awareness programme on “competition policy & law ” for media & government agencies ...
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CUTS Institute for Regulation & Competition. Awareness Programme on “Competition Policy & Law ” For Media & Government Agencies By Malaysian Competition Commission ( MyCC ) Kuala Lumpur June 08 – 09, 2013. Competition Policy & Law. - Hariprasad C G, CIRC. - PowerPoint PPT PresentationTRANSCRIPT
Awareness Programme on
“Competition Policy & Law” For Media & Government Agencies
By
Malaysian Competition Commission (MyCC)
Kuala Lumpur
June 08 – 09, 2013
April 22, 2023
1
CUTS Institute for Regulation & Competition
Competition Policy & Law
- Hariprasad C G, CIRC
April 22, 2023
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The views expressed herein are personal and not purported to reflect those of the CIRC
What is Competition?
Competition occurs when two or more firms are pursuing the same objective at the same time
In a healthy market economy companies compete with each other to gain the purchase of the consumer
Competition then leads to:
Greater efficiency Fair prices Innovation
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Competition…
Is a Dynamic ConceptIs an amalgam factors that stimulate
economic rivalryIs a tool to mount market pressureIs a tool to penalise laggards..And is a tool to reward the enterprising
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Competition Policy vis-à-vis Competition Law
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Goals of Competition Policy
Preservation and promotion of the competitive process
Efficiency in production and allocation of goods and services
Innovation and adjustment to technological change
Sustained economic growthProtection of consumer interests
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Applicability of Competition Law
All undertakings engaged in manufacture, supply and distribution in the private sector
Public sector undertakings owned by the government or government undertakings
Statutory corporations Undertakings under the management of
controllers appointed by law Cooperative societies Financial institutions, banks
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Rubric of Competition Law
Competition law generally has four compartments :
Anti-competition agreementsAbuse of dominanceMergers, amalgamations, acquisitions and
take-oversFostering competition
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Is Competition Law Required at all..
With globalization, there is likely to be significant restructuring of manufacture, trade and services
Domestic consolidation and entry of foreign entities
Anti-competition practices may surface as a consequence
WTO fall out obligations need to be addressed
Regulatory and advocacy functions need to be posited
Without a cop, trade traffic may prejudice consumer interest
Competition law will be a cop and a friendApril 22, 2023
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World-wide enforcement – More than 130 countries already have competition
laws
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Highest individual UK fine to date
GBP122 million in Aug 2008
(BA, fuel surcharges)
Highest EU cartel fine to date EURO 1.4 billion
in 2008 (Car Glass manufacturer)
Largest recent US cartel fine
USD 700 millionin 2005/06
(DRAM semiconductor memory products)INTEL fine on
abuse of dominanceEURO 1.06 billion
on May 2009
Microsoft fined for bundling
EURO 497 million in Mar 2004 and further EURO 899 million for not paying earlier
fine in Feb 2008
Improves Quality
Decrease in
prices
Econ
omic
Gro
wth C
reates C
hoices
Encourages Innovation
BENEFITS OF COMPETITION
India big market, leaders in growth
Telecom – Tariffs per second or minute have come down drastically
Two Wheelers – from 30 kmpl to 100 kmpl
…and choices lead to consumer achieving better quality at lower prices eg. airtravel
Witnessed across goods, be it electronics, mobiles, automobiles….
Benefits of Competition
These benefits to consumers and producers can take place only if competition in the markets is free and fair.
But the competition in markets is not always fair; there may be distortions to the competition through anti-competitive behavior of the market players.
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Prohibitions regime
Market Behaviour
Section 4Prohibition
Anti – competitiveagreements
Section 10Prohibition
Abuse of dominantposition
Mergers and
Acquisition
S4 Prohibitions - Anti – competitive agreements
• Section 4 of the Competition Act 2010 (Act 712) (“Act”) prohibits horizontal agreements and vertical agreements between enterprises where such agreements have the object or effect of significantly preventing, restricting or distorting competition in any market for goods or services
Section 4Prohibition
Horizontal orvertical
agreementsObject or
effect
Significant prevention,
restriction ordistortion ofcompetition
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Definition of ‘agreements’
Need not be in the form of formal agreement
Contracts, understanding, whether or not legally enforceable
“concerted practices” or "gentleman's handshake"
Decision of associations
Meaning of concerted practice
"a form of coordination between undertakings which, without having reached the stage where an agreement properly so-called has been concluded, knowingly substitutes practical cooperation between them for the risks of competition"
Main elements:1. Mental consensus - direct or indirect contact/conduct2. Factual based (similar behaviour/circumstantial evidence)3. Differentiate with independent parallel behaviour/oligopoly defence
Horizontal agreement
Traditionally, competition policy regards horizontal agreements as being more objectionable as these agreements are made between competitors.
Some horizontal agreements are considered Hard Core and are absolutely prohibited (S4(2)).
Manufacturer A Manufacturer BHorizontalAgreement
Distributor A Distributor BHorizontalAgreement
Vertical agreement
Manufacturer
Wholesaler
Retailer
Vertical Agreement
Vertical Agreement
Meaning of 'object' or 'effect'
'Object' Type of Agreement
Types of agreement the anti-competitiveness of which can be determined simply from their object
deemed to have the purpose of restraining competition
unnecessary to prove agreement would have an anti competitive effect
subjective intention irrelevant
Meaning of 'object' or 'effect'
'Effect' Type of Agreement
Where it is not possible to say that the object of an agreement is to restrict competition, it is then necessary to conduct an extensive analysis of its effect on competition in the market before it can be found to infringe section 4 CA 2010
Stay Away !!!!
Horizontal agreements:
• to fix prices • to limit/share markets • to limit sales/production • to bid rig • to exchange current or future price information• collective exclusive dealing• perform group boycott
Vertical agreements:
• to fix resale prices to wholesalers/distributors/retailers
The Object Box
04/22/2023
Vertical Restraints...mostly requires effect type analysis
Resale pricemaintenance
(RPM)
• A producer / manufacturer’s contractual requirement that its product be retailed at a fixed or minimum price to consumers
• Specification of a maximum price and/or recommended resale price (RRP) is “usually OK” unless the specified price has the effect of fixing the retail terms of sale or dampening retail price competition.
Exclusivedistribution
• A manufacturer supplies its (branded) product to only one distributor or wholesaler or retailer in a particular territory or geographical area
• It may have the effect of preventing “downstream” market entry and “intra – brand” competition
Selectivedistribution
• A manufacturer supplies its (branded) product to a limited number of dealers who are contractually restricted from selling other brands
• It may foreclose a market to inter – brand competition at the retail level
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Lets decide who will win
Price cartel
Users and Consumers
Entrepreneur A
Entrepreneur B
Entrepreneur C
Entrepreneur D
Decision of selling price
among competitors
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Abuse of Dominance
a) ExploitativeDirectly harm consumers. Ex – Excessive price
b) ExclusionaryIndirectly harm consumers foreclosing competitors and as a result increasing firms’ ability to increase prices to consumers. Ex –
i. Exclusive Dealingii. Tying & Bundlingiii.Predationiv. Refusals to Supply & Margin Squeeze (?) (vertical
foreclosure of downstream rivals) v. Denial of Market Access or Foreclosure of Raw Material
Sources
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Is it fair competition?
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….The result is clear.
Whatever….
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April 22, 2023
Thank You
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