Author: Vrinda Bhandarkar, 4th Year BBA LL.B, SDM Law College, Managalore
In the arena of Commerce, competition is considered to be a rivalry between businesses with the aim of accomplishing superiority through development of a greater customer base over a period of time. As commerce itself is all pervasive, competition too has permeated both domestic and international spheres with the intention of upholding consumer interests and welfare. Consequently, certain similarities and overlapping in substantive and procedural aspects on an international level is inevitable. Therefore, the significance and necessity of undertaking a meticulous study of the transnational perspective of competition law is axiomatic.
In this pursuit, the present article provides a succinct analysis of the conceptual framework of competition law from the stage of its genesis to the development of its philosophy and prominence. Additionally, a bird’s eye view of the domestic competition law regime along with the transnational perspective has been provided. Moreover, the challenges posed by cross border disputes has been briefly stated in order to arrive at pertinent conclusions.
It is believed that the earliest instance of competition law was in 50 B.C for guarding grain businesses by imposition of huge fines resulting in blockage of ships. It is also alleged that ancient European cities had formed cartels in the form of guilds in as early as the middle ages. Additionally, contracts restricting trade can be traced back to the English Common Law of the early fifteenth century. However, the first legislative framework in the modern world has been envisaged by the United States through the Sherman Act of 1890 and Clayton Act of 1914 which prohibited trusts and monopolistic business practices which were considered harmful to consumer welfare. Subsequently, several European countries followed the cue of the United States owing to rampant cartelisation. After the Second World War, stricter competition laws were introduced by a number of countries. It is pertinent to note that developing countries have also introduced stronger competition law regimes.
- Philosophy and Prominence
The raison d’etre of the Competition law rests upon the objectives of Economic welfare, economic efficiency and free and fair competition. Moreover, Adam Smith’s allegory of the ‘Invisible Hand’ is recognised to be undermined by people of the same trade when they conspire against the public through contrivance of prices or other. Thus, the primary purpose of Competition Law is to avoid as well as restrict formation of cartels,  anti-competitive agreements etc. with the motive of upholding consumer welfare. Moreover, the rudimentary factor behind the progress of competition law realm is the internationalisation of business and commerce which has inevitably resulted in interdependence among nations. Additionally, the increasing number of countries that have emphasised and developed their respective comprehensive competition law and policy has increased.
- Overview of Competition Laws in India
After the attainment of Independence, India adopted the Nehruvian Socialism Model which is a blend of market economy and socialist economy which was aimed at achieving economic growth with social justice. However, when the Nehruvian Socialism Model failed to deliver desired results despite best efforts, the Mahalanobis Committee was appointed in October, 1960 for meticulously examining the inequality of income distribution in India. On the basis of its recommendations, the Monopolies Inquiry Commission (MIC) was constituted in 1964 which found extremely high levels of concentration of economic power in over 85 percentages of industrial items in India. Consequently, Monopolies and Restrictive Trade Practices Act was passed by the Indian Government with the aim of regulating concentration of economic power in India.
- Monopolies and Restrictive Trade Practices Act, 1969
The primary goal of the MRTP Act was control of monopolistic behaviour and curbing of concentration of economic power and restrictive trade practices. In this pursuit, the provisions of the MRTP Act permeated all-pervasively to several areas inter alia inclusive of production, distribution, mergers, amalgamations and takeovers. The MRTP commission was set up in order to effectively deal with the offences committed under the MRTP Act. Despite its bonafide genesis, a strong criticism lingered on that its provisions stunted economic growth tremendously. In 1984, the MRTP Act was amended upon the recommendations of the Justice Rajinder Sachar Committee in order to extend protection from deceptive and misleading advertisements. It also led to the creation of a new authority in the form of the Director-General of Investigation and Registration (DGIR) who was supposed to work in liaison with the Commission. After the New Economic Reforms of 1991, pre-entry restrictions on entry were removed from the MRTP Act and the applicability of its provisions was restricted to only State owned Enterprises through subsequent amendments. Additionally, approval in case of mergers and amalgamations ceased to be within the ambit of the MRTP Act.
- Competition Act, 2002
The advent of the Competition Act, 2002 marked the transcendental paradigm shift from prohibition to promotion of competition. It was introduced based on the recommendations of the Raghavan Committee after the obsolescence of MRTP Act became palpable. It prohibits or regulates a) Anti-competitive agreements (Section 3) b) Abuse of dominant position (Section 4) c) Combinations (Section 5 & 6). In this regard, the Competition Commission of India (CCI) established under Section 7 is empowered to ensure compliance with the provisions envisaged under the Competition Act. It is conferred with the powers of investigation as well as imposition of sanctions in the event of infringement in the form of a cease and desist order, imposition of penalty not exceeding ten percent and upto or higher than ten percent in cartel cases. Its jurisprudential evolution involves a catena of cases including MCX Stock Exchange v. NSE, wherein CCI held that NSE’s zero pricing policy which involved waiving off its transaction fees, in addition to, extremely low deposit fees involved leverage of power resulting in abuse of dominance. Similarly, in DLF v. CCI, CCI held DLF liable for formulation of unfair and arbitrary clauses against the apartment buyers in its apartment purchase agreements resulting in abuse of dominance.
- International Perspective
- United States
The United States of America has based its anti-trust laws on three legislations namely the Sherman Act of 1860, the Clayton Act of 1914 and the Federal Trade Commission Act of 1914. The courts have interpreted the Sherman Act to outlaw contracts that unreasonably restrain trade in an attempt of obtaining monopoly power by illegitimate means. Moreover, the Clayton Act prohibits price discrimination; tying, mergers and acquisitions which tend to lessen competition and create monopoly. Accordingly, the courts can grant remedies against violation of these provisions. The Federal Trade Commission Act of 1914 established the Federal Trade Commission (FTC) which generally possesses the same powers as that of the Department of Justice, but, also possesses certain unique powers such as the power to enforce a statutory prohibition on unfair methods of competition or deceptive practices and to obtain a court order temporarily enjoining conduct that violates antitrust laws or to conduct hearings to decide whether a firm has violated antitrust laws. Moreover, in 1976, the Scott-Rodino Act was enacted to overcome the delay and inefficiencies of past procedure, thereby mandating filing of proposals of mergers and acquisitions with the Department of Justice and Federal Trade Commission at least 30 days prior to the proposed event.
Additionally, Federal courts have the power to grant any of the civil or criminal remedies which has been authorised by the anti-trust laws in response to a complaint filed by the Department of Justice or the Federal Trade Commission. In this regard, private parties that are injured by antitrust laws can file a complaint in a Federal court and can seek any of the civil penalties as provided in the antitrust statutes. Similarly, State Attorney Generals can sue firms in case of violation of Federal Antitrust law on behalf of their respective States. In such cases of civil as well as criminal nature, the defendants are entitled to a fair trial by Jury. It is pertinent to note that the Department of Justice initiates criminal proceedings only in rare cases of intentional violation of antitrust laws such as the vitamin price fixing conspiracy by several major manufacturers.
Presently, the Anti-Trust law regime of the United States has undergone a phenomenal paradigm shift from protection of competitors to protection of competitive markets with the object of maximising social welfare. Accordingly, the Antitrust jurisprudence has evolved through a plethora of judicial precedents. In this regard, entering into exclusive licensing agreements with computer manufacturers to overtake Netscape by Microsoft was held to demonstrate an intent to monopolise the industry in United States v. Microsoft. Similarly, several cases were successfully decided during the early years of the U.S Antitrust Laws inter alia including United States v. Trenton Potteries Co. et al where price fixing by manufacturers and distributors of a specific variety of vitreous pottery and control of 82% of market share was considered a violation of the law. Similarly, price fixing and cartelisation were strictly tackled in Arizona v. Maricopa County Medical Society case and its stand was reiterated in United States v. Socony- Vacuum Oil Co. case. Furthermore, the emphasis on U.S Antitrust Laws has increased tremendously after Google was accused of contracting with other companies to prioritise its search engine in their products.
- European Union Law
The European Competition Law was first formulated and adopted in the 1960s within the framework of the Treaty of Rome of 1957 with the initial object of integration and common market. Presently, the Competition Law of European Union aims at prohibiting agreements that are or are likely to prevent or restrict competition, abusive practices by dominant businesses, mergers and acquisitions that prevent or restrict competition, reviewing market and its conditions in case of suspected violations and prevention of grant of State aid by EU Member States which is likely to distort competition. In its implementation, the European Commission in Brussels acts as the primary enforcement body. It is also vested with powers to conduct investigations even in case of business which are not suspected of violations, but may furnish relevant evidence for facilitating investigation. Additionally, dawn raids and interviews may be undertaken to ensure effective investigation.Further, the EU merger policy requires parties to notify the regulator prior to completion of merger or acquisition.
Other Competition Institutions within the EU are the European Courts, the General Court and the European Court of Justice as envisaged under Article 19 (1) of the Treaty of the European Union which hears matters of Appeal and cases that are referred by individual member States. Decentralised form of co-operation has been envisaged between the European Commission and the National Competition Authority established under the domestic competition laws as enshrined under Article 3 of Regulation 1/2003. Further, the EU Competition Law has rapidly evolved through a myriad of crucial decisions including the Intel Corporation v. European Commission , where Intel was held liable for misusing its dominant position in the market through loyalty rebates and foreclosure of markets.
- ASEAN Member States and Asia- Pacific Region
Despite the early adoption of the Competition Law regime by Japan and South Korea, the major developments of Competition Law in ASEAN Member States is of a more recent origin. Thereby, a concerted approach was taken up in order to adopt competition laws by the end of 2015 which proved to be magnificently successful with nine out of ten countries taking up Competition Law. Most of the countries have adopted a legal framework that conforms to the international framework in this regard, but is also flexible enough to accommodate the peculiarities in their respective jurisdictions. In this direction, the ASEAN Regional Guidelines on Competition Policy (2010) stipulates that merger regulations must be introduced last due to complexities involved in analysing merger cases while deliberating on carrying on a phased implementation.
The common law jurisdiction of Australia is governed by Australian Competition and Consumer Act (2010) which permeates all the sectors and is effectively enforced by the Australian Competition and Consumer Commission which was established in 1995.Similarly, China is chiefly governed by the Anti-Monopoly Law of the People’s Republic of China of 2008 , alongside interalia Price Law of 1998, Bidding Law of 2000 which are stringently enforced by the Development and Reform Commissions at National and State levels. Similarly, Hong Kong is mainly governed by the Competition Ordinance of 2012. Moreover, Japan regulates competition through its Anti-Monopoly Act, 1947 which is enforced through the Japan Fair Trade Commission. Inter alia, Korea, Malaysia, Mongolia too possess a comprehensive Competition Law regime.
- Challenges faced in Cross- Border Competition Disputes
Globalisation of domestic economies has resulted in a significant impact on the nature of the enforcement of competition authorities calling for greater international cooperation. In this pursuit, UNCTAD has been constantly striving to enhance international co-operation of cross-border competition cases. To achieve efficiency in this regard, Indian Competition Commission has signed MOUs with several jurisdictions inter alia including U.S.A, Canada, and European Union.
As pertinently opined by Angus Deaton, “International Cooperation is vital to keeping our globe safe, commerce flowing and our planet hospitable.” The intensity of his words resonate even within the International Competition Law framework. Thereby, embarking on an analysis of transnational approach enables improvement of domestic legal system, increased co-operation and facilitates efficient and effective regulation of competition with the aim of upholding fair competition, consumer welfare and holistic economic progress as a common global goal. In this pursuit, the evolution of international competition law from archaic times to the modern approach shows constant dynamism. A common observation regarding international competition law regimes is the paradigm shift from prevention of competition to promotion of competition in the light of consumer welfare. The philosophy and significance of Competition law was appreciated and imbibed early in certain jurisdictions like the U.S and the European Union which have carved a niche for themselves in this area. However, the developing countries too are fast evolving and imbibing facilitative competition law framework in order to bolster economic growth and consumer welfare. Such cooperation will also alleviate the existing roadblocks in developing a smooth cross border dispute resolution mechanism for adjudicating competition law disputes effectively.
Vishwa, International History of Competition Law, LEGAL SERVICE INDIA, http://www.legalserviceindia.com/legal/article-1298-international-history-of-competition-law.html.
 Anubhav Pandey, Evolution and Development of Competition Law in India, IPLEADERS (Aug.08, 2017), https://blog.ipleaders.in/competition-law-evolution/.
 ADAM SMITH, AN ENQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS 423 (Modern Library, 1937).
 Cassey Lee, The Objectives of Competition Law, The Project of Competition Law, RESEARCH GATE,https://www.researchgate.net/publication/307634289_The_Objectives_of_Competition_Lw.
 Jai Balaji Industries Ltd. v. UOI, W.P (C) 5923/2010 (India).
 FICCI Multiplex Association of India v. United Producers, Case No. 01 of 2009 (India).
 David.P.Fidler, Competition Law and International Relations, 41 INTERNATIONAL AND COMPARATIVE LAW QUARTERLY 566 (1992).
 Brendan Sweeney, International Competition Law and Policy: A Work in Progress, 10 MELBOURNE JOURNAL OF INTERNATIONAL LAW 1-11 (2009).
Nishith Desai Associates, Competition Law in India, NISHITH DESAI ASSOCIATES (June, 2015),http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research%20Papers/Competition_Law_in_India.pdf.
 S. CHAKRAVARTHY, WHY INDIA ADOPTED A NEW COMPETITION LAW 2-10 (CUTS International, 2006).
 Anand Malathi, The Competition Act- Overview, THE CHAMBER’S LAW JOURNAL 18-22 (Mar., 2014).
 Rajkumar Dubey, India: Indian Competition Act: An Overview, MONDAQ (Jul.27, 2005), https://www.mondaq.com/india/antitrust-eu-competition-/33971/indian-competition-act-an-overview.
 Piyush Gupta, Competition Laws in India – An Overview, 2-4 , Kochhar & Co.
 MCX Stock Exchange v. NSE, Case No. 13/ 2009 (India).
 DLF v. Competition Commission of India, W.P (C) 6361/2014 (India).
 Northern Pacific Railway Co. v. United States, 356 U.S. (1958).
 NAOMI LAMOREAUX, THE GREAT MERGER MOVEMENT IN AMERICAN BUSINESS 1895-1937 (Harvard University Press, 1991).
 Verizon Communications v. Law Offices of Curtis V. Trinko, 540 U.S. 398, 407 (2004).
 Laura Philips Sawyer, U.S Antitrust Law and Policy in Historical Perspective, 19-110 HARVARD BUSINESS SCHOOL WORKING PAPER (2019).
 Richard Jr. & Pierce Jr., Comparing the Competition Law Regimes of the United States and India, 2017-27 GWU LEGAL STUDIES RESEARCH PAPER (2017).
 Naftali Bendavid, Vitamin Price Fixing Draws Record $755 Million in Fines, CHICAGO TRIBUNE (May. 21, 1999),https://www.chicagotribune.com/news/ct-xpm-1999-05-21-9905210013-story.html.
 United States v. Microsoft, 253 F.3d 34 (2001).
 United States v. Trenton Potteries Co. et al, 273 US 392.
 Arizona v. Maricopa County Medical Society, 457 U.S. 332 (1982).
 United States v. Socony- Vacuum Oil Co., 310 U.S. 150 (1940).
 Kari Paul, Google is Facing the biggest Antitrust Case in a Generation- What Could Happen?, THE GUARDIAN (Oct.21, 2020, 4:57 P.M),https://www.the guardian.com/technology/2020/oct/21/google-antitrust-charges-what-is-next.
 Barbara Valockova, EU Competition Law: A Roadmap for ASEAN, EU CENTRE IN SINGAPORE WORKING PAPER No. 25 (Nov. 25, 2015).
 Ashurst, Overview of EU and UK Competition Law, ASHURST (Mar.5, 2020), https://www,ashurst.com/en/news-and-insights/legal-updates/quickguide-overview-of-eu-and-uk-competition-law/.
 William M. Hannay, Transnational Competition Law Aspects of Mergers and Acquisitions, 289 20 (2) Northwestern Journal of International Law & Business (2000).
 Rishabh Yadav, Position of Cartels vis- a-vis Competition Law in India- A Critical Study, SHODHGANGA (2017), http://hdl.handle.net/10603/207272.
 Intel Corporation v. European Commission, C-413/14 P.
 Elvinger Hoss, CJEU Renders Landmark Judgement in Competition Case against Intel, MONDAQ (Sept. 19, 2017), https://www.mondaq.com/antitrust-eu-competition-/630024/cjeu-renders-landmark-judgment-in-competition-case-against-intel.
 Hogan Lovells, The Rise of Competition Laws in Asia, LEXOLOGY (Oct. 29, 2019),http://www.lexology.com/library/detail.aspx?g=e98d3fd9-f1a6-4496-bd10-a2df5511b06d.
 LexisNexis, Association of SouthEast Asian Nations (ASEAN) Merger Control, LEXISNEXIS, http://www.lexisnexis.co.uk/legal/guidance/association-of-southeast-asian-nations-asean-mereger-control.
 OECD, Competition Law in Asia- Pacific, OECD/ KOREA POLICY CENTRE COMPETITION PROGRAMME (2018).
 OECD, Challenges of International Co-operation in Competition Law Enforcement, OECD (2014).
Disclaimer: Views and opinions as expressed in the Research Articles are solely of the author and any member of the core team of the website shall not be liable for the same.
Edited By: Yamya Pandey ( Associate Editor)