India's Competition Policy: An Assessment

Abstract

This paper undertakes a detailed economic assessment of India's emerging competition policy regime, in the context of the international debate on competition policy and the possibility of WTO negotiations on the subject. It begins with a review of several recent judgments of the Indian Supreme Court, in which it has overturned rulings by the Indian antitrust agency, the Monopolies and Restrictive Trade Practices Commission, depriving the latter of extra-territorial jurisdiction and the power to restrict imports. Section II of the paper assesses the new Indian Competition Act of 2002 from the perspective of modern industrial organization theory and contemporary international practice, both of which focus on "efficiency" as the major objective. It argues that several provisions of the new Act(especially the reinstatement of the competition authority's power to restrain imports) will be self-defeating or hard to implement. Section III adopts a more historical approach to show that competition policy has served many other objectives in Europe and the United States, especially distributive goals, and makes a case in the Indian context for generous exemptions from the new Act. Section IV argues that the gains to developing countries from a WTO agreement to control international cartels have been greatly overstated.

Keywords: antitrust, competition policy, cartels, political economy, India, WTO

JEL Classification: F13, L40, N40