Dr. Rajesh Kumar Lecture-1 Competition Law Dr. Rajesh Kumar Lecture-1

Background Capitalism is based on two ideas ; freedom and capacity to enter into contract with maintaining its sanctity These two ideas has resulted into massive industrialization of U.S. and western economies and emergence of big corporations . After acquiring big size, it started misusing its market power then some restrictions were placed on their power to enter into an agreement with competing enterprise .Then, they started forming a trust and doing the same. It led public outcry against those trust. It led enactment of laws to curb anticompetitive practices by the trusts. So, In U.S., it is known as antitrust laws. Firstly, Sherman Act, 1890 then Clayton act, 1914 and Federal trade commission act, 1914, which was followed by other legislations. Sherman Act ,Sec 1. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding one million dollars if a corporation, or, if any other person, one hundred thousand dollars or by imprisonment not exceeding three years, or by both said punishments, in the discretion of the court. 2. Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons to monopolize any part of the trade or commerce among the several States, or with foreign nations shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding one million dollars if a corporation, or, if any other person, one hundred thousand dollars or by imprisonment not exceeding three years, or by both said punishments, in the discretion of the court.

Continued Language of the provisions are aimed towards misuse of contract, combination and conspiracy to restrain freedom of trade and commerce and monopoly power. For example Sec 1 and sec 2 of Sherman act and the provisions of the clayton act. However, the clayton act was enacted to ease the strictness imposed by provisions of Sherman act. Initially, the courts have started interpreting the law literally but later on adopted two rules of interpretations : Per se rule and Rule of reasons to differentiate between reasonable and unreasonable restraints However, stricter interpretations were made till 1970 , after which Chicago school jurisprudence was emerged. Important cases: Northern pacific R. Company v U.S., Goldfarb v Virginia Bar Association, FTC v Indiana federation of dentist , Board of trade Chicago v U.S. , Standard Oil company v U.S.

Competition Law In Europe Capitalism was adopted by the European countries from the very beginning. Any unfair trade practices or manipulative trading was considered as prohibited activity with penalty. Hitler created the exception by permitting the cartels to support the war expense . After the second world war, in ministers conference, economic integration and defence integration was considered first, followed by establishment of ECSC(1951), European economic community( 1957),EU( 1991). Presently, Art 101 and Art 102 of TEFU of EU provides the competition law of European union. Art 101 is focussed on agreements and Art 102 deals with abuse of dominance

Art 101 1. The following shall be prohibited as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which: (a) directly or indirectly fix purchase or selling prices or any other trading conditions; (b) limit or control production, markets, technical development, or investment; (c) share markets or sources of supply; (d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts. 2. Any agreements or decisions prohibited pursuant to this Article shall be automatically void. 3. The provisions of paragraph 1 may, however, be declared inapplicable in the case of: - any agreement or category of agreements between undertakings, - any decision or category of decisions by associations of undertakings, - any concerted practice or category of concerted practices, which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not: (a) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives; (b) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question

Art 102 article 102 (ex Article 82 TEC) Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States. Such abuse may, in particular, consist in: (a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; (b) limiting production, markets or technical development to the prejudice of consumers; (c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

Competition Law in India Policy of command and control and license raj was adopted post 1947. Government played both the role of a businessman and a regulator , which prohibited the development of competition in India. Constitution provides for economic justice, existence of public and private enterprises and Decentralisation of resources MRTP Act was enacted with exempting government entities, providing for restrictive trade practices, Monopolist trade practices and Unfair Trade practices Discrimination between public and private enterprises, Prohibition of monopoly( Acquiring 25 percent or more) and different types of Restrictive and Unfair trade practices However, the supreme court gave some respite from the restrict and oppressive law in the following cases: Mahindra and Mahindra v Union of India M/S Pieco electronics v Union of India Colgate Palmolive v MRTP Commision Hindustan Lever Limited v Union of India

Continued Following the silent outcry and under the influence of globalisation and liberalisation, Raghvan Committee was appointed , which recommended for competition law of the country Accordingly, Competition Act, 2002 was enacted . It has following features . Sec 7-17 Deals with the establishment of the CCI . Sec 64 of the Act deals with the quasi legislative power of CCI to make the regulations Sec 19 and 20 of the act provides executive powers to investigate and inquire into anticompetitive practices Sec 33 and sec 42-48 empowers CCI to adjudicate and impose penalty for violation of competition law and regulations Sec 49 of the Act provides for competition advocacy Sec 53 A provides for establishment, power and functions of Competition Appellate tribunal Sec 3 deals with the anticompetitive agreements, sec 4 with abuse of dominance and sec 5 deals with regulation of combinations.