Legislative History of Indian Competition Law

Policy Documents
1. Draft National Competition Policy 2011

Acts
2. Indian Competition Act 2002

3. The Competition Amendment Bill 2012

4. The Competition Amendment Act 2007

5.  Indian Monopolies and Restrictive Trade Practices Act 1969

International Instruments 

Singapore Ministerial Declaration
1. Singapore Ministerial Declaration of 1996

Working Group on the Interaction between Trade and Competition Policy
1. WT/WGTCP/W/24 10th July 1997

2. WT/WGTCP/W/79 24 July 1998

3. WT/WGTCP/W/110 16 November 1998 

 4. WT/WGTCP/W/149 18 September 2000

5.WT/GC/W/459 6 November 2001 

6. WT/WGTCP/W/215 26 September 2002

7. WT/WGTCP/W/216 26 September 2002  

8. WT/GC/W/513 23 August 2003

9. WT/GC/W/522 12 December 2003


Reports

Report of High Level Committee on Competition Policy & Law – SVS Raghavan Committee

Working group on competition policy of Planning Commission

Consumer Protection and Competition Policy  Planning Commission

11th Five Year Plan – Mid Term Appraisal (2011) 

Standing Committee Report on the Competition (Amendment) Bill, 2006  

Standing Committee Report on the Competition Bill, 2001

Google and Antitrust: Is It a New Microsoft

Microsoft and its anti-competitive activities in the form of tying up window media player and internet explorer, everyone knows. Now there are new monopolies in Internet sector. These are Google and Facebook. In this post, I discuss briefly, how Google works and its history. This post will be followed by further posts on Google antitrust (anti competitive behaviour).

Internet is a network of inter-connected networks, connected through wire and wireless. So we need searching mechanism as we search telephone directory for searching telephone numbers if we do not know it. Similarly, on internet also we search in search engine if we don know the domain name of a website. So search engines play a role of directory. The new thing about this directory is that everybody is on it. So it is very lucrative for firms to advertise on it.

Google was started by Stanford University PhD students Larry Page and others in 1996. It started as an academic search engine without economic motive. Throughout time if we see Google business strategy has changed tremendously. After gaining the market share in general search, it has 99 percent share in India. See here. It has entered into advertising and vertical search. Vertical search are kind of specialized search like youtbe, Google Pic and others.

Now they have incentive to put there search results over the other organic search results. They have economic incentive to manipulate the search results in favour of companies advertising with them. Because they are getting revenue from them.

Some scholars comment that there is no switching cost on internet and other search engines are also available. So if Google does not give good results users will shift to other better search engines. So they have economic incentive in maintaining the quality of results they provide.

Currently, Google is facing competition issues in issues in various jurisdictions are:

1. Manipulating the organic search results.

2. Allotting trademark of one company to its competitor.

3. Denying access to other vertical search engines on its first page

4. Not sharing their search query content stored by Google.

5. Denial of essential patents access to competitors. See

 Search engine industry pose new challenges to competition authorities in form of its new economics of low switching cost, availability of alternative services. Still there is a virtual monopoly. Further this issue will be discussed in post in future.

Just Another Match Fixing: Anti-Competitive Activiteis by BCCI in IPL

CCI has recently passed an order against BCCI in case of Sh. Surinder Singh Barmi v BCCI. The case is related to Franchisee, Media rights distribution by BCCI with respect to IPL matches. BCCI enjoys de facto monopoly over Cricket in India. It is generally known fact that BCCI is a very rich sports authority. We discuss the anti-competitive behavior of BCCI in this post. In a similar caseFédération Internationale de Football Association's conduct was examined for anti-competitive effect. The judgement is available here.

In every case of abuse of dominance, there is a four step process.

1. proving an entity enterprise or group of enterprise.

2. Defining relevant market (substitute products or services)

3. Establishing dominance in relevant market

4. Abuse of dominance

So in this case, BCCI was contending that it is not an enterprise because it is a non profit organisation.

Section 2(h) in The Competition Act, 2002

(h) " enterprise" means a person or a department of the Government, who or which is, or has been, engaged in any activity, relating to the production, storage, supply, distribution, acquisition or control of articles or goods, or the provision of services of any kind, or in investment, or in the business of acquiring, holding, underwriting or dealing with shares, debentures or other securities of any other body corporate, either directly or through one or more of its units or is located at the same place where the enterprise is located or at a different place or at different places, but does not include any activity of the Government relatable to the sovereign functions of the Governm divisions or subsidiaries, w ether such unit or division or subsidiary nt including all activities carried on by the departments of the Central Government dealing with atomic energy, currency, defence and space. Explanation."

Concluding after analysing this definition profit is not the retirement anywhere. In the similar case Hemant Sharma and Others Vs. Union of India Chess Federation of India was considered enterprise by the Delhi High Court.

Organisational Structure of BCCI 

BCCI is a registered society under Tamilnadu Societies Registration Act. It does not have any statutory authority. However having or not having statutory authority does not affect anti-competitive liability. BCCI issues franchisee, media rights. It is a commercial activity. And it is an enterprise under Competition Act 2002. 

Defining Relevant Market

Defining relevant market is very complex phenomena in abuse of dominance. Anti-competitiveness depends upon how the relevant market is defined. An activity can be anti-competitive in narrow relevant market whilst same activity can be not anti-competitive due broad market definition due to increase in market share. Vice-versa can also be true. In a broader defined market a firm can be dominant. In a narrow defined market an enterprise may not have dominance. As in Google case, considering all types of advertisements. It has almost 99 percent market share. If all types of advertisements are treated as different market, it may not have dominance in the relevant market. 

Similar is the case with BCCI as well. BCCI is a de-facto regulator of Cricket in India. Perhaps it gets the monopoly due to the membership of International Cricket Council (ICC).

So considering Indian Cricket as a relevant market BCCI has dominant position. 

Regarding the substitutability of Cricket with other games, it need not be discussed that Cricket is not substitutable with any game in India. Though SSNIP is the economic test used for this analysis. SSNIP is examining the effect of 5-10% price rise on the demand. So here 5-10% rise in price is not expected to have any bearing on demand of Cricket.

Anti-competitive Issues

Irregularities in the grant of franchise rights for team ownership.

b. Irregularities in the grant of media rights for coverage of the league.

c. Irregularities in the award of sponsorship rights and other local contracts related to organization of IPL.

CCI held that BCCI has abused its dominant position.

Food for Thought:

1. Whether considering whole cricket sport as a relevant market is right?

2. If  no, what should be the criteria for defining market?

Indian Competition Law: Raghvan Committe Report

Indian Competition Law: Raghvan Committe Report: Raghvan Committee was the committee constituted for necessity of new competition law in India and relevance of MRTP Act 1969. It submitted...

Raghvan Committe Report

Raghvan Committee was the committee constituted for necessity of new competition law in India and relevance of MRTP Act 1969. It submitted its 8 chapter report in 2001. It discussed the industrial policy, entry barrier, licensing and state of competition in various industries. Its report is available here.

Raghavan Committe report concluded that MRTP Act is outdated in the present economic state of liberalization. So there was a need to enact new competition law.

In fourth chapter of its report the committee said that anti-competitive agreement (multilateral), abuse of dominance (unilateral) and combination will be the main areas of competition law.

Which we can find in the Section 3-6 of the Competition Act 2002.

Regarding the interface between competition policy and IPRs, it states that all IPRs have potential of being anti-competitive in its fifth chapter.

Objective of Indian Competition Law

Objective of competition legislation is debatable in all jurisdiction. Different scholars explain the different objectives of competition law. Some argue that objective of competition law is to enhance efficiency. Some argue that main objective is to protect consumer interest while others argue that it is to save the competitors so that competition remains in market and monopolist could not abuse its market power.

The objectives of competition law change with the concept of competition. Theory of competition is developed by the industrial economists of Havard in 1940s. They evolved Structure Conduct and performance model that structure in form of number of buyers and sellers, conduct in forms of R&D, sale etc and performance in terms of profit, equity, static efficiency and dynamic efficiency (innovation) has effect over each other. 

Later in 1980 Chicago school of competition law argues that structure conduct performance is not the only factors in competition law. Efficiency is more important than the other factors. A monopoly may be more efficient hence more competitive than the other structures of market. A firm may grow due to its managerial skills, quality raw material and better human resource. 

The reality lies somewhere in between both the schools of competition ideology. Objective of a legislation is very important. Because objective is going to give a direction to the legislation. Without clear objective law is like a kite without string. 

So the question arises what is objective of Indian Competition Law. The objective of Indian Competition Act 2002 states five objectives in the current economic conditions of the country:

1. to establish CCI to curb anti-competitive activities

2. promote and sustain competition in market 

3. protect consumer interest 

4. to ensure freedom of trade carried on by other participants in the markets in India.

5. Connected and incidental matters

It is important to notice that efficiency is not the express objective of Competition Act in India as opposed to Chinese competition law and other competition laws. It is very important to examine whether it is intentional or unintentional omission.

The third objective is the most complex one of all the objectives. Because there can be various dimensions to consumer protection  such as immediate consumer protection, long term consumer protection. Consumer has a wider definition in Competition Act 2002 than the earlier Monopolistic and Restrictive Trade Practices Act 1969. Purchase for sale or commercial purpose is also a consumer. 

So there is no clear cut division between Consumer and Producer class. It is about the role one is playing in the particular situation.    

There is need of intense research on real objective of Indian Competition law and suggested approach to achieve this objective.

Interface Between Competition Law and IPRs in India

Interface between competition law and IP is a very new area in India. As there is only one pertinent case related to interface between competition law and IP in India. This case is FICCI Multiplex Association v. United Producers and Distributors Association. The CCI order of this case is available Here. This case is related to refusal to license a product film which is IP protected.

Defendant contend that CCI does not have jurisdiction to deal with this issue as it is copyrighted material. Regarding jurisdiction in case of Amir Khan Private Ltd. v. CCI Bombay High court held that CCI has the power to deal with the this case. 

CCI in this case felt the problem how to deal with an IP matter. CCI was cautious to deal with an IP matter. They pointed out the ambiguity in the provision Section 3(5)i of Competition Act 2002. Section 3(5)i provides that IP owner can impose reasonable restriction to protect its intellectual property. Bombay High Court in Amir Khan case opined that reasonable restriction provision is to ensure that IP owner can file a case for the violation of Intellectual Property, so that said infringer do not take the plea of anti-competitive activity and escape liability under IP law. 

On the other hand CCI on the safe side discussed the Copyright scope and came to conclusion that the said issue is out of rights provided under Copyright Act 1957 so this matter can be decided by CCI.

This order does not set a right precedent relating to interface between competition law and IP in India. As the commentator such as Mark Lemley condemn the IP scope doctrine by the way of giving immunity to IP within is subject matter. He argues for antitrust treatment of IP if it is anti-competitive. 

I argue for the strong application of Competition law as well as IP law to increase innovation and competition culture in India.