Mrtp and Competition Act- India
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Transcript of Mrtp and Competition Act- India
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Bangkok.
Contents
Where are we today?
How did we get here?
MRTP Act, 1969 New Economic Policy 1991 Amendments to
MRTP Act
Competition Act 2002
Competition Policy 2006-07?
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Indias Competition Regime today:
New Competition Law:
The Competition Act , 2002
The CompetitionCommission of India (CCI);
The Competition Appellate Tribunal (CAT)
New Competition Policy:
Advisory Committee to prepare draft NationalCompetition Policy (December 2005)
Working group on Competition Policy at thePlanning Commission (for 11th Five Year Plan)
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EVOLUTION- How We Got Here - 1
Constitution of India, Art. 39 (c)theoperation of the economic system doesnot result in the concentration of wealth
and means of production to the commondetriment
1947- 1969: Regimented and strict systemof government controls
1969: Monopolies and Restrictive TradePractices Act (MRTP Act) legislated
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Monopolies and Restrictive TradePractices Act , 1969
OBJECTIVES:
Prevention of concentration of economicpower in a few hands
Control and regulation of monopolies incertain sectors
Prevention of unfair trade practices Prevention of restrictive trade practices
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THE MRTP COMMISSION
A Quasi-Judicial Authority (Chairman (SC/HCJudge) and 2-8 members)
Assisted by Dir Gen of Investigation MRTPC vested with powers of a Civil Court:
cease and desist orders; injunction; awardcompensation, etc.
Can make recommendations to CentralGovernment on functioning of enterprises, when
such functioning was detrimental to public interest Suo Motoaction possible, though not used
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EVOLUTION- How We Got Here - 2
1991: Widespread economic reforms in IndiaAimed at Liberalisation, Privatisation andGlobalisation
Changes felt necessary in MRTP Act Concentration of economic power to the
common detriment and control of monopoliesde-emphasised
Pre-entry restrictions (prior approval ofgovernment), expanding existing undertaking,M&As, takeovers deleted from Act
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EVOLUTION- How We Got Here - 3
1999: Expert Group on interaction betweenTrade and Competition Policy recommendednew competition law to promote fair
competition and control (eliminate) anti-competitive practices in the market
2000: GoI High Level Committee on CompetitionLaw and Policy provided a draft Competition law.
2002:The Competition Act legislated
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THE COMPETITION ACT, 2002What and how
WHAT?
Main Focus areas of the Act : Prohibition of Anti Competitive Agreements
Prohibition of Abuse of Dominance
Regulation of Combinations
Competition Advocacy
HOW?Through establishment of a Competition
Commission of India (CCI) and CompetitionAppellate Tribunal (CAT)
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FOCUS AREAS OF 2002 ACT - 1
A. PROHIBITION OF ANTI-COMPETITIVEAGREEMENTS
All Anti-competitive agreements are void, i.e.,agreements which could restrict competition, vertical
or horizontal Rule of Reason to be applied for determining legality
of an agreement
Certain agreements between same or similarenterprises regarding prices or quantities, on bidding,or to share or divide markets are per seillegal
Leniency provision for whistleblowers in a cartel (ifdisclosure is before prosecution)
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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
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FOCUS AREAS OF 2002 ACT - 2
B. PROHIBITION OF ABUSE OFDOMINANT POSITION:
Mere dominance is not an offence, abuse ofdominance is prohibited
Important shift from size / structure tobehaviour / conduct
Instances of unfair, discriminatory or predatorypricing; restricting quantities, markets or
technical development, etc. will qualify
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FOCUS AREAS OF 2002 ACT - 3
C. REGULATION OF COMBINATIONS: Includes M&As, Amalgamations, Acquisitions of control -
all above a certain high level threshold (Rs.1000 croreaggregate value of assets or Rs.3000 crore turnover ofcombining parties)
Thresholds deliberately high to allow small Indiancompanies to combine to become active internationalplayers
Combinations that cause or are likely to cause anadverse effect on competition are under focus (e.g.,horizontal mergers between competitors; vertical mergerby dominant player with firm in adjacent market, etc.)
Pre-notification voluntary
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7Up2 Meeting, June 27-28, 2006,Bangkok.
FOCUS AREAS OF 2002 ACT - 4
D. COMPETITION ADVOCACY: CCI to create culture of competition Empowered to participate in formulation of
countrys economic policies Create awareness and training on competition
issues Establishment of Competition Fund for above Recently asked to develop Consultation Paper on
National Competition Policy (to harmonisevarious government policies)
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7Up2 Meeting, June 27-28, 2006,Bangkok.
COMPETITION COMMISSIONOF INDIA (CCI)
Adjudicative wing distinct from Investigative andProsecution wing
Allows appointment of economists, lawyers,
other professionals as investigators (departurefrom practice of appointing retd. bureaucrats)
UTPs removed from the purview of Act and allpending cases transferred to the Consumer
Protection Act, 1986 (CPA) Phased introduction of Act competition
advocacy (Y1); Anti-Competitive Practices andAbuse of Dominance (Y2); Combinations (Y3)
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7Up2 Meeting, June 27-28, 2006,Bangkok.
COMPETITION APPELLATE TRIBUNAL(CAT)
Established after intervention by Supreme Courtof Indiato retain judicial powers within the
judicial system
CAT to hear and dispose appeals against anydirection issued or decision made or orderpassed by CCI
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EVOLUTION- How We Got Here - 4
2004: UPA government elected despite IndiaShining belief
NCMP commits to greater effort towards
increasing competition and a competitiveenvironment broad basing development
2005: GoI asks CCI to develop consultationpaper on National Competition Policy
2005: CCI establishes Advisory Committee todevelop draft National Competition Policy
2006: Planning Commission establishes WorkingGroup on Competition Policy (for 11th Plan
2007-12)
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Competition in India the road map
Shift from size / structure focus to conduct
Shift from discouraging dominance to discouragingabuse of dominance
Includes combinations (previously ignored) Includes strong component on competition advocacy
Replaces Rule of Law approach with Rule of Reasonapproach
New Competition law to deliver above Decision to locate Competition law within broader
Competition Policy that harmonises various policies