The Competition Act of 2002 is inadequate to deal with abuses of monopoly power in a changing business environment. Comment. (250 Words)

Mentors Comments:
1. mention why competition act came in the first place
2. how is it able to change with times and its limitations
3. what ways would you suggest to ensure fair competition

Competition policy in India is governed by the Competition Act of 2002. The main motive of the act was to promote the competition in the Indian market so that the interests of the customers can be protected and to ensure freedom of trade carried on by participants in the Indian market.

Following are the Objectives of the competition Act 2002:
1. To protect the interests of the consumers by providing them good products and services at reasonable prices.
2. To promote healthy competition in the Indian market.
3. To prevent the interests of the smaller companies or prevent the abuse of dominant position in the market.
4. To prevent those practices which have adverse impact on competition in the Indian markets.
5. To ensure freedom of trade in Indian markets.
6. To regulate the operation and activities of combinations (acquisitions, mergers and amalgamation).

Following are significance of the act-
 It  recognises only 4 offences, which are deemed to be against the principle of natural justice.
 The Competition Act can pass an order to prevent and punish such activities, which abuses competition.
 The Competition Act provides competition fund for promotion of competition advocacy and creation of awareness about competitive issues and training as may be prescribed in its rules.
 Under Competition Act entity having status of dominant position is not considered as bad. Whereas abuse of dominant position affecting consumer interest is considered as immoral.
 Competition Act does not lay down any such requirement for registration of agreements.
 Under Competition Act the 'group' defination has been simplified and it focuses on the firm’s structure not on the size factor.
 Competition Commission can initiate the suo motu proceedings and levy penalties.
 Under Competition Act the cases relating to unfair trade practices will be transferrd to consumer courts.
 The chairman of the Competition Act will be appointed by a committee consisting of retired judiciary, person having professional expertise in various fields of trade commerce, industry, finance etc. 
 The leniency regime, as a whistleblower’s tool, has given a boost to the CCI’s cartel enforcement.
 CCI has expeditiously cleared over 650 merger notifications with an average disposal time of 23 days in 2018.
The Act is now inadequate to deal with the changing business environment in telecommunications, technology and e-commerce, and the government’s own role in distorting competition.
 Dealing with antitrust issues involving new age economy and evolving ways in which business is done globally is a key challenge.
 Antitrust regulators around the world are grappling with tools of analysis to examine issues involving the digital economy. These include the algorithm pricing, big data, or mergers where data and not turnover are of real relevance.
 Also, moving away from traditional measures of market share only to parameters which include access to data, network effects, and multi-sided markets is essential.
 The consumer data and behaviour is the “asset" around which a monopoly or an oligopoly can exist. Private corporations or the government can abuse this asset by monopolizing it to deliver a range of goods and services.
 A government may abuse its power to regulate by preferring large domestic corporations over foreign ones, or by interfering in pricing. 
 It prescribes threshold limits that do not correspond to the disparate needs of various sectors of the Indian economy. For instance, mere asset size is not a sufficient criterion to restrict enterprises from expanding their market base.
 Capital intensive sectors such as infrastructure and petroleum refining, need substantial asset creation and may unnecessarily be subjected to the rigours of the Act merely by virtue of their asset size.
 It seems to thwart the completion of combinations, including outbound combinations that have put India in the limelight of corporate activity globally. Consequently, enterprises are wary of undertaking combinations.
 It imposes time-consuming notification requirements, with little corresponding certainty even after the expiry of the prescribed waiting periods.
 Unlike the US, the waiting period is significantly shorter (30 days). The lengthy 210-day wait in India’s case impacts time lines for closing transactions, and raises the costs involved in waiting, too.
 Several high courts are failing to appreciate the role of regulators, particularly CCI, which was set up in 2009. Its jurisdiction is still questioned and high courts are brisk in stalling investigations initiated by them.

Unless the shortcomings are adequately dealt with, India’s competition law could project India’s economy as being unfavorable to globalization and as one that is unduly restrictive of competition. It should be reformed in line with the dynamics of the Indian economy as opposed to merely replicating international principles.

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3 years ago

Pls review

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Vishwanath Pratap Singh
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MOJO9801U00N04106675, Please Review My Answer.