INDIA ‘S NEW
COMPETITION REGIME:
Competition in a large
emerging economy
Bharath Jairaj
Citizen consumer and civic Action Group
Chennai, India
www.cag.org.in
Contents
Where are we today?
 How did we get here?
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– MRTP Act, 1969
– New Economic Policy 1991 – Amendments to
MRTP Act
– Competition Act 2002
– Competition Policy 2006-07?
7Up2 Meeting, June 27-28, 2006,
Bangkok.
India’s Competition Regime today:
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New Competition Law:
– The Competition Act , 2002
 The Competition Commission of India (CCI);
 The Competition Appellate Tribunal (CAT)
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New Competition Policy:
– Advisory Committee to prepare draft National
Competition Policy (December 2005)
– Working group on ‘Competition Policy’ at the
Planning Commission (for 11th Five Year Plan)
7Up2 Meeting, June 27-28, 2006,
Bangkok.
EVOLUTION- How We Got Here - 1
Constitution of India, Art. 39 (c) – “the
operation of the economic system does
not result in the concentration of wealth
and means of production to the common
detriment”
 1947- 1969: Regimented and strict system
of government controls
 1969: Monopolies and Restrictive Trade
Practices Act (MRTP Act) legislated
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7Up2 Meeting, June 27-28, 2006,
Bangkok.
Monopolies and Restrictive Trade
Practices Act , 1969
OBJECTIVES:
 Prevention of concentration of economic
power in a few hands
 Control and regulation of monopolies in
certain sectors
 Prevention of unfair trade practices
 Prevention of restrictive trade practices
7Up2 Meeting, June 27-28, 2006,
Bangkok.
THE MRTP COMMISSION
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A Quasi-Judicial Authority (Chairman (SC/HC
Judge) and 2-8 members)
Assisted by Dir Gen of Investigation
MRTPC vested with powers of a Civil Court:
“cease and desist” orders; injunction; award
compensation, etc.
Can make recommendations to Central
Government on functioning of enterprises, when
such functioning was detrimental to public interest
Suo Moto action possible, though not used
7Up2 Meeting, June 27-28, 2006,
Bangkok.
EVOLUTION- How We Got Here - 2
1991: Widespread economic reforms in India –
Aimed at Liberalisation, Privatisation and
Globalisation
 Changes felt necessary in MRTP Act
 Concentration of economic power to the
common detriment and control of monopolies –
de-emphasised
 Pre-entry restrictions (prior approval of
government), expanding existing undertaking,
M&A’s, takeovers – deleted from Act
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7Up2 Meeting, June 27-28, 2006,
Bangkok.
EVOLUTION- How We Got Here - 3
1999: Expert Group on interaction between
Trade and Competition Policy recommended new
competition law to “promote fair competition
and control (eliminate) anti-competitive
practices” in the market
 2000: GoI High Level Committee on Competition
Law and Policy provided a draft Competition law.
 2002:The Competition Act legislated
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7Up2 Meeting, June 27-28, 2006,
Bangkok.
THE COMPETITION ACT, 2002
What and how
WHAT?
Main Focus areas of the Act :
Prohibition of Anti Competitive Agreements
 Prohibition of Abuse of Dominance
 Regulation of Combinations
 Competition Advocacy

HOW?
Through establishment of a Competition
Commission of India (CCI) and Competition
Appellate Tribunal (CAT)
7Up2 Meeting, June 27-28, 2006,
Bangkok.
FOCUS AREAS OF 2002 ACT - 1
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A. PROHIBITION OF ANTI-COMPETITIVE
AGREEMENTS
All Anti-competitive agreements are void, i.e.,
agreements which could restrict competition, vertical
or horizontal
Rule of Reason to be applied for determining legality of
an agreement
Certain agreements between same or similar
enterprises regarding prices or quantities, on bidding,
or to share or divide markets are per se illegal
Leniency provision – for whistleblowers in a cartel (if
disclosure is before prosecution)
7Up2 Meeting, June 27-28, 2006,
Bangkok.
FOCUS AREAS OF 2002 ACT - 1
EXCEPTIONS:
 Export cartels (problem is somewhere else!)
 Agreements permitted in law
 Agreements under IPR (not unreasonable restrictions like
patent pooling, price-fixing etc.)
RULE OF REASON TO BE APPLIED (factors):
 Creation of entry barriers
 Driving existing competitors out of the market
 Accrual of benefits to consumers
 Improvements in goods and services
 Increase in Technical development
7Up2 Meeting, June 27-28, 2006,
Bangkok.
FOCUS AREAS OF 2002 ACT - 2
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B. PROHIBITION OF ABUSE OF
DOMINANT POSITION:
Mere dominance is not an offence, abuse of
dominance is prohibited
Important shift from ‘size’ / ‘structure’ to
‘behaviour’ / ‘conduct’
Instances of unfair, discriminatory or predatory
pricing; restricting quantities, markets or
technical development, etc. will qualify
7Up2 Meeting, June 27-28, 2006,
Bangkok.
FOCUS AREAS OF 2002 ACT - 3
C. REGULATION OF COMBINATIONS:
 Includes M&A’s, Amalgamations, Acquisitions of control all above a certain high level threshold (Rs.1000 crore
aggregate value of assets or Rs.3000 crore turnover of
combining parties)
 Thresholds deliberately high to allow small Indian
companies to combine to become active international
players
 Combinations that cause or are likely to cause an
adverse effect on competition are under focus (e.g.,
horizontal mergers between competitors; vertical merger
by dominant player with firm in adjacent market, etc.)
 Pre-notification voluntary
7Up2 Meeting, June 27-28, 2006,
Bangkok.
FOCUS AREAS OF 2002 ACT - 4
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D. COMPETITION ADVOCACY:
CCI to create “culture of competition”
Empowered to participate in formulation of
country’s economic policies
Create awareness and training on competition
issues
Establishment of “Competition Fund” for above
Recently asked to develop Consultation Paper on
National Competition Policy (to harmonise
various government policies)
7Up2 Meeting, June 27-28, 2006,
Bangkok.
COMPETITION COMMISSION
OF INDIA (CCI)
Adjudicative wing distinct from Investigative and
Prosecution wing
 Allows appointment of economists, lawyers,
other professionals as investigators (departure
from practice of appointing retd. bureaucrats)
 UTPs removed from the purview of Act and all
pending cases transferred to the Consumer
Protection Act, 1986 (CPA)
 Phased introduction of Act – competition
advocacy (Y1); Anti-Competitive Practices and
Abuse of Dominance (Y2); Combinations (Y3)
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7Up2 Meeting, June 27-28, 2006,
Bangkok.
COMPETITION APPELLATE TRIBUNAL
(CAT)
Established after intervention by Supreme Court
of India – to retain “judicial powers” within the
judicial system
 CAT to hear and dispose appeals against any
direction issued or decision made or order
passed by CCI
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7Up2 Meeting, June 27-28, 2006,
Bangkok.
EVOLUTION- How We Got Here - 4
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2004: UPA government elected despite “India
Shining” belief
NCMP commits to greater effort towards
increasing competition and a competitive
environment – broad basing development
2005: GoI asks CCI to develop consultation
paper on National Competition Policy
2005: CCI establishes Advisory Committee to
develop draft National Competition Policy
2006: Planning Commission establishes Working
Group on Competition Policy (for 11th Plan –
7Up2 Meeting, June 27-28, 2006,
2007-12)
Bangkok.
Competition in India – the road map
Shift from “size / structure” focus to “conduct”
 Shift from discouraging “dominance” to discouraging
“abuse of dominance”
 Includes “combinations” (previously ignored)
 Includes strong component on “competition advocacy”
 Replaces “Rule of Law” approach with “Rule of Reason”
approach
 New Competition law to deliver above
 Decision to locate Competition law within broader
Competition Policy – that harmonises various policies
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7Up2 Meeting, June 27-28, 2006,
Bangkok.
Thank you!
7Up2 Meeting, June 27-28, 2006,
Bangkok.