MRTP and Competition Act Compared

BY ANAND GORISARIA MMS FINANCE ROLL NO.
116
Three main areas the MRTP Act focused on: Concentration of economic power Competition law Consumer protection
The principal objectives sought to be achieved through the MRTP Act: Prevention of concentration of economic power to the common detriment Control of monopolies Prohibition of Monopolistic Trade Practices (MTP) Prohibition of Restrictive Trade Practices (RTP) Prohibition of Unfair Trade Practices (UTP)
An act to provide, keeping in view of the economic development of the country, for the establishment of a commission to prevent practices having adverse effect on competition in the market, to protect the interest of consumers and to ensure freedom of trade carried on by other participants in the markets, in India, and for matters connected there with or incidental thereto.
The foremost constituent of any competition policy/law is to foster competition and the need to deal effectively against practices and conduct that subvert competition. Competition Act, 2002 has essentially four compartments

Anti - Competition Agreements Abuse of Dominance Combinations Regulation Competition Advocacy
Firms enter into agreements, which may have
the potential of restricting competition. There are two types of anti-competitive agreements horizontal agreements and the vertical agreements.
HORIZONTAL AGREEMENTS
Agreements between two or more enterprises that are at the same stage of the production chain and in the same market dealing in the same product or products.
Agreements regarding prices - agreements that directly
or indirectly fix the purchase or sale price. Agreements regarding quantities - agreements aimed at limiting or controlling production, supply, markets, technical development, investment or provision of services. Agreements regarding bids (collusive bidding or bid rigging) - These include tenders submitted as a result of any joint activity or agreement. Agreements regarding market sharing - agreements for sharing of markets or sources of production or provision of services by way of allocation of geographical area of market or type of goods or services or number of customers in the market or any other similar way.
VERTICAL AGREEMENT
The vertical agreements are those relating to an actual or potential relationship of purchasing or selling to each other.
Tie in arrangement agreement requiring a purchaser to
purchase some other goods. Exclusive supply agreement agreement restricting the purchaser from acquiring any goods other than those of the seller. Exclusive distribution agreement agreement to restrict the supply of any goods for sale of the goods Refusal to deal agreement which restricts to deal with the persons to whom the goods are sold or bought from Resale price maintenance agreement to sell the goods on condition that the prices to be charged shall be the prices stipulated by the seller.
Position of strength, enjoyed by an enterprise, in the relevant market, in India, which enables it to (i) operate independently of competitive forces prevailing in the relevant market; or (ii) affect its competitors or consumers or the relevant market, in its favor
Directly or indirectly, imposes unfair or
discriminatory1. Condition in purchase or sale of goods or service; or 2. Price in purchase or sale (including predatory price) of goods or service
Limits or restricts- Production of goods or provision of
services or market
Indulges in practice or practices resulting in denial of
market access.
Uses its dominant position in one relevant market to
enter into, or protect, other relevant market.
Combinations, in terms of the meaning given
to them in the Act, include mergers, amalgamations, acquisitions and acquisitions of control. A merger leads to a bad outcome only if it creates a dominant enterprise that subsequently abuses its dominance
The
actual and potential level of competition through imports in the market. The extent of barriers to entry to the market. The level of combination in the market. The market share, in the relevant market. The extent to which substitutes are available. Whether the benefits of the combination outweigh the adverse impact of the combination.
One of the main objectives of competition advocacy is to foster conditions that lead to a more competitive market structure and business behavior without the direct penalty loaded intervention of the Competition Commission of India (CCI).
The CCI in the Act has been entrusted with the following two basic functions:
Administration and enforcement of competition law
and competition policy to foster economic efficiency and consumer welfare.

Involvement proactively in Governmental policy
formulation to ensure that markets remain fair, free, open, flexible and adaptable.
MRTP ACT 1. 2. 3. Based on the pre-reforms scenario Based on size as a factor Competition offences implicit or not defined Complex in arrangement and language
COMPETITION ACT Based on the post-reforms scenario Based on structure as a factor Competition offences explicit and defined
4.
Simple in arrangement and language and easily comprehensible 4 per se offences and all the rest subjected to rule of reason Frowns upon abuse of dominance No requirement of registration of agreements
5.
14 per se offences negating the principles of natural justice Frowns upon dominance Registration of agreements compulsory
6. 7.
MRTP ACT (ctd.) 08. No combinations regulation
COMPETITION ACT (ctd.) Combinations regulated beyond a high threshold limit Competition Commission selected by a Collegium (search committee) Relatively more autonomy for the Competition Commission
09.
Competition Commission appointed by the Government Very little administrative and financial autonomy for the Competition Commission No competition advocacy role for the Competition Commission No penalties for offences Reactive and rigid Unfair trade practices covered
10.
11.
Competition Commission has competition advocacy role Penalties for offences Proactive and flexible Unfair trade practices omitted (consumer forum will deal with them)
12. 13. 14.

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BY ANAND GORISARIA MMS FINANCE ROLL NO.

Anti - Competition Agreements Abuse of Dominance Combinations Regulation Competition Advocacy

Firms enter into agreements, which may have

Directly or indirectly, imposes unfair or

enter into, or protect, other relevant market.

Combinations, in terms of the meaning given

and competition policy to foster economic efficiency and consumer welfare.

MRTP ACT (ctd.) 08. No combinations regulation

12. 13. 14.

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