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The Competition (Amendment) Bill 2007: A Review and Critique

With the passage of the Competition (Amendment) Bill (2007) India is poised to usher in a new era in competition policy, supported by sophisticated legislation that in many ways represents international best practices. However, there are uncertainties and challenges ahead as well. This article summarises the major features of the new law and critically examines its strengths and weaknesses. Concerns are expressed on how courts will interpret the primary objective of the legislation, and the degree to which the enforcement agency will be sufficiently funded and properly independent.

The Competition (Amendment) Bill 2007: A Review and Critique

Subhadip Ghosh, Thomas W Ross

Anti-Competitive Agreements: Section 3 covers both horizontal and vertical agreements. Section 3(3) states that for four types of “horizontal agreements” between enterprises involved in the same industry, something close to a “per se” standard of illegality would be applied.3 These agree-

With the passage of the Competition (Amendment) Bill (2007) India is poised to usher in a new era in competition policy, supported by sophisticated legislation that in many ways represents international best practices. However, there are uncertainties and challenges ahead as well. This article summarises the major features of the new law and critically examines its strengths and weaknesses. Concerns are expressed on how courts will interpret the primary objective of the legislation, and the degree to which the enforcement agency will be sufficiently funded and properly independent.

The authors are grateful for very helpful communications with Aditya Bhattacharjea, Manish Agarwal, S Chakravarthi and R Shyam Khemani. They also gratefully acknowledge the financial support of the Phelps Centre for the Study of Government and Business in the Sauder School of Business at the University of British Columbia, Vancouver.

Subhadip Ghosh (subhadip.ghosh@sauder.ubc.ca) is currently post doctoral fellow, Sauder School of Business, University of British Columbia. Thomas W Ross (tom.ross@sauder.ubc.ca) is with the Sauder School of Business, University of British Columbia, Vancouver, Canada.

Economic & Political Weekly

EPW
december 20, 2008

O
n 10 September 2007, India’s Parliament passed the Competition (Amendment) Bill (2007) amending the Competition Act it had passed in 2002. The purpose of this article is to briefly describe the new Competition Act as it stands after the passage of the Competition (Amendment) Bill (2007), and critically examine its potential strengths and weaknesses. From this point on, unless otherwise clear from the context, references to the Competition Act should be assumed to be reference to the Act including the amendments.1

1 Introduction

Much of the 2002 Act could not be activated due to a writ petition in the Supreme Court, which challenged the validity of the Act. In effect, the petition claimed that since the Competition Commission of India (CCI) would exercise judicial f unctions, the doctrine of separation of powers as expressed in the Indian Constitution mandates that the chairman of the CCI should necessarily be a judge c hosen by the chief justice of India.2 H owever, the issues that held up the activation of the Act appear to be largely resolved with the passage of the Amendment Bill in Parliament, and the Competition Act is set to come into force having been signed into law by the president on 24 September 2007.

2 After the Amendment 2007

The key provisions of the Act include Section 3, which deals with anti-competitive agreements; Section 4, which covers abuse of dominance; and Sections 5 and 6, which deal with combinations (mergers). F urther, Section 7 creates the CCI, the new national antitrust agency charged with both the enforcement and advocacy f unctions. A brief outline of the Act is d iscussed.

ments are those that: (i) lead to price fixing; (ii) limit or control quantities;

(iii) share or divide markets; and

(iv) result in bid-rigging. Section 3(4) identifies a number of vertical agreements subject to review under “rule of reason” style test, here defined as a test of whether the agreement will lead to an “appreciable adverse effect on competition (AAEC) in India”: tied selling, exclusive supply/ distribution agreements, refusal to deal and resale price maintenance.

Section 3(5) lists certain exceptions from the application of the provisions relating to anti-competitive agreements. First, the provisions of the Act will not restrict “reasonable conditions” that form a part of the protection of intellectual property rights. The second is the exception granted to export cartels.

Abuse of Dominance: A dominant position is defined in terms of a “position of strength” enjoyed by an enterprise in the relevant market in India.4 Section 4(2) of the Act lists five categories of “abuse”:

  • (i) imposing unfair/discriminatory conditions (or price) in purchase or sale of goods or service (including predatory price); (ii) limiting or restricting production, or technical or scientific development; (iii) denial of market access;
  • (iv) making any contract subject to
  • o bligations unrelated to the subject of the contract; and (v) using a dominant position in one market to enter or protect another market.
  • Combinations Regulation (Merger and Amalgamation): “Combinations”, as defined in Section 5 of the Act, include mergers, amalgamations, acquisition of shares and acquisitions of control, when these are above-specified size thresholds. Section 5 states that any combination that exceeds the threshold limits specified in the Act in terms of value of assets or turnover, can be scrutinised by the CCI to determine whether it will cause or is likely to cause an appreciable adverse effect on competition within the relevant market in India.

    The threshold limits differ according to whether the parties to the acquisition involve enterprises or involve groups of enterprises. The threshold limits also vary according to whether the combination has assets or turnover only in India or worldwide. If the latter (i e, worldwide), a “local nexus” clause is attached which adds a minimum asset value of the combination in India, in addition to existing g lobal asset or turnover limits. This local nexus clause was absent in the original 2002 Act and is a new addition in the 2007 amendments.

    The Amendment Bill makes it mandatory (it was voluntary in the 2002 Act) for the person or enterprise proposing to enter into a combination to give notice to the CCI of such intention, providing details of the combination. The CCI may approve the combination, or direct that the com bination shall not take effect, or propose modifications.

    Enforcement: The CCI, the authority entrusted with the powers to enforce the provisions of the Competition Act, can enquire into possibly anti-competitive agreements or abuse of dominance either on its own initiative or on receipt of a c omplaint or information from any p erson, consumer, consumers’ association, a trade association or on a reference by the c entral government, state government, or a statutory authority.5 It can issue “cease and desist” orders and impose p enalties not exceeding 10% of the average turnover during the preceding three years in these cases. Cartels can also be penalised up to three times their illegal profits if this is more than 10% of the turnover. The CCI can also order the break-up of a dominant firm.6

    Any combination (i e, those transactions that meet the statutory thresholds) must be pre-notified to the CCI. After notification is given, the CCI must review the combination within 210 days or the combination shall be considered approved according to the Competition (Amendment) Act; in the recent draft regulations on combinations (discussed in Section 5 of this paper), the

    36 CCI has proposed modifying this time limit. For combinations already formed, the CCI is further empowered, according to Section 20(1) to inquire upon its own knowledge or information, whether any such combination, has caused or is likely to cause an AAEC (and declare them void). However, such a review must start not later than one year from the date on which such a combination had taken effect.

    Contravention of the orders of the CCI for the first time shall lead to imposition of monetary penalties. If non-compliance continues or the person does not pay the monetary penalties then it shall be treated as criminal offence, and it may be punishable with imprisonment up to three years, or a very steep monetary penalty or both, as the Chief Metropolitan Magistrate of Delhi deems fit.7

    Section 53A, added in the 2007 amendments, provides for the establishment of the Competition Appellate Tribunal (CAT), a three-member quasi-judicial body headed by a person who is or has been a judge of the Supreme Court or the chief justice of a high court. Selections of the chairperson and other members of the CAT are to be made by a selection committee headed by the chief justice of the Supreme Court of India or his nominee.

    The CAT has two main functions: (a) to hear appeals against any direction issued, decision made, or order passed by the CCI; and (b) to adjudicate claims for compensation and to issue orders for the recovery of compensation from any enterprise for any loss or damage suffered as a result of any contravention of the provisions of the Act. Appeals against a ruling of the CAT must be made directly to the Supreme Court.

    Competition Advocacy: The central government or any state government can make a reference to the CCI asking its opinion on the possible effect of a policy under formulation or of an existing law related to competition. The CCI is mandated to provide its opinion to the government within 60 days of receiving the r eference. The government, however, is not bound to abide by the opinion of the

    CCI. In addition to the requirement that it respond to government references, the CCI is also instructed to “take suitable m easures … for the promotion of competition advocacy, creating awareness and imparting training about competition issues.”8

    3 Strengths of the New Law

    The Competition (Amendment) Bill (2007) improves on the original Competition Act (2002) in many ways, a number of which we discuss.9

    Extraterritorial Jurisdiction: The Competition Act (2002) allowed the CCI only to “inquire” into acts by firms outside India that adversely affect competition in India. Section 32 of the Amendment Bill (2007) allows the CCI “pass such orders as it may deem fit” against such acts. By explicitly allowing the CCI to take such actions, the Amendment Bill will help it to deal more effectively with international cartels.

    Power to Deal with Dominant Undertakings Directly: In the Competition Act (2002), the central government was given the power to order the division of any firm enjoying dominant position, on recommendation of the commission. This was similar to the situation that existed under the Monopolies and Restrictive Trade Practices (MRTP) Act (1969); however, the record of government action against dominant firms was quite unsatisfactory. Fortunately, the Competition (Amendment) Bill (2007) confers the power to divide any dominant undertaking upon the CCI directly. This is a significant change, since it makes the Competition Commission the final decision-making authority in this area, and makes it much more likely that significant actions can be taken against dominant firms. Even if – as we believe – structural remedies, such as the division of dominant firms, should be used by antitrust authorities only very rarely, the very fact that the CCI has this power will give it greater leverage in negotiations with dominant firms to stop anticompetitive practices.

    Merger Notification Mandatory: The Competition Act (2002) had made notification of combinations by the participating firms voluntary. The CCI could inquire into such combinations, but not later than one year after they had been completed. The

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    possible delay in detection of non-notified combinations with the potential to produce an AAEC in India, combined with the one year limitation on action by the CCI could have allowed some anti-competitive transactions to “slip by”. The Competition (Amendment) Bill (2007), by making merger notifications mandatory has addressed this potential problem. At the same time, however, it retains a different problem by leaving the definition of what combinations are reviewable the same as that for which pre-notification is required. We return to this in Section 5.

    Competition Advocacy: The Competition (Amendment) Bill (2007) allows not only the central government (as in Competition Act (2002)) but also state governments to seek the opinion of the CCI on policy m atters that may affect competition. This may help state governments improve the “competition-friendliness” of their policies, and help spread a culture of effective competition to the farthest corners of India. Importantly, for example, agriculture and labour markets are regulated at the state level and it would indeed be u seful for the CCI to work to help make these sectors more competitive through appropriate advocacy.

    Cooling-off Period: A smaller, but welcome change provided in Section 12 of the Competition Amendement Bill increases from one year to two years the “coolingoff” period for which the chairman and members of the CCI are restricted from accepting employment with any (private) enterprise that has been party to any proceedings before it. This is commendable as a device to address concerns related to regulatory capture.

    Ability to Act on Information: Amendments to Sections 19 and 26 allow the CCI to act on information received, not only upon receipt of a formal complaint. This is also praiseworthy, since informants willing to simply provide information may not be willing to come forward with a public, f ormal complaint. This is particularly the case when the informant has a commercial relationship (e g, is a customer) with the parties against which the information applies.

    Economic & Political Weekly

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    december 20, 2008

    Leniency Policy: In the 2002 Act, Section 46 introduced a “first-party-in” leniency policy, providing for a reduced penalty for the first cartel member who makes a full disclosure of having violated the Act, and provides vital information. Such a reduction however was not available if any proceedings, or even an investigation, had already commenced – a condition that may limit the policy’s effectiveness according to some recent antitrust literature (for example, Motta and Polo 2003). However, the Amendment Bill brought changes to Section 46 – under these changes all parties who wish to cooperate with an enquiry could do so (and be considered for reduced penalties) as long as, at the time, the director g eneral (DG) had not submitted a report to the CCI. Unfortunately, as noted in Bhattacharjea (2006), the section did not clarify the exact amount of reduction given to the first cartel member as well as later members, nor does it clearly explain what kind of information would be regarded as “vital” enough for the CCI to grant amnesty. This could leave a great deal of uncertainty in a potential whistleblower’s mind, reducing the incentive for cartel members to come forward with information.

    However, the details of a leniency policy may be best left to regulations and enforcement guidelines. Indeed, the new Draft Regulations on Lesser Penalty (14 January 2008) provide considerably more guidance: they explain the amount of penalty reduction granted to applicants applying for amnesty, as well as the conditions under which such lesser penalty would be given.10 Only the first cartel member to make a disclosure would be given full leniency, while the second a pplicant would be given a lesser penalty of 50% of the full penalty available, the third applicant 30%, while subsequent applicants would be given 10% of the same, as long as they provide evidence that gives “significant added value” with respect to the evidence previously avail

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    able to the CCI.

    4 Concerns and Uncertainties

    As with any new legislation of the scope of the new Indian law, there is much that will remain uncertain about its reach and effect until we have seen it in action over a number of years. In this section, we list some of the uncertainties and concerns we hold regarding the law even after the passage of the Competition (Amendment) Bill, 2007.12 Concerns related to the new treatment of combinations will be dealt with in Section 5.

    Trade Unions: Interestingly, omitted from the list of exemptions to anticompetitive agreements in Section 3 are those related to the collective bargaining activities of unions. The MRTP Act had contained such an exemption (in its S ection 3), and similar exemptions are found in many other competition laws, including the Canadian Competition Act at Section 4(1). We have not seen a discussion of this point in other writings about the new law and we are not at all clear why this exemption was excluded.

    Development Criterion: The preamble of the Act, while apparently attacking practices “having an adverse effect on competition”, mentions that this is to be done “keeping in view of the economic development of the country”. The “development qualification” appears in a number of places in the Indian Act and has generated some concern among Indian scholars that it could open its door to abusive and anticompetitive behaviour by firms that are seen to be encouraging development (Bhattacharjea 2007; Mehta et al 2006). For example, this development objective could be used to defend exclusionary p ractices by Indian firms aimed at m aintaining anticompetitive positions against the potential of the entry of foreign competitors.

    Competition Test: Throughout the Indian Act there is only one specified competition test; it requires that, to be condemned, an action or agreement must have an AAEC.13 It will be very interesting to see how the CCI, CAT and (possibly) the Supreme Court define an AAEC: that is, how large must an effect be to be deemed “appreciable”? For example, will it be any effect beyond a de minimus effect or will it be more like the “substantial lessening of competition” tests of other countries (e g, Canada).

    Efficiency Exemptions for Horizontal Agreements: Interestingly, while hardcore cartel behaviour is per se illegal under Section 3(3) as stated before, there is, in Section 19(3), an additional “efficiency” protection for all agreements (horizontal and vertical) that promise static or dynamic efficiencies. In this subsection, the CCI is directed to have “due regard” to a list of factors when it is considering whether the agreement has an AAEC in India.

    It is certainly not obvious to us how this general efficiency provision might apply to what would otherwise be (nearly) per se prohibitions in Section 3(3). However, it seems the cartels may only have to show some efficiency, not that the efficiency gains must be “greater than” the anticompetitive costs of say, price-fixing.14 It would of course be unfortunate if small efficiencies (even if genuine) were allowed to exempt an agreement with large anticompetitive effects.

    Exemptions for Intellectual Property Rights: Section 3(5) of the Act requires that provisions of the Act will not restrict “the right of any person to restrain any infringement of, or to impose reasonable conditions, as may be necessary for protecting any of his rights which have been or may be conferred upon him” under the various intellectual property right (IPR) statutes. However, what are deemed to be “reasonable conditions” are not defined anywhere in the Act, and this might lead to difficulties in interpretation. For example, it is not clear under what conditions patent pooling, prohibiting the licensee to use competing technology or other such practices that are generally scrutinised by competition agencies in other countries might be considered unreasonable.

    Further, the Act is not very clear as to what remedies are called for if the conditions that accompany IPRs are not reasonable. For example, will they be punished (as with other anti-competitive agreements) with monetary fines and “cease-and-desist” orders or would parallel imports, compulsory licensing and other specialised IPR remedies be employed?15

    Abuse of Dominant Position: There are a number of restrictions placed on an e nterprise in a dominant position.16 As reported earlier, such a firm cannot impose “unfair or discriminatory” conditions in (i) purchase or sales of goods/ services or (ii) prices in purchases or sales (including specific reference to predatory pricing) of goods/services. Significantly, the terms “unfair” and “discriminatory” are not defined in the Act. This might lead to challenges in interpreting the law.

    More importantly, and potentially the most troubling feature of these provisions, is that there does not appear to be a competitive effects test here at all. That is, once a firm is determined to be in a dominant position, these actions are per se condemned. This could involve considerable overreach as many innocent or proefficient actions by dominant firms might be found to fall into this list.

    A second concern relates to the definition of predation: the Act defines “predatory” as involving pricing below cost “with a view to reduce competition or eliminate the competitors”. Current antitrust thinking tells us that competition policy generally, and abuse provisions (including those related to predation) specifically, should seek to protect competition, not competitors. Yet, the Indian law provides for the protection of competitors.17

    Eliminating Regional Benches and S pecialised Merger Bench: The Amendment Bill removed the provision for regional benches and at least one specialised merger bench that were present in the 2002 Act. This is unfortunate, since, as noted by Bhattacharjea (2006), a commission operating only in Delhi might seem inaccessible to plaintiffs in distant towns across as large a country as India; indeed, this appeared to be a problem under the MRTP Commission. Moreover the detailed economic evaluations related to, among other issues, market definition, competitive effects and efficiencies, that have become part of modern merger reviews could certainly benefit from the kind of expert technical capacity that might have been easier to secure with a specialised merger bench.

    Limited Room for Private Actions: Any private party can pay a fee and bring a complaint to the commission. However, they are not allowed to go to court directly. The lack of direct private access to enforce the competition law has a number of implications. The first is that what are certain to be limited state-funded resources for enforcement will not be much supplemented by private parties. An overworked agency will likely not be able to take all meritorious cases, but will have to select cases based on some measure of their “importance”. This can mean that some victims of anti-competitive conduct will not have access to justice, even when they may possess the resources to support a case. Second, with a limited role for private enforcement, the competition bar in India is likely to come to be dominated by defence-oriented counsel. This has implications for public discussions of competition law and the kind of advice the government will get from the legal community when it considers policy directions or new amendments. In contrast to the United States (US) (where private actions represent the vast majority of antitrust cases), where debates on toughening or loosening competition laws can find capable champions from the private bar on both sides, similar debates in India could come to be one-sided.

    Autonomy: The Amendment Bill fails to address certain provisions in the original Act, which impair autonomy of the CCI. Provisions such as that which provides for the grant of money to the CCI as the government may think fit undermines the financial autonomy of the commission (Section 50). It could be argued that the Parliament itself should approve the budget of the CCI, without leaving it to the will of the government, thus ensuring autonomy.

    No Provisions for Part-time Members:

    There are no provisions to appoint parttime members to the CCI, which may limit

    available at

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    this body’s ability to obtain the services of experts not interested or able to work full time for the CCI, due to professional commitments, economic considerations or any other reasons. Part-time memberships on similar bodies are found in some countries, like the United Kingdom and Canada.

    5 Combinations (Mergers)18

    There has been more international focus on the merger provisions of the new law than any other. The International Bar Association (IBA) and the American Bar Association (ABA) each issued a memorandum expressing concerns on three points. First, the 210-day waiting period prescribed to review the proposed combination is considered too long compared to the 30-day waiting period in the USA, or in the European Union, where a Phase I decision is reached within 25 days from the effective date of notification, and (only in case of complex transactions requiring indepth investigation) a Phase II investigation decision within 90 working days. The CCI’s recently revised Draft Regulations (dated 17 January 2008) respond to this concern. The new Draft Regulations state that, on notification of a deal, the CCI will approve the transaction within 30 days, if it feels there are no adverse competitive effects. In any case, if the CCI does not communicate with the merging parties within 30 days, the merger will be considered as cleared. Merger clearance will take more than 30 days only if the CCI issues a show-cause notice stating that, prima facie, the merger generates adverse competitive effects; in which case merging parties are to “submit an explanation as to why the proposed combination is not likely to cause, or has caused an appreciable adverse effect on competition in India”.19 Failure to do so will lead to a detailed inquiry, which may take a maximum of 210 days.

    Second, even with the new local nexus condition (which applies to the postmerger entity), a merger involving a firm with no business in India would still need to be notified if the other party alone has assets or turnover in India exceeding the threshold. Taking this into account, the recent Draft Regulations specify modified thresholds for worldwide assets (Rs 200 crore or about $50 million) or turnover

    Economic & Political Weekly

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    december 20, 2008

    (Rs 600 crore or about $125 million) within India for each party (at least two of the merging parties) to the combination individually, on the grounds that combinations involving parties below these thresholds are among those that are “not likely to cause an appreciable adverse effect on competition in India”.20

    Finally the concern was expressed about Section 6 of the Act that states that parties to a combination need to file notifications within 30 days after either approval of the merger by their board of directors or the execution of “any agreement or other document for acquisition”. However, it does not specify which one of the two events will trigger the 30-day deadline. The IBA and ABA memoranda called on the CCI to devise appropriate implementing regulations to deal with this anomaly.21

    We wish to make a few additional points about the merger provisions. (i) The local nexus issue became a problem, in part, because the 2002 law (reinforced through the amendments) effectively tied together the definitions of what combinations are reviewable (i e, subject to the law) and which combinations should or (after the amendments) must pre-notify. These are now the same set of combinations. In our view this is unfortunate and unnecessary. Mandatory pre-notification thresholds can be defined (as in Canada and the US) as simply a level at which reporting to the authority becomes an obligation, but this level does not have to limit the authority’s ability to review any combination that it feels might harm competition in India. Understanding that, in some markets, competition can be harmed even by the combination of relatively small firms, if you are going to limit the law’s application by size you will have to set a fairly low threshold. However, this implies that many small firms combining in big markets in which market power is clearly not an issue will nevertheless still have to prenotify. An alternative approach is to say that the law applies to any combination that lessens competition – with no thresholds limiting the authority’s ability to look at any merger. Of course the enforcement agency will want to issue some guidelines to clarify the conditions under which it is likely to review a combination, but this is now standard practice and several good models for such guidelines exist. To stress an important point, there are various conditions under which combinations of firms with very limited presences in India could nevertheless do significant harm to competition in the country. Examples of such cases are provided in Agarwal and Bhattacharjea (2008).

    (ii) Section 6 indicates that a combination which causes, or which is likely to cause, an AAEC in India are void. However, Section 20(4) lists a number of “factors” to which the CCI “shall have due regard” in determining whether a combination would lead to, or likely lead to, an AAEC in India. Among them, item (n) in the Indian list is: “whether the benefits of the combination outweigh the adverse impact of the combination, if any”. It is not clear what may constitute “benefits” here (or whose benefits “count”). However, in contrast to the efficiencies provisions for agreements, here at least we know that the benefits must “outweigh the adverse impact of the combination” so we have a better sense of how significant the benefits must be.

    (iii) The Act grants the CCI the power to investigate a combination only up to one year after “such combination has taken effect”.22 This obviously limits the CCI’s power to address concerns when a merger results in anti-competitive effects that show up gradually over a few years. In contrast, in Canada for example, the Competition Bureau may make an application to the Competition Tribunal regarding a merger up to three years after the merger has been “substantially completed”.23 It is worth noting, of course, that with the existing pre-notification provisions the CCI must be informed of any combination over which it would have jurisdiction, so at least mergers cannot slip past without the CCI’s knowledge. A shorter review period is less problematic in this case.

    6 Concluding Remarks

    The new competition law in India, despite some concerns expressed above, is certainly much more consistent with current antitrust thinking than the outgoing MRTP Act. The success of the new Indian model will now turn on its implementation. In this regard, a number of questions arise. First, will the CCI and CAT be able to attract the level of expertise and sufficient funding required to successfully cope with well-financed firms appearing before them? It is noteworthy here that the funding levels of the previous MRTP Commission were not generally viewed as adequate (CUTS International 2003; Ghosh 2007). Second, will the government allow the CCI and the Appellate Tribunal to have the independence now considered essential for the proper conduct of the competition policy? Third, how, and where, will efficiencies be balanced against anticompetitive effects? The law appears to allow for efficiency considerations for virtually any competition matter (except for the section on abuse of dominance), but provides little guidance as to how tradeoffs are to be conducted – this will presumably be determined by how the CCI, the CAT and the Supreme Court interprets the law. Fourth, will economic efficiency clearly emerge as the central objective of the law or will it be compromised in some ways in the interest of furthering “development” objectives? Finally, what kind of private access will emerge here – what damages will be recognised; how open will the CAT be to their award; what fees will be charged to applicants; and how difficult will it be to bring group or class actions?

    Despite these concerns, one must note that no competition law can ever be perfect, and most laws evolve through time, with learning through experience, and the development of the case law. Therefore, we look forward to the full operation of the Competition Act as recently amended, and to watching the CCI begin its enforcement work. While we expect experience to be a great teacher, leading to further amendments in the future, with the 2002 law and the 2007 amendments, India would appear to have taken a very substantial step towards the adoption of a modern competition policy.

    Notes

    1 For a more detailed discussion of the Competition Act (2002) prior to the amendments, see Bhattacharjea (2003) and Chakravarthy (2005). Our focus here will be much more on changes introduced by the 2007 amendments.

    2 Supreme Court (2005), Brahm Dutt vs Union of India, Writ Petition (civil) 490 of 2003. Date of Judgment: 20 January 2005.

    3 It is not exactly a per se prohibition because e fficiency-enhancing joint ventures may be exempt. Of some significance is the fact that “joint venture” is not defined in the Act.

    4 This position of strength must allow the firm to “operate independently of competitive forces prevailing in the relevant market” or to “affect its competitors or consumers in the relevant market in its favour”.

    5 “Statutory Authority” is defined Section 2(W) of the Act as “any authority, board, cooperation, council, institute, university or any other body corporate, established by or under any Central, State or Provincial Act for the purposes of regulating production or supply of good or provision of any services or markets therefore or any matter connected therewith or incidental thereto…” .

    6 Section 28(1) added in the 2007 amendment; earlier the CCI could only recommend such structural remedies to the central government – recommendations the government was free to reject.

    7 Section 42(1). In the original Competition Act, 2002 (prior to the amendments), the Commission itself had been given the power to imprison in the event of non-compliance with the orders of the Commission.

    8 Section 49(3). 9 We do not talk about the improvements of the original Competition Act (2002) over the MRTP Act, which has been discussed extensively by Bhattacharjea (2003). 10 “Proposed Draft of the Competition Commission

    of India (Lesser Penalty) Regulations, 200_”, accessed from http://www.competition-commission-india.nic.in

    11 Regulations 3 and 4 of the “Proposed Draft of the Competition Commission of India (Lesser P enalty) Regulations, 200_”.

    12 Some of the amendments were also in the Competition Amendment Bill (2006) that was tabled in the Parliament. This bill underwent several modifications and was finally passed as the Competition Amendment Bill (2007). A nice discussion of the Competition Amendment Bill (2006) can be found in Bhattacharjea (2006).

    13 In most sections the AAEC language is followed with “in India” though not in the Section 3(3) on “per se” horizontal agreements.

    14 Others are uncertain on this point as well – see Bhattacharjea (2007) and Dhall (2007).

    15 A more detailed discussion of the issue of exemptions to IPRs in the Act can be found in Mehta, Mehta and Simi (2006).

    16 The original Act in 2002 did not contemplate “joint dominance” and only referred to an “enterprise” in a dominant position. The amendments in 2007 however changed the reference to “enterprise or group”.

    17 India is not alone in this regard. For example, Canada’s Competition Act also protects competitors in its criminal provisions related to predatory pricing (Sections 50(1) (b) and (c)).

    18 A much more complete treatment of issues related to the new provisions on combinations is provided in Agarwal and Bhattacharjea (2008).

    19 Form 4, Show Cause under Section 29 (1), of C ompetition Act, 2002, “Proposed Draft of the Competition Commission of India (Combination) Regulations, 200_”, accessed from http://www. competition-commission-india.nic.in

    20 Regulations 5(1) and 5(2) (iii) from “Proposed Draft of the Competition Commission of India (Combination) Regulations, 200_”, accessed from http://www.competition-commission-india. nic.in.

    21 The IBA memoranda is accessed from http:// www.ibanet.org/legalpractice/AntitrustWGIndia.cfm; for the ABA http://www.abanet.org/ antitrust/at-comments/2007/11-07/CommentsIndianCompetition.pdf

    22 Section 20 (1), Competition (Amendment) Act, 2007.

    23 Competition Act (Canada), Section 97. Australia also has, in effect, a three-year limitation period as laid out in its Trade Practices Act at Section 81(2). By contrast there is no statutory limitation on the US government’s authority to review mergers after they have been completed; however, it would be highly unusual for either of the US federal antitrust agencies to seek to take action against a transaction that had been completed some time in the past.

    References

    Agarwal, M and A Bhattacharjea (2008): “Are Merger Regulations Diluting Parliamentary Intent?”, Economic & Political Weekly, 28 June: 10-13.

    Bhattacharjea, Aditya (2003): “India’s Constitution Policy: An Assessment” in Economic & Political Weekly, 23 August: 12-22.

  • (2006): “Amending India’s Competition Act”, Economic & Political Weekly, Vol 41, No 41, pp 4314-17.
  • (2007): “Potential Problems in the Implementation of the Competition Act” in Jaivir Singh (ed.), Understanding Regulation: Institutional and Legal Dimensions (New Delhi: Social S ciences Press).
  • Chakravarthy, S (2005): “India” in Douglas H Brooks and Simon J Evenett (ed.), Competition Policy and Development in Asia, Asian Development Bank (New York: Palgrave Macmillan).

    CUTS International (2003): “Pulling Up Our Socks: A Study of Competition Regimes of Seven Developing Countries of Africa and Asia under the 7-Up Project”, Centre for Competition, Investment and Economic Regulation, Jaipur.

    Dhall, Vinod (2007): “Competition Law in India”, Antitrust, 21(2), Spring.

    Ghosh, Subhadip (2007): “India’s Competition Policy: A Brief Review”, Working Paper, Phelps Centre for the Study of Government and Business, Sauder School of Business, University of British Columbia.

    Mehta, Udai S, Pradeep Mehta and T B Simi (2006): “The Competition Amendment Bill: What Needs To Be Done”. This paper has been researched and written for CUTS International, Jaipur and is available at http://www.cuts-international.org/ pdf/Bill-Blow-up2-2006.pdf

    Motta, Massimo and Michele Polo (2003): “Leniency Programs and Cartel Prosecution”, International Journal of Industrial Organisation, 21: 347-79.

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