Bharath Jairaj - India

8/8/2019 Bharath Jairaj - India

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INDIA S NEWINDIA S NEW

COMPETITION REGIME:COMPETITION REGIME:Competition in a largeCompetition in a large

emerging economyemerging economy

Bharath Jairaj

Citizen consumer and civic Action GroupChennai, India

www.cag.org.in


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7Up2 Meeting, June 2


7--28, 2006,28, 2006,Bangkok.Bangkok.

ContentsContents

Where are we today?Where are we today?

How did we get here?How did we get here?

MRTP Act, 1969MRTP Act, 1969 New Economic Policy 1991New Economic Policy 1991 Amendments toAmendments to

MRTP ActMRTP Act

Competition Act 2002Competition Act 2002

Competition Policy 2006Competition Policy 2006--07?07?


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7--28, 2006,28, 2006,Bangkok.Bangkok.

Indias Competition Regime today:Indias Competition Regime today:

New Competition Law:New Competition Law:

The Competition Act , 2002The Competition Act , 2002

The CompetitionThe Competition Commission of India (CCI);Commission of India (CCI);

The Competition Appellate Tribunal (CAT)The Competition Appellate Tribunal (CAT)

New Competition Policy:New Competition Policy:

Advisory Committee to prepare draft NationalAdvisory Committee to prepare draft NationalCompetition Policy (December 2005)Competition Policy (December 2005)

Working group on Competition Policy at theWorking group on Competition Policy at thePlanning Commission (for 11Planning Commission (for 11thth Five Year Plan)Five Year Plan)


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7--28, 2006,28, 2006,Bangkok.Bangkok.

EVOLUTIONEVOLUTION-- How We Got HereHow We Got Here -- 11

Constitution of India, Art. 39 (c)Constitution of India, Art. 39 (c) thetheoperation of the economic system doesoperation of the economic system doesnot result in thenot result in the concentration of wealthconcentration of wealth

and means of productionand means of production to the commonto the commondetrimentdetriment

19471947-- 1969: Regimented and strict system1969: Regimented and strict system

of government controlsof government controls 1969: Monopolies and Restrictive Trade1969: Monopolies and Restrictive Trade

Practices Act (MRTP Act) legislatedPractices Act (MRTP Act) legislated


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7--28, 2006,28, 2006,Bangkok.Bangkok.

Monopolies and Restrictive TradeMonopolies and Restrictive TradePractices Act , 1969Practices Act , 1969

OBJECTIVES:OBJECTIVES:

Prevention of concentration of economicPrevention of concentration of economic

power in a few handspower in a few hands Control and regulation of monopolies inControl and regulation of monopolies in

certain sectorscertain sectors

Prevention of unfair trade practicesPrevention of unfair trade practices Prevention of restrictive trade practicesPrevention of restrictive trade practices


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7--28, 2006,28, 2006,Bangkok.Bangkok.

THE MRTP COMMISSIONTHE MRTP COMMISSION

A QuasiA Quasi--Judicial Authority (Chairman (SC/HCJudicial Authority (Chairman (SC/HCJudge) and 2Judge) and 2--8 members)8 members)

Assisted by Dir Gen of InvestigationAssisted by Dir Gen of Investigation

MRTPC vested with powers of a Civil Court:MRTPC vested with powers of a Civil Court:cease and desist orders; injunction; awardcease and desist orders; injunction; awardcompensation, etc.compensation, etc.

Can make recommendations to CentralCan make recommendations to CentralGovernment on functioning of enterprises, whenGovernment on functioning of enterprises, when

such functioning was detrimental to public interestsuch functioning was detrimental to public interest Suo MotoSuo Moto action possible, though not usedaction possible, though not used


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7--28, 2006,28, 2006,Bangkok.Bangkok.


1991: Widespread economic reforms in India1991: Widespread economic reforms in India Aimed at Liberalisation, Privatisation andAimed at Liberalisation, Privatisation andGlobalisationGlobalisation

Changes felt necessary in MRTP ActChanges felt necessary in MRTP Act Concentration of economic power to theConcentration of economic power to the

common detriment and control of monopoliescommon detriment and control of monopolies dede--emphasisedemphasised

PrePre--entry restrictions (prior approval ofentry restrictions (prior approval ofgovernment), expanding existing undertaking,government), expanding existing undertaking,M&As, takeoversM&As, takeovers deleted from Actdeleted from Act


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7--28, 2006,28, 2006,Bangkok.Bangkok.


1999: Expert Group on interaction between1999: Expert Group on interaction betweenTrade and Competition Policy recommendedTrade and Competition Policy recommendednew competition law to promote fairnew competition law to promote fair

competition and control (eliminate) anticompetition and control (eliminate) anti--competitive practices in the marketcompetitive practices in the market

2000: GoI High Level Committee on Competition2000: GoI High Level Committee on CompetitionLaw and Policy provided a draft Competition law.Law and Policy provided a draft Competition law.

2002:The Competition Act legislated2002:The Competition Act legislated


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7U

p2 Meeting, June 277U

p2 Meeting, June 27--

28, 2006,28, 2006,Bangkok.Bangkok.

THETHE COMPETITIONCOMPETITIONACT, 2002ACT, 2002What and howWhat and how

WHAT?WHAT?

Main Focus areas of the Act :Main Focus areas of the Act :

Prohibition of Anti Competitive AgreementsProhibition of Anti Competitive Agreements Prohibition of Abuse of DominanceProhibition of Abuse of Dominance

Regulation of CombinationsRegulation of Combinations

Competition AdvocacyCompetition Advocacy

HOW?HOW?Through establishment of a CompetitionThrough establishment of a Competition

Commission of India (CCI) and CompetitionCommission of India (CCI) and CompetitionAppellate Tribunal (CAT)Appellate Tribunal (CAT)


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FOCUS AREAS OF 2002 ACTFOCUS AREAS OF 2002 ACT -- 11

A. PROHIBITION OF ANTIA. PROHIBITION OF ANTI--COMPETITIVECOMPETITIVEAGREEMENTSAGREEMENTS

All AntiAll Anti--competitive agreements are void, i.e.,competitive agreements are void, i.e.,agreements which could restrict competition, verticalagreements which could restrict competition, verticalor horizontalor horizontal

Rule of Reason to be applied for determining legalityRule of Reason to be applied for determining legalityof an agreementof an agreement

Certain agreements between same or similarCertain agreements between same or similar

enterprises regarding prices or quantities, on bidding,enterprises regarding prices or quantities, on bidding,or to share or divide markets areor to share or divide markets are per seper se illegalillegal

Leniency provisionLeniency provision for whistleblowers in a cartel (iffor whistleblowers in a cartel (ifdisclosure is before prosecution)disclosure is before prosecution)


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EXCEPTIONS:EXCEPTIONS: Export cartels (problem is somewhere else!)Export cartels (problem is somewhere else!) Agreements permitted in lawAgreements permitted in law Agreements under IPR (not unreasonable restrictionsAgreements under IPR (not unreasonable restrictions

like patent pooling, pricelike patent pooling, price--fixing etc.)fixing etc.)

RULE OF REASON TO BE APPLIED (factors):RULE OF REASON TO BE APPLIED (factors): Creation of entry barriersCreation of entry barriers

Driving existing competitors out of the marketDriving existing competitors out of the market Accrual of benefits to consumersAccrual of benefits to consumers Improvements in goods and servicesImprovements in goods and services Increase in Technical developmentIncrease in Technical development


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7Up2 Meeting, June 277Up2 Meeting, June 27--28, 2006,28, 2006,Bangkok.Bangkok.


B. PROHIBITION OF ABUSE OFB. PROHIBITION OF ABUSE OFDOMINANT POSITION:DOMINANT POSITION:

Mere dominance is not an offence, abuse ofMere dominance is not an offence, abuse ofdominance is prohibiteddominance is prohibited

Important shift from size / structure toImportant shift from size / structure tobehaviour / conductbehaviour / conduct

Instances of unfair, discriminatory or predatoryInstances of unfair, discriminatory or predatorypricing; restricting quantities, markets orpricing; restricting quantities, markets or

technical development, etc. will qualifytechnical development, etc. will qualify


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C. REGULATION OF COMBINATIONS:C. REGULATION OF COMBINATIONS: Includes M&As, Amalgamations, Acquisitions of controlIncludes M&As, Amalgamations, Acquisitions of control --

all above a certain high level threshold (Rs.1000 croreall above a certain high level threshold (Rs.1000 croreaggregate value of assets or Rs.3000 crore turnover ofaggregate value of assets or Rs.3000 crore turnover of

combining parties)combining parties) Thresholds deliberately high to allow small IndianThresholds deliberately high to allow small Indian

companies to combine to become active internationalcompanies to combine to become active internationalplayersplayers

Combinations that cause or are likely to cause anCombinations that cause or are likely to cause anadverse effect on competition are under focus (e.g.,adverse effect on competition are under focus (e.g.,horizontal mergers between competitors; vertical mergerhorizontal mergers between competitors; vertical mergerby dominant player with firm in adjacent market, etc.)by dominant player with firm in adjacent market, etc.)

PrePre--notification voluntarynotification voluntary


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D. COMPETITION ADVOCACY:D. COMPETITION ADVOCACY: CCI to create culture of competitionCCI to create culture of competition Empowered to participate in formulation ofEmpowered to participate in formulation of

countrys economic policiescountrys economic policies Create awareness and training on competitionCreate awareness and training on competition

issuesissues Establishment of Competition Fund for aboveEstablishment of Competition Fund for above

Recently asked to develop Consultation Paper onRecently asked to develop Consultation Paper onNational Competition Policy (to harmoniseNational Competition Policy (to harmonisevarious government policies)various government policies)


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COMPETITION COMMISSIONCOMPETITION COMMISSIONOF INDIA (CCI)OF INDIA (CCI)

Adjudicative wing distinct from Investigative andAdjudicative wing distinct from Investigative andProsecution wingProsecution wing

Allows appointment of economists, lawyers,Allows appointment of economists, lawyers,

other professionals as investigators (departureother professionals as investigators (departurefrom practice of appointing retd. bureaucrats)from practice of appointing retd. bureaucrats)

UTPs removed from the purview of Act and allUTPs removed from the purview of Act and allpending cases transferred to the Consumerpending cases transferred to the Consumer

Protection Act, 1986 (CPA)Protection Act, 1986 (CPA) Phased introduction of ActPhased introduction of Act competitioncompetition

advocacy (Y1); Antiadvocacy (Y1); Anti--Competitive Practices andCompetitive Practices andAbuse of Dominance (Y2); Combinations (Y3)Abuse of Dominance (Y2); Combinations (Y3)


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COMPETITION APPELLATE TRIBUNALCOMPETITION APPELLATE TRIBUNAL(CAT)(CAT)

Established after intervention by Supreme CourtEstablished after intervention by Supreme Courtof Indiaof India to retain judicial powers within theto retain judicial powers within the

judicial systemjudicial system

CAT to hear and dispose appeals against anyCAT to hear and dispose appeals against anydirection issued or decision made or orderdirection issued or decision made or orderpassed by CCIpassed by CCI


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2004: UPA government elected despite India2004: UPA government elected despite IndiaShining beliefShining belief

NCMP commits to greater effort towardsNCMP commits to greater effort towards

increasing competition and a competitiveincreasing competition and a competitiveenvironmentenvironment broad basing developmentbroad basing development

2005: GoI asks CCI to develop consultation2005: GoI asks CCI to develop consultationpaper on National Competition Policypaper on National Competition Policy

2005: CCI establishes Advisory Committee to2005: CCI establishes Advisory Committee todevelop draft National Competition Policydevelop draft National Competition Policy

2006: Planning Commission establishes Working2006: Planning Commission establishes WorkingGroup on Competition Policy (for 11Group on Competition Policy (for 11thth PlanPlan

20072007--12)12)


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Competition in IndiaCompetition in India the road mapthe road map

Shift from size / structure focus to conductShift from size / structure focus to conduct

Shift from discouraging dominance to discouragingShift from discouraging dominance to discouragingabuse of dominanceabuse of dominance

Includes combinations (previously ignored)Includes combinations (previously ignored) Includes strong component on competition advocacyIncludes strong component on competition advocacy

Replaces Rule of Law approach with Rule of ReasonReplaces Rule of Law approach with Rule of Reasonapproachapproach

New Competition law to deliver aboveNew Competition law to deliver above Decision to locate Competition law within broaderDecision to locate Competition law within broader

Competition PolicyCompetition Policy that harmonises various policiesthat harmonises various policies


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Thank you!Thank you!

Bharath Jairaj - India

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