Competition law: the ambiguity ends4 min read . Updated: 13 Sep 2009, 09:45 PM IST
Competition law: the ambiguity ends
Competition law: the ambiguity ends
While the capitalist economies of the West have kept their business giants (from their Rockefellers to their Bill Gateses) under check with a gamut of laws to prevent abuse of market dominance and market distortive business practices, India (no stranger to legislation against such practices) did not really have an effective law on antitrust issues till the enactment of the Competition Act, 2002 (as amended)—Competition Act—substantial provisions of which have now been notified (excluding provisions on merger control).
It is common knowledge that the provisions of the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act) were inadequate to effectively deal with antitrust issues in India and post-1991 (when the Indian government initiated economic reforms and open market policies), substantial portions of the MRTP Act had more or less become redundant.
This resulted in a legislative oddity of sorts, as there were effectively two independent statutes (the MRTP Act and the Competition Act) having concurrent jurisdiction. This also resulted in ambiguity and confusion due to the uneasy coexistence of two antitrust regulators without reconciled powers and functions—the MRTP Commission (the regulator formed under the old legislation—the MRTP Act) and the Competition Commission of India, or CCI, (the regulator formed under the new legislation—the Competition Act).
Both regulators dealt with anti-competitive agreements/arrangements.
This oddity was removed with the notification of section 66 of the Competition Act with effect from 1 September. Through this notification, the repeal of the MRTP Act and dissolution of the MRTP Commission has been put into effect.
This marks the beginning of the end of a dormant and ineffective phase of the competition law regime in India.
Section 66 of the Competition Act also lays down the parameters on how various cases and investigations pending under the MRTP Act are to be handled. Subject to the transitory provisions under section 66 of the Competition Act, the MRTP Commission has ceased to take up any new matters after 1 September.
As per section 66 of the Competition Act, the MRTP Commission will function for two years from 1 September to dispose of the pending cases dealing with Restrictive Trade Practices (RTP), Monopolistic Trade Practices (MTP) and those involving a combination of RTP, MTP and Unfair Trade Practices (UTP). After that, these cases will be transferred to the appellate body formed under the Competition Act, that is, the Competition Appellate Tribunal (CAT). CAT is required to decide these cases in accordance with the MRTP Act, as if the MRTP Act had not been repealed.
However, cases which relate to UTP under the MRTP Act (except those which relate to giving false information for disparaging of goods and services of another person under the MRTP Act), after the above-mentioned two-year period, will be transferred to the National Consumer Disputes Redressal Commission (National Commission), an appellate body constituted under the Consumer Protection Act, 1986 and not CAT. These cases will be dealt with in accordance with the consumer law.
As far as pending investigations or proceedings relating to MTP and/or RTP before the director general of investigation and registration (DGIR), that is, the investigating arm of the MRTP Act, are concerned, the same will be immediately transferred to CCI. CCI can determine these investigations and proceedings in the manner it may deem fit. The “investigations" or “proceedings" relating to UTP which are pending before DGIR (except those which relate to giving false information for disparaging of goods and services of another person under the MRTP Act) will now be transferred to the National Commission and the commission will handle it as it may deem fit.
The savings clause of section 66 of the Competition Act also mentions that the repeal of the MRTP Act will not affect the previous operation of the MRTP Act or anything done or suffered under the MRTP Act, including any right, privilege and obligation accrued or any liability, penalty and punishment incurred in respect of any contravention of the MRTP Act.
The Competition Act has been enacted to replace the MRTP Act and provide a regulatory regime that is consistent with the international practices and aware of the economic realities. The Competition Act focuses on four main issues, that is, anti-competitive agreements, abuse of dominance, regulation of combinations and competition advocacy. One of the most important elements of the Competition Act is competition advocacy.
CCI has been empowered to evolve the competition law through promotion of competition advocacy, creating awareness and actively imparting training about competition issues. Further, the operation of the Competition Act is not confined to transactions within the boundaries of India, but also targets transactions or any anti-competitive practices overseas which has, or causes, an appreciable adverse affect on competition in India.
CCI is expected to be more responsive to the issues raised in the evolving business environment and has been provided with enough ammunition to have a deterrent effect on anti-competitive practices. However, how far CCI will be able to effectively regulate the anti-competitive behaviour and ensure a healthy competition regime remains to be seen.
This column is contributed by Aparna Mehra and Kunal Mehra of AZB & Partners, Advocates & Solicitors.
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