Mrtp Act 1969
Journal of Competition Law & Economics, 4(3), 609–638 doi:10.1093/joclec/nhn021 Advance Access publication 16 July 2008
INDIA’S NEW COMPETITION LAW: A COMPARATIVE ASSESSMENT Aditya Bhattacharjea Ã
ABSTRACT This paper critically examines India’s new Competition Act. I begin by examining the working of its predecessor, the 1969 Monopolies and Restrictive Trade Practices Act. Earlier studies, as well as a survey of recent cases undertaken for this paper, show that most cases under that Act involved consumer complaints and contractual disputes unrelated to competition. Very few cartels were prosecuted, the development of a rule of reason for vertical agreements was hamstrung by the legislature, and merger review was terminated in 1991. Thereafter, judgments increasingly tried to enforce “fair” business conduct “in the public interest,” often protecting competitors rather than competition. India thus has little relevant experience for the many technical economic criteria in the Competition Act. Although the new Act has several positive features, it is riddled with loopholes that might condone hard-core cartels, predatory pricing, and potentially anticompetitive cross-border mergers, while it also perpetuates the earlier tendency to penalize “unfair” behavior with no bearing on competition. I argue that several institutional limitations will also impair the Act’s effectiveness and conclude with a plea for capacity building and phased implementation. JEL Codes: K21; L40; O25
I. INTRODUCTION
After a long and troubled gestation, India’s new Competition Act1 is soon to take effect. It is not that new, having been passed by both Houses of the Indian Parliament in December 2002 after several years of discussion and drafting. Some of its administrative clauses were brought into force by government notification, and the Competition Commission of India (CCI) was formally constituted with one member and a skeleton staff in October 2003. But further expansion of the CCI,
INDIA’S NEW COMPETITION LAW: A COMPARATIVE ASSESSMENT Aditya Bhattacharjea Ã
ABSTRACT This paper critically examines India’s new Competition Act. I begin by examining the working of its predecessor, the 1969 Monopolies and Restrictive Trade Practices Act. Earlier studies, as well as a survey of recent cases undertaken for this paper, show that most cases under that Act involved consumer complaints and contractual disputes unrelated to competition. Very few cartels were prosecuted, the development of a rule of reason for vertical agreements was hamstrung by the legislature, and merger review was terminated in 1991. Thereafter, judgments increasingly tried to enforce “fair” business conduct “in the public interest,” often protecting competitors rather than competition. India thus has little relevant experience for the many technical economic criteria in the Competition Act. Although the new Act has several positive features, it is riddled with loopholes that might condone hard-core cartels, predatory pricing, and potentially anticompetitive cross-border mergers, while it also perpetuates the earlier tendency to penalize “unfair” behavior with no bearing on competition. I argue that several institutional limitations will also impair the Act’s effectiveness and conclude with a plea for capacity building and phased implementation. JEL Codes: K21; L40; O25
I. INTRODUCTION
After a long and troubled gestation, India’s new Competition Act1 is soon to take effect. It is not that new, having been passed by both Houses of the Indian Parliament in December 2002 after several years of discussion and drafting. Some of its administrative clauses were brought into force by government notification, and the Competition Commission of India (CCI) was formally constituted with one member and a skeleton staff in October 2003. But further expansion of the CCI,