Competition law regime: new regulations and uncertainties

Competition law regime: new regulations and uncertainties
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First Published: Sun, Nov 08 2009. 08 36 PM IST

Illustration: Jayachandran / Mint
Illustration: Jayachandran / Mint
Updated: Sun, Nov 08 2009. 08 36 PM IST
Through the Competition (Amendment) Ordinance 2009 promulgated by the President of India on 14 October, the competition law regime in India finally saw the end of the 40-year-old competition law regulator, the Monopolies and Restrictive Trade Practices Commission (MRTPC).
The ordinance provides that section 66 of the Competition Act, 2002, which deals with repeal and saving, has been amended such that all cases relating to monopolistic trade practices and restrictive trade practices, or those involving a combination of restrictive and monopolistic trade practices or unfair trade practices will stand transferred to the Competition Appellate Tribunal (CAT) with effect from 14 October. However, such cases will be decided by CAT in accordance with the older legislation, that is, the Monopolies and Restrictive Trade Practices (MRTP) Act. Prior to the ordinance, these cases were to continue with the MRTPC for a period of two years with effect from 1 September and transferred to CAT only after the expiry of the two-year period. However, as the MRTPC stands dissolved with effect from 14 October, the two-year window granted to the MRTPC no longer exists.
Illustration: Jayachandran / Mint
Further, the ordinance provides that all cases pertaining to unfair trade practices will stand transferred to the National Commission under the Consumer Protection Act, 1986, with effect from 14 October, which the National Commission will decide in accordance with the MRTP Act.
Apart from the changes mentioned above, the ordinance has not effected any other change to section 66 of the Competition Act. As far as all pending investigations or proceedings relating to unfair trade practices before the director general of investigation and registration under the MRTP Act are concerned, these are to be transferred to the National Commission, and all pending investigation or proceedings (other than unfair trade practices) before the director general will be transferred to the Competition Commission of India (CCI), with effect from 1 September. The CCI and the National Commission will have the power to conduct or order for conduct of such investigation or proceedings in the manner as they may deem fit.
However, while these changes in the legal framework are noteworthy and will have a significant impact on the legal regime relating to competition, an important consideration is the nature of the promulgation bringing about this change. It may be noted that an ordinance is a law that is passed when Parliament is not in session and so the tenure of the ordinance is temporary. But during the life of the ordinance, it has the same effect as an Act of Parliament. When Parliament is not in session, the President can assume the legislative powers of both the houses of Parliament temporarily and promulgate an ordinance. Accordingly, each ordinance has to be tabled in Parliament when the houses reassemble for their approval. The ordinance will cease to operate six weeks after Parliament reassembles or before the expiry of this six-week period if both houses of Parliament disapprove the ordinance. In the latter case, the ordinance will cease to exist from the date the second house of Parliament (either the Lok Sabha or the Rajya Sabha) disapproves the ordinance. Therefore, the life of the ordinance extends to a maximum of six weeks from the date Parliament reassembles.
However, it is noteworthy that the lapse or disapproval of an ordinance will not affect the initial validity of the ordinance and the acts done and completed under the ordinance. Also, the ordinance will not become void merely because it ceases to operate. Therefore, any decision taken by CAT with effect from 14 October until the ordinance lapses will not affect the validity of the decisions or orders passed by it.
If the ordinance is passed by both the houses of Parliament, the ordinance will become an Act and the shift from the MRTPC to CAT will become permanent.
In the unlikely event that the ordinance lapses or is disapproved, the government will have to bring into existence the same state of affairs as existed before the ordinance was passed, even though the MRTPC has been dissolved.
This scenario would certainly cause uncertainty and confusion that could only be detrimental to industry, by shifting regimes back from CAT to the MRTPC (for the balance portion of the two-year period beginning 1 September).
However, if the government is persistent in dissolving the MRTPC, in the case of lapse or non-approval of the ordinance, it could table a new amendment Bill for the same before Parliament.
This column is contributed by Aparna Mehra of AZB & Partners, Advocates & Solicitors.
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First Published: Sun, Nov 08 2009. 08 36 PM IST