The document discusses India's transition from a "command-and-control" economy to a more liberalized market-based economy beginning in 1991. It also discusses the evolution of India's competition law and policy, including the passage of the new Competition Act in 2002 to replace the older Monopolies and Restrictive Trade Practices Act of 1969. However, certain key provisions of the 2002 Act relating to mergers and acquisitions oversight by the Competition Commission of India have yet to be notified due to concerns about the mandatory notification requirements and timelines. Determining market dominance is also a complex task for the new competition authority.
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The document discusses India's transition from a "command-and-control" economy to a more liberalized market-based economy beginning in 1991. It also discusses the evolution of India's competition law and policy, including the passage of the new Competition Act in 2002 to replace the older Monopolies and Restrictive Trade Practices Act of 1969. However, certain key provisions of the 2002 Act relating to mergers and acquisitions oversight by the Competition Commission of India have yet to be notified due to concerns about the mandatory notification requirements and timelines. Determining market dominance is also a complex task for the new competition authority.
The document discusses India's transition from a "command-and-control" economy to a more liberalized market-based economy beginning in 1991. It also discusses the evolution of India's competition law and policy, including the passage of the new Competition Act in 2002 to replace the older Monopolies and Restrictive Trade Practices Act of 1969. However, certain key provisions of the 2002 Act relating to mergers and acquisitions oversight by the Competition Commission of India have yet to be notified due to concerns about the mandatory notification requirements and timelines. Determining market dominance is also a complex task for the new competition authority.
Copyright:
Attribution Non-Commercial (BY-NC)
Available Formats
Download as DOCX, PDF, TXT or read online from Scribd
The document discusses India's transition from a "command-and-control" economy to a more liberalized market-based economy beginning in 1991. It also discusses the evolution of India's competition law and policy, including the passage of the new Competition Act in 2002 to replace the older Monopolies and Restrictive Trade Practices Act of 1969. However, certain key provisions of the 2002 Act relating to mergers and acquisitions oversight by the Competition Commission of India have yet to be notified due to concerns about the mandatory notification requirements and timelines. Determining market dominance is also a complex task for the new competition authority.
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Since attaining Independence in 1947, India, for the better part of half a century thereafter, adopted and followed policies comprising what are known as ³Command-and-Control´ laws, rules, regulations and executive orders. The competition law of India, namely, the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act, for brief) was one such. It was in 1991 that widespread economic reforms were undertaken and consequently the march from ³Command-and-Control´ economy to an economy based more on free market principles commenced its stride. As is true of many countries, economic liberalisation has taken root in India and the need for an effective competition regime has also been recognised. (For a history of evolution of competition policy in several countries, see Ewing, 2003).
In the context of the new economic policy paradigm, India has chosen to enact a new competition law called the Competition Act, 2002 (Act, for brief). The MRTP Act has metamorphosed into the new law, Competition Act, 2002. The new law is designed to repeal the extant MRTP Act. As of now, only a few provisions of the new law have been brought into force and the process of constituting the regulatory authority, namely, the Competition Commission of India under the new Act, is on. The remaining provisions of the new law will be brought into force in a phased manner. For the present, the outgoing law, MRTP Act, 1969 and the new law, Competition Act, 2002 are concurrently in force, though as mentioned above, only some provisions of the new law have been brought into force.
It has been over six years since the Competition Act 2002 came into force. But certain key provisions of the amended Competition Act, meant to give full power to the anti-monopoly watchdog, Competition Commission of India (CCI), are yet to be notified.
This is because the Government is yet to address concerns on mergers and acquisitions (M&As). There are many who are concerned about the way the Government is going about the implementation of the competition legislation.
Mandatory regime Industry¶s worries include the Act shifting to a mandatory notification regime from the earlier voluntary system. The mandatory regime requires companies that enter into M&As and meeting the asset/turnover thresholds specified in the Act seek prior approval from the CCI.
The earlier 90-day timeframe for clearance of M&As by CCI has been enhanced to 210 days, which is considered too long a time by industry. Another issue is whether sectoral regulators will only give inputs to the CCI on M&As in their sector or if they would have the final say.
The banking regulator, the Reserve Bank of India, wants to have the last word on banking sector M&As, especially as it may have to take swift decisions on compulsory M&As that might be required to prevent certain banks from failing. The RBI indicated that in such cases, it would not be pragmatic to comply with the CCI¶s clearance timeframe of 210 days. Industry is concerned about the mandatory notification regime as it widens the scope of the Competition Act. ³M&As that satisfy the asset/turnover threshold, even if they are not seen as very high in the current context, will need to be notified before the CCI,´ says Ms Vinati Kastia, who co-heads the competition law practice of the law firm AZB & Partners in Delhi.
The authorities have also not looked at the consequential changes required for a mandatory regime, she says. For instance, the takeover code has a timeline within which one has to complete the acquisition through public and private transactions.
CCI market determining dominance
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The message is loud yet clear that a well planned exhaustive competition compliance programme can be of great benefit to all enterprises irrespective of their size, area of operation, jurisdiction involved, nature of products supplied or services rendered and the same is essential for companies, its directors and the delegatee key corporate executives to avoid insurmountable hardships of monetary fines, civil imprisonment, beside loss of hard-earned reputation when the Competition Authorities, the media and others reveal the misdeeds in public. In the changed scenario, India do needs a fresh law for competition and a new regulatory authority, which under this policy is the ` c cc
#. The law will serve the purpose only if it is made independently, runs independently and is less expensive. Unhesitatingly, protecting consumers and ensuring freedom of businesses and to engage in economic conduct free from abuse by dominant firms will contribute to economic development but determining dominance of a firm or group is highly subjective and complex. It is more challenging for a new agency of an emerging economy of India. There are no hard and fast rules to determine dominance. Erroneous determination of dominance will discourage firms from pursuing pro-competitive conducts. Erroneous non-determination of dominance will allow them to perpetuate with exploitative and exclusionary conducts. The OFT in UK, therefore, seeks to optimise its level of intervention... recognising that there are costs associated with both inappropriate interventions and non-interventions. Thus, CCI needs to strike a balance to avoid both types of error.
