Copyright - Dr. S. Chakravarthy1 GREETINGS TO CHARTERED ACCOUNTANTS FOR ICAIS POST QUALIFICATION COURSE VIDEO CONFERENCE FROM HYDERABAD 25 AUGUST 2005

Copyright - Dr. S. Chakravarthy2 COMPETITION ACT, 2002 THE NEW INDIAN COMPETITION LAW Dr. S. CHAKRAVARTHY (Profession : Civil Servant) Formerly, Member, Monopolies and Restrictive Trade Practices Commission, Member, High Level Committee on Competition Policy and Law And Member of Committee for Drafting the Law. Presently, Adviser/Consultant Competition Policy and Law HYDERABAD, INDIA

Copyright - Dr. S. Chakravarthy3 COMPETITION GENIE COMPETITION AMBIENCE YET TO FLOWER INDIAS POLICY MAKERS GENIE TRAPPED - LID CLOSED

Copyright - Dr. S. Chakravarthy4 C O M P E T I T I O N……. IS A DYNAMIC CONCEPT IS AN AMALGAM OF FACTORS THAT STIMULATE ECONOMIC RIVALRY IS A TOOL TO MOUNT MARKET PRESSURE TO PENALISE LAGGARDS AND TO REWARD THE ENTERPRISING

Copyright - Dr. S. Chakravarthy5 COMPETITION POLICY - GOALS PRESERVATION AND PROMOTION OF THE COMPETITIVE PROCESS EFFICIENCY IN PRODUCTION AND ALLOCATION OF GOODS AND SERVICES INNOVATION AND ADJUSTMENT TO TECHNOLOGICAL CHANGE SUSTAINED ECONOMIC GROWTH

Copyright - Dr. S. Chakravarthy6 EXTANT COMPETITION LAW OF INDIA MONOPOLIES AND RESTRICTIVE TRADE PRACTICES ACT,1969 BROUGHT INTO FORCE IN 1970

Copyright - Dr. S. Chakravarthy7 FOUR COMPARTMENTS ã ANTI-COMPETITION AGREEMENTS ã ABUSE OF DOMINANCE ã MERGERS, AMALGAMATIONS, ACQUISITIONS AND TAKE-OVERS ã FOSTERING COMPETITION

Copyright - Dr. S. Chakravarthy8 ANTI - COMPETITION AGREEMENTS : HORIZONTAL RESTRAINTS : nCARTELS {FIXING PURCHASE OR SALE PRICES (EXPORT CARTELS EXEMPTED) } n BID-RIGGING (COLLUSIVE TENDERING) n SHARING MARKETS BY TERRITORY, TYPE ETC. n LIMITING PRODUCTION, SUPPLY, TECHNICAL DEVELOPMENT THE ABOVE ARE PER SE ILLEGAL. : VERTICAL RESTRAINTS : n TIE-IN ARRANGEMENTS n EXCLUSIVE SUPPLIES n EXCLUSIVE DISTRIBUTION n REFUSAL TO DEAL n RESALE PRICE MAINTENANCE n ADJUDICATION BY RULE OF REASON

Copyright - Dr. S. Chakravarthy9 ABUSE OF DOMINANCE DOMINANCE NOT LINKED TO ANY ARITHMETIC FIGURE OF MARKET SHARE DOMINANCE MEANS A POSITION OF STRENGTH ENABLING AN ENTERPRISE TO OPERATE INDEPENDENTLY OF COMPETITIVE PRESSURE AND TO APPRECIABLY AFFECT THE RELEVANT MARKET,COMPETITION AND CONSUMERS. ABUSE OF DOMINANCE ARISES IF AN ENTERPRISE IMPOSES UNFAIR /DISCRIMINATORY PURCHASE OR SALE PRICES (INCLUDING PREDATORY PRICES) LIMITS PRODUCTION,MARKETS OR TECHNICAL DEVELOPMENT DENIES MARKET ACCESS CONCLUDES CONTRACTS SUBJECT TO OBLIGATIONS HAVING NO CONNECTION WITH THE SUBJECT OF THE CONTRACTS. USES DOMINANCE TO MOVE INTO OR PROTECT OTHER MARKETS RELEVANT MARKET = RELEVANT PRODUCT MARKET + RELEVANT GEOGRAPHIC MARKET

Copyright - Dr. S. Chakravarthy10 COMBINATIONS MERGERS/AMALGAMATIONS 1. REDUCTION IN NUMBER OF PLAYERS 2. ACQUISITION OF ENORMOUS ECONOMIC STRENGTH 3. DISCOURAGEMENT OF NEW ENTRANTS PEJORATIVE EFFECTS 4. DICTATION OF PRICES 5. DOMINANCE 1. COMPETITION LAW TO HAVE SURVEILLANCE OVER COMBINATIONS BEYOND A THRESHOLD LIMIT (Assets > Rs.1000 Crores or Turnover > Rs.3000 Crores ) 2. NOTIFICATION OF COMBINATIONS VOLUNTARY AND NOT MANDATORY 3. CCI MANDATED TO DECIDE WITHIN 90 WORKING DAYS ELSE DEEMED APPROVAL REGULATION ON COMPETITION PERSPECTIVE

Copyright - Dr. S. Chakravarthy11 COMPETITION ADVOCACY THE COMPETITION COMMISSION OF INDIA ¨ IS ENABLED TO PARTICIPATE IN THE FORMULATION OF POLICIES AND REVIEWING OF POLICIES RELATING TO COMPETITION AT THE INSTANCE OF THE GOVERNMENT ¨ IS REQUIRED TO CREATE COMPETITION CULTURE ¨ IS REQUIRED TO ACT AS COMPETITION ADVOCATE

Copyright - Dr. S. Chakravarthy12 EXEMPTIONS GOVERNMENT BY NOTIFICATION MAY EXEMPT FROM THE COMPETITION LAW A ANY CLASS OF ENTERPRISES IN THE INTEREST OF NATIONAL SECURITY/PUBLIC INTEREST. B.ANY PRACTICE/AGREEMENT ARISING OUT OF INTERNATIONAL TREATY/AGREEMENT C.ANY ENTERPRISE PERFORMING A SOVEREIGN FUNCTION ON BEHALF OF GOVERNMENT DIFFERENT PROVISIONS FROM DIFFERENT DATES IF, NEED BE.

Copyright - Dr. S. Chakravarthy13 COMPETITION COMMISSION OF INDIA COMPRISES : CHAIRPERSON MEMBERS (Max. Ten) SELECTION BY A COLLEGIUM THIS IS TO MINIMISE POLITICISATION OF APPOINTMENTS

Copyright - Dr. S. Chakravarthy14 DEPOLITICISATION AND CASTING NET WIDE n RATIONALE FOR THE COLLEGIUM APPROACH IS TO MINIMISE POLITICISATION OF APPOINTMENTS n CHAIRPERSON NEED NOT BE FROM THE JUDICIARY n CHAIRPERSON AND MEMBERS FROM FIELDS – JUDICIARY, ECONOMICS, LAW, INTERNATIONAL TRADE, BUSINESS, COMMERCE, INDUSTRY, FINANCE, ACCOUTANCY, MANAGEMENT, PUBLIC AFFAIRS, AND ADMINISTRATION n EVERY BENCH WILL HAVE A JUDICIAL MEMBER

Copyright - Dr. S. Chakravarthy15 THE NEW LAW AND IPRs n SECTION 3(5) OF THE COMPETITION ACT, 2002 EXCLUDES ALL IPRs FROM ITS APPLICABILITY n INTELLECTUAL PROPERTY RIGHT CARRIES WITH IT A BUNDLE OF RIGHTS IN THE INTEREST OF CREATIVITY AND INNOVATION n ANY CONDITION OR OBLIGATION OUTSIDE THE BUNDLE OF RIGHTS CANNOT BE COUNTENANCED IF IT TRENCHES COMPETITION n THE ACT HAS THEREFORE BROUGHT UNDER ITS SURVEILLANCE UNREASONABLE PRACTICES THAT MAY ACCOMPANY THE EXPLOITATION OF IPRs

Copyright - Dr. S. Chakravarthy16 EXTRA TERRITORIAL REACH n THE COMPETITION ACT, 2002 EXTENDS THE CCIs REACH BEYOND THE INDIAN SOIL n THE EXTRA TERRITORIAL REACH IS BASED ON EFFECTS DOCTRINE.

Copyright - Dr. S. Chakravarthy17 CONCERNS ARTICULATED 1. THE NEW LAW IS DRACONIAN. 2. COMBINATION(MERGERS) REGULATION WILL IMPEDE INDIA FROM BECOMING GLOBALLY COMPETITIVE. 3. JOINT VENTURES SHOULD NOT BE REGULATED. 4. POSSIBLE INJURY TO DOMESTIC INDUSTRIES PARTICULARLY THE SMALL SCALE SECTOR. 5. CCI WILL BECOME A SUPER REGULATOR AS OTHER REGULATORY AUTHORITIES ARE SUBJECT TO COMPETITION LAW. 6. THE GROUP CONCEPT IN COMBINATION REGULATION IS REGRESSIVE 7. THE NEW LAW SUPERSEDES ALL OTHER LAWS AND THUS CCI BECOMES A BEHEMOTH.

Copyright - Dr. S. Chakravarthy18 WHO PRESSURISED INDIA TO HAVE A NEW COMPETITION LAW? n SOME COMMENT THAT WTO HAS PRESSURISED INDIA TO ENACT A NEW COMPETITION LAW n SOME OTHERS BELIEVE THAT WORLD BANK, IMF AND ADB HAVE INSISTED ON A NEW LAW FOR INDIA n THERE ARE SOME WHO BELIEVE THAT SOME POTENTIAL INVESTORS (FDI) WANT INDIA TO HAVE A NEW EFFECTIVE COMPETITION LAW TO PROTECT THEIR INTERESTS n THERE ARE SOME WHO BELIEVE THAT SOME PATENT HOLDERS WANT INDIA TO HAVE PROVISIONS IN THE COMPETITION LAW TO PROTECT THEIR INTERESTS NONE OF THE ABOVE COMMENTS AND BELIEFS IS TRUE OR HAS ANY BASIS INDIA HAS EXERCISED ITS SOVEREIGN RIGHT TO HAVE A NEW MODERN COMPETITION LAW

Copyright - Dr. S. Chakravarthy19 OLD WINE OR NEW WINE ? MRTP ACT 1. BASED ON PRE-1991 LPG 2. PREMISED ON SIZE 3. PROCEDURE ORIENTED 4. NO TEETH (REFORMATORY) 5. OFFENCES DEFINED IMPLICITLY (CARTELS, BID-RIGGING ETC.) 6. FROWNS ON DOMINANCE (25% OF MARKET SHARE) 7. A LARGE NO. OF PER SE OFFENCES (AGAINST PRINCIPLES OF NATURAL JUSTICE) NEW LAW 1. BASED ON POST-1991 LPG 2. PREMISED ON BEHAVIOUR/ CONDUCT 3. RESULT ORIENTED 4. CAN BITE (PUNITIVE ) 5. OFFENCES DEFINED EXPLICITLY 6. FROWNS ON ABUSE OF DOMINANCE (NO PERCENTAGE OF MARKET SHARE) 7. JUST FOUR ARE PER SE OFFENCES (REST BY RULE OF REASON)

Copyright - Dr. S. Chakravarthy20 OLD WINE OR NEW WINE ? MRTP ACT 8. COVERS UNFAIR TRADE PRACTICES (INDIVIDUAL CONSUMER INTEREST) 9. POLITICAL APPOINTMENTS OF CHAIRPERSON/MEMBERS 10. NO COMPETITION ADVOCACY ROLE 11. REACTIVE NEW LAW 8. UNFAIR TRADE PRACTICES EXCLUDED (COVERED UNDER CONSUMER PROTECTION ACT) 9. APPOINTMENTS BY A COLLEGIUM 10. CCI HAS COMPETITION ADVOCACY ROLE 11. PROACTIVE NO LAW IS BETTER THAN A POORLY ADMINISTERED LAW

Copyright - Dr. S. Chakravarthy21 ONE WOULD LIKE TO AVOID THE DANGER OF HOLLOW PURISM THAT HAS MADE SO MUCH OF MODERN ECONOMICS UNFIT FOR ACTUAL USE AMARTYA SEN INDIAN NOBEL LAUREATE

Copyright - Dr. S. Chakravarthy22 COMPETITION GENIE COMPETITION AMBIENCE INDIAS POLICY MAKERS GENIE RELEASED - LID OPENED

THANK YOU FOR YOUR KIND ATTENTION Copy right Dr. S. Chakravarthy