Competition Act in India

Topics: Competition law, Monopoly, Economics Pages: 42 (12476 words) Published: August 27, 2010
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Table of Contents

Introduction of Competition………………………………………………………………………2

Economic Phases in India…………………………………………………………………………4

The Competition Act, 2002……………………………………………………………………….8

Anti – Competition Agreements (Section 3)…………………………………………….10

Abuse of Dominance (Section 4)………………………………………………………...11

Regulations of Combinations (Section 6)………………………………………………..13

Competition Advocacy (Section 49)…………………………………………………….16

Competition Commission of India………………………………………………………………18

Case Studies……………………………………………………………………………………...26

Jet Airways & Air Sahara………………………………………………………………..30

European Union Competition Commission……………………………………………………...31

Background………………………………………………………………………………32

Cartels……………………………………………………………………………………33

Dominance & Monopoly………………………………………………………………...33

Mergers…………………………………………………………………………………..34

State Aid…………………………………………………………………………………35

Anti Trust………………………………………………………………………………..36

Other Case Studies………………………………………………………………………………37

Intel Anitrust Case……………………………………………………………………….37 Acelor Mittal Case……………………………………………………………………….38

Conclusion……………………………………………………………………………………….42

References……………………………………………………………………………………….44

Introduction

What is competition?

Competition is a process of economic rivalry between market players to attract customers. These market players can be multinational or domestic companies, wholesalers, and retailers. Market competition spurs firms to be more efficient, innovative, and responsive to consumer needs. Consumers enjoy more choices, lower prices, and better products and services. The economy as a whole benefits from greater productivity gains and more efficient resource allocation. Therefore, wherever appropriate, sectors are opened of the economy to market competition. Competition law and liberalization co-exists. Liberalization without competition law is like a car without an engine. The success of liberalization depends on presence of strong and effective competition policy to drive the economy and regulate the conduct of operators in the relevant markets.

Competition has innumerable advantages:
1.It encourages manufacturers and service providers to be more efficient. 2.Better response to the needs of their customers.
3.Encourages the firms to continuously innovate.
4.Encourages the firms to venture in new businesses.
5.Competition reduces the prices of the goods.
6.Competition increases quality with lower prices.
7.Competition has a deflationary effect on the economy.

In professional words: it optimizes the allocation of resources at the firm level and as a result throughout the national economy. Competition benefits the economy, as a whole, the consumers and other producers; those who are not fit to survive die out and cease to waste the rare resources of humanity. Competition laws aim to establish fairness of commercial conduct among entrepreneurs and competitors, which are the sources of said competition and innovation.

Free markets often fail or are unable or unwilling to provide goods, services, or competition. The highly competitive environment and the increase in the unfair practices adopted worldwide gave birth to a need for some mechanism which would keep a check on all individuals or entities involved in trade. India too realized this in the late 1960s and thus the MRTP act of 1969 was formulated. There were few modifications that were done in the years that followed and later on a new Act entirely replaced the MRTP Act, 1969. It was called the Competition Act, 2002.

Economic Phases in India

The economic phases which led to the evolution of MRTP act and the Competition Act can be divided into 2 phases:

1) Indian Economy between 1947 to 1990 and

2) Indian economy between 1990 to 2010

Indian Economy between 1947 to 1990
During independence the economy was...

References: Birth of MRTP Act, 1969
The first Indian competition law was enacted in 1969 and was christened the MONOPOLIES AND RESTRICTIVE TRADE PRACTICES ACT, 1969 (MRTP Act)
The need for a new law had its origin in Finance Minister’s, Mr. Yashwant Sinha budget speech in February, 1999:
“The MRTP Act has become obsolete in certain areas in the light of international economic developments relating to competition laws
The Competition Act, 2002
As against the aforesaid backdrop, the Competition Act, 2002 differs in many respects from the MRTP Act, 1969
Preamble of the Competition Act, 2002:
1. Eliminate anti-competitive practices.
Special Features of Competition Act, 2002:
1. No discrimination between private and public enterprises.
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