Competitiveness of Indian Business Vis-à-Vis Legal Provisions and Judicial Interpretation
IIMKInternational Conference on Competitiveness, March 2006
14 Pages Posted: 8 Jan 2007
A business operates its over all activities in environment where legal framework provides a protection to the business for its right and similarly business is also accountable for its duties towards various stakeholders. In dynamic environment and more particularly after liberalization in the country and over all globalisation, a business requires being more vigilant in framing strategies at corporate and business level. The concept of competition now is seen as sine qua non for three reasons; (1) being mandate by the State and Statute, one can't escape from its legal responsibility (2) being used as a weapon to improve quality and thereby winning confidence of customers, building brand image, increasing market share (3) improving quality using optimum resources is seen as corporate social responsibility.
The paper discusses on the first aspect, analysing Constitutional provisions and other relevant Statutes and interpretation by Supreme Court and various High Courts in the matter related to dispute aroused between supplier of goods & services vs. customers & society.
The Constitutional Law of India has directed State by chapter IV, known as Directive Principles. The chapter III, gives fundamental rights to the citizens implementing this chapter has many time created conflicts with the other chapter i.e. directive principles. The courts have harmonized such conflicts by giving higher weightage to either of two. The concerned chapter IV directs State in matter of concentration of wealth, welfare of consumers' vis-à-vis Fundamental Rights (under chapter III) of a citizen (supplier of consumers). From this general mandate, government enacted MRTP Act, Consumer Protection Act, Competition Act, Company Act and few other Statues.
On the passage of time path of socialistic pattern by government changed into capitalistic pattern, influenced by global forces has also changed mindset of consumers as well judicial interpretation also changed direction of doing business by taking care of consumers and society. Recent judgments related to above Acts and relevant issues, e.g. restricting competition, welfare of consumers, marketing and unfair trade practices, abolishing unnecessary restrictions on manufacturers that are imposed by government, restrictive and monopolistic practice etc are few examples that are discussed and analysed at length in the paper.
The paper discusses on the second aspect that is competition is being used as weapon to improve quality and thereby winning confidence of customers, building brand image, increasing market share. The business survives and excels if they satisfy their important stakeholder, i.e. consumer. This is possible by improving quality of the product and complying legal obligation attracts more consumers for longer period. That gives them an edge in marketing, because loyalty of consumer consumes less market expenses and consumers perceive law-abiding business as good business. The paper highlights few business cases that succeeded in wealth maximization of stakeholders.
Finally we discuss how competition improves quality of the product and service using optimum resources is seen as corporate social responsibility. The perception and mind set has been changed due to increased literacy and awareness. Society expects that as business also consume common resources of the society and hence it should return a part of the fruit for social cause. The paper discusses few socially responsible corporate pertinent to above two aspects and conclude over all competitive business environment in light of legal provisions and judicial pronouncements.
Keywords: Competitiveness, Restrictive, Monopolistic and Unfair Trade Practice
JEL Classification: L41
Suggested Citation: Suggested Citation