MRTP ACT AND COMPETITION ACT

MRTP ACT AND COMPETITION ACT

MRTP ACT,1969 The MRTP, 1969, aimed to prevent concentration of economic power to the common detriment, provide for control of monopolies and probation of monopolistic, restrictive and unfair trade practice, and protect consumer interest i.e 1. To ensure that the operation of the economic system does not result in the concentration of economic power in hands of few, 2. To provide for the control of monopolies, and 3. To prohibit monopolistic and restrictive trade practices.

1991 AMENDMENTS TO MRTP ACT 1. Size concept given up 2. Curbs on growth of monopoly companies deleted 3. Merger control removed 4. More emphasis on prohibition of RTPS, UTPS and MTPS In sum, big becoming bigger was no more ugly

NEED FOR A NEW ACT Need for a new law has its origin in finance minister s budget speech in february,1999 : the MRTP act has become obsolete in certain areas in the light of international economic developments relating to competition laws. We need to shift our focus from curbing monopolies to promoting competition. The government has decided to appoint a committee to examine this range of issues and propose a modern competition law suitable for our conditions.

HIGH LEVEL COMMITTEE Government appointed a high level committee to advise a modern competition law for India in line with international developments and to suggest a legislative frame work. The committee included competition expert, representatives of industry and consumers, economist, chartered accountant, advocate etc.

TRIGGER FOR METAMORPHOSIS FROM MRTP ACT TO COMPETITION ACT RECOMMENDATIONS OF EXPERT GROUP RECOMMENDATIONS OF HIGH LEVEL COMMITTEE RECOMMENDATIONS OF STANDING COMMITTEE OF PARLIAMENT UNANIMITY TO REPEAL MRTP ACT AND TO ENACT A NEW LAW APPRECIATION THAT THE MRTP ACT WAS MORE CONCERNED WITH CURBING MONOPOLIES RATHER THAN WITH PROMOTING COMPETITION APPRECIATION THAT PRE-1991 LPG HAS CHANGED TO POST-1991 LPG RECOGNITION THAT INDIAN ENTERPRISES ARE SMALL IN SIZE AND NEED TO GROW TO BECOME GLOBALLY COMPETITIVE

COMPETITION ACT,2002 An Act was enacted to provide, keeping in view of the economic development of the country, the establishment of a Commission with the following objectives:- Prevent practices having adverse effect on competition. Promote and sustain competition in markets. Protect the interests of consumers. Ensure freedom of trade carried on by other participants in markets in India

FOUR COMPARTMENTS 1. ANTI-COMPETITION AGREEMENTS 2. ABUSE OF DOMINANCE 3. MERGERS, AMALGAMATIONS, ACQUISITIONS AND TAKEOVERS 4. FOSTERING COMPETITION

ANTI-COMPETITION AGREEMENTS For example: Cartels Tie-in arrangement Exclusive supply agreement Exclusive Distribution Agreement

ABUSE OF DOMINANCE There shall be an abuse of dominant position: directly or indirectly, imposes unfair or discriminatory- a) condition in purchase or sale of goods or services, or b) price in purchase or sale of goods or services limits or restricts: a) production of goods or provision of services or market therefor b) technical or scientific development relating to goods or services to the prejudice of consumers Indulges in practices resulting in denial of market access Uses its dominant position in one relevant market to enter into, or protect other relevant market

COMBINATIONS, MERGERS AND AMALGAMATIONS 1. REDUCTION IN NUMBER OF PLAYERS 2. ACQUISITION OF ENORMOUS ECONOMIC STRENGTH 3. DISCOURAGEMENT OF NEW ENTRANTS 4. DICTATION OF PRICES 5. DOMINANCE

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

COMPETITION COMMISSION OF INDIA Establishment of Commission. (1) With effect from such date as the Central Government may, by notification, appoint, there shall be established, for the purposes of this Act, a Commission to be called the Competition Commission of India. (2) The Commission shall be a body corporate by the name afore said having perpetual succession and a common seal with power, subject to the provisions of this Act, to acquire, hold and dispose of property, both movable and immovable, and to contract and shall, by the said name, sue or be sued. (3) The head office of the Commission shall be at such place as the Central Government may decide from time to time. (4) The Commission may establish offices at other places in India

COMPOSITION OF COMMISSION (1) The Commission shall consist of a Chairperson and not less than two and not more than six other Members to be appointed by the Central Government. (2) The Chairperson and every other Member shall be a person of ability, integrity and standing and who has special knowledge of, and such professional experience of not less than fifteen years in, international trade, economics, business, commerce, law, finance, accountancy, management, industry, public affairs or competition matters, including competition law and policy, which in the opinion of the Central Government, may be useful to the Commission. (3) The Chairperson and other Members shall be whole-time Members.

POWERS AND FUNCTIONS OF COMMISSION Inquiry into certain agreements (section 19) Inquiry whether an enterprise enjoys dominant position Inquiry into combination by commission (Section 20) Power to Grant Interim Relief (Section 33) Power to Award Compensation (Section 34)

DIFFERENCE B/W MRTP ACT AND COMPETITION 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) 8. Covers unfair trade practices (individual consumer interest) 9. Political appointments of chairperson/members 10. No competition advocacy role 11. Reactive 1. Based on post-1991 LPG 2. Premised on behavior/ 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) 8. Unfair trade practices excluded (covered under consumer protection act) 9. Appointments by a collegium 10. CCI has competition advocacy role 11. Proactive