Of Omissions and Commissions: India's Competition Laws

Abstract:     
In 2009, India repealed its 40 year old Monopolies and Restrictive Trade Practices (MRTP) Act, and brought into force most sections of the 2002 Competition Act. After a brief introduction to the basic economic principles underlying modern competition law, this paper reviews the country’s experience with the MRTP Act. It argues that the way the Act was structured, amended, interpreted and enforced ensured that it could not serve as a competition law. Consequently, it did not bequeath a body of expertise that could help in the implementation of its successor, the Competition Act, which is very demanding in terms of economic analysis. The strengths and weaknesses of the new law, the reasons for its delayed implementation, and the first few decisions of the Competition Commission of India (CCI) are then discussed.

Although in many respects the new regime marks an improvement relative to the MRTP Act and MRTP Commission, there are also several potentially serious problems. In particular, “contribution to economic development” may be employed in deciding on mergers or abuse of dominance; provisions on anti-competitive agreements may be interpreted to allow a rule of reason even for cartels; those on abuse of dominance give the CCI authority to take action even in cases where there is no adverse effect on competition. The sections governing merger review remain very controversial, and had not been brought into force as of September 2010. The CCI and the tribunal set up to hear appeals from its decisions have been saddled with a huge backlog of unresolved cases and investigations that were pending with the MRTP Commission. Finally, the long delay (from 2003 to 2009) in bringing the Act into force has resulted in the departure from the CCI of all the staff members who had acquired some familiarity with competition analysis.

Number of Pages in PDF File: 18

Keywords: Competition law, antitrust, India

JEL Classification: K21

Accepted Paper Series