Competition Policy

UNFAIR TRADE PRACTICES AND COMPETITION POLICY

Background 

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“Competition” (L – “compete”) is an ageold phenomenon In olden days, competition  

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existed amongst cave-men is also reflected in the Mahabharat

In modern times, competition  

has become a global phenomenon starts right from Kindergarten & Nursery classes

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Benefits of Competition…. 

Companies : Efficiency, cost-saving operations, better utilization of resources, etc.

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The Consumer : Wider choice of goods at competitive prices

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The Government : Generates revenue

BUT………………………… 3

….Benefits of Competition ………all these benefits are lost if Competition is UNFAIR or NONEXISTANT   

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Choice of CARS in the olden days MTNL Monopoly : The position today Airlines : INDIAN AIRLINES : JET : SAHARA Mobiles : Price Wars Indian Railways : The monopoly continues….

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Evolution of Competition Law 

Before MRTP Act came into force (1970), limited provisions existed under :   

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The Indian Contract Act The Law of Torts Directive Principles of State Policy (Nonenforceable)

The MRTP Act brought in a four-pronged thrust :    

Concentration of economic power ( - Repealed in 1991 - ) Restrictive Trade Practices Monopolistic Trade Practices ( - Almost a dead letter - ) Unfair Trade Practices ( - Added in 1984 - ) 5

Unfair Trade Practices   

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Many competition regimes do NOT consider this as part of Competition Law BUT, it does affect competition – directly or indirectly Consumer protection provisions made for the first time in India by 1984 Amendments in the MRTP Act The Consumer Protection Act came only 2 years later How Consumer Courts were hurriedly constituted After 1986, MRTP Commission and Consumer Courts had parallel jurisdiction Consumer Courts v MRTP Commission : Pros & Cons 6

Unfair Trade Practices 

HOW UTPs affect competition :   

Warranties not based on lab tests After sales guarantees not honoured Contests & Competitions  

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Disparagement of competing products   

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View of the MRTP Commission View of the Supreme Court Godrej v Kelvinator Colgate v Pepsodent Rulings in RIDAKE (India) & XENICAL (USA)

Misleading sales ads   

“ 60% OFF” Guptaji’s Sales Ads of CURRYS (U.K.’s biggest electrical chain) UPTO

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UTPs vis-à-vis Competition Act Under the Competition Act : No provision for Unfair Trade Practices  Only Consumer Courts will have jurisdiction  Pending cases will be continued by MRTPC for 2 years  After 2 years : 

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All cases (except Disparagement Cases) will be transferred to National Commission under CPA All Disparagement Cases will be transferred to Competition Commission 8

Powers of Competition Commission as Regards Agreements 

After the inquiry into the Agreement, Competition Commission can: direct parties to discontinue the agreement  prohibit parties from re-entering such agreement  direct modification of the agreement  impose penalty upto 10% of average turnover of the enterprise 

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Abuse of Dominance  

Mandate of the Act : “No enterprise shall abuse its dominant position.” 5 categories of “abuse” are listed in the Act, as for instance, Imposing discriminatory conditions in purchase or sale of goods  Predatory pricing  Limiting production or scientific or technical development  Using dominant position in one market to enter another market, etc. 

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Abuse of Dominance 

Power of the Competition Commission  After

inquiry into abuse of dominant position, the Competition Commission can order: discontinuance of abuse of dominant position  impose a penalty upto 10% of the average turnover of the enterprise 

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Thank You! 12