Vinod Dhall Presentation

8/7/2019 Vinod Dhall Presentation

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Development of Competition Law

in India*by

Vinod Dhall

Former Member and actg. Chairman,

Competition Commission of India

Seminars on

Importance of Competition Law in

Modern BusinessBhurban, Karachi

July, 2008

* Copyright author


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Vinod Dhall,Seminars in Pakistan,July 2008 2

Economic Policy in India Following independence, India adopted a

socialist, state directed economic policy

Few options at that time; even necessity

But overstayed its usefulness

Also morphed into license and control

regime

Adverse economic and social consequences


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Concerns about Concentration of

Economic WealthConstitution of Indiaprovisions connected to competition law:

Art. 39:

...ownership and control of the material resources of the communityshould be so distributed as best to subserve the common good. and

the operation of the economic system does not result in the concentrationof wealth and means of production to the common detriment.

Art.19(1) (g):

Fundamental Rightto carry on any occupation, trade or business.


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tudies of Economic Concentration Mahalanobis Committee on Distribution of

Incomes and Levels of Living,1960 observed:

growing income inequality in India. Monopolies InquiryCommission,1965: to

inquire into extent and effect of concentration

of economic power in private hands, andsuggest necessary legislation and other

measures.


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Monopolies InquiryCommission

Observations High levels of concentration e.g. in: food

articles, clothing, household goods, transport

goods, building materials. Entry barriers: licensing, financing,

economies of scale, established businesses.

Anti-competitive practices: price fixing,cartels, boycott, RPM, exclusive dealing,

predatory pricing, price discrimination.


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MRTP Act, 1969 Followed report ofMIC

Focus on controlling monopolies ( MRTP

companies): turnover above Rs 20 crores(later Rs 100 cr), or Rs 1 crore if dominant

(market share over 25%)

Frowned on size Not truly economics-based law; but glimpses

of SCP approach


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MRTP Act Provisions Approvalby Govt. (not Commission) for

M&A, establishment of new undertakings,

expansion/diversification MTP: defined, expanded in 1984; but power

only to recommend

RTP: defined, gave inclusive list


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MRTP Act Developments SacharCommittee on working ofMRTP Act

Major amendments followed in 1984: No change in MRTP companies provisions

No change in MTP powers, but added practices

Listed RTPs to be deemed illegal

UTP provisions added


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Economic Reforms, 1991Among first reforms, changes in MRTP Act:

Deleted provisions relating to MRTP

companies ( M&A, expansion, new

undertaking)

Included PSUs in Act


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MRTP Act:Current Provisions No merger regulation

MTP: only advisory role

RTP

UTP

No advocacy role

Remedies - weak ( only cease and desist, and

compensation)


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MRTP Act:Current Provisions (contd.)Other provisions:

Contempt

Temporary injunction orders Enforcement through court

Extra-territorial jurisdiction, after goods

imported IPRs not exempted, except patents

Doctrine of state action


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Economic Reforms-second phase 1991: Provisions relating to MRTP companies

deleted

Finance Ministersbudget speech,1999: MRTPActhad become obsolete in certain areas in the light ofinternational economic developments, andGovernment has decided to appoint a Committee topropose a modern competition law

Following committees report, The CompetitionAct,2002 enacted January,2003; CompetitionCommission of India established October,2003


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Economic Reforms-second phase(contd)

Before enforcement could commence, WP

challenging certain provisions of the Act

After disposal of WP, CompetitionAmendmentAct,2007 passed September,2007

Amendments have set the stage for

commencement of enforcement


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Competition Act (as amended) OECD : close to state-of-the-art (Economic

Survey India Report 2007)

WTO : Law is broadly comparable to those ofother jurisdictions with effective laws in this area

and, for the most part, embodies a modern

economics - based approach (Trade Policy

Review of India 2007)

Close similarity to EU and UK laws


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Competition Act-Main Provisions Prohibition of anti-competitive agreements;

stringent provisions against cartels; includes

leniency provision Prohibition of abuse of dominance

Regulation of combinations (mergers,

amalgamations, etc) Competition advocacy and public awareness


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An Economic Law Mainly rule of reason; presumptive only

against hard-core horizontal agreements

Dominance not bad, only abuse of dominance Determination of dominance on specified

factors, not just size or market share

Determination of appreciable adverse effecton competition (AAEC) based on specifiedfactors, +ve and ve


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An Economic Law (contd) Mergers to be assessed on specified factors,

+ve and ve

Starting point: determination of relevantmarket

Relevant market: product + geographic

Predatory pricing:below average variablecost

Effects doctrine; extra-territorial jurisdiction

Competition advocacy


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Present Status and Work ofCCIEnforcement not commenced. On-going work of

Commission:

Competition advocacy and public awareness

Legal and professional ground-work

Organisational structuring and institution-

building

( MRTPC to continue till enforcement by CCI begins)


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ompet t on vocacy an pu c

awareness

Competition impact opinion to Govt. Examples: Postal Bill

Warehousing Bill

Telecommunications policy: number portability, spectrum allotment Infrastructure concessions: highways, ports, airports

Banking

Proposal for National Competition Policy; PlanningCommissions Working Group

Presentations / meetings with ministries /regulators


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Competition Advocacy and public

awareness (contd) Seminars; over 100 ?

Speeches by actg Chairman/staff: very large

number

Write-ups/interviews in press/media; several

Meetings with trade associations: cement,

steel, airlines, drugs, professions, etc

Literature:booklets

Website ( information, transparency)


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Legal and professional ground-work Draft regulations (8): After extensive consultations,

esp Merger Regs.Commended for sophistication ofapproach.

Internal reference materials

Internal procedures

Analysis of legal provisions

Study of globalbest practices: ICN, OECD, EU,FTC, OFT, etc

Market studies thru reputed organisations


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Organisational structuring and

institutionalbuilding Commissioned study to suggest appropriate

organisationby IIM, Bangalore

Professional staffing proposed

Emphasis on training:

Instituted Internal Training Programme

Competition Forum Comprehensive 5-year programme being planned.


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Guiding Principles ofCCI To be in sync with markets; have good

understanding of market forces

To minimize compliance costs for enterprises andcost of enforcement forCommission

To maintain confidentiality ofbusiness information;to maintain transparency in Commissions ownoperations

To be a professionalbody equipped with requisiteskills

To maintain a consultative approach


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Some Challenges Weak competition culture, acceptance/understanding

bybusiness community?

Sufficiency of human, financial and other resources

Availability of skilled staff; training facilities

Respect forCommissions autonomy

Recognition of advocacy role; needed

institutionalised arrangement Role of judiciary


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The Future? Developing country model of competition law

Regional co-operation?

Regional centre for competition law e.g. Asean, Seoul? Regional association of competition authorities?

Mutual co-operationbetween authorities?

More effective role for developing country

authorities in development of competition law


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The End

Shukria

Vinod Dhall,

B-88, Sector 88,

NOIDA, U.P.,INDIA201303

[email protected]

+91- 9811322324

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