REVAMPING COMPETITION LAW IN INDIA

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Introduction

The Monopolies and Trade Restrictive Practices Act 1969 (MRTP Act) found it’s Grundnorm from Article 39(b) &(c)  of the Indian Constitution which lays down the Directive Principle of State Policy of securing the ownership and control of the material resources of the community and to distribute them as best to sub serve the common good, and operate the economic system so that there is no  concentration  of wealth and means of production to the common detriment[1] which all the  current and earlier economic laws in India have tried to achieve. In the wake of liberalisation in Indian Economy in 1991, the Act was repealed and it set out to give out two new acts namely, Consumer Protection Act, 1987 and The Competition Act,2002.

 But the Competition Act of India gained it’s jurisprudential flavour from the List III of VII Schedule of the Indian Constitution. When comparisons were made between the parent act and its product act it is noted that the new act is less biased towards the defendants and the harsh provision of the penalisation instead of orders are injected in the act in order to make the liability more definite in case of commission of anti-competitive activity. But it didn’t reach its expected objectives and today there is a need to revamp the legislation as stated by the Hon’ble Supreme Court of India, “In the event of delay, the very purpose and object of the Act is likely to be frustrated and the possibility of great damage to the open market and resultantly, country’s economy cannot be ruled out”[2]The Act is divided into three components first judicial part being the prohibition of certain agreements, abuse of dominant position and regulation combinations, second regulatory part being , the elaborative legislative description of the Competition Commission Of India: it’s duties and penalisation power of the commission and third being competition advocacy etc.

Why Does Competetion Act in India Need a Revamp?

The ambit of the Competition Act is being crucially considered with the parallel legislation like Intellectual Property Act and the Competition laws are also seen to play a role in the App- based food industry as in December 2018 , Kerala Hotels and Restaurant Association (KHRA) went on strike against the high commission charged by the food delivery apps and had subsequently filed a complaint against CCI and Prime Minister’s Office against the unfair trade practices[3].The cursory look at the above factual developments that are taking place under the competition regime in India, it is imperative that India has too look into the deep loophole that are preventing this legislation become the economic constitution[4] of India.

The CCI’s Jurisdiction

The problem with the Competition Act is the ambiguous jurisdiction that makes it important for the judicial decision to overtake the interpretation of such an act.The one of the first cases regarding the jurisdiction of the CCI was the SAIL[5] judgement as per whose judgement an opinion was made the CCI does not have an adjudicatory function but rather a purely Administrative function. However in the recent case that the Apex court adjudicated regarding the jurisdiction was in CCI V. Airtel[6] which streamlined the CCI powers in investigating cases involving competition and sectoral issues. It was the decision in which the Bombay high Court had quashed the CCI investigation against the Telecom Cartel formed by Vodafone and Airtel. It is also to be noted that CCI had earlier also dealt with the issue of the jurisdictional claims involving the TRAI in Consumer Online Foundation[7]case, where it was alleged that as TRAI and TDSAT had “jurisdiction and responsibility to govern and regulate the telecommunication industry covering telecom, broadcasting and cable TV series” that any matter giving rise to competition concerns was within the committee’s purview though it is yet to be sanctioned by the Apex court. The CCI has never been actively been taking up case with a concrete judgement for instance the chain of cases againstGoogle and concurrent cases of Ola, Uber and others to name a few were the only case in which the COMPAT had actively taken up the investigation and were referred by them to be adjudicated under the CCI’s direction and hence, there have been very few cases where the pure jurisdiction of CCI has been involved, rest of the other cases are in parallel to the CCI’s power or adjudicated under different authority. There are many jurisdictions for the consumer or the agree vied company to file against the offender but, the economic operator will simple won’t know where they stand in the jurisdictional competition which has been the Case of Reliance Co.when it approached the court placing it’s bet for the Telecom Regulatory Authority of India Act, 1997 (TRAI) while fighting its competitors Airtel and Ors. This creates an overlapping various regulatory Acts over one another leaving the ambiguity to the current act in discussion.

Overlapping of Laws

The overlapping was not only found in the TRAI but there has been a history of Patents Act and Competitive Act crossover that has made the implementation of the law tougher. The Erricson v. CCI[8]in the distinction between the Patents Act and the Competition Act was made . It was a classic case of unfair and discriminatory charges extracted by the Ericsson from Micromax and Intex. It was seen that Patent act was a specific act and would have an overriding effect over Competition Act also an important difference in the monopoly policies that these two act approach. While one says about protecting the interest of the creator, the other says that the protection layer of monopoly shouldn’t be a devious turn to the healthy competitive practices of the company and as of now many pharmaceutical company are in a catch 22 situation because of the two acts, making the differences between the legislation irreconcilable. Thus, it mostly concluded that with the TRAI and IPR coming into picture with the complex business being undertaken in different parts of the world it is important to see if there is a way out of this obtuse jurisdiction of the current legislation.

Although in a recent, Delhi High court came clear on the constitutional challenges surrounding the Act in the case file against 14 Car making companies in which the Car makers were prohibiting the sale of the exclusive parts to some specific companies and in the later part of the investigation granted by  the CCI there were other giant car makers like Ford India, Nissan Motors Pvt Ltd and Toyota Kirloskar Motor Pvt. Ltd who were addressing the same issue in the Competition Appellate Tribunal (COMPAT). Thus, the Delhi High Court faced the issues of CCI’s jurisdiction, powers and S.27(b). Therefore, countries like India should explicitly recognise the interplay between IPR and competition policies It might be desirable to explicitly include the anti-competitive practices arising out of IPRs in the new competition law of the country.

Internet Market Dynamics

The first challenge in an economically vibrant scenario of world wide web is to address the need for a modern yet dynamic framework that will solidify the whole piece of legislation and help in dealing with the technologies like Artificial Intelligence, Internet of Things, algorithmic pricing, virtual competition, cryptocurrencies and block chain. This will significantly handle the major portion of the Ease of Doing Business ranking in India as being virtually capable will lead to enormous opportunity to India to trade with different countries and stabilise itself for any changes that will be made in the internet operative economy. Since the act tries to lift the corporate veil and expose the black masterminds of the unfair and anti-competitive trade practices it becomes crucial that act now should also focus on the anonymous transaction makers behind the screens who operate a millions and billions of business. For example, block chain as it’s decentralised, anonymous and immutable and could give rise to multiple questions regarding detection of unilateral practices and identification of perpetrators.The committee’s role shouldn’t be control of pricing of the product on the internet but rather also get a hold of the competition which is driving the internet into innovation that can shake the market structure and help consumers ultimately to be the real king but without injuring any other competing company in the business.[9]

The scope of cartel agreements

Cartelisation is a concept which is inclusive of all the restrictions that are put by the competitive laws and it is indecent to be embracive of such kinds of collusions wherein there is a restricted exchange of confidential information which make it more anti- competitive and limited extent of cooperation to the co-existing participants of the business and thereby making it is an exclusive zone of business makers who share the same goals and ideology about their respective business practices. [10]The cartelisation help to understand the pricing wringing that can cause an upheaval in the market and can lead to anti- competitive practices which impact India’s ranking in the Ease of doing business. Section 36(2) read with section 41(2) of the Competition Act confers on the CCI and Director General the powers as per the Civil Court under the Code of Civil Procedure, 1908 which include all the procedural aspect related to any ordinary civil case.” In spite of being provided with vast sweeping powers of investigation, it is very difficult to obtain direct evidence with respect to the existence of a cartel, since cartels traditionally are always hatched in secrecy”[11]. Thus, it advisable to embrace the changes in India’s cartel system which is seemingly dead for ages since the inception of the Oil market.

The Small Ambiguity and Roadblocks

The competition of India Act talks about ‘penalising’ the other party at fault while maintaining its civil jurisdiction and as far as the law of civil nature is concerned it is a law which seeking compensation as a relief rather than  penalty as the jurisprudence of civil law states that  its purpose is to restore the plaintiff rather than harm the defendant for which the compensation is the best remedy[12] but it is not applicable in competition law. Section 27(b) provides for penalties in the event of contravention of the law and does not recognise the concept of ‘relevant turnover’ thus finingthe companies on the wrongly calculated numbers.[13] The Act, as such, has mixed up both the proceedings, which are gross legal errors that need to be rectified at the earliest.

The frivolous legislations [14]have also been an issue from the defendant and the plaintiff’s side in which each of them try to suit their respective purposes by filing false cases in order to gain a bargain or nudge each other in the battlefield of market which is inherently against the spirit of the Act. The earlier MRTP Act had no line of defence for the offenders in the case of being found guilty under the Act and no merit was accepted on the part of the defendants while adjudicating but with the introduction of the Competition Act, 2002 even that is possible. The lack of awareness and the institutional memory loss are also small roadblocks that dent the standing of the act in every case now and then.[15]

CONCLUSION AND RECOMMENDATIONS

The commission as well as the government should deal with the Act in its due urgency as act like competition Act is a defense mechanism that Indi play when it will jeopardised by the trap of the big companies in order to protect its consumers. Moreover, a study conducted by Ernest and Young named ‘Calibrating the pulse of Competition law in India’ states that 80% of Indian companies are not even aware about the existence of the law. Thus,advocacy should be the aim of the competition Act and well the current government regime.

 The CCI has an active role to play when discussing about the Insolvency and Bankruptcy code as the companies have to take prior permission of CCI if they acquire a bankrupt or insolvent firm as it goes against the competitive practices in the open market. The recent acquisition of a sick co., Ruchi Soya Industries Ltd. by a consortium led by home grown PatanjaliAyurved a leading company in edible oils and soya products, in a record time of 13 working days , is a case in point which justifies the CCI as a contributor to the proverbial “ease of doing business” goal of the government.

 India could learn from the Hong Kong and adapt a National Competition Policy that can look after the whole enigma of the judicial as well as the regulatory aspect and the objective of it being clear and concise wouldn’t even interfere with the other legislation. A draft of Competition Policy 2011 is pending before the parliament and should be approved as soon as possible as it will help cover almost all the loopholes present in the Act.The proponents of this viewpoint to the high post-war growth rates of Japan, Korea and other East Asian economies as evidence of national competitiveness relative to that of the United Kingdom and the US and it is also hoped that India will also take the best of its opportunity in its favour to turn it into fortune.

End Notes

 [1]Ind. Const. art. 39.

[2] Competition Commission of India v. Steel Authority of India Limited, 10 SCC 744 (2010).

[3]Susan Varghese,Online food delivery services to stop in Kochi from Saturday (Nov. 29, 2018 10:58 AM), http://www.newindianexpress.com/cities/kochi/2018/nov/29/foods-not-coming-home-anymore-1904700.html

[4]‘US called its competition law as an economic constitution’: Paul H. Brietzke, The Constitutionalization of Antitrust: Jefferson, Madison, Hamilton, and Thomas C. Arthur, 22 Val. U. L. Rev. 275 (1988). Available at: http://scholar.valpo.edu/vulr/vol22/iss2/2

[5]Competition Commission of India v. Steel Authority of India Ltd.; 10 SCC 744. (2010).

[6]Competition Commission of India v. Bharti Airtel Ltd. &Ors.; C.A. No. 11843 to 11852 of 05.12.2018 (2018).

[7]Consumer Online Foundation v. Tata Sky Limited &Ors., Case No. 02/2009 decided on 24.03.2011 (2011).

[8] Telefonaktiebolaget LM Ericsson  (PUBL) v. Competition Commission of India, W.P. (C) 464/2014 & 1006/2014 was decided on 30.03.2016and is pending in appeal in L.P.A. 550/2016 ( 2016).

[9]SmritiParsheera, Ajay Shah and Avirup Bose, Competition Issues in India’s Online Economy, NATIONAL INSTITUTE OF PUBLIC FINANCE AND POLICY NEW DELHI, WORKING PAPER NO. 194 (2017).

[10] UN: THE ORGANIZATION OF PETROLEUM EXPORTING COUNTRIES, COMPETITION AND THE WORLD TRADE ORGANIZATION, UNCTAD/DITC/CLP/2003/11 (2003).

[11]Abir Roy, Chapter 2: Anti-Competitive Agreements And Competition law, Competition Law In India: A Practical Guide,KluwerLaw International; KluwerLaw International, pp.43 – 156 (2016).

[12]Santo Davide Ferrara Et Al, Personal Injury And Damage Ascertainment Under Civil Law: State-Of-The-Art International Guidelines (2016).

[13]This was argued in the case of the Re;Anti- competitive conduct in the Dry –Cell Batries Market in India vs. Panasonic Energy Ltd and Ors Case No. 61 of 2014 (2019).

[14]ChandramauliDwivedi, India: Competition Law And Frivolous Litigation: An Indian Perspective, ( Jan 21, 2019) http://www.mondaq.com/india/x/774208/Antitrust+Competition/Competition+Law +And+Frivolous+Litigation+An+Indian+Perspective

[15] Manas Kumar Chaudhari, MRTP Act to Competition Act: The Way Forward,Vikalpa The Journal For Decision Makers 41(2) 168–193 Indian Institute Of Management, Ahmedabad Sage Publications (2016), available at:  sagepub.in/home.nav DOI: 10.1177/0256090916647222 http://vik.sagepub.com


Ritam Khanna

BBA LLB
Symbiosis Law School, NOIDA
email: ritamk3@gmail.com

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