Independence of Competition Commission of India

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A competition regulator is generally a statutory authority with the mandate to enforce competition law (also called antitrust law in some countries such as USA) and may sometimes also enforce consumer protection laws. Competition regulators may regulate anti-competitive agreements including cartels as well as abuse of dominant position in the markets. They also regulate certain aspects of mergers and acquisitions of business and often undertake advocacy also to promote competition culture. There are more than hundred such regulators in the world with USA and European Commission being two major jurisdictions, among others.

Introduction

Competition Act, 2002 was passed in January 2003. Competition Commission of India (CCI) was set up in October 2003 to implement this law. However, legal challenge prevented full constitution and enforcement and only advocacy function was notified. CCI was duly established on 1.3.2009 as an autonomous independent body comprising Chairperson and six members. An appellate body called Competition Appellate Tribunal was also set up on 20.5.2009 with final appeal to Supreme Court of India. CCI is thus, a fully empowered body today and Indian Competition Law has fully come into force. It is the duty of the Commission to eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade in the markets of India. The Commission is also required to give opinion on competition issues on a reference received from a statutory authority established under any law and to undertake competition advocacy, create public awareness and impart training on competition issues.

History

The earliest efforts to control price fluctuations and unfair trade practices can be traced back to the Indian and Roman civilizations. Competition is “a situation in a market in which firms or sellers independently strive for the buyers’ patronage in order to achieve a particular business objective for example, profits, sales or market share” (World Bank, 1999). Competition Law is structured to promote and provide a fair chance for healthy competition between contending competitors in the market and to protect the consumer’s interests. The earliest ancient example of modern competition law’s ancestors is Lex Julia de Annona, during the Roman Republic around 50 BC. To protect the corn trade, heavy fines were imposed on direct, deliberate and insidious attempt to stop supply ships.The study of competition began formally in the 18th century by using different terms to describe this area like restrictive practices, the law of monopolies, combination acts and the restraint of trade in works like Adam Smith’s The Wealth of Nations.

European rulers and legislators repeatedly cracked down on monopolies in the middle ages. The end of the 19th Century saw a number of laws being enacted in the United States of America to restrict monopoly in business practices, popularly known as anti-trust laws. The doctrine of restraint of trade in English common law leads to modern competition law and the United States antitrust statutes, which in turn had great influence on the development of European community competition laws after the World War II.

Increasingly the focus has moved to international competition enforcement in a globalized economy.The Treaty of the European Community (EC Treaty of Rome) was signed by six Western European countries in 1957. Modern competition law begins with the Sherman Act of 1890 and the Clayton Act of 1914 in the United States.

Competition law has been substantially internationalized and the US model is followed globally. Presently recommendations about the competition law for the neo-liberal business economy are being made by two internationally famous organization for the world economy – (i) The United Nations Conference on Trade and Development [UNCTAD]

(ii) The Organisation for Economic Co-operation and Development [OECD] At present more than 90 countries have Competition Laws.

Elements

Competition Commission of India (CCI) was established under the Competition Act. (Sec.7) to regulate competition and to implement the Act. The government notified rules and regulations to select the chairperson and other officials to form the first ever Competition Commission of India ( CCI ) which was established on the 14th October, 2003.

Competition Commission of India consists of a chairperson and six other Members . Competition Commission of India(CCI) functions as a quasi-judicial body and acts as a regulatory body to prevent and regulate anti-competitive business practices in the country. The Competition Act is created by the central government and parliamentary legislature and there is no equating state govt. law. A competition appellate tribunal has also been established namely The Competition Appellate Tribunal (COMPAT). After enactment of the Act, it was subsequently amended in different times.

A. The Competition (Amendment) Act, 2007 was approved by the Parliament of India in September 2007 and received assent from the President of India on 24th September 2007. The validity of the commission was challenged before the apex court of India in ‘Brahm Dutt Vs. Union of India’ 2005, where the Government of India specified about amendments and the Act was amended substantially. The amendment changed the then existing regulatory infrastructure of the Competition Act significantly. This amendment Act inter alia divided the competition authority into two –

(i) The Competition Commission of India (CCI) would be an expert administrative body which will function as collegium and as a market regulatory authority to prevent anti-competitive practices in the country and will function as an advisory body and also have advocacy functions.

(ii) The Competition Appellate Tribunal (COMPAT) to execute adjudicatory functions as mentioned u/s 53A of the Act. and to hear appeals against any counsel or directions made by the Competition Commission of India. The orders or decisions of the COMPAT can be challenged in the Supreme Court.

B. The Competition (Amendment) Act, 2009- The Commission notified the provisions of the Competition Act relating to anti-competitive agreements and abuse of dominant positions on 20th May , 2009 under the Competition Act. For amendment of Section 66 of the Competition Act, 2002, an ordinance was issued by the President of India on the 14th October, 2009 named as ‘The Competition (Amendment) Ordinance, 2009′. The ordinance was replaced by the ‘Competition (Amendment) Bill, 2009′ which was passed by the Parliament of India on 14th December, 2009 by the Lok Sabha and on the 16th December, 2009 by Rajya Sabha. The Bill was converted into an Act. As a result of the enactment of the Act, pending cases on which the jurisdiction of MRTPC was to continue for 2 years after the repeal of the MRTP Act will now have the jurisdiction of the Competition Appellate Tribunal in accordance with the repealed MRTP Act.

The Competition Commission of India was established in October 2003. However the operative provisions of the Competition Act would be brought into force in two phases in May, 2009 and in June, 2011 respectively. In the 1st phase, the anti-competitive agreement and abuse of dominance provisions were notified. Subsequently, the combination provision was notified.

The Ministry of Corporate Affairs, Government of India has constituted a committee to frame the National Competition Policy and to check other related issues and suggest the changes & strategies for fine-tuning the Competition Act. A draft National Competition Policy was prepared by the committee which emphasized on the establishment of a National Competition Policy Council (NCPC) which will enforce National Competition Policy. The Committee recommended the changes required in the Act and proposed a methodology and the strategy of coherence between government policies and the competition policy and competition advocacy. The Ministry of Corporate Affairs, Government of India had moved a Competition (Amendment) Bill, 2012 on the 10th December, 2012 in the upper House of the Parliament to amend the Competition Act further, with a view of fine tuning of the provisions of the Competition Act and to get in line with the present day requirements of the market in the field of competition, based on the experiences gained in the actual functioning of the CCI over the recent years.

The Competition Act intended to promote equal distribution of power in the economy of the country and to prohibit the concentration of economic power and wealth. It was enacted to provide the procedure for the formation of a commission to prevent practices which affect adversely on competition, and to promote a sustainable competition in the business structure and the economic system of the country by ensuring freedom of trade conducted by other existing and probable competitors in the market and to protect consumer’s interest and provide good services to them.

Under World Common Law

While the term 'Renaissance' originally referred to a cultural movement that characterized the period from around the 14th to 17th centuries, it has also come to refer to an historic era affecting other aspects of daily life, including that of trade and competition. During this Renaissance period, particularly from the 16th century onward, international trade started booming. While much of this trade and the resultant wealth were illicit, authorities saw the need to regulate trade to engender a spirit of fairness and free competition. The precursor of modern patent laws, known as the Statute of Monopolies, was passed by England's parliament in 1623. Prior to the Statute of Monopolies, patent laws were subject to abuse by authorities. History reveals that Elizabeth I was known to have granted patents for everyday household commodities such as salt and starch, thereby creating monopolies on necessities. In the following years, various attempts were made to break monopolies and set laws to encourage competition and free trade. But those with good intentions often found that traders maintaining monopolies had the kind of wealth that bought themselves a favoured position with authorities. Other developments that eventually led to modern competition law included laws relating to restraint of trade. As the term suggests, restraint of trade prevents parties from setting up, or engaging in, similar activities in opposition to one another. Modern day competition law is generally accepted to have had its foundations in the Sherman Act (1890) and the Clayton Act (1914) – both instituted in the United States. At the time, European countries had various forms of rules and laws to regulate monopolies and competition, but further developments, particularly after World War II and the fall of the Berlin wall in 1990, have elements of the Sherman and Clayton Acts as their foundation. With the rapid development of international trade going into the 21st century, competition and anti-trust laws have had to keep pace. It was following WWI that other countries started to implement competition policies along the lines of those introduced by the United States. Competition regulators were formed to ensure that competition and antitrust policies and laws were adhered to. Following the 2nd World War, the Allies introduced regulations to break up cartels and monopolies that had formed during the war years. At the time, this was mainly aimed at Germany and Japan. In the case of Germany, it was feared that large industry cartels were manipulated in a manner that gave total economic control of the country to the Nazi regime. With Japan, big business was a hotbed of nepotism resulting in multi-industry conglomerates that controlled the Japanese economy. However, the surrender of both Germany and Japan to the Allied forces at the end of WWII allowed for tighter controls to be enforced, and these controls were based on the principle of those being used in the U.S. In the U.S., the term 'antitrust' is more commonly used when referring to laws preventing the formation of cartels, also referred to as 'business trusts'. Although antitrust laws are generally separate from consumer protection laws, they do offer consumers a measure of protection from unscrupulous suppliers who seek to monopolize a market sector. Mergers and acquisitions undergo a rigorous screening process in line with antitrust and competition laws before being given the go ahead. Since attaining Independence in 1947, India, for the better part of half a century thereafter, adopted and followed policies comprising what are known as Command-and-Control laws, rules, regulations and executive orders. The competition law of India, namely, the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act) was one such. It was in 1991 that widespread economic reforms were undertaken and consequently the march from Command-and-Control economy to an economy based more on free market principles commenced its stride. As is true of many countries, economic liberalisation has taken root in India and the need for an effective competition regime has also been recognised. Competition Law for India was triggered by Articles 38 and 39 of the Constitution of India. These Articles are a part of the Directive Principles of State Policy. Pegging on the Directive Principles, the first Indian competition law was enacted in 1969 and was christened the Monopolies and Restrictive Trade Practices, 1969 (MRTP Act). Articles 38 and 39 of the Constitution of India mandate, inter alia, that the State shall strive to promote the welfare of the people by securing and protecting as effectively, as it may, a social order in which justice social, economic and political shall inform all the institutions of the national life, and the State shall, in particular, direct its policy towards securing.

1. That the ownership and control of material resources of the community are so distributed as best to subserve the common good; and

2. That the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment.

In October 1999, the Government of India appointed a High Level Committee on Competition Policy and Competition Law to advise a modern competition law for the country in line with international developments and to suggest a legislative framework, which may entail a new law or appropriate amendments to the MRTP Act. The Committee presented its Competition Policy report to the Government in May 2000. The draft competition law was drafted and presented to the Government in November 2000. After some refinements, following extensive consultations and discussions with all interested parties, the Parliament passed in December 2002 the new law, namely, the Competition Act, 2002.

References

a) http://lawstudentsprojects.blogspot.com/2014/03/independence-of-competition-commission.html

b) http://www.arthapedia.in/index.php?title=Competition_Commission_of_India

c) https://blog.ipleaders.in/competition-law-india/