INTRODUCTION

In the wake of economic liberalization and widespread economic reforms introduced in 1991, and in its attempt to move from a 'command and control' regime to a regime based on free market principles, India decided to replace its then existing competition law the Monopolies and Restrictive Trade Practices Act 1969, which was primarily designed to restrict the growth of monopolies in the market, with a modern competition law in sync with established competition law principles. As the first step towards this transformation, the Competition Act 2002 was enacted and received presidential assent on 13th January2003. The Competition Act has been designed as an omnibus code to deal with matters relating to the existence and regulation of competition and monopolies. Its objects are lofty, and include the promotion and sustenance of competition in markets, protection of consumer interests and ensuring freedom of trade of other participants in the market, all against the backdrop of the economic development of the country. These objectives are sought to be achieved by the establishment of the Competition Commission of India, which was established by the central government with effect from 14th October 2003. Accordingly, the commission is mandated to prohibit anti-competitive agreements and abuse of dominant positions by enterprises and to regulate combinations through a process of inquiry and investigation.

COMPETITION LAW IN INDIA a. Historical background for Competition Law.

Law governing competition is found in over two millennia of history. Roman Emperors and Medieval monarchs alike used tariffs to stabilize prices or support local production. The formal study of "competition began in earnest during the 18th century with such works as Adam Smith's The Wealth of Nations. Different terms were used to describe this area of the law, including "restrictive practices", "the law of monopolies", "combination acts" and the "restraint of trade. An early example of competition law is the Lex Julia de Annona1, enacted during the Roman Republic around 50 BC. To protect the grain trade, heavy fines were imposed on anyone directly, deliberately and insidiously stopping supply ships. Under Diocletian in 301 AD an edict imposed the death penalty for anyone violating a tariff system, for example by buying up or contriving the scarcity of everyday goods. Legislation in England to control monopolies and restrictive practices were in force well before the Norman Conquest. The Doomsday Book of 1086 recorded that "foresteel2" was one of three forfeitures that King Edward the Confessor could carry out through England. But concern for fair prices also led to attempts to directly regulate the market. Under Henry III an act was passed in 1266 to fix bread and ale prices in correspondence with corn prices laid down by the assizes. A fourteenth century statute labeled forestallers as "oppressors of the poor and the community at large and enemies of the whole country." Under King Edward III the Statute of Laborers of 1349 fixed wages of artificers and workmen and decreed that foodstuffs should be sold at reasonable prices. On top of existing penalties, the statute stated that overcharging merchants must pay the injured party double the sum he received.

The English law of restraint of trade is the direct predecessor to modern competition law. Its current use is small, given modern and economically oriented statutes in most common law countries. Its approach was based on the two concepts of prohibiting agreements that ran counter to public policy, unless the reasonableness of an agreement could be shown. A restraint of trade is simply some kind of agreed provision that is designed to restrain another's trade. Modern competition law begins with the competition law enacted by Canada in 1889 followed by the United States legislation of the Sherman Act of 1890 and the Clayton Act of 1914. While other, particularly European, countries also had some form of regulation on monopolies and cartels, the US codification of the common law position on restraint of trade had a widespread effect on subsequent competition law development. Both after World War II and after the fall of the Berlin wall competition law has gone through phases of renewed attention and legislative updates around the world. The number of countries with Competition laws increased phenomenally in the past 25 years from 32 in 1980 to 105 in 2008. Many more countries are in the process of enacting competition laws and the numbers are slated to increase further in the coming few years.

b. Need of Competition Law.

India has had much to celebrate over the past decade that has understandably led to a growing conviction among Indians that the upcoming century belongs to India. India has become one of the worlds fastest growing economies with a global presence in automotives, business process outsourcing,

telecommunications, pharmaceuticals and information technology. Indias GDP in purchasing power terms is $3,526 billion averaging a GDP growth rate of 8.5% for the last five years
Competition Law for India was triggered by Articles 38 3 and 39 4 of the Constitution of India. These Articles are a part of the Directive Principles of State Policy. a. That the ownership and control of material resources of the community are so distributed as best to subserve the common good; and b. That the operation of the economic system does not result in the concentration of wealth and means of production to common detriment. In 1964, when the Indian democracy was in its nascent stage, barely 17 years old, the Government of India appointed the Monopolies Inquiry Commission to inquire into the extent and effect of concentration of economic power in private hands and the prevalence of monopolistic and restrictive trade practices in important sectors of economic activity other than agriculture. The Commission submitted its report along with The Monopolies and Restrictive Trade Practices Bill, 1965 5. It came into force on June 1st, 1970 as the Monopolies and Restrictive Trade Practices Act, 1969. The object and reasons of the Act was to provide that the operation of the economic system did not result in the concentration of economic power to the common

detriment, for the control of monopolies, for the prohibition of monopolistic and restrictive trade practices and for matters connected therewith and incidental thereto. Since 1970, the Act had been amended several times to suit to the changing circumstances. However, of late, particularly after the economic reforms of early 1990s, it was felt that the MRTP Act had become obsolete in certain respects in the light of international economic developments relating more particularly to competition laws and there was a need to shift focus from curbing monopolies to promoting competition. In October 1999, the Government of India appointed a High Level Committee (Raghavan Committee) on Competition Policy and Competition Law to advise a modern competition law for the country in line with international developments and to suggest a legislative framework, which may entail a new law or appropriate amendments to the MRTP Act. The Committee presented its Competition Policy report to the Government in May 2000 and the Competition Act, 2002 received assent of the President of India on January 13, 2003 and was published in the Gazette of India dated January 14, 2003.

Pursuant to the Act, the Competition Commission of India was established and one Chairperson as also an Administrative Member of the Commission was appointed on 14th October, 2003. The Government has appointed the Chairperson and other Members of the Commission, who have assumed office. The Commission and Appellate Tribunal have become fully operational with effect from 20.05.2009.

c. Competition policy in India.

The past few years have been challenging for the economy and for businesses world over, making the task of policy makers even more daunting. India, in the pursuit of globalization responded by opening up its economy by removing controls and resorting to liberalization. In the light of this, the obvious need of the hour was that the Indian market be geared to face competition from within the country and outside. The financial crisis which gripped world

strengthened the need and highlighted the importance of a strong and effective competition policy, a policy which would encourage markets to work well for the benefit of business and consumers, thereby increasing the countrys economic fitness: markets characterized by effective competition makes firms innovate more, keep prices down for consumers and improved total factor productivity drives economic growth. These factors are all the more relevant given the financial challenges faced by the country. It is clear that ultimately, the way out of this crisis for the financial sector and the wider economy lies with competitive markets, backed up by a robust competition policy. Competition policy is defined as those government measures that affect the behavior of enterprises and structure of the industry with a view to promoting efficiency and maximizing consumer/ social welfare. There are two

components of a comprehensive competition policy. The first involves putting in place a set of policies that enhance competition or competitive outcomes in the markets, such as relaxed industrial policy, liberalized trade policy, convenient entry and exit conditions, reduced controls and greater reliance on

market forces. The other component of competition policy is a law and its effective implementation to prohibit anti competitive behavior by businesses, to prohibit abusive conduct by dominant enterprise, to regulate potentially anti competitive mergers and to minimize unwarranted government/regulatory controls. In the wake of economic liberalization and wide spread economic reforms introduced by India since 1991 and in conformity with the commitments made at the WTO, in October 1999, the Government of India appointed Raghavan Committee on Competition Policy and Competition Law to advise a modern competition law for the country in line with international developments and to suggest a legislative framework, which may entail a new law or appropriate amendments to the MRTP Act. The Central Government after considering the suggestions of the trade and industry and the general public decided to enact a law on Competition to replace the then existing competition law namely, the Monopolies and Restrictive Practices Act 1969 which was primarily designed to restrict growth of monopolies in the market with a modern competition law in sync with the established competition law principles.

d. Repealing of MRTP Commission.

The Central Government has issued the Competition (Amendment)

Ordinance, 2009 on the 14th October, 2009. By this Ordinance, the MRTP Commission (MRTPC) has ceased to exist with immediate effect. The Ordinance has amended Section 66 of the Competition Act, 2002 relating to the sun set period for the continuance of the MRTPC i.e. for two years after the date of commencement of the said Act. Consequently, all the provisos and explanations included in the relevant subsections of the section 66 whereby the MRTPC was to continue to exercise jurisdiction and powers under the repealed MRTP Act, 1969 for a period of two years after the date of commencement, have either been omitted or been substituted with the words on the commencement of the Ordinance. 1. The Monopolies and Restrictive Trade Practices Act, 1969 is hereby repealed and the Monopolies and Restrictive Trade Practices Commission established under the said Act shall stand dissolved. 2. All cases pertaining to monopolistic trade practices or restrictive trade practices pending, before the Monopolies and Restrictive Trade Practices Commission shall be transferred to the Appellate Tribunal. 3. Subject to the provisions of sub-section(3), all cases pertaining to unfair trade practices other than those referred to in clause (x) of sub-section(1) of section 36A of the Monopolies and Restrictive Trade Practices Act, 1969 and pending before the Monopolies and Restrictive Trade Practices Commission immediately before the commencement of the competition

(Amendment) Ordinance, 2009 shall, on such commencement stand transferred to the National Commission constituted under the Consumer Protection Act, 1986 and the National Commission shall dispose of such cases as if they were cases filed under that Act. 4. All cases pertaining to unfair trade practices referred to in clause (x) of sub-section(1) of section 36A of the Monopolies and Restrictive Trade Practices Act, 1969 and pending before the Monopolies and Restrictive Trade Practices Commission shall, on the commencement of the Competition (Amendment) Ordinance, 2009 stand transferred to the Appellate Tribunal and the Appellate Tribunal shall dispose of such cases as if they were cases filed under that Act. Of these three authorities, the Competition Commission of India and the National Commission under the Consumer protection Act, 1986, have the discretion to dispose the pending investigations or proceedings, in the manner deemed fit.

APPLICATION OF COMPETITION ACT. a. Anti competitive agreements.

An agreement in respect of the production, supply, distribution, storage, acquisition or control of goods or the provision of services, which causes or is likely to cause an "appreciable adverse effect on competition" within India, is defined as an 'anticompetitive agreement'. The Competition Act prohibits anticompetitive agreements and declares that such agreements shall be void. However, the prohibition contained in Section 3 is not absolute and permits joint venture agreements where certain parameters are met. The proviso to Section 3(3) of the Competition Act reads as follows: "Provided that nothing contained in this sub-section shall apply to any agreement entered into by way of joint ventures if such agreement increases efficiency in production, supply, distribution, storage, acquisition or control of goods or provision of services." Anti-competitive agreements can be 'horizontal' (agreements between direct competitors), 'vertical' (agreements between enterprises at different levels of the production chain in different markets, such as agreements between a manufacturer and a distributor or a distributor and a retailer) or both. Horizontal agreements include: a. b. Agreements to fix prices; Agreements to limit production, supply, markets, technical development, investments or provisions of services;

c.

Agreements to allocate markets or the source of production or provision of services through the allocation of, for example, geographical area, type of good or service or the number of customers; and

d.

Bid rigging or collusive bidding.

These horizontal agreements are presumed to have an appreciable adverse effect on competition, which is similar to the per se rule. Vertical agreements include: a. b. c. d. e. Tie-in arrangements; Exclusive supply agreements; Exclusive distribution agreements; Refusal to deal; and Resale price maintenance.

However, such arrangements are common business practices and infringe the law only if they reduce competition. The five above-mentioned categories of vertical agreement have the potential for foreclosing competition by hindering the entry of new players into the market and hence may be considered anticompetitive.

b. Abuse of dominance
The Competition Act does not frown on dominance as such. An enterprise is free to grow as large as it pleases or achieve as big a market share as it can. The problem arises only when there is an abuse of dominance. Abuse of a dominant position occurs when a dominant firm in a market, or a dominant group of firms, engages in conduct that is intended to eliminate or discipline a competitor or to deter future entry by new competitors, with the result that competition is prevented or lessened substantially. The Competition Act provides for the following business practices which, if found to be conducted by an enterprise or a group, will lead to the inference of abuse of a dominant position, provided that the enterprise or group is found to be dominant in the relevant market: a. Imposition of an unfair or discriminatory condition on the purchase or sale of goods or services, or on price in the purchase or sale of goods or services, including predatory pricing; b. The limitation or restriction of the production of goods or the provision of services or the market thereof; c. The limitation or restriction of technical or scientific development relating to goods or services to the prejudice of consumers; d. e. Denial of market access in any manner; Making the conclusion of contracts subject to acceptance by other parties of supplementary obligations which, by their nature or commercial usage, have no connection with the subject of such contracts; or

f.

Use of its dominant position in one relevant market to enter into or protect another relevant market.

Abuse of dominant position is a serious violation under the Competition Act, 2002. Section 4 of the Act specifically states that no enterprise should abuse its dominant position. It also states that there will be an abuse of dominant position if an enterprise imposes unfair or discriminatory conditions or prices in the purchase or sale of goods or provision of services or if it limits or restricts production of goods or provision of services or technical and scientific development or it denies market access, etc.

c. Combinations regulation
The term 'combination' for the purposes of the Competition Act is defined very broadly, to include any acquisition of shares, voting rights, control or assets or merger or amalgamation of enterprises, where the parties to the acquisition, merger or amalgamation satisfy the prescribed monetary thresholds in relation to the size of the acquired enterprise and the combined size of the acquiring and acquired enterprises with regard to the assets and turnover of such enterprises. The Competition Act, 2002 provides for regulation of combinations.

Combination includes acquisition of shares, control, voting rights or assets, mergers and amalgamations. Only those combinations where the total value of the assets or the turnover of the combining parties exceeds the threshold limits prescribed are regulated by the Act. The Competition Act was partially enforced on 20 May, 2009 whereby the provisions relating to anti-competitive agreements and abuse of dominant position were notified. Sections 5 and 6 of the Competition Act will regulate 'combinations', requiring prior notification and approval where such provisions are applicable. These provisions and the Combination Regulations are scheduled to come into effect on June 1, 2011. With the enforcement of the combination provisions and the notification of the Combination Regulations, all mergers, amalgamations and/or acquisitions falling within the thresholds indicated in section 5 of the Competition Act will require prior approval of the CCI

From June 1, 2011, with the notification of the Combination Regulations, the CCI will have full power to review acquisition, acquisition of control, mergers and amalgamation under the Competition Act. Where the parties to the combination fail to notify the CCI and the CCI initiates investigation on its own, the CCI shall direct the parties to the combination to file notice in Form II. Further, the failure to notify and obtain required approval attracts penalties under the Competition Act, and in such cases, the transaction would be rendered void, if the CCI subsequently determines that the combination has an 'appreciable adverse effect on competition in India'.

d. Competition advocacy
Competition Advocacy is defined as the ability of the competition office to provide advice, influence and participate in government economic and regulatory policies in order to promote more competitive industry structure, firm behavior and market performance. Section 49 of the Competition Act states that: a. The Central Government may, in formulating a policy on competition or any other matter, and a State Government may, in formulating a policy on competition or on any other matter, as the case may be, make a reference to the Commission for its opinion on possible effect of such policy on competition and on the receipt of such a reference, the Commission shall, within sixty days of making such reference, give its opinion to the Central Government, or the State Government, as the case may be, which may thereafter take further action as it deems fit. b. The opinion given by the Commission under sub-section (1) shall not be binding upon the Central Government or the State Government, as the case may be in formulating such policy. c. The Commission shall take suitable measures for the promotion of competition advocacy, creating awareness and imparting training about competition issues. Section 49 of the Competition Act, 2002, empowers the Competition Commission of India (CCI) to undertake 'competition advocacy'.

REGULATORY FRAMEWORK a. Competition Commission (Chapter-III 6 of the Act).

The objectives of the Competition Act are sought to be achieved through the Competition Commission of India (CCI), which has been established by the Central Government with effect from 14 October 2003. CCI consists of a Chairperson and 6 Members appointed by the Central Government. It is the duty of the Commission to eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade in the markets of India. The Commission is also required to give opinion on competition issues on a reference received from a statutory authority established under any law and to undertake competition advocacy, create public awareness and impart training on competition issues.

b. Constitution of Competition Commission (Section-8).

1. The Commission shall consist of a Chairperson and not less than two and not more than ten other Members to be appointed by the Central Government: Provided that the Central Government shall appoint the Chairperson and a Member during the first year of the establishment of the Commission. 2. The Chairperson and every other Member shall be a person of ability, integrity and standing and who has been, or is qualified to be a judge of a High Court, or, has special knowledge of, and professional experience of

not less than fifteen years in international trade, economics, business, commerce, law, finance, accountancy, management, industry, public affairs, administration or in any other matter which, in the opinion of the Central Government may be useful to the Commission. 3. The Chairperson and other Members shall be whole-time Members.

c. Powers and Duties (Chapter-IV of the Act)

Section 18 to 40 of the Competition Act clearly states about the powers and duties of the Competition Commission. Subject to the provisions of this Act, it shall be the duty of the Commission to eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade carried on by other participants, in markets in India. Case-1 : Hindustan Lever Ltd. v. Colgate Palmolive Ltd. AIR 1999 SC 3105 Case-2 : Colgate Palmolive (India) Ltd. v. MRTP Commission AIR 2003 SC 317 Facts: The matter pertains to Colgate toothpaste, a product of Colgate Palmolive India Limited display of the ring round the family as "Suraksha Chakra" in Colgate Palmolive's hoardings, print advertisements and T.V. commercials, Decision of the Commission: The commission had then appointed an expert panel to verify HLL's claim by consulting independent experts. HLL was in infringement of the MRTP Act since their advertisement projected that their toothpaste was superior in overall dental care and not only in anti-bacterial

protection. This is against the Unfair Trade Practices Act. and HLL was in violation of the MRTP Act, 1969 under Section 36A of unfair trade practices and the advertisement should be banned and suitable compensation to be given to Colgate Palmolive India Ltd. Decision of the Supreme Court: The Court explained that although a seller has the latitude to represent his product in such a manner that he attracts more customers than he normally would have, such latitude would translate into description and reasonable assertion of the product, but not to misrepresentation. In other words, factual representations are perfectly legitimate. The Apex Court went a step further to state that commendatory expressions are not dealt with as serious representations of fact. When the SC says that commendatory expressions are not dealt with as serious representations of fact, it does not mean that such representations are untrue or misleading. On the contrary, what it means is that such representations cannot be taken seriously and that there is no obligation on the part of the seller to the customer with regard to the true quality, rather standing of goods merely because the seller has resorted to puffing. However, the Supreme Court also cautioned that these principles are by no means conclusive since, by and large, cases of puffing are borderline cases, and that there exists a very thin line which separates puffing from falsehood.

d. Competition Appellate Tribunal

The Competition Appellate Tribunal is a statutory organization established under the provisions of the Competition Act, 2002 to hear and dispose of appeals against any direction issued or decision made or order passed by the Competition Commission of India under sub-sections (2) and (6) of section 26, section 27, section 28, section 31, section 32, section 33, section 38, section 39, section 43, section 43A, section 44, section 45 or section 46 of the Competition Act, 2002. The Appellate Tribunal shall also adjudicate on claim for compensation that may arise from the findings of the Competition Commission of India or the orders of the Appellate Tribunal in an appeal against any findings of the Competition Commission of India or under section 42A or under sub-section (2) of section 53Q of the Act and pass orders for the recovery of compensation under section 53N of the Act. The Central Government has set up the Appellate Tribunal on 15th May, 2009 having its Headquarter at New Delhi. Honble Dr. Justice Arijit Pasayat, former Judge of Supreme Court, has been appointed as the First Chairperson of the Appellate Tribunal. Besides, the Chairperson, the Appellate Tribunal shall consist of not more than two Members to be appointed by the Central Government. The Chairperson of the Appellate Tribunal shall be a person, who is, or has been a Judge of the Supreme Court or the Chief Justice of a High Court. A Member of the Appellate Tribunal shall be a person of ability, integrity and standing having special knowledge of, and professional experience of not less than twenty-five years in, competition matters,

including competition law and policy, international trade, economics, business, commerce, law, finance, accountancy, management, industry, public affairs, administration or in any other matter which in the opinion of the Central Government, may be useful to the Appellate Tribunal. The Chairperson or a Member of the Appellate Tribunal shall hold office for a term of five years and shall be eligible for re-appointment. Provided that no Chairperson or other Member of the Appellate Tribunal shall hold office after he has attained the age of sixty-eight years or sixty-five years respectively. Every appeal shall be filed within a period of 60 days from the date on which a copy of the direction or decision or order made by the Competition Commission of India is received and it shall be in the prescribed form and be accompanied by the prescribed fees. The Appellate Tribunal may entertain an appeal after the expiry of the period of 60 days if it is satisfied that there was sufficient cause for not filing it within that period. The Appellate Tribunal shall not be bound by the procedure laid down in the Code of Civil Procedure, 1908 , but shall be guided by the principles of natural justice and, subject to the other provisions of this Act and of any rules made by the Central Government. Every order made by the Appellate Tribunal shall be enforced by it in the same manner as if it were a decree made by a court in a suit pending therein. If any person contravenes, without any reasonable ground, any order of the Appellate Tribunal, he shall be liable for a penalty of not exceeding rupees one crore or imprisonment for a term up to three years or with both as the Chief Metropolitan Magistrate, Delhi may deem fit.

UNFAIR TRADE PRACTICES a. Meaning of unfair trade practices

An unfair trade practice means a trade practice, which, for the purpose of promoting any sale, use or supply of any goods or services, adopts unfair method, or unfair or deceptive practice. Unfair practices may be categorised as under: A. False Representation The practice of making any oral or written statement or representation which: 1. Falsely suggests that the goods are of a particular standard quality, quantity, grade, composition, style or model; 2. 3. Falsely suggests that the services are of a particular standard or grade; Falsely suggests any re-built, second-hand renovated, reconditioned or old goods as new goods; 4. Represents that the goods or services have sponsorship, approval, performance, characteristics, accessories, uses or benefits which they do not have; 5. Represents that the seller or the supplier has a sponsorship or approval or affiliation which he does not have; 6. Makes a false or misleading representation concerning the need for, or the usefulness of, any goods or services; 7. Gives any warranty or guarantee of the performance, efficacy or length of life of the goods, that is not based on an adequate or proper test;

8.

Materially misleads about the prices at which such goods or services are available in the market; or

9.

Gives false or misleading facts disparaging the goods, services or trade of another person. B. False Offer Of Bargain Price

Where an advertisement is published in a newspaper or otherwise, whereby goods or services are offered at a bargain price when in fact there is no intention that the same may be offered at that price, for a reasonable period or reasonable quantity, it shall amount to an unfair trade practice. The 'bargain price', for this purpose means: 1. the price stated in the advertisement in such manner as suggests that it is lesser than the ordinary price, or 2. the price which any person coming across the advertisement would believe to be better than the price at which such goods are ordinarily sold. C. Free Gifts Offer And Prize Scheme The unfair trade practices under this category are: 1. Offering any gifts, prizes or other items along with the goods when the real intention is different, or 2. Creating impression that something is being offered free along with the goods, when in fact the price is wholly or partly covered by the price of the article sold, or 3. Offering some prizes to the buyers by the conduct of any contest, lottery or game of chance or skill, with real intention to promote sales or business.

Case-3: H.M.M. Ltd. v. D.G. MRTP AIR 1968 SC 269 The HMM Ltd. manufactured and marketed Horlicks. In September 1985, it advertised a scheme called the Hidden Wealth Prize Offer for the buyers in Delhi. A lucky purchaser of a bottle of Horlicks could find a coupon inside the bottle. The advertisements stated that even if the buyers coupon did not carry a winning message, he/she had several more chances to try. So get the goodness of Horlicks, now. Because with it, you surely cant lose! The Commission had held this to be an unfair trade practice as the system of getting coupon was nothing but a lottery. The Commission had thus heldOn these postulates, it is not difficult to say that the trade practice is no better than a lottery and that the buyer who does not get any prize does lose it as against the one who wins it although both take to the same transaction. So, the trade practice that is meant to wean away the consumer from Bournvita by this allurement is obviously an instrument of facing competition in the market by unfair means and, therefore, prejudicial to public interest. The Commission gave its judgment in 1989. In the light of its own experiences, it was never an issue that schemes like this were not a contest, lottery, game of chance or skill for direct or indirect promotion of sales. Decision of the Court: The Supreme Court, in its short judgment in 1998, commented that this was not a case of lottery as there was no draw of lots or that a price was charged for participation in the draw... The fact that some

bottles of Horlicks contained a slip of paper which entitled the buyer to a prize is not a lottery in the ordinary sense of the word. D. Non-Compliance of Prescribed Standards Any sale or supply of goods, for use by consumers, knowing or having reason to believe that the goods do not comply with the standards prescribed by some competent authority, in relation to their performance, composition, contents, design, construction, finishing or packing, as are necessary to prevent or reduce the risk of injury to the person using such goods, shall amount to an unfair trade practice. Case-4: Reckitt & Colman of India Ltd. v. Kiwi T.T.K. Ltd 63 (1996) DLT 29, 1996 (37) DRJ 649, (1996) 114 PLR 45 Facts: The plaintiff company is engaged in manufacture and sale of consumer products and one of the products of the plaintiff is liquid shoe polish being manufactured and marketed by them under the name and style of Cherry Blossom Premium Liquid Wax Polish. Liquid polish being marketed by the defendant and some other manufacturers has much less wax contents and more acrylic contents as compared to the liquid polish of the plaintiff. Ad of the defendant shows a bottle of "KIWI" which does not drip as against another bottle described as "OTHERS" which drips. Bottle of "OTHERS" is marked "Brand X" and allegedly looks like the bottle of the liquid shoe polish of the plaintiff for which the plaintiff allegedly has a designed registration granted.

Decision of the Court: Advertisement was regarded as comparative advertisement. Five principles were laid down by the Court to decide as to whether a party is entitled to an injunction. 1. A tradesman is entitled to declare his goods to be best in the words, even though the declaration is untrue. . 2. He can also say that my goods are better than his competitors', even though such statement is untrue. 3. For the purpose of saying that his goods are the best in the world or his goods are better than his competitors' he can even compare the advantages of his goods over the goods of others. 4. He, however, cannot while saying his goods are better than his competitors', say that his competitors' goods are bad. If he says so, he really slanders the goods of his competitors. In other words he defames his competitors and their goods, which is not permissible. 5. If there is no defamation to the goods or to the manufacturer of such goods no action lies, but if there is such defamation an action lies and if an action lies for recovery of damages for defamation, then the Court is also competent to grant an order of injunction restraining repetition of such defamation." A manufacturer is entitled to make a statement that his goods are the best but is not entitled to say that his competitor's goods are bad. observations, the application is disposed of. With these

b. MTP, RTP & UTP.

Monopolistic trade practices (MTPs) An MTP is a trade practice which has or is likely to have the effect of: a. Maintaining the prices of goods or charges for the services at an unreasonable level by limiting, reducing or otherwise controlling the production, supply or distribution of goods or the supply of any services or in any other manner; b. Unreasonably preventing or lessening competition in the production, supply or distribution of any goods or in the supply of any services; c. Limiting technical development or capital investment to the common detriment or allowing the quality of any goods produced, supplied or distributed, or any services rendered, in India to deteriorate; d. Preventing or lessening competition in the production, supply or distribution of any goods or in the provision or maintenance of any services by the adoption of unfair methods or unfair or deceptive practices. Restrictive trade practices (RTPs) A restrictive trade practice is generally one which has the effect of preventing, distorting or restricting competition. In particular, a practice which tends to obstruct the flow of capital or resources into the stream of production is an RTP. Likewise, manipulation of prices, conditions of delivery or flow of supply in the market which may have the effect of imposing on the consumer unjustified costs or restrictions are regarded as restrictive trade practices. But

competition is not always a necessary touchstone on which a trade practice is judged if it is a RTP. All restrictive trade practices under the Act as mentioned above are deemed legally to be prejudicial to public interest. The onus is, therefore, on the entity, body or undertaking charged with the perpetration of the restrictive trade practice to plead for gateways provided in the Act itself. Unfair trade practices (UTPs) Essentially unfair trade practices fall under the following categories in Indian law: a. b. c. Misleading advertisement and false representation; Bargain sale, bait and switch selling; Offering of gifts or prizes with the intention of not providing them and conducting promotional contests; d. e. Product safety standards; Hoarding or destruction of goods.

Making false or misleading representation of facts disparaging the goods, services or trade of another person is also a restrictive trade practice under Indian law.

c. Exemptions under the act

The Act provides for the Government to bring into force its different provisions on different dates by a notification. Furthermore, it empowers the Central Government by notification to exempt from the application of the law or any part thereof for such period, as it deems fit,

a.

Any class of enterprises if such exemption necessary in the interest of security of the State or public interest;

b.

Any practice or agreement arising out of and in accordance with any obligation assumed by India under any treaty, agreement or convention with any other country or countries ;

c.

Any enterprise which performs a sovereign function on behalf of the Central Government or a State Government.

The aforesaid provisions in the Act relating to exemptions should enable the Government to take care of the country's goals, objectives and needs. The Act provides flexibility to the Government to use this provision appropriate to the needs of the country.

REGULATION OF UNFAIR TRADE PRACTICES

Any trade association, consumer or registered consumers association aggrieved by such of the practices mentioned above can seek relief by filing a complaint before the Monopolies and Restrictive Trade Practices Commission, which on such complaint has powers to conduct an inquiry into such practices. The Commission may, on satisfaction that the practice is an unfair trade practice, direct that such practice shall be discontinued, and in cases in which agreements in relation to such practices are made, the Commission may also direct that such agreement shall be void or specify the manner in which it shall be modified. Further the Commission also has the power to direct that any information relating to such unfair trade practices shall be disclosed, issued or published. Where such party takes such steps to ensure that the trade practice is no longer prejudicial to public interest, or the interest of any consumer or consumers generally, the Commission may permit such party to carry on such trade.

a. Regulations for merger control 7

In competition Law, the term merger is used in a broad sense covering combinations of enterprises in various forms e.g. a merger proper, amalgamation, acquisition of shares, voting rights, or assets, or acquisition of control over an enterprise. Mergers are a normal activity within the economy and are a means for enterprises to expand business activity.

The administration of merger control is generally carried out by specialist statutory bodies, with responsibility for enforcement often being entrusted to quasi judicial specialist tribunals in conjunction with courts of general jurisdiction. This structure reflects the fact that the merger control requires more than just an undertaking of the laws use to regulate mergers- it also requires an understanding of the economic concepts and business realities underlying the operation of such laws. In India, the act now makes it obligatory to give a notice when any merger taking place. The merger control rules of the Competition Act 2002 apply to the acquisition of one or more enterprises by one or more persons or merger or amalgamation of enterprises. The Combination Regulations are to take effect from June 1, 2011 to supplement the notification of Sections 5 and 6 of the Competition Act, 2002 relating to combinations. With the publication of these Combination Regulations, the CCI has been finally saddled with all the powers required to act as an economic regulator and exercise merger-control over the Indian soils. Case- 5: Godrej GE Appliances Ltd. vs. Whirlpool of India Limited 1999 (2) CPJ 41A. The Whirlpool Ltd. was back before the Commission to get the interim injunction lifted on its scratch a gift scheme in the light of the HMM case. In the earlier instance, the Commission was convinced that the scheme involved an element of chance or luck and was, therefore, prima facie, violated section 36A(3) of the Act. It had, thus, put an interim injunction on Whirlpool to stop

the scheme. The Commission, post-HMM Ltd. case, reversed its reasoning. Citing similarity with the HMM case, it observed: In this case also there is no draw of lots nor any price charged for participation in the scheme. Each participant got the value for his or her money and in addition stood a chance for winning a prize. According to the Commission, the Whirlpool case was on even sounder foundation as: While some purchasers of Horlicks in the 'Hidden Wealth Prize Offer' did not get any prize, in the 'Scratch a Gift Scheme' of the respondent, every purchaser of scheme would get gifts though of varied values Combinations, in terms of the meaning given to them in the Act, include mergers, amalgamations, acquisitions and acquisitions of control, but for the purposes of the discussion that follows, mergers regulation has been reckoned. Mergers are a legitimate means by which firms can grow and are generally as much part of the natural process of industrial evolution and restructuring as new entry, growth and exit. From the point of view of competition policy, it is horizontal mergers that are generally the focus of attention. Conglomerate mergers should generally be beyond the purview of any law on mergers. A merger leads to a bad outcome only if it creates a dominant enterprise that subsequently abuses its dominance. To some extent, the issue is analogous to that of agreements among enterprises and also overlaps with the issue of dominance and its abuse, discussed earlier. Viewed in this way, there is probably no need to have a separate law on mergers. The reason that such a

provision exists in most laws is to pre-empt the potential abuse of dominance where it is probable, as subsequent unbundling can be both difficult and socially costly.

b. Part Enforcement without Merger Control

Section 5 and 6 of the Competition Act, 2002 relate to regulation of combinations. Section 5 explains the types of acquisitions, mergers and amalgamations that are combinations for the purpose of the Act. Section 6 prohibits combinations which causes or is likely to cause an appreciable adverse effect on competition. Any person who proposes to enter into a combination shall give notice to the Competition Commission of India in the form as may be specified and the fee which may be determined by regulations. Such proposals reported to CCI would not take into effect until either the expiry of two hundred and ten days from the day on which notice was given or the Commission has passed orders on merger. CCI, while determining whether the proposed combination causes or likely to cause AAEC, is mandated to have due regard to all or any of the factors mentioned in section 20(4) of the Act. A holistic reading of these factors shows that CCI would consider both anti-competitive and welfare consequences of the proposed combination. a. b. c. nature and extent of vertical integration in the market; possibility of a failing business; nature and extent of innovation;

d.

relative advantage, by way of the contribution to the economic development, by any combination having or likely to have appreciable adverse effect on competition;

e.

Whether the benefits of the combination outweigh the adverse impact of the combination, if any.

As regards the factor in section 20(4) (l) of the Act nature and extent of innovation is concerned, this can also be seen both ways. Sometimes a merger can raise the possibilities of future innovation on account of the possibilities of economics of a scale and scope and incentive to invest in research and development activities. However, this can also be a negative consideration if one of the entities to a merger is having some IPRs which may not be utilized by the other entity to the merger for fear of competition with its own existing line of products. In some cases, the IPRs may be brought into market after a gap of some time period by the acquiring entity with not a sole eye on consumer welfare. In such eventualities, the effect of the combination would be anti-competitive. Further, the Indian competition law also takes into account relative advantage by way of contribution to the economic development, by any combination having or likely to have appreciable adverse effect on competition.

CONCLUSION AND SUGGESTION

Universally, effective enforcement of competition law is understood as a tool for distributing the welfare generated out of open market and competition thereof. However, enforcement of competition law is not a standalone tool; it presupposes various socio-economic stipulations including pro-market government policies and a pro-competitive market system. India had made a new beginning after Independence. This required significant knowledge in several field to create and manage a command economy. India has made another beginning as a liberalised-globalised economy. The emergent context of India is new and unfamiliar to us. We would need to create newer frameworks and generate knowledge anew to understand this unfolding and better manage the economy and society. Besides enforcement, the very role of competition law is also dependent on the stage of the economy. For instance, in developing economies, vigorous

enforcement of competition law may prejudice industrial policies that are aimed at economic growth. In these economies competition law shall

supplement, not contradict, economic growth. Thus, there is a need for developing/transitional economies such as India to recognize economies (efficiencies) that facilitate development. SUGGESTIONS: A world class legal system is absolutely essential to support an economy that aims to be world class. India needs to take a hard look at its commercial laws and the system of dispensing justice in commercial matters. A beginning needs

to be made at both ends. Creation of a Commercial Court division within each High Court and the training of judges in the civil and criminal courts. There is no shame in admitting our inadequacies. Lawyers and judges need training in economic and commercial matters. Likewise, economists and subject-matter experts need training in legal principles. A major challenge in developing countries towards effective implementation of competition laws and policies are institutional, administrative and policy arrangements that makes the elimination of uncertainties difficult. These factors hinder countries capacity to reap benefits from market reforms processes, due to failure to attract both domestic and international investors. Governments should envisage creation/development of an effective

competition agency endowed with the requisite mandate, resources and authority to implement the competition law of the country for instilling transparency and predictability in the business environment. The need for both regulators to coexist should therefore see a proper delineation of mandate and functions, especially through specific roles articulated properly in the legislation. The complementarily of objectives should also see a proper framework where there is a maximum level of cooperation between the two sets of regulators in place. This ensures that all unnecessary conflicts which may happen at the expense of the market participants are minimised or removed totally.

BIBLIOGRAPHY
Text Books: 1. MRTP Law Principles Provisions and Cases 2. Guide to MRTP Act 2nd ed1982 Wadhwa & A Ramaiya Co. 3. Principles of Law relating to MRTP 4. 5. MRTP Law and Practice Competition Law in India 2nd ed. Wadhwa & Co S.M. Duggar,. Abir Roy and Jayant Kumar Krishnamurthi Nov1992 ed D.P.S Dr. Verma

Websites: a. www.ieee.org/documents/competition_act_2002_india.pdf b. cci.gov.in/images/media/.../37_icai_29feb08_20080708135754.pdf c. www.lawzonline.com Bare Acts

d. www.legalserviceindia.com/articles/compet.htm e. indianjournals.com/ijor.aspx?target=ijor:rt&volume=2005 f. http://www.markandgirish.com/download/Indian%20Competition%20

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