OF THE COMPETITION ACT, 2002 EXCLUDES ALL IPRs FROM ITS APPLICABILITY

INTELLECTUAL PROPERTY RIGHT CARRIES WITH IT A BUNDLE OF RIGHTS IN THE INTEREST OF CREATIVITY AND INNOVATION

ANY CONDITION OR OBLIGATION OUTSIDE THE BUNDLE OF RIGHTS CANNOT BE COUNTENANCED IF IT TRENCHES COMPETITION

THE ACT HAS THEREFORE BROUGHT UNDER ITS SURVEILLANCE UNREASONABLE PRACTICES THAT MAY ACCOMPANY THE EXPLOITATION OF IPRs


EXTRA TERRITORIAL REACH

THE COMPETITION ACT, 2002 EXTENDS THE CCI’s REACH BEYOND THE INDIAN SOIL

THE EXTRA TERRITORIAL REACH IS BASED ON “EFFECTS DOCTRINE”.


CONCERNS ARTICULATED

1. THE NEW LAW IS DRACONIAN.

2. COMBINATION(MERGERS) REGULATION WILL IMPEDE INDIA FROM

BECOMING GLOBALLY COMPETITIVE.

3. JOINT VENTURES SHOULD NOT BE REGULATED.

4. POSSIBLE INJURY TO DOMESTIC INDUSTRIES PARTICULARLY THE

SMALL SCALE SECTOR.

5. CCI WILL BECOME A SUPER REGULATOR AS OTHER REGULATORY

AUTHORITIES ARE SUBJECT TO COMPETITION LAW.

6. THE “GROUP” CONCEPT IN COMBINATION REGULATION IS

REGRESSIVE7. THE NEW LAW SUPERSEDES ALL OTHER LAWS AND THUS CCI

BECOMES A BEHEMOTH.


WHO PRESSURISED INDIA TO HAVE A NEW COMPETITION LAW?

SOME COMMENT THAT WTO HAS PRESSURISED INDIA TO ENACT A NEW COMPETITION LAW

SOME OTHERS BELIEVE THAT WORLD BANK, IMF AND ADB HAVE INSISTED ON A NEW LAW FOR INDIA

THERE ARE SOME WHO BELIEVE THAT SOME POTENTIAL INVESTORS (FDI) WANT INDIA TO HAVE A NEW EFFECTIVE COMPETITION LAW TO PROTECT THEIR INTERESTS

THERE ARE SOME WHO BELIEVE THAT SOME PATENT HOLDERS WANT INDIA TO HAVE PROVISIONS IN THE COMPETITION LAW TO PROTECT THEIR INTERESTS

NONE OF THE ABOVE COMMENTS AND BELIEFS IS TRUE OR HAS ANY BASIS

INDIA HAS EXERCISED ITS SOVEREIGN RIGHT TO HAVE A NEW MODERN COMPETITION LAW


OLD WINE OR NEW WINE ?OLD WINE OR NEW WINE ?

MRTP ACT

1. BASED ON PRE-1991 LPG

2. PREMISED ON SIZE

3. PROCEDURE ORIENTED

4. NO TEETH (REFORMATORY)

5. OFFENCES DEFINED IMPLICITLY

(CARTELS, BID-RIGGING ETC.)

6. FROWNS ON DOMINANCE

(25% OF MARKET SHARE)

7. A LARGE NO. OF PER SE OFFENCES

(AGAINST PRINCIPLES OF NATURAL JUSTICE)

NEW LAW1. BASED ON POST-1991 LPG

2. PREMISED ON BEHAVIOUR/ CONDUCT

3. RESULT ORIENTED

4. CAN BITE (PUNITIVE )

5. OFFENCES DEFINED EXPLICITLY

6. FROWNS ON ABUSE OF DOMINANCE

(NO PERCENTAGE OF MARKET SHARE)

7. JUST FOUR ARE PER SE OFFENCES

(REST BY RULE OF REASON)


OLD WINE OR NEW WINE ?OLD WINE OR NEW WINE ?MRTP ACT

8. COVERS UNFAIR TRADE PRACTICES (INDIVIDUAL CONSUMER INTEREST)

9. POLITICAL APPOINTMENTS OF

CHAIRPERSON/MEMBERS

10. NO COMPETITION ADVOCACY

ROLE

11. REACTIVE

NEW LAW 8. UNFAIR TRADE PRACTICES

EXCLUDED (COVERED UNDER CONSUMER PROTECTION ACT)

9. APPOINTMENTS BY A COLLEGIUM

10. CCI HAS COMPETITION ADVOCACY ROLE

11. PROACTIVE

NO LAW IS BETTER THAN A POORLY ADMINISTERED LAW


ONE WOULD LIKE TO AVOIDTHE DANGER OF HOLLOW PURISM

THAT HAS MADE SO MUCHOF MODERN ECONOMICSUNFIT FOR ACTUAL USE

AMARTYA SENAMARTYA SENINDIAN NOBEL LAUREATE


COMPETITION GENIE

COMPETITION AMBIENCE

INDIA’S POLICY MAKERS

GENIE RELEASED - LID OPENED

THANK YOU

FOR YOUR

KIND ATTENTIONCopy right Dr. S. Chakravarthy

Copyright - Dr. S. Chakravarthy1 GREETINGS TO CHARTERED ACCOUNTANTS FOR ICAIS POST QUALIFICATION...

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