Research On The Indian Competition Laws From The Perspective Of The Developing Countries

Around the World War II, the monopoly emerged in the course of modernizationin the developing countries where the competition law was used for the sake ofanti-monopoly and of promoting competition. India, one of the few developingcountries making earlier efforts to conduct competition legislation, enacted its firstcompetition law in1969. In the1980s, especially after the establishment of the WTO,domestic economic problems suffered by the developing countries, together with theopportunities and challenges brought by the economic globalization, gave greatimpetus to the rapid occurrences of competition policies and competition laws in thesecountries. When most of the developing countries get down to the competitionlegislation, India had already engaged in a new round of adjustments regardingcompetition policies and competition laws.Recent years witnessed the rapid development of India’s economy. India,together with Brazil, Russia, China and South Africa, is reckoned as one of the BRICswith the most potential economic development in the future. Indian competition lawmakes a significant contribution to promoting competition, maintaining impartialmarket order, and even to protecting the interest of consumers. Systematical andcomprehensive research of the Indian Competition laws, from theory to practice, froma micro to macro perspective，from history to current situation, and to the future, can not only provide other developing countries with more suitable experience for theenactment and enforcement of their domestic competition laws, but also meet theurgent requirements for disciplinary development and for the foreign exchangebetween Chinese and foreign enforcement authorities of competition law.This paper is divided into eight parts, namely the Introduction and Seven mainChapters.Chapter One starts with the current situation of trade and competition law of thedeveloping countries under the WTO. The developing countries’ attention tocompetition law derives from their urge for economic development and free trade.Particularly, with the deep development of trade freedom under the WTO, developingmembers are aware of closer and closer relationship between trade and competition,and more and more significant effect on international trade from domesticcompetition policies. After empirically studying the legislative status of thedeveloping countries, the research illustrates that the developing countries embarkedon the large-scale competition legislation from the1990s, which can be explained bythe fact that the external impulses from international organizations and major foreigncompetition authorities are much more than the internal forces. Consequently,advanced legal ideas and legislative patterns of competition law were introduced intothe developing countries. Nevertheless, such ideas and legislative patterns did notplay an anticipated role through the test of decades, and some of them were evenimpractical. Therefore, it is advisable for the developing countries to reconsider andchoose the competition policy and legislative pattern consisting with their nationalrealities. In addition to the above-mentioned issue of choosing legislative pattern,most developing countries encountered all sorts of difficulties with respect to theenforcement of competition law, for instance, the boycott of competition policies byvested interest groups, lacking of effective supervision, the contravene with industrialregulators and the scarcity of various resources. There is still a long way to go tofundamentally address those problems. From the successful experience of relevantcountries, fostering positive competition culture and strengthening their capabilitybuildings are the most efficient approaches to break the predicaments. Besides, it’s important and necessary to study and draw lessons from other similar countries’experience in enactment and implementation of competition laws. Among the manydeveloping countries, India has accumulated rich experience in the field ofcompetition law and made great achievements. The Indian competition laws are notdivorced from the common stage of economic developments which developingcountries are experiencing, and also has certain foresightedness, therefore the Indiancompetition laws occupy a special place in the field of developing countries’competition laws, and have a vital significance.Chapter Two mainly involves the development and evolution of the Indiancompetition laws. The legislative background of the Monopolies and Restrictive TradePractices Act1969(hereinafter referred to as “MRTP”) was primarily introducedfrom the perspective of India’s development strategies as well as their impacts afternational independence on the ground of Indian constitutional law. The MRTP wasamended up to nine times with two most critical amendments, namely the1984Amendment and the1991Amendment. The former one added relevant provisionsconcerning the prohibition of unfair trade practices for the purpose of consumerprotection, while the latter was the outcome of domestic economic structure reformwith its regulation transferred from the centralization of economic forces and thecontrol of monopolies to inhibitions of monopoly trade practices, restrictive tradepractices and unfair competition practices, in order to safeguard impartial tradecompetition and to protect the interest of consumers. Specifically, this Amendmentabolished the preview rules for business mergers. This Chapter subsequentlydemonstrates the main content and the implementation of the MRTP, correspondingcomments was expounded as well. However, the MRTP was not capable of satisfyingthe demands of economic development at both the domestic and international leveleven with frequent revisions. Especially after the establishment of the WTO in1995,the Indian government and enterprises were fully aware that new competition lawcomplying with new development situation and requirements shall be enacted on thebasis of the large-scale emergence of transnational corporations due to the obligationsand measures of trade liberalization undertaken and adopted by India under the WTO Agreements. New Competition Law, issued in2002, went through a massiveamendment in2007prior to entering into effect. The principal revision concentratedon the addition of new competition authorities, namely the Competition AppellateTribunal (the “CompAT”). As a result, an overall enforcement system of Indiancompetition laws was formulated from then on, including the CompetitionCommission of India (the “CCI”), the ComAT and the Supreme Court. Thestage-by-stage model of taking effect was adopted by the new competition law, andthus it did not come into effect completely until2011. Additionally, the competitionauthorities formally operated in2009, superseding the original Monopolies andRestrictive Trade Practices Commission (the “MRTPC”), and the MRTP was put to anend up to2009. Compared to the old one, the new competition law was regarded asthe “new wine in a new bottle”, not only incorporating modern elements but alsofollowing the national condition of India.Provisions in relation to the anti-competitive agreements, a universalphenomenon in the activities of the market economy, are discussed in Chapter Three.Since not all anti-competitive agreements is prejudice to the competition and thewhole society at large, the “per se rule” and the “rule of reason” are adoptedseparately to different agreements by modern competition laws. Both the old and thenew-established competition law of India set forth relevant provisions regarding suchagreements, but the old law tended to apply the “per se rule” to all the agreementswhile the new law makes an explicit distinction. This Chapter straightens out themethods dealing with all kinds of anti-competitive agreements assumed bycompetition authorities and the Supreme Court, further sheds light on the issues ofthese existing provisions, and finally concludes with the inspirations to developingcountries from legislation and enforcement on anti-competitive agreements in Indiancompetition laws.Chapter Four mainly elaborates on the regulations of the Indian competition lawswith regard to the abuse of market dominant position. Neither the old nor the newcompetition law treats the market dominant position itself as illegal, but the abuse of this position is forbidden. It usually involves three steps: the first is to define therelevant market, and then to ascertain whether it takes a dominant position or not, andthe last step is to confirm whether it abuses such position. Generally speaking, severalelements of the modern competition law were absorbed by the new law. For example,instead of expressly stipulating market shares like the old competition law, the newone makes a perfect combination between the behaviorism and the structuralism; thecancellation of the ambiguous concept of “public interest” is another example.Nevertheless, it is considered that the existing provisions concerned may actuallybring about new problems, or even more serious issues. For instance, thediversification of legal purposes may lead to varieties of conflicts in practice, and thedirect incorporation of competition law’s legal purposes into specific clauses willincrease difficulties and uncertainties in the process of enforcement by thecompetition authorities. By the same token, the overlook of the competition per semight give rise to the deviation of the role definition of competition authoritiesconcerned.Provisions regarding combination are chiefly referred to in Chapter Five. Duringthe interval from MRTP in1969to its1991Amendment, and to the Competition Lawof2002, the stringent attitude of India’s competition laws to combination becamelooser and looser in gradual prior to converting back to prudence. Such alteringprocess illustrates that the control of combination is the most controversialcharacteristic of the Indian competition laws. However, it is sensible to pay closeattention to the issues arising in the process of clarifying the criteria of substantialreview and the procedural rules in controlling combination. For instance, the single“scale” factor was adopted as the criteria of the review, which deviated from thepractical activities of enterprises’ combination, lacking scientificity and reasonability.As another example, there was no specific indication for the declaration standard ofcombination applicable to the “joint venture”(namely to establish a new enterprisewith joint control, or to take over an existing enterprise to conduct joint control),which might render massive circumventions of relevant provisions regarding thedeclaration of enterprises’ combination. The legislative history and attitude towards combination controls give some enlightenment to developing countries. First,developing countries should make full sense of the competition law and appreciate it,and set it in a dependent rather than affiliated position, not being abandoned at will.Second, developing countries should keep their own independence in the legislativeprocess of competition laws, and uphold courage and determination of resist pressuresand preclude resistances.Chapter Six introduces the implementation of Indian competition laws andconcludes its meaning to developing countries. As a whole, these authorities played apositive role in practice, whether from the MRTPC in1970to the CCI in2003or tothe coexistence of CCI and ComAT in2007. In particular, the CCI, officially launchedin2009, made significant achievements within a couple of years, which wasuniversally recognized as a competition authority of high-efficiency and pragmatism.Facing the same difficulties with other developing countries, such as lack of fundingand limited resources, the competition authority of India emphasize on capacityinternal building, and attach importance to competition advocacy and competitionculture, and in the meanwhile never concede to any activity breaking the competitionlaw. In fact, what is actually difficult for numerous developing countries is not toenact the competition law or to establish the authorities concerned, but how toimplement the competition law effectively. Regard to India’s experience, thedependence and authority of the competition authority is very importance on one hand,and competition advocacy should be set in the same important position as competitionlaw enforcement, or even more important position than the latter.The extraterritorial application of the Indian competition laws is dwelled on inChapter Seven, which is different from the extraterritorial application in traditionalinternational private law. It has been controversial since it emerged, but it exists inmost domestic competition laws in practice. The issue concerning whether the Indiancompetition laws have the extraterritorial effect went through three phases, namelythe ambiguous, negative and positive phases. In case that such effect was commonlystipulated by domestic competition laws, it will inevitably give rise to conflicts oflaws at the international level. To effectively address this conflict, two main methods shall be adopted, namely the unilateral self-restriction and the multilateralinternational cooperation. Developing countries should realize the importance ofinternational corporations, and participate as possible as they can. Especially, theyshould reinforce communications with other developing countries, and are aware ofthe significance of “getting together”, in order to contest with other countries oforganizations, and fight for the right to speak in the international arena to maximizingtheirs interests.