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| Paper Title: | HISTORICAL BACKGROUND AND CONTOURS OF COMPETITION POLICY |
| Authors Name: | Shivani Gupta , Shalini Kumari |
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IJRTI_183521
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| Published Paper Id: | IJRTI2208048 |
| Published In: | Volume 7 Issue 8, August-2022 |
| DOI: | |
| Abstract: | Competition law not only ensures competition in the market, but all tries to keep a check on all the practices that are harmful to the competitive process. Now, the question arises by whose act it can be checked because business enterprises are more profit oriented and they themselves cannot regulate. According, to the definition given by World Bank in 1999 states that 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, profit, sales or market share”. Being profit oriented organization sometimes these enterprises enter into such activities that kills competition in the market and make people handicapped and suffer losses due to malpractices. Now it is the duty of the state to protect the interest of the citizens. Articles 38 and 39 of the Constitution provide that the State shall strive to promote the welfare of the people by securing and protecting from various kind of discrimination. So, the Competition Act, 2002 is considered as an act of the Government which prohibits conduct which is anti-competitive and tends to interfere with the free enterprise because if competition or free enterprise is unprotected by the Government, it sometimes produces, in some areas of business, practices which are anti-competitive or monopolistic leading to inefficiencies in the market. Competition is the engine of the free enterprise and market economy performs better when there is competition in the market. Competition was defined by the courts as a process that required numerous participants and decentralization. Competition laws have been described as magna carta of free enterprise. They are important to the preservation of economic freedom and the free enterprise system. The need for competition law arises because market can suffer from failures and distortions, and various players can resort to anti- competitive activities such as cartels, abuse of dominance etc which adversely impact economic efficiency and consumer welfare. The definition and the interpretation to various anti- competitive agreements will be dealt under the conceptual contours in the later part of the research in depth. Thus, there is a need for respect to competition law to provide a regulative force which establishes effective control over economic activities. There is a widening consensus among jurisdictions with respect to competition laws that “the basic objective of competition policy is to protect competition as the most appropriate means of ensuring the efficient allocation of resources and thus efficient market outcome-in free market economies”. When India moved towards liberalization and opened its economy for International trade, strong need was felt to have a sound internal and external competition. At that time MRTP Act was proved to be a complete redundant as it only regulated the monopoly in the market. The need was felt to create a healthy and competitive environment, the Competition Act 2002 came as a positive step but the working of the commission became functional in May 2009. As soon as the commission became functional, it took the lead in curbing the anti competitive practices which were causing an adverse effect on competition in the economy and also abusing their dominant position. Various persons or associations of person came under the scanner of Competition Commission of India (hereinafter CCI) who were indulging in cartelization, entering into anti competitive agreement or misusing their dominant position. As CCI was functional after 2009, it started its investigation and in the year 2011 National Stock Exchange (NSE)was fined with 55 Crore for abusing its dominant position in currency derivative market and in the same year it imposed a fine Rs 630 Crore on DLF for abuse of dominant position. In June 2012, CCI imposed a fine of Rs 6,300 Crore on 11 cement companies for cartelization. Section 27 of the Competition Act gives a wide discretion to CCI to decide on the quantum of penalty and states that it has the power to impose such penalty as it deem fit. Fines under the Competition Act are linked to and may extend up to 10% of the turnover of the enterprises and in cases of a cartel agreement they may extend up to three times of the profit made by the guilty enterprises. CCI’s decisions say nothing about how it decides to impose a fine equaling the maximum 10% limit in certain cases and in certain others equaling only 5% of the turnover. In a recent Cement cartel case mentioned above, CCI has even imposed a fine equaling 0.5 times the profit (i.e. 50% of the profit), again without providing any reasons. A broad assertion by CCI that the fines have been fixed taking into account the facts and circumstances of the case cannot be said to meet the requirement of fair and reasonable exercise of discretionary powers. So far, penalties have been imposed by the CCI, but in most of the cases (more than 90%), enterprises have not paid the fines levied and have appealed to the Competition Appellate Tribunal (hereinafter COMPAT). Therefore, the effect of the penalty is yet to be gauged as transparency is considered to be the essence of any administrative body. The current approach of CCI may perhaps end up defeating the very purpose of why the Competition Act provides for levying penalties. First, an order which imposes very high penalties and does not contain a description of how the penalty amount has been determined is bound to be litigated, the obvious expectation being that COMPAT or the Supreme Court of India (“SC”) would strike down such an order. If the orders of CCI are litigated, it would defeat the entire purpose of the carrot and stick approach that CCI has been advocating through its lesser penalty regulation. Second, if the penalty is not commensurate with the magnitude of the offence, it would not have the desired deterrent effect. Moreover, an excessive and disproportionate levy of penalty will end up providing undue and unfair advantage to the infringing parties’ competitors. Faced with unduly burdensome cost of compliance, the penalized firms may not only lose their competitiveness, but being so burdened and simultaneously weakened because of undue advantage accruing to their rivals, they may even be forced to exit the market. In the long run, CCI’s practice may chill competition rather than protect and promote. The immediate question for CCI, therefore, is how to make the process of determining the quantum of penalty transparent and error-free. The first step would be to give the concerned parties an opportunity to be heard separately on the issue of quantum of penalty. Such an opportunity was indeed envisaged in the initial version of Regulation 48 of the CCI General Regulations, 2009, which was later amended to effectively do away with the opportunity. The end result is that parties have to make their submission on the quantum of penalty at a stage when they do not even know whether CCI will hold them guilty of infringement. Amending the General Regulations to provide the parties an opportunity to be heard post the determination of guilt by CCI will go a long way in making the entire process of assessing the penalty amount transparent. |
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| Cite Article: | "HISTORICAL BACKGROUND AND CONTOURS OF COMPETITION POLICY", International Journal of Science & Engineering Development Research (www.ijrti.org), ISSN:2455-2631, Vol.7, Issue 8, page no.300 - 308, August-2022, Available :http://www.ijrti.org/papers/IJRTI2208048.pdf |
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2456-3315 | IMPACT FACTOR: 8.14 Calculated By Google Scholar| ESTD YEAR: 2016 An International Scholarly Open Access Journal, Peer-Reviewed, Refereed Journal Impact Factor 8.14 Calculate by Google Scholar and Semantic Scholar | AI-Powered Research Tool, Multidisciplinary, Monthly, Multilanguage Journal Indexing in All Major Database & Metadata, Citation Generator |
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Published Paper ID: IJRTI2208048
Registration ID:183521
Published In: Volume 7 Issue 8, August-2022
DOI (Digital Object Identifier):
Page No: 300 - 308 Country: DEHRADUN, Uttarakhand, India Research Area: Other Publisher : IJ Publication Published Paper URL : https://www.ijrti.org/viewpaperforall?paper=IJRTI2208048 Published Paper PDF: https://www.ijrti.org/papers/IJRTI2208048 |
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