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PRESENTATION ON ANTI-COMPETITION LAW BY- SATYENDRA SINGH CHOUHAN ISBE-B 10-12 SUBMITED TO – PROF DEEPU KRISNASWAMY

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Need for Competition Law <ul><li>Competition: </li></ul><ul><li>Increases efficiency </li></ul><ul><li>Encourages innovation </li></ul><ul><li>Enhances consumer welfare – wider choice, lower prices, better quality </li></ul><ul><li>Conducive to economic and political democracy </li></ul><ul><li>Apprehension of market failure has prompted 100 countries to enact modern competition laws </li></ul>

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EXTANT COMPETITION LAW OF INDIA <ul><li>MONOPOLIES AND RESTRICTIVE </li></ul><ul><li>TRADE PRACTICES ACT,1969 </li></ul><ul><li>BROUGHT INTO FORCE IN 1970 </li></ul>

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OBJECTIVES OF THE MRTP ACT <ul><ul><li>PREVENTION OF CONCENTRATION OF ECONOMIC POWER TO THE COMMON DETRIMENT </li></ul></ul><ul><ul><li>CONTROL OF MONOPOLIES </li></ul></ul><ul><ul><li>PROHIBITION OF MONOPOLISTIC TRADE PRACTICES (MTP) </li></ul></ul><ul><ul><li>PROHIBITION OF RESTRICTIVE TRADE PRACTICES (RTP) </li></ul></ul><ul><ul><li>PROHIBITION OF UNFAIR TRADE PRACTICES(UTP) </li></ul></ul>

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<ul><ul><li>Prohibits Anti-Competitive Agreements </li></ul></ul><ul><ul><li>Prohibits Abuse of Dominant Position </li></ul></ul><ul><ul><li>Provides for Regulation of Combinations </li></ul></ul><ul><ul><li>Mandates Competition Advocacy </li></ul></ul>Main features of Competition Act

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MONOPOLISTIC TRADE PRACTICES <ul><li>UNREASONABLE PRICING </li></ul><ul><li>PREVENTING OR LESSENING COMPETITION IN SUPPLY/DISTRIBUTION OF GOODS/SERVICES </li></ul><ul><li>LIMITING TECHNICAL DEVELOPMENT, CAPITAL INVESTMENT OR PRODUCTION/SUPPLY </li></ul><ul><li>UNREASONABLE PROFITS (PROFITEERING ) </li></ul>

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RESTRICTIVE TRADE PRACTICES <ul><li>REFUSAL TO DEAL </li></ul><ul><li>TIE-UP SALES </li></ul><ul><li>FULL LINE FORCING </li></ul><ul><li>EXCLUSIVE DEALINGS </li></ul><ul><li>PRICE DISCRIMINATION </li></ul><ul><li>RE-SALE PRICE MAINTENANCE </li></ul><ul><li>AREA RESTRICTION </li></ul>

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UNFAIR TRADE PRACTICES <ul><li>MISLEADING ADVERTISEMENT AND FALSE REPRESENTATION </li></ul><ul><li>BARGAIN SALE, BAIT AND SWITCH SELLING </li></ul><ul><li>OFFERING OF GIFTS OR PRIZES WITH THE INTENTION OF NOT PROVIDING THEM AND CONDUCTING PROMOTIONAL CONTESTS </li></ul><ul><li>PRODUCT SAFETY STANDARDS </li></ul><ul><li>HOARDING OR DESTRUCTION OF GOODS </li></ul>

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Anti – Competitive Agreements <ul><li>Horizontal Agreements including cartels, e.g., price fixing, limiting production, sharing markets, bid-rigging </li></ul><ul><li>Vertical Agreements e.g., tie-in, exclusive supply/ distribution, refusal to deal </li></ul><ul><li>Cartel regarded most pernicious violation - heavy penalties - criminal offence (lysine, vitamins, graphite electrodes) </li></ul>

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Difference between Horizontal & Vertical agreement. <ul><li>VERTICAL RESTRAINTS : </li></ul><ul><li>TIE-IN ARRANGEMENTS </li></ul><ul><li>EXCLUSIVE SUPPLIES </li></ul><ul><li>EXCLUSIVE DISTRIBUTION </li></ul><ul><li>REFUSAL TO DEAL </li></ul><ul><li>RESALE PRICE AINTENANCE </li></ul><ul><li>ADJUDICATION BY RULE OF REASON </li></ul><ul><li>HORIZONTAL RESTRAINTS : </li></ul><ul><li>CARTELS {FIXING PURCHASE OR SALE PRICES (EXPORT CARTELS EXEMPTED) } </li></ul><ul><li>BID-RIGGING (COLLUSIVE TENDERING) </li></ul><ul><li>SHARING MARKETS BY TERRITORY, TYPE ETC. </li></ul><ul><li>LIMITING PRODUCTION, SUPPLY, TECHNICAL DEVELOPMENT </li></ul>

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Abuse of dominance <ul><li>Not dominance, but abuse is illegal </li></ul><ul><li>Dominance based, not on arithmetical formula, but on economic factors listed in Acts </li></ul><ul><li>Abuse includes : discriminatory pricing, limiting production, denying access </li></ul><ul><li>Examples : Microsoft (penalized Euro 497m) </li></ul>

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Mergers <ul><li>Ex-post action </li></ul><ul><li>Notification either compulsory or optional </li></ul><ul><li>Strict time frame for decision </li></ul><ul><li>Threshold limits </li></ul><ul><li>Less than 5% merger applications are prohibited worldwide </li></ul>

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Difference between Old & New <ul><li>MRTP ACT </li></ul><ul><li>1 . BASED ON PRE-1991 control regime </li></ul><ul><li>2. PREMISED ON SIZE </li></ul><ul><li>3. PROCEDURE ORIENTED </li></ul><ul><li>4. NO TEETH (REFORMATORY) </li></ul><ul><li>5. OFFENCES DEFINED IMPLICITLY </li></ul><ul><li>(CARTELS, BID-RIGGING ETC.) </li></ul><ul><li>6. FROWNS ON DOMINANCE </li></ul><ul><li>(25% OF MARKET SHARE) </li></ul><ul><li>7. UNFAIR TRADE PRACTICES COVERED </li></ul><ul><li>8. RUE OF LAW APPROACH </li></ul><ul><li>9. NO COMPETITION ADVOCACY ROLE FOR MRTPC </li></ul><ul><li>NEW LAW </li></ul><ul><li>1. BASED ON POST-1991 reforms </li></ul><ul><li>2. PREMISED ON CONDUCT </li></ul><ul><li>3. RESULT ORIENTED </li></ul><ul><li>4. CAN BITE (PUNITIVE ) </li></ul><ul><li>5. OFFENCES DEFINED EXPLICITLY </li></ul><ul><li>6. FROWNS ON ABUSE OF DOMINANCE </li></ul><ul><li>7.UNFAIR TRADE PRACTICES OMITTED </li></ul><ul><li>8. RULE OF REASON APPROACH </li></ul><ul><li>9. CCI HAS COMPETITION ADVOCACY ROLE </li></ul>

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Competition commission of India <ul><li>The Commission shall consist of a Chairperson and not less than two and not more than ten other members to be appointed by the Central Government, provided that the Central Government shall appoint the Chairperson and a Member during the first year of the establishment of the Commission. </li></ul><ul><li>The Chairperson and every other Member shall be a person of ability, integrity and standing and who, has been, or is qualified to be, a judge of a High Court; or, has special knowledge of, and professional experience of not less than fifteen years in international trade, economics, business, commerce, law, finance, accountancy, management, industry, public affairs, administration or in any other matter </li></ul>

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Some Important Cases <ul><li>Graphite Electrode </li></ul><ul><li>UCAR International Inc in 1995 took part in international price fixing conspiracy. Graphite Electrodes are used in manufacturing of steel. A federal jury of the Philadelphia convicted the Company and paid fine of US$ 110 mn after being pleaded guilty of price fixing </li></ul>

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<ul><li>Lysine Cartel </li></ul><ul><li>All important Lysine producers of the world doubled the international price of Lysine for three years. Lysine is a feed additive for poultry. During the continuance of the conspiracy, the cartel raised prices on over US $ 1.4 bn in global sales, which implied overcharging of US $ 140 Mn </li></ul>

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<ul><li>Vitamins Cartel </li></ul><ul><li>Hoffmann-La Roche & Lonza AG, BASF, Degussa-Huls Agand Merck KGAA of Germany and Rhone-Poulenc of France led a global conspiracy to fix price of vitamins, allocate markets, supply contracts and sales apart from bid-rigging on several occasions. Majority colluding firms admitted the conspiracy. Roche agreed to pay US$ 500mn. Five executives of Lonza agreed to cooperate in the investigation and paid fine of US$ 10.5 mn. BASF paid a fine of US $ 225 mn but Rhone-Poulenc through leniency programme escaped punishment because it supplied most of the evidence </li></ul>

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<ul><li>THANK YOU </li></ul>