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EVOLUTION AND DEVELOPMENT OF COMPETITION LAW



INTRODUCTION

Laws are framed for human or individual wellbeing. Laws are framed for human or individual wellbeing. Many branches of law have taken on the task of aiding a person. In this manner, a person can earn a living which is not unlawful. Everyone on the market must strive to be competitive and to succeed successfully in the market. One company or a firm should not destroy other people on the market in order to meet their demands and reach smoothly. Competition law originated as a distinct branch of law to govern and conduct competition on the market, and to monitor anti-competitive activity on the market. This article traces Competition law history.


REASON FOR MRTP ACT ENACTMENT

Articles 38 and 39 of the Constitution of India mandate that the government secure and preserve the society in which people obtain social, economic and political justice and address all the nation's institutions and that the State direct its policies as-

  1. Ownership and command of material resources are so well distributed that they aid the common good.

  2. The economic system does not work, since it produces a concentration of resources and common detrimental means.


OBJECTIVES OF MRTP ACT

• Prevention and concentration of economic power in few hands.

• Control and regulation of monopolies in certain sectors.

• Prevention of unfair trade practices.

• Prevention of restrictive trade practices.

• To regulate restrictive trade practices


DRAWBACKS OF MRTP ACT

• Poorly resourced commission

• Inadequacy in dealing effectively with anticompetitive practices, due to lack of definitions, cumbersome procedures and scarce resources

• Absence of specification of identifiable anticompetition practices

• Anti- competition practices like cartels , predatory pricing, rigging etc are not clearly defined.


Evolution of MRTP as a Competition Law

India chose a centrally planned economic system after independence, also known as the Nehruvian model of socialism. The Nehruvian model was a model of a mixed economy-a model that was neither a capitalist economy like the United States of America nor a socialist economy like the USSR All the private and public sectors co-existed under the mixed model. The strategy behind the mixed economy model was to argue that the government played an important role in the country's capital formation to encourage inclusive economic growth and social justice, but free market competition suffered as a result of government policies as follows: -

  1. Only the major companies were preferred

  2. The state levied high tariffs

  3. There was no proper system of license allocation

These issues led to the introduction of New Industrial Policy (NIP) and New Economic Policy (NEP) and consequently, competition law became important in the new era of LPG (liberalization, privatization, globalization).

Competition is “a situation in a market in which firms or sellers independently strive for the buyers’ patronage in order to achieve a particular business objective for example, profits, sales or market share” (World Bank, 1999). Competition law is designed to encourage and provide a equal opportunity for healthy competition between competing market players, and to protect the interests of consumers.


OBJECTIVES OF COMPETITION ACT

  • To provide for the establishment of a commission to prevent practices having adverse effect on competition;

  • To promote and sustain competition in markets in India;

  • To protect the interests of consumers;

  • To promote and sustain competition in markets,

  • To prevent anti-competitive practices,

  • To ensure freedom of trade


The USA perspective on Competition law

Moving back into the 1800s, several major corporations were known as trusts. They controlled entire segments of the economy, including railroads, oil, steel, and sugar. The major trusts recognized were the U.S. Steel and commonplace Oil; they were monopolies that regulated their commodity availability. With one corporation controlling a whole country, there was no competition, and smaller companies and consumers had no decisions concerning from whom to purchase. costs went through the roof, and quality appeared not to be a priority. This has caused hardship and the new American prosperity has become vulnerable. Trust-owning businessmen became wealthier and wealthier, the general public became angry and demanded action President Roosevelt violated many relationships. The aim of those laws was to guard customers by promoting market-based competition by enforcing what came to be called antitrust laws.

There are two major elements in the Competition Act:

  • Anti-competitive Agreements

  • Abuse of Dominant Position


ANTI COMPETITIVE AGREEMENTS

• Enterprises, entities or associations, including cartels, shall not enter into agreements concerning the manufacture, supply, distribution, storage, acquisition or control of goods or the provision of services which cause, or are likely to cause, a "serious adverse effect" on competition in India.

• Directly or indirectly determine sale or purchase prices,

• Limit or control production, supply, markets, technical development, investment or provision of services,

• Share the market or the source of output or service provision by allocating, inter alia, the geographical area of the market, the quality of the products or the number of customers or some other related means

• Directly or indirectly result in bid rigging or collusive bidding.


ABUSE OF DOMINANT POSITION

Dominant role abuse shall occur where an enterprise directly or indirectly imposes unreasonable or discriminatory conditions on the purchase or sale of goods or services, or limits production or technological growth, or establishes barriers to the entry of new operators to the detriment of consumers. In case American Tobacco Co. v. United States, 147 F.2d 93 (6th Cir. 1945), the US supreme court held that a company is dominant when it is in a position to make the other companies to leave the market.



CONCLUSION

India and the world were going through a new era of globalization, liberalization and privatization, and these changing times brought new obstacles, and in the modern era the existing MRTP Act became obsolete. Hence the new Competition Act was created to fit the hour's need. The new Act is focused on controlling the actions or activity of market actors Further the act’s main purpose is to protect and promote competition in the market.



About Author

Anamika Chhabra

I am a third-year student at FIMT and I seeked a summer intern position in The High Court of Delhi for summer 2019. I worked many district courts and NGO’s too, and I plan for a work experience in law firms. I am interested in Corporate law, and fighting for the rights of minority classes. I am also interested in legal research as it is an important skill for being a lawyer After graduation, I would like to work in a corporate firm. Well there is nothing wrong in dreaming big.

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