India bade farewell to the MRTP Act of 1969, quite ceremoniously on 28th August, 2009 by notifying the Section 66 of the Competition Act 2002 and the rest was taken care by the promulgation of the Competition ( Amendment ) Ordnance, 2009 dated 14th October 2009.
The Competition Commission of India is our new regulator. Although the Competition Act 2002 came into being in the year 2003 but the relevant sections were notified very recently, only in 2009 and about the same time Mr. Dhanendra Kumar was appointed as the full time Chairman of the Commission.
Competition Act 2002 ( the said Act, here in after ) and the Competition Commission ( The Commission, here in after ) has professional orientation from it’s inception and it is expected to emerge as one of the most powerful regulators, if not the most powerful regulator, in the days to come.
Recognition to Professionals
Section 35 of the said Act contains provisions related to appearance before the Competition Commission of India. This Section enables Company Secretaries, Chartered Accountants, Cost & Works Accountants and Legal Practitioners to appear before the Commission. Further, Section 53S of the said Act enables the said professionals to appear before the Competition Appellate Tribunal. Involvement of different professionals belonging to different disciplines and organizations will certainly enrich the Commission and further develop professionalism.
Speedy Adjudication Process
Section 35 of the said Act contains provisions related to appearance before the Competition Commission of India. This Section enables Company Secretaries, Chartered Accountants, Cost & Works Accountants and Legal Practitioners to appear before the Commission. Further, Section 53S of the said Act enables the said professionals to appear before the Competition Appellate Tribunal. Involvement of different professionals belonging to different disciplines and organizations will certainly enrich the Commission and further develop professionalism.
Speedy Adjudication Process
Under the said Act, there is a three tier speedy adjudication process,
Tier One - Competition Commission of India
Tier Two – Competition Appellate Tribunal
Tier Three – Supreme Court of India
There is yet another significant provision, that is, the exclusion of the jurisdiction of Civil Courts vide Section 61 of the said Act . This is significant for a modern economy as this provision will stop parties from taking injunction from a civil court. As per the news paper reports a civil court has refused to entertain the petition by Kingfisher Airlines seeking relief against the enquiry by the Competition Commission of India in the Code Sharing issue of Jet – Kingfisher deal.
Tier One - Competition Commission of India
Tier Two – Competition Appellate Tribunal
Tier Three – Supreme Court of India
There is yet another significant provision, that is, the exclusion of the jurisdiction of Civil Courts vide Section 61 of the said Act . This is significant for a modern economy as this provision will stop parties from taking injunction from a civil court. As per the news paper reports a civil court has refused to entertain the petition by Kingfisher Airlines seeking relief against the enquiry by the Competition Commission of India in the Code Sharing issue of Jet – Kingfisher deal.
Latest Significant Developments
Notification of Sections 3 and 4 of the said Act on 15th May, 2009 brought into effect the provisions related to “Prohibition of Anti Competitive Agreements” and “Prohibition of Abuse of Dominant Position”. With these notifications, Bid Rigging, Cartel formation and other anti competitive activities have come under the scanner of the Competition Commission of India. The Commission has recently been engaged by the Government of India to enquire the matter related to the alleged bid rigging in Indian Premier League ( IPL ).
Notification of Section 66 on 28th August, 2009 and subsequent promulgation of the Competition ( Amendment ) ordnance 2009 have repealed the MRTP Act 1969 completely and has also closed the MRTP Commission permanently. This ordnance has the effect of transferring the pending cases to such authorities as mentioned here in below;
( a ) All cases related to Monopolistic and Restrictive Trade Practices, including those in which Unfair Trade Practices have also been alleged have been transferred to the Competition Appellate Tribunal
( b ) All cases related to Unfair Trade Practices ( other that under Clause X of Section 36A ( 1 ) of the MRTP Act 1969 ) have been transferred to the National Commission established under the Consumer Protection Act 1986 and
( c ) All cases related to Unfair Trade Practices (under Clause X of Section 36A(1) of the MRTP Act 1969 ) have been transferred to the Competition Appellate Tribunal
Notification of Sections 3 and 4 of the said Act on 15th May, 2009 brought into effect the provisions related to “Prohibition of Anti Competitive Agreements” and “Prohibition of Abuse of Dominant Position”. With these notifications, Bid Rigging, Cartel formation and other anti competitive activities have come under the scanner of the Competition Commission of India. The Commission has recently been engaged by the Government of India to enquire the matter related to the alleged bid rigging in Indian Premier League ( IPL ).
Notification of Section 66 on 28th August, 2009 and subsequent promulgation of the Competition ( Amendment ) ordnance 2009 have repealed the MRTP Act 1969 completely and has also closed the MRTP Commission permanently. This ordnance has the effect of transferring the pending cases to such authorities as mentioned here in below;
( a ) All cases related to Monopolistic and Restrictive Trade Practices, including those in which Unfair Trade Practices have also been alleged have been transferred to the Competition Appellate Tribunal
( b ) All cases related to Unfair Trade Practices ( other that under Clause X of Section 36A ( 1 ) of the MRTP Act 1969 ) have been transferred to the National Commission established under the Consumer Protection Act 1986 and
( c ) All cases related to Unfair Trade Practices (under Clause X of Section 36A(1) of the MRTP Act 1969 ) have been transferred to the Competition Appellate Tribunal
Positive Role of a Regulator
The policy behind the said Act and the Commission is prevention of the abuse of dominant position. The Act recognizes and accepts dominant positions and prohibits it’s abuse. Dominant position of an undertaking is an integral part of economic development and it should not be prevented, unless it can or results in deprivation of consumers or adversity towards healthy competition. In the words of the Chairman, Competition Commission “If you wish to define dominance, you have to first define what is relevant market, and within that relevant market there could be situations of dominance. So every case has to be viewed on a case-by-case basis but the intention is very clear that unless there is a situation there is an undertaking which can abuse its dominance to the detriment with the market we won’t like to step in”.
The policy behind the said Act and the Commission is prevention of the abuse of dominant position. The Act recognizes and accepts dominant positions and prohibits it’s abuse. Dominant position of an undertaking is an integral part of economic development and it should not be prevented, unless it can or results in deprivation of consumers or adversity towards healthy competition. In the words of the Chairman, Competition Commission “If you wish to define dominance, you have to first define what is relevant market, and within that relevant market there could be situations of dominance. So every case has to be viewed on a case-by-case basis but the intention is very clear that unless there is a situation there is an undertaking which can abuse its dominance to the detriment with the market we won’t like to step in”.
A Wide Domain
The Commission has within it’s legal jurisdiction a wide range of corporate entities and activities. Competition Act 2002 is applicable to a person or a department of Government as well, except in matter related of sovereign functions, Atomic Energy, Currency, Defence and Space. The Commission can therefore exercise it’s jurisdiction over a large number of sectors and areas such as Banking, Insurance, Telecom, Capital Market, Roads, Railways, Airlines, Ports, Broadcasting, Films, Television, Mines, Minerals, Sports and others. In some areas there are sector specific regulators, say Indian Banks Association and some of these regulators have been trying to restrict the jurisdiction of the Commission in their specified sectors, however, it is unlikely that the powers of the Commission would be curtailed.
The Commission has within it’s legal jurisdiction a wide range of corporate entities and activities. Competition Act 2002 is applicable to a person or a department of Government as well, except in matter related of sovereign functions, Atomic Energy, Currency, Defence and Space. The Commission can therefore exercise it’s jurisdiction over a large number of sectors and areas such as Banking, Insurance, Telecom, Capital Market, Roads, Railways, Airlines, Ports, Broadcasting, Films, Television, Mines, Minerals, Sports and others. In some areas there are sector specific regulators, say Indian Banks Association and some of these regulators have been trying to restrict the jurisdiction of the Commission in their specified sectors, however, it is unlikely that the powers of the Commission would be curtailed.
Deeming Provision
In case of combinations ( arising out of mergers ), as per Section 31 of the said Act, if the Commission does not reply within 210 days from the date of service of the notice by the applicant under Section 6 ( 2 ) of the Act, seeking approval for the combination, it shall be deemed that the approval has been granted.
Leniency Provision
In case of combinations ( arising out of mergers ), as per Section 31 of the said Act, if the Commission does not reply within 210 days from the date of service of the notice by the applicant under Section 6 ( 2 ) of the Act, seeking approval for the combination, it shall be deemed that the approval has been granted.
Leniency Provision
Section 46 of the Act provides for leniency in penalty and punishment where the party voluntarily intimates the Commission about his involvement in any cartel leading to violation of the Section 3 of the said Act. The Commission can impose lesser penalty in these cases.
Is something still pending ?
Yes India Inc. is eagerly awaiting the notifications of Sections 5 and 6 of the Act and the issue of Combination Regulations, which will set a new course for big scale mergers and acquisitions in India.
Is something still pending ?
Yes India Inc. is eagerly awaiting the notifications of Sections 5 and 6 of the Act and the issue of Combination Regulations, which will set a new course for big scale mergers and acquisitions in India.
Thanks for the news..
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