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Analysis of Anti-Trust Laws

India is one of the largest and most dynamic markets in the world which makes it quite a task to maintain the balance between the interests of the consumer and the producer. It is at this point that the Antitrust laws or the Competition act 2002 comes into play, that deal with Anti Competitive trade practices which includes anticompetitive agreements, abuse of Dominant position by enterprises and also regulation of acquisitions and mergers.

After it was realized that competition in markets is essential for all consumers, producers and economy as a whole it had become even more important to keep a check and obviate any attempt at subversion of free trade, abuse of market dominance and competition. It is a universally believed fact that competition laws are essential to ensure quality goods and services at affordable prices.

Anti Competitive Agreement

Anticompetitive agreements are agreements among competitors to prevent, restrict or distort competition. As per chapter 2, section 3(1) 'No enterprise or association of enterprises or person or association of persons shall enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India.'

The act declares any such agreement entered into void. The agreement shall not necessarily be written, as oral understandings are also covered under the law. Anti- competitive agreements can be of two types � Horizontal and Vertical. The difference between Horizontal and Vertical anti-competitive Agreement is that of the levels of the entities involved. Horizontal agreements as per section 3(3) are the ones where entities engaged in similar kind of trade practices initiate agreements such as agreement to fix price, to limit supply or production, to allocate markets, etc.

Such agreements are favorable only for the producer and detrimental for the consumers. In this case anticompetitive circumstances are generally created due to sharing of price related information amongst the competitors, though exchange of other types of information like strategic information, business plan, capacity details etc. can be equally problematic.

Vertical agreements as per section3(4) are those which are made between entities at different stages of production. For instance between producer and the supplier. Tie- in agreements, exclusive supply agreement, refusal to deal and resale price maintenance are the kinds of agreements involved and are declared void as per the act.

Therefore essential ingredients according to Section3(4) are:
  • There shall exist an agreement amongst enterprises or persons.
  • Parties to the agreement must not be at the same level of production.
  • The agreement should cause or should be likely to cause adverse effect on competition.

Abuse Of Dominant Position

As per the Competition Act,2002, Sub-section (1) of section 4 'Dominant position' means a position of strength, enjoyed by an enterprise in the relevant market in India, which enables it to operate independently of competitive forces prevailing in the market, or affects it's competitors or consumers in its favour.

It is also coherent that the act does not prohibit having a dominant position but rather outlaws its abuse. It has to be acknowledged that prior to the 2007 amendments the legislation was applicable only to an enterprise and not to the group of enterprises. Factors that help to establish dominance of a firm in the market are the market share, size and resources of the enterprise, the competitors, economic power, extent of entry and exit barriers in the market, etc.

It cannot solely be decided on the basis of market share that the firm has, as it in itself is affected by a lot of factors.It can be interpreted that the definition does not prescribe any arithmetical figure like percentage of market share to define dominance and it simply means the position of strength enjoyed by the entity in the relevant market.

The abuse is said to occur when an entity uses it's dominant position in an exclusionary or exploitative manner. Abuse of dominant position covers imposing unfair conditions or price, limiting production and development, denying market access, using dominant position in one relevant market to gain advantage in another relevant market, etc.

Development Of Competition Laws In India

The competition act, 2002 or the Anti-Trust laws were preceded by The Monopolies and restrictive trade Practices act, 1969 (MRTP). In 1964 the Monopolies Inquiry Commission was constituted under the chairmanship of Justice K.C. Das Gupta, a judge of the Supreme court. It led to the constitution of The Monopolies and Restrictive Trade practices commission in 1970. The Monopolies and restrictive trade practices act, 1969 has its roots in the Directive principles of state policy.

Its aim was to constraint concentration of wealth in a few hands. It had to be replaced with The competition Act,2002 because it was ill equipped to deal with the obstacles India was facing as an emerging economy. The act was highly non-dynamic and vague in nature. The MRTP Act comprised of unjust categorization i.e, it categorized any enterprise owning assets worth more than 20 crores to be a Dominant firm which was unreasonable as it was based solely on the factor of market share of the enterprise.

Another drawback was that it was ambiguous, it failed to clarify which activity would be restrictive and hence would constitute an offence under the act. It also included all types of possible offences under its ambit thereby leading to a variety of interpretations by the courts in the way of which the essence of law was lost.

Other major drawback was that it considered Dominance in itself adverse which wasn't the motive, when in reality the abuse of dominant position should be considered adverse. After gaps were identified in the act, several amendments were made in the act like the 1991 amendment which made it applicable to public sector undertakings and government companies.

However, eventually it was realized that due to multiple shortcomings, a new legislation was the need of the hour with the simultaneous emergence of the Liberalization, Privatisation, Globalisation (LPG) policy. Therefore to lay the foundations for a more healthier and competitive market the Monopolies and Restrictive Trade Practices Act was replaced by The Competition Act, 2002, which was further amended in the year 2007 and 2009.

Enforcement And Administration

The statutory body responsible for administration and enforcement of the Competition Act,2002 is The Competition Commission of India. It looks into cases and takes up complaints against the enterprises and persons in violation of the act.

The commission was established on 14th October,2003. It consists of a chairperson and not less than two and not more than six people. A few notable cases decided by the Competition Commission of India include that from 2014,whereby the CCI imposed a fine of Rs. 10 million upon goggle for failure to comply with the directions given by the director general seeking information and documents.

Also in December 2021, CCI took a step back from approving Amazon's investment in a Future group company which had initially received assent in 2019 as it was alleged that Amazon concealed the scope and complete information of its investment while seeking approval. And many other prominent cases.

The Anti trust laws of India have witnessed major transformations throughout these years and is now serving its function in the post liberalized economy where it is realized that Competition is the life and blood of the economy or the markets. The laws have proved to be beneficial in the recent cases due to the regular amendments that have taken place in the legislation in accordance with the recent socioeconomic and legal changes in the country.

The amendments of the year 2007 and 2009 and even the change to competition act, 2002 from the MRTP Act,1969 evidently portray the dynamic nature of the laws which is one of the most characteristic features. It is one of the most characteristic feature because to protect and secure the rights and welfare of the consumers the laws shall match up to the advancements made in the society and go through equal development.

Hence it can be said that the Antitrust laws are only enough when they are qualified to deal with the contemporary issues faced by the consumers. In the current scenario when E-commerce giants are leading the market and there is a paradigm shift in the way businesses are handled,it is very important to have a close scrutiny over them to ensure protection of consumer welfare.

This concern has indeed led to another amendment bill which can be regarded as a positive step as it aims to deal with Section 5 of the act pertaining to the mergers and acquisitions of the enterprise. The decision has been taken as several digital mergers and acquisitions with low transaction values are often not notified to the CCI.

The bill also includes provision to tighten the ropes on Anti-Competitive Practices while seeking amendments in Section 48, Section 41 regarding the penalties and powers described in the act. It is expected to be discussed in the upcoming winter session of the Parliament. Approval of the bill shall be a welcome step in the making the Antitrust laws more consumer friendly.

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