Developments in Indian Competition Law

In 2009, India repealed its 40 year old Monopolies and Restrictive Trade Practices (MRTP) Act, and brought into force most sections of the 2002 Competition Act. In a recent article in the Economic and Political Weekly (subscription required), Aditya Bhattacharjea, a professor of economics at the Delhi School of Economics discusses both the old and the new laws. After a brief introduction to the basic economic principles underlying modern competition (antitrust) law, he reviews India’s experience with the MRTP Act, arguing that the way it was structured, amended, interpreted and enforced ensured that it could not serve as a competition law. Consequently, it did not bequeath a body of expertise that could help in the implementation of its successor, the Competition Act, which is very demanding in terms of economic analysis. He then discusses the strengths and weaknesses of the new law, the reasons for its delayed implementation, and the first few decisions of the Competition Commission of India (CCI).

Although in many respects the new regime marks an improvement relative to the MRTP Act and MRTP Commission, there are also several potentially serious problems. In particular, “contribution to economic development” may be employed in deciding on mergers or abuse of dominance; provisions on anti-competitive agreements may be interpreted to allow a rule of reason even for cartels; and those on abuse of dominance give the CCI authority to take action even in cases where there is no adverse effect on competition. The sections governing merger review remain very controversial, and had not been brought into force as of September 2010. The CCI and the tribunal set up to hear appeals from its decisions have been saddled with a huge backlog of unresolved cases and investigations that were pending with the MRTP Commission. Finally, the long delay (from 2003 to 2009) in bringing the Act into force has resulted in the departure from the CCI of all the staff members who had acquired some familiarity with competition analysis. A slightly revised version of the article is available at SSRN.

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