vinod dhall presentation
TRANSCRIPT
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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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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
+91- 9811322324