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ANTIDUMPING AND COMPETITION LAW: INDIAN
PERSPECTIVE
RESEARCH PAPER
SUBMITTED TO:
Ms. Renuka Jain Gupta
DIRECTOR (ECO)
COMPETITION COMMISSION OF INDIA
SUBMITTED BY:
NAVEEN CHUGH
NATIONAL LAW SCHOOL OF INDIA UNIVERSITY
BANGALORE
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ACKNOWLEDGEMENT
At the outset, I would like to thank my supervisor Ms. Renuka Jain Gupta,
Director (Eco), Competition Commission of India, for being a guiding force
throughout the course of this submission and being instrumental in the
successful completion of this project report without which my efforts would
have been in vain. She has been kind enough to give me her precious time and
all the help which I needed. I am immensely thankful for the strength that she
has endowed me with.
I would also like to express my heartfelt gratitude to the other staff of
Competition Commission of India, for being immeasurably accommodating to
the requirements of this humble endeavor.
Naveen ChughNational Law School of India University
Bangalore
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ANTI-DUMPING AND COMPETITION LAW: INDIAN
PERSPECTIVE
CHAPTER 1
1. Introduction p.5
Meaning of dumping p.5
Rationale for dumping p.6
Meaning of Anti-dumping p.6
Justification of Anti-dumping p.7
CHAPTER 2
2. Anti-Dumping Law: An Overview p.8
Anti-Dumping Law with specific reference to WTO and Anti-Dumping Agreement p.8
International Perspectives: Application of Anti-Dumping Law in US p.12
Anti-Dumping Law in India: Institutional Arrangement and Existing Administrative Mechanism p.16
Investigation Process followed by Ministry of Commerce in Anti-Dumping Petitions p.23
CHAPTER 3
3. Interface between Anti-Dumping Law and Competition Law p.27
Competition Act, 2002 (India) - Brief Introduction p.27
Competition law and Anti-Dumping Law Areas of Overlaps and Conflicts p.30
(a) Conflict between Competition law and Anti-Dumping Law p.30
(b) Overlaps between Competition Law and Anti-Dumping Law p.32
CHAPTER 4
4. Criticism of Anti-Dumping Law and its effect on Competition p.39
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CHAPTER 5
5. Few Instances of Anti Dumping & Competition with reference to India p.44
CHAPTER 6
6. Suggestions & Conclusion p.47
BIBLIOGRAPHY p.49
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I. INTRODUCTION
Dumping, is a pricing practice where a firm charges a lower price for exporting goods than it
does for the same goods sold domestically. It is said to be the most common form of price
discrimination in international trade. Dumping can only occur at places where imperfect
competition and where the markets are segmented in a way such that domestic residents cannot
easily purchase goods intended for export. It is a subtle measure of protection which comes under
the non-tariff barriers and is product and source specific. Antidumping duties were initiated with
the intention of nullifying the effect of the market distortions created due to unfair trade practices
adopted by aggressive exports. They are meant to be remedial and not punitive in nature. A
harmful to the domestic producers as their products are unable to compete with the artificially
low prices imposed by the imported goods. As a method of protection to the domestic industries,
anti dumping duties are thus levied on the exporting country which has been accused of dumping
goods in another country. As the antidumping duty is only meant to provide protection to thedomestic firms in the initial stages, as per the international laws, the antidumping legislations
may last for a maximum period of five years. Antidumping measures are of two kinds:1
Antidumping duty: This is imposed at the time of imports, in addition to other customs
duties. The purpose of antidumping duty is to raise the price of the commodity when
introduced in the market of the importing country.
Price undertaking: If the exporter himself undertakes to raise the price of the product then
the importing country can consider it and accept it instead of imposing antidumping duty.
1. Meaning of Dumping
1. The Concise Oxford Dictionary defines the term dumping as to sell (excess goods) to a foreign
market at a low price
2. Haberler2 defined dumping as the sale of goods abroad at a price which is lower than the
selling price of the same goods at the same time in the same circumstances at home, taking
account, of differences in transport costs.
3. Dumping of goods in the most common economic sense means to send goods unsalable at a high
price in the home market to a foreign market for sale at a low price, to keep up the price at home and
to capture a new market.3
1Rai Sheela, Dumping and Anti-dumping
2 Haberler, Gottifried Von, The Theory of International Trade with its Application to Commercial Policy.
Translated by Alfred Stonier and Frederic Benham. P. 300, New York: Macmillan, 1937.
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1.1 Rationale Behind Dumping: An Economic Perspective
Dumping occurs when firms start using price discrimination as a strategy for profit maximisation.
The conditions mandatory for dumping to take place are:
Presence of an imperfect market where price discrimination between markets is possible.
(Because in imperfect market firms are price setters not price takers).
Segmented markets where there is no arbitrage easily possible between markets.
Only if the above two conditions are satisfied is it profitable for the exporting firm to engage in
dumping. For any firm, price discrimination in favour of exports is more common because the
share of exports is usually lesser than the domestic demand. In the export market, individual firms
have lesser monopoly power and hence choose to keep prices lower in foreign markets whilecharging higher prices for domestic markets. This can also be explained through the price
elasticity of demand for goods. In areas where the demand is price inelastic, producers tend to
charge a higher price. This is said to be the case in domestic markets. In foreign markets, price
elasticity of demand is elastic and hence prices are low. Thus, if there is high elasticity on export
sales than on domestic sales, firms will dump.
2. Meaning of Anti-Dumping
Moving on as to what is anti-dumping, it can be fined as a protective device available to the states
against vicissitudes associated with the free trade. In the recent years a large number countries have
become frequent users of anti-dumping. Many of the heaviest anti-dumping users are countries who
did not even have an anti- dumping statute a decade ago.4 The traditional users continue to make use
of these measures with more vigour by targeting new users. Anti-Dumping duties were introduced by
the developed countries to protect their industries against the low priced imports. Developing
countries supported the inclusion of the provision relating to anti-dumping duties under GATT
because they wanted to levy of anti-dumping duties to be under international regulation. Anti-
dumping measures are not only legal but they are also flexible in usage. Further, anti-dumping duties
can be presented not as protection but as encounter against unfair competition.
3R.K Gupta, , Safeguards,Countervailing and Anti-Dumping Measures Against Imports and Exports-Commentary, Cases and
Text, Academy of Business Studies, New Delhi, 1998, p 824
T.P Bhat, Globalisation of Anti-Dumping and its Impact, Foreign Trade Review, 2003, Vol.38, Issue No. 2, pp 54-90 at
p.54
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2.1 Justifications for antidumping duty
In free trade, firms are allowed to charge different rates in different markets. The result would be
that firms would charge lower prices in foreign markets and higher prices in domestic markets,
leading to material injury to the domestic producers. Had price discrimination taken place by a
monopoly firm within one economy, the government would have intervened to stop consumerexploitation by enforcing an Act similar to the MRTP Act, in India. Hence, in the international
context, it is the antidumping duty that protects the domestic producers initially and consumers in
the long run. The duty is justified because in case of many industries the start up period is long
and start-up costs are also high. Once these firms are forced out of the market as a result of
dumping by exporters, it is very difficult for them to restart when the same exporters raise prices.
Usually, the intentions of charging such low prices to foreign consumers is to be able to wipe out
the domestic industries and eventually acquiring monopoly power in the foreign market (i.e.
using predatory pricing). Thus it is on this ground that the anti dumping duties have been
justified. The main intension is to protect the domestic industries.
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II. ANTI DUMPING: AN OVERVIEW
1. Anti-Dumping Law with specific reference to WTO and Anti-Dumping Agreement
1.1 Introductory
GATT/WTO was established with the objective of promoting free trade. Barriers to free trade may be
tariff barrier or non-tariff barrier. Tariff regimes are easy to administer and simple to understand.
Non-tariff measures involve intricate issues and are governed by various WTO agreements. Anti-
dumping is one of the most frequently used non-tariff measure. WTO rules allow the member
countries to opt for anti-dumping measures with specific stipulation. Article VI of the GATT, 19945
deals about antidumping. Further there is also Agreement to give effect to Article VI which contains
provisions which must be strictly followed when conducting anti-dumping investigation. If a country
today has anti-dumping legislations, it must be consistent with the agreement. The practices and
procedures in actual investigation must conform to the agreement. Today large numbers of countrieshave become frequent users of anti-dumping measures. Anti-dumping has unique combination of
political and economic manipulability. During the last fourteen years of WTO, the use of anti-
dumping has become rampant that it is criticized as threatening to limit the market access achieved
under GATT/WTO trade negotiations over the last fifty years or so. On the one hand there is fear that
anti dumping measures are used for protectionist purpose. On the other hand, many support it
because it can be used as encounter against unfair trade practices.
1.2 Historical Background
Anti-dumping rules started to develop in the early part of this century with the adoption of
legislations firstly by Canada in 1904, New Zealand in 1905, Australia in 1906 and United
States in 1916, which were later subjected to quite a few amendments. In 1921 the United
Kingdom also enacted its first anti-dumping legislation. Notwithstanding these developments
anti-dumping remained a relatively infrequent instrument until well after the advent of the
GATT, despite the fact that Article VI of the 1947 GATT provided the basic conditions for
adopting anti-dumping measures. In the immediate post-war period only South Africa,
Canada and Australia were the only countries using anti-dumping as an important trade
instrument. During the Kennedy Round of trade negotiations, discussions took place for the,
first time on Article VI of the GATT in order to secure more standardized approach to anti-
5
The contracting parties recognize that dumping, by which products of one country are introduced into the
commerce of another country at less than the normal value of the products, is to be condemned if it causes or
threatens material injury to an established industry in the territory of a contracting party or materially retards
the establishment of a domestic industry.
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dumping. This in turn led to the Agreement on Implementation of Article VI of the GATT
which, in turn formed the basis for the first European Community anti-dumping legislation
adopted in 1968. Subsequent trade rounds have more precisely dealt with the rules and
procedures that WTO members are expected to adhere to in implementing their anti-dumping
legislations although even now the WTO members are allowed certain leeway in their
behaviour.
1.3 Dumping With Specific Reference to GATT
Dumping is said to occur when the goods are exported by a country to another country at a
price lower than its normal value. A product is being considered as being dumped if the
export price of the product from one country to another is less than the comparable price, in
the ordinary course of trade, for the like product when destined for consumption in the
exporting country. Opinions may differ as to whether or not this practice, per se, constitutes
unfair price competition. Anti-dumping is a measure to rectify the situation arising out of the
dumping of goods and its trade distortive effect. Thus, the purpose of anti-dumping duty is to
rectify the trade distortive effect of dumping and re-establish fair trade. The use of
antidumping measure as an instrument of fair competition is permitted by the WTO.
Anti-dumping, in common parlance is understood as a measure of protection for domestic
industry. However, anti-dumping measures do not provide protection per se to the domestic
industry. It only serves the purpose of providing remedy to the domestic industry against the
injury caused by the unfair trade practice of dumping.6 Often, dumping is mistaken and
simplified to mean cheap or low priced imports. However, it is a misunderstanding of the
term. Dumping implies low priced imports only in the relative sense (relative to the normal
value), and not in absolute sense. Import of cheap products through illegal trade channels like
smuggling does not fall within the purview of anti-dumping measures. Ironically, the use and
importance of anti-dumping law is inversely related to the prevalence and efficacy of free
trade agreements. As free trade agreements have reduced tariffs and outlawed most import
quotas, anti-dumping cases have increased dramatically. Over the last fifty years, the average
tariff level has fallen from 40 percent to 3.9 percent, and 43 percent of goods are now exempt
from all tariffs. Over the same period of time, the number of successful anti-dumping cases
6In fact, anti-dumping is a trade remedial measure to counteract the trade distortion caused by dumping and
the consequential injury to the domestic industry. Only in this sense, it can be seen as a protective measure. It
can never be regarded as a protectionist measure; See Handbook on Anti-Dumping, Ministry of Commerce,
Government of India(visited July 11, 2003). This View, However, is subject to challenge.
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filed in the United States alone has increased a staggering 2500 percent.10 This powerful
inverse relationship between free trade agreements and antidumping actions is easy to
explain. As domestic market participants around the world lose access to their traditional
protectionist weapons tariffs and import quotas they find that they have only one
protectionist weapon left an anti-dumping action. That weapon is at least as potent as the
traditional weapons. As a result, market participants use it liberally and with great success.7
1.4 WTO and Anti-Dumping Agreement
The Agreement on Implementation of Article VI of the General Agreement on Tariffs and
Trade 1994 (hereinafter referred to as the Agreement) governs the application of
antidumping measures by Members of the WTO. The provisions of the Agreement were first
negotiated during the Kennedy Round (1967) and later substantially revised during the Tokyo
Round (1979) of GATT negotiations. Anti-dumping measures are unilateral remedies which
may be applied by a Member after an investigation and determination by that Member; in
accordance with the provisions of the Agreement, that an imported product is dumped and
that the dumped imports are causing material injury to a domestic industry producing the like
product.
The Agreement sets out rules for the conduct of anti-dumping investigations, including
initiation of cases, calculation of dumping margins, the application of remedial measures,
injury determinations, enforcement, reviews, duration of the measure and dispute settlement.
The Agreement applies to trade in goods only. Trade in services is not covered by this
agreement. The Agreement provides for the right of contracting parties to apply anti-dumping
measures, i.e. measures against imports of a product at an export price below its normal
value (usually the price of the product in the domestic market of the exporting country) if
such dumped imports cause injury to a domestic industry in the territory of the importing
contracting party.8 In particular, the Agreement provides for greater clarity and more detailed
rules in relation to the method of determining that a product is dumped, the criteria to be
taken into account in a determination that dumped imports cause injury to a domestic
industry, the procedures to be followed in initiating and conducting anti-dumping
investigations,9 and the implementation and duration of anti-dumping measures.10 In addition,
7See Richard J.Pierce, Jr., Anti-dumping as a means of facilitating Cartelization, 725, 67 Antitrust L.J.
8Article 3.5.
9Article 6.
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the Agreement clarifies the role of dispute settlement panels in disputes relating to anti-
dumping actions taken by domestic authorities.
On the methodology for determining that a product is exported at a dumped price, the
Agreement adds specific provisions on such issues as criteria for allocating costs when the
export price is compared with a constructed normal value and rules to ensure that a fair
comparison is made between the export price and the normal value of a product so as not to
arbitrarily create or inflate margins of dumping.11 The Agreement strengthens the
requirement for the importing country to establish a clear causal relationship between
dumped imports and injury to the domestic industry. The examination of the dumped
imports on the industry concerned must include an evaluation of all relevant economic factors
bearing on the state of the industry concerned. The Agreement confirms the existing
interpretation of the term domestic industry. Subject to a few exceptions, domesticindustry refers to the domestic producers as a whole of the like products or to those of them
whose collective output of the products constitutes a major proportion of the total domestic
production of those products.12
The Agreement establishes procedures on how anti-dumping cases are to be initiated and how
such investigations are to be conducted. Conditions for ensuring that all interested parties are
given an opportunity to present evidence are set out. Provisions on the application of
provisional measures, the use of price undertakings in anti-dumping cases, and on the
duration of anti-dumping measures have been strengthened. The Agreement lays the sunset
provision under which anti-dumping measures shall expire five years after the date of
imposition (or the most recent review), unless a determination is made by the authorities that,
in the event of termination of the measures, dumping and injury would be likely to continue
or recur.13 A new provision requires the immediate termination of an anti-dumping
investigation in cases where the authorities determine that the margin of dumping is de
minimis (which is defined as less than 2 per cent, expressed as a percentage of the export
price of the product) or that the volume of dumped imports is negligible (generally when the
10Article 11
11Article 2
12Article 5
13Article 11; See Terence P. Stewart & Amy S. Dwyer, WTO Antidumping and Subsidy Agreements 65 (Kluwer
Law International 1998).
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volume of dumped imports from an individual country accounts for less than 3 per cent of the
imports of the product in question into the importing country).14
The Agreement calls for prompt and detailed notification of all preliminary or final
antidumping actions to a Committee on Anti-dumping Practices.15 The Agreement will afford
parties the opportunity of consulting on any matter relating to the operation of the agreement
or the furtherance of its objectives, and to request the establishment of panels to examine
disputes.16 From many perspectives, the most significant feature of the WTO anti-dumping
framework is its dispute settlement procedure, which greatly strengthens the ability of
national governments to challenge anti-dumping actions by other member nations.17 One
controversial omission in the Agreement is the public interest requirement. There can be a
situation where dumping and injury have been proved, but the gains to the consumers from
lower prices more than outweigh the losses suffered by the producers. The public intereststandard stipulates that the imposition of duties should be made only if it is in the interest of
the community. For a public interest clause to be effective the term public interest should be
given a clear operational definition and the factors that might form a test for public interest
should be clearly stated. Further, it is important that this clause is looked into at the same
time when injury to producers is established. Incidentally, In the EU Basic Regulation on
Anti-dumping, community interest clause has been given a mandatory status,18 while there
is no such requirement under the Indian law.
2. International Perspectives: US Anti-Dumping Law
2.1 Introductory
The antidumping and countervailing-duty laws provide protection to domestic firms from
import competition. U.S. antidumping law is a tangled and confusing subject because U.S.
law and procedures have changed substantially over time. U.S. antidumping law was once a
reasonably close approximation of a prohibition on predatory pricing of imports; it served as
a complement to antitrust law, which prohibited predatory pricing by domestic firms. Over
14Article 5.8
15Article 16
16Article 17
17See Joseph E. Pattison, Antidumping and Countervailing Duty Law, 1-30 Vol. 3 (West Group 1999).
18Article 21, Council Regulation, 384/96; See Sebastian Farr, EU Anti-dumping Law: pursuing & Defending
Investigations (Palladian Law Publishing 1998).
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the years, antidumping law and antitrust law have evolved in different directions, so that now
the United States treats similar pricing practices differently depending on whether the product
being sold is domestically produced or imported. Predatory pricing, as the term is currently
used, refers to the practice of intentionally selling a product at a loss in order to drive
competitors out of business, thereby establishing increased market power that allows one to
raise prices above competitive market levels and increase profits. It is one of a number of
unfair competitive practices that the Sherman Antitrust Act has been interpreted to prohibit.
Early court decisions, however, ruled that acts committed in other countries were beyond the
jurisdiction of the Sherman Act. Among other things, this interpretation effectively ruled out
most Sherman Act prosecutions of predatory pricing of imports.
The Antidumping Act of 1916 specifically applied to the practice of pricing imports
substantially below their normal market value with the intent of destroying, injuring, or
preventing the establishment of an industry in the United States. Over time, antidumping
policy and antitrust policy have diverged strikingly. Antidumping law and policy have
evolved along a path of ever-increasing protection for U.S. firms from imports and
decreasing concern for consumers and the economy as a whole. Antitrust law relating to
predatory pricing, at least in recent decades, has taken a path of increasing concern for
consumers and the economy as a whole and decreasing concern for firms suffering intense
competition. Antidumping law no longer acts primarily against predatory pricing. It acts
against international price discrimination (sales at a lower price in the United States than in
the home country of the exporter) and sales below cost, regardless of whether the sales are
predatory or not Yet, the relevant provisions of the antitrust laws prohibit only predatory
pricing; they do not prohibit selling below cost or price discrimination analogous to that
prohibited by the antidumping laws except in cases where it is predatory. This difference is
important. Predatory pricing is detrimental to economic welfare because it leads to
monopolies, which cause economic inefficiency and raise concerns about social equity. It
seldom occurs, however, because it is rarely a profitable strategy and is usually not possible.
By contrast, nonpredatory price discrimination and sales below cost generally provide net
benefits to the country receiving the lower price, and both are relatively common. Moreover,
seldom do cases of price discrimination or selling below cost have anything to do with
predatory pricing. Countervailing-duty laws provide for added duties on imports that have
been subsidized by the government of the exporting country. They date from before the turn
of the century. But unlike the antidumping laws, these laws have not changed in character
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over time, though they have become more inclusive. The first such U.S. law covered only
imports of sugar, A later law covered all dutiable imports, and a later revision expanded
coverage to include both dutiable and nondutiable imports.
Over the years since World War II, U.S. tariffs have steadily declined in accord with
agreements reached in successive rounds of negotiations to liberalize the General Agreement
on Tariffs and Trade (GATT). This decline has resulted in increasing competition for
domestic firms from imports. For industries suffering from such increased competition, U.S.
trade law provides two forms of assistance: trade adjustment assistance and protection under
the Section 201 escape clause.1 Trade adjustment assistance consists of training, employment
services, job search and relocation allowances, and other forms of aid to displaced workers in
industries adversely affected by increased import competition. The Section 201 escape clause
provides temporary protection from imports to provide breathing room for domestic
industries to adjust to increased competition. It contains several restrictions designed to
ensure that the protection it provides is used only for such temporary adjustment purposes-not
for permanent protection--and only when the adjustment costs are large and the cost of the
protection to the economy and the national interest is not large.
In the case of industries unable to become competitive with imports (such as unskilled-labor-
intensive industries), temporary breathing room for adjustment may be better than no
protection at all, but it is not what the industries really want. Anything short of long-term
protection would force painful contractions on them that trade adjustment assistance will not
completely ameliorate. Further, those industries want protection from imports that cause any
injury, not just those that cause substantial injury, and they would rather such protection be
automatic, without regard to any harm it might cause to the rest of the economy or to the
national interest generally. Consequently, they have found the escape clause to be inadequate.
As the antidumping and countervailing-duty (AD/CVD) laws became more inclusive and
protection under them became easier to obtain, industries more and more frequently were
able to obtain better protection, and to obtain it more easily, under these laws than under the
escape clause. Gradually, many groups came to view the laws as an alternative to the escape
clause for uncompetitive industries and for those industries unable to meet the stringent
criteria that the escape clause sets for the protection it provides. As more people accepted this
view, the laws and the procedures for administering them-especially the antidumping law and
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procedures-began to evolve in the direction of serving this more general protective purpose
more effectively. From the point of view that the purpose of AD/CVD laws is to prevent,
punish, and offset predatory pricing, subsidies, and other unfair practices relating to U.S.
imports, many of the legal provisions and procedures that have evolved-especially those used
for calculating dumping margins-are biased against foreign exporters (and against U.S.
consumers of foreign goods). From the point of view that the AD/CVD laws should offer
more general protection for domestic industries from troublesome import competition, these
same provisions and procedures appear more reasonable, even if a bit ad hoc, and they have
been quite effective.
2.2 How the law currently function in US
The antidumping law, and to some extent the countervailing-duty law, are now a fairly
general source of protection from foreign competition. In practice, the main hurdle to an
industry seeking protection under the AD/CVD laws is to demonstrate that it has been injured
by the imports, not that the imports are dumped or subsidized. Such injury is what the Section
201 escape clause is designed to address. However, the degree of injury that must be
demonstrated in AD/CVD cases is less than that for Section 201 cases. As a result of this and
other factors, the Section 201 escape clause is now seldom used. It is generally easier for an
industry to obtain protection under the AD/CVD laws. The Department of Commerce found
that there was dumping or subsidies in 89 percent of the cases that came before it from 1980
through 1988. Using the AD/CVD laws as a general source of protection from imports has
several disadvantages.
First, the AD/CVD laws do not have the restrictions that the Section 201 escape clause has to
ensure that protection is granted only temporarily for the purpose of aiding adjustment and
only in cases where the benefit to the protected industry outweighs the harm to the rest of the
country in terms of economic, foreign policy, and security interests. Protection under the
AD/CVD laws is permanent for all practical purposes and is given without regard to the
effects on the rest of the economy and foreign-policy and national security concerns.
Permanent protection of industries is almost always detrimental to the economy and is
contrary to the basic thrust of U.S. trade policy since World War II, which has supported the
elimination of trade barriers by ail countries.
Second, other countries have begun to follow the U.S. lead. They are using antidumping laws
to protect their industries, and many of them are targeting U.S. exports in retaliation for U.S.
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use of antidumping laws against them. As a result, although support for U.S. antidumping law
and procedures among import-competing firms remains strong, sentiment against them is
rising in the growing community of U.S. exporting and importing firms.
Third, even in those cases in which the protection is deemed desirable, the AD/CVD laws
sometimes provide inadequate protection. They apply only to imports of the product in
question from particular countries or firms and not to all imports of the product from any
source. Therefore, they can be, and sometimes are, circumvented either by the firm on whose
products the duties are imposed or by the impersonal workings of the international market.
As a result, the United States has had to devote considerable attention in recent years to
modifying the AD/CVD laws to make them apply to upstream dumping, downstream
dumping, dumping routed through third countries, and various other routes by which
AD/CVD orders have been circumvented.2
Finally, with increasing globalization, it is becoming less clear which firms should be
identified with which country. (This problem applies to other forms of protection as well as to
the AD/CVD laws.) Increasingly, firms located in foreign countries and wishing to export to
the United States are actually U.S. owned or partially U.S. owned. Also increasingly,
domestically located firms that could be protected by trade laws are foreign owned or
partially foreign owned. Such situations can make it unclear which countries are benefited or
harmed most by protection granted by the AD/CVD laws.
3. Anti-Dumping in India: Institutional Arrangement & Existing Administrative
Mechanism
3.1 Legal framework of anti dumping in India
1. The principle of imposition of anti-dumping duties was propounded by the Article VI of
General Agreement on Tariffs & Trade (GATT) 1994 Uruguay Round2. Indian legislation in this regard is contained in Section 9A and 9B (as amended in 1995) of
the Customs Tariff Act, 1975
3. Further regulations are contained in the Anti-Dumping Rules [Customs Tariff
(Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and
for Determination of Injury) Rules, 1995]
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4. The Designated Authority for conducting investigations pertaining to Anti-Dumping
issues and on basis thereof, for forwarding its recommendations is the Ministry of
Commerce, Government of India.
5. The responsibility for Imposition and Collection of duties as imposed /recommended by
the Adjudicating authority is imposed upon the Ministry of Finance, Government of India.
Section 9A of the Customs Tariff Act, 1975 (hereinafter referred to as the Act) as amended
in 1995 and the Customs Tariff (Identification, Assessment and Collection of Anti-dumping
Duty on Dumped Articles and for Determination of Injury) Rules, 1995 (hereinafter referred
to as the Rules) framed thereunder form the legal basis for anti-dumping investigations and
for the levy of anti-dumping duties. These are in consonance with the WTO Agreement on
anti-dumping measures. These rules form the legislative framework for all matters relating to
dumping of products, which include the substantive rules, rules relating to practice,procedure, regulatory mechanism and administration.
3.2 Substantive Rules
Dumping19 means export of goods by one country/territory to the market of another
country/territory at a price lower than the normal value. If the export price is lower than the
normal value, it constitutes dumping. Thus, there are two fundamental parameters used for
determination of dumping, namely, the normal value and the export price. Both these
elements have to be compared at the same level of trade, generally at ex-factory level, for
assessment of dumping.
Normal value is the comparable price at which the goods under complaint are sold, in the
ordinary course of trade, in the domestic market of the exporting country. If the normal value
can not be determined by means of the domestic sales, the following two alternative methods
may be employed to determine the normal value:
Comparable representative export price to an appropriate third country.
19Dumping means export of goods by one country/territory to the market of another country/territory at a
price lower than the normal value.
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Constructed normal value, i.e. the cost of production in the country of origin with
reasonable addition for administrative, selling and general costs and reasonable
profits.20
The export price of the goods allegedly dumped into India means the price at which it is
exported to India.21 It is generally the CIF value minus the adjustments on account of ocean
freight, insurance, commission, etc. so as to arrive at the value at ex-factory level. The
margin of dumping is the difference between the normal value and the export price of the
goods under complaint.22 It is generally expressed as a percentage of the export price.
Domestic industry means the domestic producers as a whole engaged in the manufacture of
die like article and any activity connected therewith or those whose collective output of the
said article constitutes a major proportion of the total domestic production of that article
except when such producers are related to the exporters or importers of the alleged dumped
article or are themselves importers thereof in which case such producers may be deemed not
to form part of domestic industry.23
Like article means an article which is identical or alike in all respects to the article under
investigation for being dumped in India or in the absence of such article, another article
which although not alike in all respects, has characteristics closely resembling those of the
articles under investigations.24
In regard to injury to the domestic industry, the industry must be able to show that dumped
imports are causing or are threatening to cause material injury to the domestic industry.25
Material retardation to the establishment of an industry is also regarded as injury. The
material injury or threat thereof cannot be based on mere allegation, statement or conjecture.
Sufficient evidence must be provided to support die contention of material injury. An anti-
dumping measure may not be imposed unless it is determined, pursuant to an investigation
conducted in conformity with the procedural requirements, that:
20Explanation (c) to Section 9-A (1)
21Explanation (b) to Section 9-A (1)
22Explanation (a) to Section 9-A (1)
23Rule 2 (b)
24Rule 2 (d)
25Black`s Law Dictionary, 518 ( 7
thEdn,, West Publishing Co.)
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1. There is existence ofdumped imports;
2. There is material injury to a domestic industry; and
3. There is a causal linkbetween the dumped imports and the injury.26
The basic requirement for determination of injury is that there is an objective examination,
based on positive evidence of the volume and price effects of dumped imports and the
consequent impact of dumped imports on the domestic industry such as decline in sales,
selling price, market shares, profits, production etc. The establishment of the causal link
between the dumping and injury to the domestic industry is a sine qua non for imposition of
anti-dumping duty. The causal link is generally explained in terms of volume and price
effects of dumping. The volume effect of dumping relates to the market share of the domestic
industry vis--vis the dumped imports from the subject country while with regard to the price
effect, it has to be considered whether there has been a significant price under cutting by the
dumped imports as compared with the price of the like product in India, or whether the effect
of such imports is otherwise to depress prices to a significant degree or prevent price increase
which otherwise would have occurred to a significant degree.
The relief to the domestic industry against dumping of goods from a particular country is in
the form of anti-dumping duty imposed against that country, which could go up to the
dumping margin. Such duties are exporter specific and country specific. Under the WTO
arrangement, the national authorities can impose duties up to the margin of dumping i.e. the
difference between the normal value and the export price. The Indian law also provides that
the anti-dumping duty to be recommended/levied shall not exceed the dumping margin. An
anti-dumping duty imposed under the Act unless revoked earlier remains in force for 5 years
from the date of imposition. The Designated Authority is empowered to review the need for
the continued imposition of the anti-dumping duty, from time to time. Such a review can be
done suo motu or on the basis of request received from an interested party in view of the
changed circumstances.27
Anti-dumping duty is a source-specific duty i.e. imposed only against dumped imports Anti-
dumping duty is imposed on a non-discriminatory basis, applicable to all imports of such
26Supra note 8
27Rule 23 (1)
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articles from whatever sources found dumped and causing injury to domestic industry except
in the cases from those sources from which price undertaking has been accepted. 28 The WTO
Agreement as well as the Indian law provides that the injured domestic industry is permitted
to file for relief under the anti-dumping as well as countervailing duties. However, no article
shall be subjected to both countervailing and anti-dumping duties to compensate for the same
situation of dumping or export subsidization.
3.3 Practice and Procedure
One objective of the procedural requirements is to ensure transparency of proceedings, a full
opportunity for parties to defend their interests, and adequate explanations by investigating
authorities of their determinations. The extensive and detailed procedural requirements
relating to investigations focus on the sufficiency of petitions to ensure that merit less
investigations are not initiated, on the establishment of time periods for the completion of
investigations, and on the provision of access to information to all interested parties, along
with reasonable opportunities to present their views and arguments. Additional procedural
requirements relate to the offering, acceptance, and administration of price undertakings by
exporters in lieu of the imposition of anti-dumping measures. The Rules also provide for the
timing of the imposition of anti-dumping duties, the duration of such duties, and obliges
Designated Authority to periodically review the continuing need for anti-dumping duties and
price undertakings. It is also provided that India may, at its discretion, take anti-dumping
actions on behalf of and at the request of a third country, which is a member of the World
Trade Organization.29
The anti-dumping proceedings are initiated based on an application made by or on behalf of
the concerned domestic industry to the Designated Authority in the Department of Commerce
for an investigation into alleged dumping of a product into India. Under the Rules a valid
application can be made only by those petitioners/domestic producers who expressly support
the application, and account for more than 25% of total domestic production of the like article
in question.30 The application is deemed to have been made by or on behalf of the domestic
industry, if it is supported by those domestic producers whose collective output constitutes
more than fifty- percent of the total production of the like article produced by that portion of
28Rule 19
29Rule 24
30Rule 5 (2)
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the domestic industry expressing either support for or opposition as the case may be, to the
application.31 However, such producers may exclude those who are related to die exporters or
importers of the alleged dumped article or are themselves importers thereof. In other words, a
domestic producer who is related to the exporter or importer of die dumped article or is
himself an importer thereof may not be treated as part of the domestic industry even if he
files or supports an anti-dumping petition.
The interested parties to an anti-dumping investigation include:
1. The domestic industry on whose complaint the proceedings are initiated;
2. The exporters or the foreign producers of the like articles subject to investigation;
3. The importers of the same article allegedly dumped into India;
4. The Government of the exporting country/countries.
5. The trade or business associations of the domestic producers/importers/user industries of
the dumped product.32
As a rule, the Designated Authority initiates the proceedings for anti-dumping action on the
basis of a petition received from the domestic industry alleging dumping of certain goods and
the injury caused to it by such dumping. However, Rule 5(4) provides for suo motu initiation
of anti-dumping proceedings by the Designated Authority on the basis of information
received from the Collector of Customs appointed under the Customs Act, 1962 or from any
other source. In such circumstances, the Authority initiates the antidumping investigation on
its own without any complaint/petition filed in this regard provided the Authority is satisfied
that sufficient evidence exists as to the existence of dumping, injury and causal link between
the dumped imports and the alleged injury. After initiation of the suo motu investigation the
same procedure, as the one based on a petition as mentioned in the Rules, is followed.
The remedy against dumping is not always in the form of anti-dumping duty. The
investigation may be terminated or suspended after the preliminary findings if the exporter
concerned furnishes an undertaking to revise his price to remove the dumping or the injurious
31Explanation to Rule 5 (3)
32Rule 2 (c)
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effect of dumping as the case may be. No anti-dumping duty is recommended on such
exporters from whom price undertaking has been accepted.33
An interim relief in the form of a provisional anti-dumping duty, pending the finalization of
investigation proceedings, can also be provided to the affected domestic industry. Such
provisional duty not exceeding the margin of dumping may be imposed by the Central
Government on the basis of the preliminary finding recorded by the Designated Authority.
The provisional duty can be imposed only after the expiry of 60 days from the date of
initiation of investigation and will remain in force only for a period not exceeding 6 months,
extendable to 9 months under certain circumstances.34 If the final duty levied is less than the
provisional duty which has already been levied and collected, the differential amount already
collected as provisional duty shall be refunded. If the final duty imposed is more than the
provisional duty already imposed and collected, the difference shall not be collected. If theprovisional duty is withdrawn, based on the final findings of the Designated Authority, than
the provisional duty already collected shall be refunded.35
Anti-dumping duty can also be levied on a retrospective basis in case: there is a history of
dumping which caused injury or that the importer was, or should have been aware that the
exporter practices dumping and that such dumping would cause injury; and the injury caused
by massive dumping of an article imported in a relatively short time which in the light of the
timing and the volume of imported article dumped and other circumstances is likely to
seriously undermine the remedial effect of the antidumping duty liable to be levied. However,
the anti-dumping duty cannot be levied retrospectively beyond 90 days from the date of issue
of notification imposing duty.36
3.4 Regulatory Framework
Anti-dumping, anti-subsidies & countervailing measures in India are administered by the
Directorate General of Anti-dumping and Allied Duties (DGAD) functioning in the
Department of Commerce in the Ministry of Commerce and Industry and the same is headed
by the Designated Authority. The Central Government may, by notification in the Official
Gazette, appoint a person not below the rank of a Joint Secretary to the Government of India
33Rule 15
34Rule 13
35Rule 21
36Section 9A (3)
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or such other person as that Government may think fit as the Designated Authority. 37 In
India, there is a single authority DGAD designated to initiate necessary action for
investigations and subsequent imposition of anti-dumping duties.38 The Designated Authority
is a quasi-judicial authority notified under the Customs Act, 1962. A senior level Joint
Secretary and Director, four investigating officers and four costing officers assist the DGAD.
Besides, there is a section under the DGAD headed by the Section-Officer to deal with the
monitoring and coordination of die functioning of the DGAD.
The Designated Authoritys function, however, is only to conduct die anti-dumping/anti
subsidy & countervailing duty investigation and make recommendation to the Government
for imposition of anti-dumping or anti subsidy measures. Such duty is finally imposed/levied
by a Notification of the Ministry of Finance. Thus, while the Department of Commerce
recommends the Anti-dumping duty, it is the Ministry of Finance, which levies such duty.
The law provides that an order of determination of existence, degree and effect of dumping is
appealable before the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) a
judicial tribunal. It reviews final measures and is independent of administrative authorities.
This is consistent with the WTO provision of independent tribunals for appeal against final
determination and reviews. No appeal will lie against the preliminary findings of the
Authority and the provisional duty imposed on the basis thereof. The appeal to the CEGAT
should be filed within 90 days
4. Investigation process followed by the Ministry of Commerce in Antidumping
Petitions
4.1 Legal Procedures
Any interested party may file an antidumping petition with the Ministry of Commerce 39 on
behalf of the domestic industry.40After examining the accuracy and adequacy of the evidence
37 Rule 3 (1)38
Though the WTO Agreement does not require the authorities for dumping and injury determination to be
distinct and separate, national practices in this respect van`. Generally, while the developing countries have
single authority to deal with both dumping and injury, developed countries like the US, Canada and the EU
have elaborate anti-dumping machinery; Supra note 4 at 64.39
Although the Central Government is officially charged with administering Indias antidumping law, currentregulations give the Central Government the authority to designate this responsibility to a specific governmentofficial. Currently, the Ministry of Commerce is charged with administering Indias antidumping law. The taskis specifically handled by the Directorate General of Antidumping and Allied Duties within the Ministry ofCommerce.
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in the petition, the Ministry undertakes an investigation into whether foreign products are
imported at a price lower than the normal value, and whether those imports are causing or
threatening to cause material injury to the domestic industry. In special circumstance, the
Ministry may self-initiate an investigation without having received an antidumping petition if
it has sufficient evidence of dumping, injury and a causal link between the two. The Central
Government imposes antidumping duties on the basis of the findings by the Ministry.
To determine whether the foreign products are imported at a price lower than normal value,
the Ministry calculates the dumping margin as the difference between a weighted average
normal value and a weighted average export price to India, or the difference between
individual normal values and individual export prices on a transaction-to-transaction basis
over the period of investigation. In special circumstances, the Ministry may compare a
weighted average normal value to prices of individual export transactions to India. The
Ministry determines the normal value using one of four methods. Whenever possible, the
normal value is calculated using the sales price in the exporting countrys home market.
However, if there is an insufficient quantity of sales in the exporting countrys domestic
market, the weighted average sales price is below the weighted average unit cost, or the
volume of sales below unit cost during the investigation period is more than 20 percent of the
total sales being used to determine normal value, the Ministry calculates the normal value
using one of the two alternative methods.41
The Ministry may calculate a constructed normal value using the exporting countrys cost
of production plus a reasonable amount for selling, general and administrative costs and
profits, or use the prices of sales from the exporting country to a selected third country. For
non-market economy countries, the Ministry determines the normal value using either the
sales price or constructed value in a selected market economy country, or the price from a
selected market economy country to a selected third country which may include India.42
40An antidumping investigation may be initiated if domestic producers who support the petition account for at
least 25 percent of total domestic production of the like product and have collective output of more than 50percent of the total production of such products produced by those producers who either support or oppose thepetition.41
The unit cost is defined as production costs plus selling, general and administrative costs.42
Non-market economy countries include Albania, Armenia, Azerbaijan, Belarus, Peoples Republic of China,Georgia, Kazakstan, North Korea, Kyrghyzstan, Moldova, Mongolia, Russia, Tajikistan, Turkmenistan,Ukraine, Uzbekistan and Vietnam. Due to the changing economic conditions in Russia and in the PeoplesRepublic of China, if there is sufficient evidence that market conditions prevail for any firm under investigation,normal values for these firms are calculated on the basis of the principles set out for market economies.
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If none of these methods are possible, the Ministry may calculate the normal value for a non-
market economy using the adjusted sales price of the like product in India, or using any other
reasonable basis.43
The Ministry generally calculates a separate antidumping margin for each supplier. However,
if any interested party fails to provide authentic, necessary information within the time limit,
or it is difficult to verify the provided information, the Ministry may make its determination
on the basis of facts available, which includes the information submitted in the petition or
submitted by interested parties. When the number of suppliers or products involved in the
investigation is too large, the Ministry may select a sample of suppliers or products for the
investigation using statistical sampling methods based on information available at the time of
selection or by choosing those suppliers or products with the largest import volumes. The
Ministry calculates the dumping margin for those firms not in the sample using a weighted
average of the dumping margins calculated for those suppliers selected for the investigation.
When determining whether the foreign imports are causing or threatening to cause material
injury to the domestic industry, or materially retarding the establishment of an industry, the
Ministry considers the volume of dumped imports, the effect of the dumped imports on prices
of the like product in Indias market, and the consequent effect of the dumped imports on
domestic producers. To examine the impact of the dumped imports on domestic industry, the
Ministry evaluates the magnitude of the margin of dumping and all relevant economic factors
and indices including natural and potential decline in sales, profits, output, market share,
productivity, return on investments, inventories, employments, wages, and growth in the
domestic industry. The Ministry also examines the other factors to ensure that the injury
caused by these other factors is not attributed to the dumped imports. These factors include
the volume of goods imported at a normal value, contraction in demand or changes in the
pattern of consumption, competition between foreign and domestic producers, developments
in technology, and the export performance and productivity of domestic producers. Following
its preliminary investigation, the Ministry makes a preliminary determination on dumping
and injury and issues a public notice. The Central Government then imposes a provisional
duty not exceeding the margin of dumping on the basis of preliminary determination by the
Ministry. Provisional antidumping duties usually remain in force for a period of no more than
six month; in some cases, they may be extended by the Central Government for up to nine
43Like products are defined as goods that are identical or alike in all respects to the goods under investigation
or which have characteristics closely resembling those goods.
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months. If an exporter promises to revise its price immediately and stop exporting at the
dumped prices, the Ministry may suspend or terminate the antidumping investigation
without applying provisional antidumping measures. The Ministry must also inform the
Central Government of the acceptance of an undertaking and issue a public notice. If the
exporter fails to uphold the undertaking agreement, the Ministry must inform the Central
Government of such violation and recommend imposition of provisional duties. Following a
provisional affirmative determination, the Ministry continues its investigation on the margin
of dumping and injury. Before giving its final findings, the Ministry informs all interested
parties of the essential facts under consideration which will likely form the basis of its
decision. Within one year from the date of initiation of the investigation, or in exceptional
circumstances eighteen months, the Ministry must make a final determination regarding
injury and the value of antidumping duties, submit its final findings to the Central
Government, and issue a public notice on its finding. Within three months of the date of
publication of final determination by the Ministry, the Central Government may publish a
notification in the Official Gazette imposing antidumping duties not exceeding the margin of
dumping determined by the Ministry.
The antidumping duty or undertaking agreement is usually lifted after five years unless
revoked earlier. Upon request received from interested parties or on its own initiative, the
Ministry periodically reviews the need for continuance of antidumping duty or undertaking
and determines individual dumping margins for new suppliers in the exporting country who
did not export the product to India during the original period of investigation. If it is
concluded in a review that the removal of the antidumping duties would be likely to result in
the continuation or recurrence of dumping and injury, the Central Government may extend
the period of imposition of antidumping duty for a further period of five years.
An appeal against the order of antidumping determination or review can be filed with the
Appellate Tribunal within ninety days. Every appeal must be heard by a Special Bench
consisting of the President of the Appellate Tribunal and no less than two other members,
which must include one judicial member and one technical member. A Bench can exercise
and discharge the powers and functions of the Appellate Tribunal. If the members of the
Bench differ in opinion of any issue, the decision is made according to the opinion of the
majority; if the members are equally divided, the President can either give an opinion himself
or refer the case to one or more of the other members of the Appellate Tribunal and the
decision is based on the opinion of the majority of those members.
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III. Interface between Anti-Dumping Law and Competition Law
1. Competition Act, 2002 (India): Brief Introduction
The Preamble of the Competition Act, 2002 provides that :
An Act to provide, keeping in view of the economic development of the country, for
the establishment of a Commission to prevent practices having adverse effect on
competition, to promote and sustain competition in markets, to protect the interests of
consumers and to ensure freedom of trade carried on by other participants in markets,
in India, and for matters connected therewith or incidental thereto.
The Act provides a very wide mandate for the Competition Commission of India to enforce.
Apart from it rather broad objective, the Act contains provisions which have rather become
standard in the competition jurisdictions all across the globe. These are the provisions relating
to anti-competitive agreements, abuse of dominant position and regulation of combinations.
In the respect of anti-dumping law the provisions relating to abuse of dominant position and
anti-competitive agreements assume importance. In respect of dominant position it is
pertinent to note that whereas dominance is not frowned upon by the Competition Act, 2002
abuse of dominance is certainly frowned upon by the legislation. Another significant feature
in the context of these provisions of the Act is that anti-co mpetitive agreements and abuse of
dominance are to be prohibited by the orders of the Commission whereas the mergers are to
be regulated by the orders of the e of Commission. This difference in law is of immense
significance. Whereas the former two prevent enhancement of consumer welfare the latter
drives economic growth. Hence, the distinction has been maintained.
1.1 Section 4 of Competition Act
In respect of abuse of dominant position, Section 4(2) enlists the circumstances when an
enterprise shall be considered to be abusing its dominant position. It states:
(2) There shall be an abuse of dominant position under sub-section (1), if an enterprise,-
(a) directly or indirectly, imposes unfair or discriminatory-
(i) condition in purchase or sale of goods or service; or
(ii) price in purchase or sale (including predatory price) of goods or service; or
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(b) limits or restricts-
(i) production of goods or provision of services or market therefor; or
(ii) technical or scientific development relating to goods or services to the prejudice of
consumers; or
(c) indulges in practice or practices resulting in denial of market access; or
(d) makes conclusion of contracts subject to acceptance by other parties of supplementary
obligations which, by their nature or according to commercial usage, have no connection with
the subject of such contracts; or
(e) uses its dominant position in one relevant market to enter into, or protect, other relevant
market.
1.2 Abuse of Dominant Position
One of the most vigorous users of the predominant international trade defence measure, i.e.
antidumping duty, India has an unenviable and unfortunate reputation for extreme
protectionism being afforded to its domestic industries through the use of anti-dumping
investigations and duties. Anti-dumping as an international trade defence measure is by
definition protectionist of the Indian market and is based on the following three touchstones:
(i) that there is a significant difference between the normal value of a commodity or product
and the price at which it is exported to India;
(ii) that the difference between the normal value and the export price to India greater than
certain tolerances is per se evidence of dumping;
(iii) if this dumping causes or is likely to cause injury to the domestic industry, antidumping
duties would be levied.
The effect of anti-dumping duty usually renders the export of the product to India
economically unviable. Now, the touchstone of competition law is to avoid an appreciable
adverse effect on a relevant market. Quite naturally, the availability of competing products,
whatever their source, provides wider and more economic options to consumers in the
relevant market for a product.
Let us consider a practical example. Two dominant Indian manufacturers of a product jointly
have in excess of half of the domestic production of the product. Under the rules, a petition
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for imposition of antidumping duties can be filed by the two as being representative of the
domestic industry in India. Let us assume that a few smaller domestic players and exports to
India by foreign entities constitute the rest of the supply of the product to the market in India.
There is no substantive ideological divergence between anti-dumping law and competition
law on the acceptability of the dominant nature of these petitioners. Nothing in competition
law disapproves dominance itself as long as it is good. But in case the anti-dumping
investigation takes place. This investigation will determine as to whether the users of the
product manufactured by the two dominant companies in the market will be left with a
reduced choice and constrain them to purchase willy-nilly from the two dominant companies.
The nature of anti-dumping proceedings, the costing method usually resorted to by the
petitioners, and the reluctance of foreign exporters to disclose sensitive costing information
most often means that establishing a proper normal value and that there is no difference
between the normal value and the export price to India is not possible. The result? An
overwhelming majority of the recommendations of the antidumping authority are to impose
anti-dumping duties, and thus, knock exporters out of the Indian market. Repeatedly, hapless
user-consumers of the products have vigorously protested against the imposition of anti-
dumping duties on the basis that the same constitutes handing over complete control of the
market to a few big domestic industries who, according to them, then proceed to carefully
control production volumes, manipulate market prices, refuse to deal, and indulge in whole
slew of practices that are blatantly anti-competitive under the competition law. Added to thisis the provision under the anti-dumping rules for an exporter to India to provide an
undertaking to the authority that it will not sell the product to India at anything under a
certain price-surely a prime instance of state-sponsored price-fixing. The Competition
Commission should track prices and trends for dominant domestic producers after they have
succeeded in obtaining anti-dumping duties on foreign exports. And of course, the suffering
user-consumers now have a potentially powerful ally in the New Competition Regime, to
whom they are free to complain. But most importantly in the case of our two dominant
manufactures and there anti-dumping proceedings several questions arise. (1) Shoulddominant enterprises be permitted to use the antidumping mechanism to create a pedestal
from which to unleash abuses of their dominance? (2) And last but not least, would not some
aggrieved consumers be entitled to file a complaint before the Competition Commission that
an order imposing antidumping duties has resulted in abuses of dominant position and that
the commission ought to take steps to redress the market balance?
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2. Competition law (antitrust) and antidumping law Areas of Conflicts and Overlaps
2.1 Conflict between anti dumping law and competition law
The very conflict that both the laws pose to have is in terms of goals which the respective
laws seek to achieve on one hand the goal of competition law is to promote competition, it
attaches sanctions to only such price discrimination which adversely affect competition in
markets; even if that implies that some competitors may be harmed in the process. On the
other hand antidumping law while addressing price discrimination does not take into
account competition concerns and its stated goal is to protect domestic industry and in fact
ends up as an instrument to protect competitors. Thus it seems to be in direct conflict with
Competition Law.
Competition and antidumping laws were initially thought to be complementing each other.
Over the years however, this position has changed. First, competition laws have widened
their reach to include conduct of firms who are outside the jurisdiction, which affect the
national market. Second competition law has evolved much faster than anti-dumping laws.
From concepts of law to the economic analysis - there has been a sea change in the concepts
and their application (Chicago School Knoff) in the realm of competition. By contrast Anti-
dumping laws have evolved within the shackles of the WTO Agreement and have become a
protectionist tool in several jurisdictions, with the result that in some extreme instances it
impairs competition rather than promotes it. Indeed now the ultimate objectives are quite
different with competition law aimed at protecting consumers interests and antidumping law
designed to safeguard firms businesses. Still, the two sets of laws were originally meant to
complement each other, and they are intended to act upon the same market distortion.44
Some commentators have even argued that the two laws can sometimes work at cross
purposes as competition laws are aimed at curbing the market power of domestic producers,
whereas antidumping law attempts to use market power in order to shift rents away from
foreigners.45
Antidumping laws were initially enacted to address the situation ofinternational price predation and were considered as extension of competition laws.
However over the years the focus of antidumping law seems to have changed and
44 Ian Wooton and Maurizio Zanardi, Trade and Competition Policy: Antidumping versus Anti-Trust available at:
http://homepages.strath.ac.uk/~hbs03116/Research/Trade%20and%20Competition%20Policy%20Final.pdf45Cadot Oliver, Grether Jean-Maries and Melo de Jaime, Trade and Competition Policy: Where do we stand? Journal ofWorld Trade, Vol. 34, No. June, pp 1-20.
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antidumping laws as they exist today do not seem to be concerned with the issue of predatory
pricing. To this extent it can be said that antidumping law no longer addresses competition
related concerns and since it seems to attach sanctions to every instance of international price
discrimination which can be shown to cause injury to the domestic industry, it could very
well be in conflict with competition law.
While competition laws are primarily aimed at protecting and promoting competition in
markets, antidumping laws are aimed at remedying the injury to the domestic industry which
may arise due to dumping. It can be concluded that the modern antidumping laws of today in
essence provide for protection of competitors. While both competition and anti-dumping laws
originated with the same objective (e.g. the Antidumping law of 1916 in the USA which was
clearly meant to address competition concerns arising out of the practice of transnational
price predation) the objectives surrounding the use of antidumping laws have since evolved
and modern antidumping practice has come to actually facilitate the kind of unfair and anti-
competitive behaviour it was intended to prevent.46 Several authors have commented on the
divergence of antidumping laws from their original objectives.47 The evolution in its
objectives has resulted in a change in the way that antidumping laws are being used and has
consequently changed their ultimate effect on the market and on competitive conditions. For
example, while the objectives behind earlier antidumping laws ensured that healthy price
competition between corporations was encouraged as long as predatory pricing was avoided,
today the mere presence of increasingly protectionist antidumping laws has resulted in a
change in the economic behaviour of firm48 wherein instead of profit maximization through
healthy price competition, firms choose to seek protection or undertake steps that are more
likely to lead to the imposition of an antidumping duty on imports. On the other hand,
competition laws continue to encourage price competition within firms in a market as long as
it does not result in predatory pricing, with a view to maximizing consumer welfare and
protecting the conditions of competition. In other words, the change in the objectives for
which antidumping and competition laws are being used today has also in some instances
changed their interaction from complementary to conflicting.
46N Gregory Mankiw and Phillip L Swagel, Antidumping: The Third Rail of Trade Policy, Foreign Affairs, July/August2005, available online: http://www.foreignaffairs.org/20050701faessay84408-p0/n-gregory-mankiw-phillip-l-
swagel/antidumping-the third-rail-of-trade-policy.html47 For instance, Shanker Singham, A General Theory of Trade and Competition - Trade Liberalisation and CompetitiveMarkets, Cameron May, 2007.48
Ibid.
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2.2 Overlaps
There is also a tendency to confuse competition law and antidumping law and to regard them
as if they are the same.49 No doubt, the two concepts interrelate and also often do interface.50
However, they do differ, both practically and conceptually. While competition law is
concerned with ensuring that the activities of business undertakings do not damage the
competitive process, antidumping laws target allegedly unfair trading practices of foreign
companies accused of exporting (or dumping) products into other countries at prices below
the cost of production, or below the price charged in domestic or third markets.51 As a
commentator remarked, while competition and antidumping laws come from the same family
tree, the two diverge widely. In the modern era, while competition law concentrated on the
pursuit of economic efficiency, addressing problems associated with concentrated economic
power, antidumping law was intended to create a politically popular form of contingent
protection that bears little, if any, connection to the prevention of monopoly. The political
constituency for antidumping law is not an antimonopoly constituency, but one for the
protection of industries facing weak markets or long term decline.52 As has also been argued,
the unfairness to which antidumping law is directed prices that are too low is generally
seen in competition law as evidence of the proper working of the competitive process, and as
a phenomenon beneficial to the consumers whom competition law fundamentally protects.53
More succinctly, competition law favours a dynamic, ever changing market of robust
competitors; antidumping favours a more static model of the market to protect investors and
workers from changes generated from abroad.54
Despite these underlying differences between competition and antidumping laws, there are
types of dumping which if they occur, could definitely be dealt with under the competition
laws because they have the characteristics of anticompetitive behaviour. These are
49When the then D.G. of the Bureau of Public Enterprise (BPE) was speaking about the intention of the BPE/NCP to work
towards the introduction of competition law in Nigeria, he justified it in terms of the need tp prevent Giant foreign
corporations dumping their projects on Nigerian market. In fact , he justified it on the need to protect indigenous
industries. See, Nigeria: Legal plans for competition law, Legal Brief Africa, Issue no.6, 9 December 200250
See Peter D. Ehrenhaft, Is Interface of Antidumping and Antitrust Laws Possible? (2002) The George Washington Intern
ational Law Review, vol. 34, No. 2, p. 363.51
See Claude Barfield, Antidumping Reform: Time to Go Back to Basics Barfield, (Oxford, Blackwells Publishing,2005), p. 71952 See AO Sykes (1998), Antidumping and Antitrust: What Problems Does Each Address?, in RZ Lawrence (ed.),Brookings Trade Forum: 1998 (Washington, DC: Brookings Institution) cited in Barfield, supra.53
Peter D. Ehrenhaft, supra54
Ibid.
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predatory dumping, and strategic dumping,55 both variants of market power dumping. Thus,
although competition laws and antidumping laws serve historically different functions and
address different constituencies, in some aspects they do intermingle. There have therefore
been calls in some quarters for antidumping laws to be replaced altogether by competition
laws and measures,56
though these calls are roundly rejected in some quarters too.57
It should
also be noted here that sometimes, antidumping measures could actually, though
unintendedly, be employed in a way that they would go contrary to the rules of competition.
It is possible for inefficient local companies to respond to legitimate foreign competition, not
by increasing the efficiency of their operations, but by persuading their governments to
restrict foreign competition. The weapon of choice here tends to be antidumping law since
these companies, having powerful connections, are able to make their governments utilise the
authority offered by the WTO Antidumping Agreement of 1994 to impose arbitrary and
punitive tariff measures on the threatening goods and services, and that would effectively
scuttle the foreign competition. This is an unwelcome irony that individuals and interest
groups who are committed to competition should watch out for and guard against.
Issues regarding the areas of overlap with Specific Reference to India
(i) Predatory Pricing
By definition, antidumping law does not seem to be concerned with the issue of price
discrimination taking the form of predatory pricing. However inherent in the definition of
dumping (export of a product at a price less than its normal value is the possibility that
antidumping law may end up capturing the instances of international price predation. To the
extent that antidumping rules are helpful in capturing the .instances of predatory pricing, it
can be said that there exists a clear overlap between antidumping and competition law. It is
important therefore to analyze whether there exists any parallel between the way predatory
pricing is defined and addressed under competition law with the definition of dumping
(which may also capture instances of predatory pricing) as under antidumping law.
55For a description of the different types of dumping, see Barfield, supra.
56Ibid.
57 As the Clinton administration stated in a br ief to a WTO trade and competition policy working group: If the
antidumping laws were eliminated in favour of competition laws or modified to be consistent with competition
principles, the problems which the antidumping rules seek to remedy would go unaddressed, World Trade Organisation
(1998),Communication from the Uniyted States to the Working Group on the interaction between Trade and Competition,
WT/WGTCP/W/88 (Geneva, Switzerland,28 August), cited in Bartfield, supra
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(a) Predatory Pricing and Dumping- The Essential Differences
Under competition law predatory pricing is understood as a deliberate strategy, adopted
usually by a dominant firm, to drive competitors out of the market by setting very low prices
or selling below the firms incremental costs of producing the output (often equated for
practical purposes with average variable costs) with intent to eliminate competition or
eliminate competitors. Once the predator has successfully driven out existing competitors and
deterred entry of new firms, it can raise prices and earn higher profits.58 The definition of
predatory price under competition law therefore has three constituent elements, all of which
must necessarily be satisfied before any sanction can be imposed: (i) the firm alleged to b
selling at predatory price should be in a dominant position in the relevant market; (ii) the
sale must be at prices below a certain measure of cost (usually average variable cost); and
(iii) it should be with the intent to reduce competition or eliminate competitors.
Dumping is a type of international price discrimination, wherein an exporter sells an article
at prices lower than those charged to domestic buyers, taking into account the conditions
and terms of sale. As per the definition of dumping as contained in the WTO Antidumping
Agreement (as well as the national antidumping legislations in the subject countries), the
limited requirement for dumping to be condemned and sanctions to be attached against is
that, the export price of the product alleged to be dumped should be less than the price at
which it is sold in the domestic market of the exporting country (normal value) and that it
should cause material injury to the domestic industry for the like product in the importing
country. Thus antidumping law is neither concerned with the requirement of dominance nor
intention, unlike competition law wherein both these factors are as important conditions as
the instance of price discrimination.
(b) Implication of Predatory Pricing under Competition Law:
Under competition law predatory pricing is understood as a deliberate strategy, adopted by
a dominant firm, with an intent to drive competitors out of the market by setting very low
prices or selling below the firms incremental costs of producing the output (often equated for
practical purposes with average variable costs) with a view to eliminate competition or
eliminate competitors. Once the predator has successfully driven out existing competitors and
deterred entry of new firms, it can raise prices and earn higher profits.59 In India, the
58OECD glossary of terms.
59OECD glossary of terms.
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Competition Act, 2002 defines predatory pricing as the sale of goods or provision of
services, at a price which is below the cost, as may be determined by regulations, 60 of
production of the goods or provision of services, with a view to reduce competition or
eliminate the competitors.61 The definition of predatory pricing is defined in most
jurisdictions is similar and mirror the definition under the Competition Act, 2002, i.e. sale of
goods or provision of services at a price below the average variable cost, with a view to
reduce competition or eliminate competitors. The definition of predatory pricing under
competition law therefore envisages the fulfillment of three conditions before any sanctions
can be imposed against it:
First, the enterprise indulging in such a practice should be in a position of dominance;
Thereafter, the sale of goods or provision of services shall be at a price below a relevant
measure of cost (usually average variable cost of production of goods or provision of
services);
And finally the enterprise alleged to be indulging in predatory pricing shall do so with the
intent to reduce competition or eliminate competitors.
(c) Implication of Predatory Pricing as under Antidumping Law:
Antidumping law does not specifically address the issue of predatory pricing. Instead what
antidumping law seeks to address is the issue of price discrimination between two different
geographic markets, evidenced by a higher normal value as compared with export price.
Antidumping law is therefore concerned only about the price at which the product alleged to
be dumped is sold in the two markets (domestic market of the exporting country and export
market) and not directly about the cost of production of the product or intent behind the
discrimination. Thus, it is reasonable to conclude that antidumping law, as it is applied today
does not directly concern itself with predatory pricing. However, notwithstanding the
absence of any express provision to capture the instances of predatory pricing; antidumping
laws may to the extent that the normal value is below the total cost of production it is not
in the ordinary course of trade and thus dumped captures the instances of predatory
pricing. It is in this limited situation when the export price is lower than the normal value
and at the same time also lower than t