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Updated: February 4, 2014 09:34 IST

Lucid exposition of a recent law

S. Chakravarthy
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COMPETITION LAW IN INDIA — Policy, Issues and Developments
COMPETITION LAW IN INDIA — Policy, Issues and Developments

The author has done competition law practitioners a priceless favour. Rightly christened Competition Law in India — Policy, Issues and Developments, this book which is his third edition, constitutes a seminal delineation of the law as it stands today after its amendments in 2007 and 2009.

Competition Law of India (Act, for brief) stands on 4 pillars, Anti-competitive agreements, Abuse of dominance, Regulation of combinations and Competition advocacy. The first three are traced in a Chapter each and the fourth in the Introductory and Overview Chapter by the author. In dealing with each pillar, Ramappa has made germane references to the observations and recommendations of the High Level Committee on Competition Policy and Law, thereby homing in on the conclusion that the Committee’s report was the precursor to the birth of the new law.

The Act supplants the now repealed Monopolies and Restrictive Trade Practices Act, 1969 (MRTP ACT). The repealed law was based on the then prevailing economic paradigm Licensing, Planning and Government Control. The new law is rooted on the present milieu paradigm liberalisation, privatisation and globalisation. It is common knowledge that under the old paradigm regime, if a company having assets beyond a particular limit desired to grow, it had to secure the approval of the Government under the MRTP Act in addition to all the other extant approvals. In a manner of speaking MRTP Act was a fifth wheel to the coach! The new law, namely, the Act, steers clear of such restrictions.

The raison de etre for the new law was not just the paradigmatic shift in economic policy thinking but also the fact that India had become a signatory of the WTO and its numerous agreements and that, consequently, there arose the concern that many anti-competitive practices might surface during the operation and implementation of WTO agreements. How this concern, which has panned out over the last almost two decades of WTO, may be understood by the damage caused by International cartels in the domestic market. The Act has taken this concern into account by incorporating provisions relating to extra-territorial jurisdiction of the Competition watchdog, namely, Competition Commission of India. The repealed MRTP Act too had a provision for extra territorial jurisdiction for the MRTP Commission but its wording was interpreted by the Supreme Court that nullified its operation. The provision in the new Act is worded keeping in mind the observations of the Supreme Court.

Ramappa has traced lucidly the relevance of WTO agreements in fixing the contours of the new law. Protection of the process of competition, a central object of the Act, has been according to him, impelled by a number of factors, the major ones being, inter alia, the obligations cast on India by the WTO agreements, viz. GATS, TRIPS etc. Furthermore, contends Ramappa, that the entry of large multinational companies into India consequent on India’s measures liberalizing trade, called for legislation specifically aimed at protecting the competitive process.

A feature worth mentioning is the innumerable case laws from competition regimes in the world quoted and discussed in the book. They are drawn from the U.S., EU, the U.K. and of course India (MRTP cases). The book describes some of the pernicious offences in detail like cartels, bid rigging, allocation of markets and limiting production/supply, which constitute per se violation of law. Such offences are presumed to have an appreciable adverse effect on competition. The author has distinguished the concepts of per se and rule of reason and their applicability to different offences of anti competition.

Dominance, its abuse, relevant market, joint ventures that would be exempt from the law, combinations (mergers, amalgamations, acquisitions etc), factors to be reckoned in determining appreciable adverse effect on competition, factors in determining relevant geographic market and relevant product market, factors in assessing dominant position and factors in determining whether a combination would have the effect of or is likely to have an appreciable adverse effect on competition have been well analysed with case laws in support.

Ramappa stresses that the Act being a fairly recent legislation is vital to the economic growth of the country and that for effective and therefore credible enforcement machinery, “more than ordinary care should be taken in ensuring a proper composition of the Commission”. He advises against too much emphasis on the formal qualifications of the persons to be appointed to the Commission. He counsels that “what is essential is the necessary analytical skills that will ensure the protection of the structure of a market so that competition is preserved, ultimately serving the interests of the consumers”.

Short of giving a clarion call for a National Competition Policy, Ramappa has supported the recommendations of a committee appointed by the Ministry of Corporate Affairs for framing the said policy. Quoting the committee’s report, he observes that the National Competition Policy should aim at laying down an overarching policy frame work for infusing competition principles in various policies, statutes and regulations and promoting a competitive market structure in the economy thereby striving to achieve maximum economy efficiency in various spheres and public welfare. Competition law implementation should be a pro-active and positive effort to build a competition culture in the economy.

Ramappa has made valuable suggestions for consideration in the areas of Telecommunications and Professional services. He has emphasised the need for Multidisciplinary Partnerships and for creating a strong investigative machinery supported by mutual assistance agreements with other countries for sharing information for fighting cartels. The appendix, bibliography, case index and end notes support the narrative in the book adequately. In a manner of speaking, in his book, Ramappa’s message for the Commission is protect competition not competitors. Ultimately, it is the interest of the citizens that is paramount not that of any section. Cicero, Roman orator and statesman (106-43 B.C) had said “The good of the people is the chief law”.

The Act is in place. Whether it serves the good of the people will depend on how the law is implemented and enforced. The book is a valuable addition to law books.

COMPETITION LAW IN INDIA — Policy, Issues and Developments: T. Ramappa; Oxford University Press, YMCA Library Building, 1 Jai Singh Road, New Delhi-110001. Rs. 750.

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