Competition Law's Evolution and Development in India

This article is written by Simran Verma, a student of New Law College, Pune. This research paper throws light on the topic Competition Law’s evolution and its development in India. Free and equitable competition is important to create and maintain an environment which good for the business and also for a prosperous country. This paper includes the history, salient features and the case laws related to the competition law in India

Introduction

80s and 90s decade in India has been a difficult one, and the sole reason behind all this is the introduction of new economic policy and also the Indian markets being opened up to the world. It was registered that a new competition law was also called for and the reason was that the existing Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act) had become outdated in some respects and that now there was a need to divert the focus of people from restraining monopolies to promoting competition in the market of India. A top quality committee was arranged in 1999 to propose a modern competition law in line along with the international developments for the convenience of Indian conditions.

In January 2003, there was existence of the Competition Act and in October 2003, there was an establishment of the Competition Commission of India. The Act makes it a condition that it shall be the duty of the Commission to get rid of the practices that have an adverse effect on competition, to cheer and help competition, to keep safe the concentration of consumers and guarantee liberty of trade that is carried on by other participants, in Indian markets.

History of Competition Act, 2002

In 1999, Raghavan Committee advised for a new legislation to be framed for competition law of the country, because in spite the MRTP Act had facilities regarding anti-competitive practices, it was found to be insufficient in comparison to other countries, to encourage the competition in the industry and also to reduce the anti-competitive practices.

About Competition Act, 2002

The Act’s objective is to create an environment that encourages competition and protects the independence to do the business. In the objects and reasons, the Act states that due to globalization, the economy of India has been opened up to the world, controls and restrictions have been removed and has liberalized the economy. The intention is to protect the interest of the people. The rule of a firm is determined on the basis of firm’s structure. The act is intended as punishment in character. It seeks to promote competition.

Salient Features

Anti- Competitive Agreements:

Section 3 of the Competition Act, 2002, is what that deals with Anti-competitive agreements. Anti-competitive agreements are considered as those agreements which are entered into by the enterprises or by some persons in relation to supply, production, distribution or provision of services or control of goods that have the chance of causing noteworthy amount of harmful effect. Through an agreement, collusive bidding is done between the suppliers or contractors to inflate and co-operate prices to artificially high levels. The intention behind this is illegally evade the rules made for free and competitive bidding. If an agreement of the following: exclusive supply agreement, tie-in agreement, refusal to deal, distribution agreement, resale price maintenance, all of these kinds of agreements shall come under the Act, then it is considered that they have a substantial effect on the competition in India.

Abuse of Dominant Position:

Section 4 of the Competition Act, 2002, is what that deals with abuse of dominant position. It is not considered that it is illegal for an organisation to have dominant position, but the abuse of the position is what that attracts the provisions of the Act. The entity is involving in abuse of its dominant position, if the enterprise foists an unfair price or unfair condition in sale or purchase, or restricts the scientific development or production of goods or services, that has a damaging effect on the consumers. Dominance is said to be abused when the position of an enterprise in the market has been abused to safeguard the benefits and it has considerably influenced the competition in India.

Combination and Regulation of Combinations:

Section 5 and 6 of the Competition Act, 2002, is what that deals with regulation of combinations. Combinations cover under its bound mergers, acquisition, takeovers, joint ventures or amalgamations. These sections are sought to manage the activities and operations of combinations. There is no allowance of any combination that results in real harmful effect on competition in India and the combination shall be considered illegal.

Case Laws

In the case, Aamir Khan Production v/s Union of India[1], the case had the issue whether IP can be dealt by the Competition Commission of India (CCI), and then in this matter the Bombay High Court held that CCI can deal with IPR related matters with a condition that if it is in direct violation of the provisions of the Competition Act, 2002.

In the case, Kingfisher Airline v/s Competition Commission of India[2], there was an imposition by the CCI of a fine of Rs. 1 crore on Kingfisher airlines because they failed in providing sufficient information during CCI’s investigation of the airline’s alliance with Jet Airways.

In the case, Hawkins Cookers Limited v/s Murugan Enterprises[3], it was held by the Delhi High Court that Hawkins Cookers Limited, which has a well-known mark on the excuse of being well known and important, could not be allowed to generate a monopoly in the incidental market.

Conclusion

The world and India, all of them were facing a new stage of globalisation, liberalisation and privatisation and these different and difficult times were bringing with them some newer challenges and the MRTP Act in existence at that time, became outdated in the modern era. Therefore the new Competition Act came into existence in order to suit the need of the hour. The new act is supposed to be based on the regulation of behaviour or conduct of the players in the market and is result aimed and not interested in being procedure oriented like the MRTP Act.

The main purpose of this act is to promote and protect competition in the market. Competition is considered to be very essential because it benefits: the Consumers because they get a wide range of choice of goods and services, improved value for money and better quality; it benefits the Businesses since a level playing field is created and a remedy of anti-competitive practices is accessible, the inputs are competitive priced, they incline to have substantial productivity and the ability to compete in global markets and it also benefits the state since there is most favourable awareness from sale of assets and there is intensified availability of resources for social sector.

Therefore, by securing competition in the market, the competition law is helping to benefit all the players in the market which in turn will be advantageous for the economy as a whole.

[1] Writ Petition No. 358 of 2010 along with Writ Petition No. 526 of 2010

[2] Writ Petition No. 1785 of 2009

[3] MIPR 2002 (1) 128

Latest Posts