copyright - dr. s. chakravarthy1 greetings to chartered accountants for icais post qualification...
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Copyright - Dr. S. Chakravarthy 1
GREETINGS
TO
CHARTERED ACCOUNTANTS
FOR
ICAI’S POST QUALIFICATION COURSE
VIDEO CONFERENCE FROM HYDERABAD
25 AUGUST 2005
Copyright - Dr. S. Chakravarthy 2
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. Chakravarthy 3
COMPETITION GENIE
COMPETITION AMBIENCE YET TO FLOWER
INDIA’S POLICY MAKERS
GENIE TRAPPED - LID CLOSED
Copyright - Dr. S. Chakravarthy 4
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. Chakravarthy 5
COMPETITION POLICY - GOALS
PRESERVATION AND PROMOTION OF THECOMPETITIVE PROCESS
EFFICIENCY IN PRODUCTION ANDALLOCATION OF GOODS AND SERVICES
INNOVATION AND ADJUSTMENT TOTECHNOLOGICAL CHANGE
SUSTAINED ECONOMIC GROWTH
Copyright - Dr. S. Chakravarthy 6
EXTANT COMPETITION LAW OF INDIA
MONOPOLIES AND RESTRICTIVE
TRADE PRACTICES ACT,1969
BROUGHT INTO FORCE IN 1970
Copyright - Dr. S. Chakravarthy 7
FOUR COMPARTMENTSFOUR COMPARTMENTS
ANTI-COMPETITION AGREEMENTS
ABUSE OF DOMINANCE
MERGERS, AMALGAMATIONS, ACQUISITIONS AND TAKE-OVERS
FOSTERING COMPETITION
Copyright - Dr. S. Chakravarthy 8
ANTI - COMPETITION AGREEMENTS HORIZONTAL RESTRAINTS : :
CARTELS {FIXING PURCHASE OR SALE PRICES (EXPORT CARTELS EXEMPTED) }
BID-RIGGING (COLLUSIVE TENDERING)
SHARING MARKETS BY TERRITORY, TYPE ETC.
LIMITING PRODUCTION, SUPPLY, TECHNICAL DEVELOPMENT
THE ABOVE ARE “PER SE” ILLEGAL.
VERTICAL RESTRAINTS : :
TIE-IN ARRANGEMENTS
EXCLUSIVE SUPPLIES
EXCLUSIVE DISTRIBUTION
REFUSAL TO DEAL
RESALE PRICE MAINTENANCE
ADJUDICATION BY RULE OF REASON
Copyright - Dr. S. Chakravarthy 9
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 RELEVANT MARKET = RELEVANT PRODUCT MARKET + RELEVANT GEOGRAPHIC MARKETMARKET
Copyright - Dr. S. Chakravarthy 10
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. Chakravarthy 11
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. Chakravarthy 12
EXEMPTIONSEXEMPTIONS
GOVERNMENT BY NOTIFICATION MAY EXEMPT FROM THE GOVERNMENT BY NOTIFICATION MAY EXEMPT FROM THE COMPETITION LAW 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.DIFFERENT PROVISIONS FROM DIFFERENT DATES IF, NEED BE.
Copyright - Dr. S. Chakravarthy 13
COMPETITION COMMISSION OF INDIA
COMPRISES COMPRISES ::
• CHAIRPERSON
• MEMBERS (Max. Ten)
SELECTION BY A COLLEGIUMSELECTION BY A COLLEGIUM
THIS IS TO MINIMISE THIS IS TO MINIMISE POLITICISATION OF APPOINTMENTSPOLITICISATION OF APPOINTMENTS
Copyright - Dr. S. Chakravarthy 14
DEPOLITICISATION AND CASTING NET WIDE
RATIONALE FOR THE COLLEGIUM APPROACH IS TO MINIMISE POLITICISATION OF APPOINTMENTS
CHAIRPERSON NEED NOT BE FROM THE JUDICIARY
CHAIRPERSON AND MEMBERS FROM FIELDS – JUDICIARY, ECONOMICS, LAW, INTERNATIONAL TRADE, BUSINESS, COMMERCE, INDUSTRY, FINANCE, ACCOUTANCY, MANAGEMENT, PUBLIC AFFAIRS, AND ADMINISTRATION
EVERY BENCH WILL HAVE A JUDICIAL MEMBER
Copyright - Dr. S. Chakravarthy 15
THE NEW LAW AND IPRs
SECTION 3(5) OF THE COMPETITION ACT, 2002 EXCLUDES ALL IPRs FROM ITS APPLICABILITY
INTELLECTUAL PROPERTY RIGHT CARRIES WITH IT A BUNDLE OF RIGHTS IN THE INTEREST OF CREATIVITY AND INNOVATION
ANY CONDITION OR OBLIGATION OUTSIDE THE BUNDLE OF RIGHTS CANNOT BE COUNTENANCED IF IT TRENCHES COMPETITION
THE ACT HAS THEREFORE BROUGHT UNDER ITS SURVEILLANCE UNREASONABLE PRACTICES THAT MAY ACCOMPANY THE EXPLOITATION OF IPRs
Copyright - Dr. S. Chakravarthy 16
EXTRA TERRITORIAL REACH
THE COMPETITION ACT, 2002 EXTENDS THE CCI’s REACH BEYOND THE INDIAN SOIL
THE EXTRA TERRITORIAL REACH IS BASED ON “EFFECTS DOCTRINE”.
Copyright - Dr. S. Chakravarthy 17
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
REGRESSIVE7. THE NEW LAW SUPERSEDES ALL OTHER LAWS AND THUS CCI
BECOMES A BEHEMOTH.
Copyright - Dr. S. Chakravarthy 18
WHO PRESSURISED INDIA TO HAVE A NEW COMPETITION LAW?
SOME COMMENT THAT WTO HAS PRESSURISED INDIA TO ENACT A NEW COMPETITION LAW
SOME OTHERS BELIEVE THAT WORLD BANK, IMF AND ADB HAVE INSISTED ON A NEW LAW FOR INDIA
THERE ARE SOME WHO BELIEVE THAT SOME POTENTIAL INVESTORS (FDI) WANT INDIA TO HAVE A NEW EFFECTIVE COMPETITION LAW TO PROTECT THEIR INTERESTS
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. Chakravarthy 19
OLD WINE OR NEW WINE ?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 LAW1. 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. Chakravarthy 20
OLD WINE OR NEW WINE ?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. Chakravarthy 21
ONE WOULD LIKE TO AVOIDTHE DANGER OF HOLLOW PURISM
THAT HAS MADE SO MUCHOF MODERN ECONOMICSUNFIT FOR ACTUAL USE
AMARTYA SENAMARTYA SENINDIAN NOBEL LAUREATE
Copyright - Dr. S. Chakravarthy 22
COMPETITION GENIE
COMPETITION AMBIENCE
INDIA’S POLICY MAKERS
GENIE RELEASED - LID OPENED
THANK YOU
FOR YOUR
KIND ATTENTIONCopy right Dr. S. Chakravarthy
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