EVOLUTION AND DEVELOPMENT OF COMPETITION LAW
The author of this blog is Anamika Chhabra, 3rd year BA. LLB student at Fairfield Institute of Management and Technology, IP University.
CONCLUSION
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 mandates 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-
Articles 38 and 39 of the Constitution of India mandates 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 anti-competition practices
• Anti- competition practices like cartels,
predatory pricing, rigging etc are not clearly defined.
EVOLUTION OF MRTP AS 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: -
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)[1].
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 in 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 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[2]
·
Abuse of Dominant Position [3]
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 Cor. 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.
India
and the world we're 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.
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