Competition Policy

The Competition Commission of India’s landmark order in the Hyundai case on resale price maintenance is analysed in light of the CCI’s broader decisional practice on RPM. It finds that, unlike in other cases, the CCI did not examine the possible benefits of RPM in increasing the sale of cars. In effect, the CCI presumed that the very existence of the discount control measure was unlawful, without the need to assess competitive effects. The Hyundai case is used to highlight the inconsistencies in the CCI’s decisional practice on RPM.

Even as it is confronted with the likelihood of negotiations on competition policy after the Cancun Ministerial of the WTO, India is in transition between its Monopolies and Restrictive Trade Practices (MRTP) Act and the new Competition Act. This paper undertakes a detailed analysis of various aspects of this situation. It first reviews a series of recent judgments of the Supreme Court that have set aside orders of the MRTP Commission, depriving it of extra-territorial jurisdiction and the power to restrict imports, and curbing its tendency to adjudicate 'fair' prices. Section II examines the Competition Act, especially several amendments that were introduced as it was being passed, including one that explicitly arms the Competition Commission with the authority to impose import restrictions, and several others that will be self-defeating or difficult to implement. While these two sections employ standard economic theory and comparisons with contemporary international practice, Section III adopts a more historical approach, examining the political economy of competition policy in various countries, and its limited scope for serving distributional objectives in the Indian context. Section IV argues that the case for a WTO agreement on competition policy is greatly overstated, and that India should ally with other developing countries to block such an agreement. On a more positive note, while amendments to the Competition Act are implied by the analysis of Section II, the two succeeding sections develop criteria for exemptions from its provisions.