March 25, 2021

Scope of Competition Law in India

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Scope of Competition Law in India

Author: Parth Jaisinghani, Symbiosis Law School, Hyderabad

Introduction-

Statutory bodies are made by parliament and they are non-constitutional bodies. They are given the responsibility to pass the laws and take the decision on behalf of the government just like delegated legislation. Competition Commission of India is one such statutory body under the government of India. It must carry out the Competition Act, 2002 in the whole of the country. The main aim of this statutory body is to regulate and keep a check on competition in India.

How is competition law evolved in India:

After independence, India chooses the Nehruvian Socialism Model. It was a mixed economy model that is a mixture of both the market economy and socialist economies like the US and Russia. The great advantage of this model was that here both the private and public sectors co-exist. The main objective of the model was to make economic growth with social justice in hand to hand where the government plays a significant role. Here the government divided the sectors into two parts public and private. The public sector was governed by the government which included mines, electricity, and heavy industries while the private sector was given to the Industrial (Development and Regulation Act),1951. However, this plan was not able to fulfill all the objectives as government powers were increased in investment decisions of the private sector, which created a monopoly of government, and no private company was interested in investing in India. Later reforms were made to this in the 1980s and 1991.

In the year 1960, Mahalanobis Committee was appointed. This committee told to look over the industrial structure as by business giants housing were emerging due to “planned economy”. Keeping o note the government made the Monopolies Inquiry Commission in 1964 to check monopolistic practice in India. Later MRTP act was passed in the year 1970 to enhance government power in the market.

Later the Competition Commission of India was been established by the Indian Parliament in the year 2003 but it came into force in 2009. So the Competition Commission of India was being formed under Competition Act 2002 by Atal Vajpayee government who was the 15th Prime Minister of India. Later in the year 2007, there was an amendment made to the Competiton Act,2002. Due to this amendment, two statutory body was formed these were Competitive Appellant Tribunal and Competition Commission of India.

The role of the Competition Appellate Tribunal is to hear all the cases and dispose of them which are issued or passed against the Competition Commission of India. But the Competitive Appellate Tribunal was replaced by NCLAT in the year 2017. NCLAT stands for National Company Law Appellate Tribunal.

Role of Competition Law in the Indian Market

This role can be divided into three broad parts-

Help in free enterprise
No dominant player to misuse his power in the market and make an anti-competitive market.
Help in the growth of domestic industries- Competition Commission of India help domestic industries to grow so as they are not surpassed by giant industry in the name of globalization.

What was the need to enact competition law in India?

The main objective of this commission is to create a healthy competitive environment while engaging with all the key players of the market these are stakeholders, government, and industries so to run the Indian economy. Also, to remove malpractice from the market to help the medium and small level industries sustain, to safeguard consumer interest and ensure that there is no monopoly in the market and everyone has an equal right and to check that there is no restriction on companies to import and export.

Composition of Competition Commission of India-

Currently, it consists of one chairperson and two members, all being elected by the central government. It can maximum have three members excluding the chairperson and a minimum of two members. Right now, the chairperson of the Competition Commission of India is Mr. Ashok Kumar Gupta. The eligibility criteria for the members is that either he should be qualified to be a judge of the high court or has 15 years of experience in international trade, economics, commerce, etc. which in the view of government is useful for handling the Competition Commission matters.

Difficulties against Competition Commission of India-

Competition Commission of India has faced many difficulties both internally that is domestic level and externally that is international level while implementing the Competition Act,2002

As the economy is growing rapidly so there is a continuous change in way of doing business. So it is difficult to be up to date with it continuously.
Current laws are provided only for assets and turnover but the emerging business model is solely on e-commerce platforms hence it is a big problem for the Competition Commission of India.
As we can see, the composition of the Commission of India is only one chairperson and three members there is a lot of delay in cases hence a bigger composition is needed to give speedy judgment.

Development in Competition Commission of India-

In 2019, there was a major development in the competition law of India. Competition Commission of India has established in the year 2019and the act came in the year 2002 by the name of Competition Act,2002 that came to force in the year 2009. Recently Competition Commission of India published a report by the name of “Market Study on E-Commerce in India” which talks about e-commerce competition. It also talks about what steps the Competition Commission of India is going to take in e-commerce competition.

The Competition Commission of India monitors e-commerce by keeping regulation at platform neutrality, a platform to a business contract term, platform price party clause, exclusive agreements, and deep discounts.

Why did the Competition Commission of India report on e-commerce marketing?

In 20019, online traveling agencies like make my trip.com or oyo.com used their dominance by denying market access and predatory pricing. On the other hand, when we talk about android phones Google has clear-cut domination over there and no rivals can survive against him. Also, the Competition Commission of India has scrutinized other sectors like the sports sector or the automobile sector. An example of the automobile sector can be where Maruti Suzuki was being charged for allegedly imposing resale prices on its dealer.

To tackle these practices competition commission took two major steps first one is the green channel route and the second one is the introduction of Regulation 5B.

When we look globally so in 2019 European Commission blocked three deals in the steel, rial, and copper sector. Due to this, there was a decline in competition, inclination in price as a monopolistic market was created, and as there was no competition so it reduced innovation also.

Suggestive Reading,

Issues in Enforcement of Competition Law

What is the scope of competition laws in India and suggestive measures for resolving the issues faced by the competition commission of India?

There was a report by Ernst and Young India, which stated that 80 percent of Indian enterprises are not familiar with competition law.

Competitive Law Review submitted a report in the year 2019 which laid down certain amendments need to be made. Mr. Injeli Srinivas chaired the committee. The amendment is as follows-

The size of the governing body should be increased to a chairperson, six complete members, and six part-time members for the speedy judgment and supervisory role.
In violation of the Competition Commission Act,2002 Director-General conducts an investigation. To enhance administrative efficiency his office should work with the Competition Commission of India.
All the matters are held by NCLAT. So it creates an overburden on them to give judgment on each matter within 6 months. So a special bench should be made who just hears all the appeals of this act.
Green channel: there should be an automatic green channel, which allows companies for merger and acquisition cases where there is no adverse effect. It will both help in economic growth and reduce the technicalities that a firm has to face.
Fines: the committee noted that fines imposed on the companies are much less as the Competition Commission of India several articles is challenged before the court. One of the reasons for challenging is that these fines are disproportionate to the act so a proper formula is needed to calculate the penalties under the competition commission act,2002

Hence, these are some changes that need to be imbibed in the Competition Commission Act, 2002. Also, there should be publicity in form of publishing articles in newspapers or campaigns so that domestic enterprises get to know about competition laws.

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