Enforcement Of Competition Law In India: A Comparative Analysis With U.K & EU
India has some unique features including a mixed economy, where private sector participation has been allowed in some public sector undertakings. In addition, some of its markets have recently opened up resulting in foreign direct investment in various permitted sectors. Eventually, it is envisaged that the old practise of state-protection to companies will vanish, giving way to a more open, independent way of working for each enterprise.
On the other hand, the US had a free economy from the start. In fact, their problems were reining in the anti-competitive conduct of big business. The EU is also largely a group of developed countries and their objective has been to bring about a single common market. The point is that those countries did not have to experience the kind of transition that is taking place in India, and readjust to the changed business environment and the introduction of regulatory mechanism to protect competition in the market. It is this changing situation that the Competition Act is to commence its operation. This requires that reorientation in outlook is necessary not only for the government but for business also.
The Act, patterned largely on the EU model has to be worked to assess its appropriateness to the country’s present scene. A further opening up of markets in new sectors would invite more entrepreneurs who would demand an effective law relating to competition and one under which they are not discriminated against. More than the set of sections prescribing the substantive law, what is necessary to make the Act serve the intended purpose would be effective and consistent enforcement.
The primary purpose of the research on this topic is to compare the enforcement mechanism of Competition Law in India with that of U.K and EU and to find out how can we make our Competition Law more effective or is it well functional this way only. This project analysis the enforcement mechanism in U.K as well as in EU.
Enforcement of Competition Law in India
The main objective of competition policy is to promote efficiency and maximise welfare. The ultimate goal of competition is the interest of the consumer. The consumer’s right to free and fair competition cannot be denied by any other consideration. Hence for ensuring this right of the consumer there is a need of supportive institutions to strengthen a competitive society notably, adequate spread of information throughout the market, free and easy communication and ready accessibility of goods and this are the institutions responsible for enforcement of Competition law in India. In India basically there are three enforcement institutions namely: (1) Competition Commission, (2) Director General and (3) Competition Appellate Tribunal.
Competition Commission of India
CCI is an expert body which functions as a regulator for preventing anti-competitive practices in the country and also have advisory and advocacy functions. CCI is a quasi-judicial and corporate body. The commission consists of a chairperson and not less than two and not more than six other members appointed by central government.
Competition Commission of India and its operations:
Ø Acts taking place outside India but having an effect on Competition in India - Section 32 of Act authorises CCI to “inquire” for acts taking place outside India but having an effect on competition in India. The Commission shall have power to inquire into agreement or abuse of dominant position or combination if such agreement or dominant position or combination has, or is likely to have, an appreciable adverse effect on Competition into the relevant market in India and pass such order as it deems fit.
Ø Synergised relationship between the sectoral regulators and Competition Commission of India - The jurisdiction of Competition Act extends to all the sectors of the economy and sector regulated by sector specific laws. Hence within the purview of the Act the CCI can make reference to a statutory authority or receive reference from statutory authority. Further wherein course of a proceeding before any statutory authority an issue is raised by any party that any decision which such statutory authority has taken or propose to take, is or would be, contrary to any of the provisions of this Act, then such statutory authority can make a reference in respect of such issue to the commission. The statutory authority can also make the reference suo motu to Commission.
Ø Commission has power despite other laws - The provisions of the Act are having an overriding effect over any other law. Further the jurisdiction of civil courts is barred in respect of those cases where CCI and CAT are having jurisdiction.
Ø Inquiry into certain agreements and dominant position of enterprise - The Commission may inquire into any alleged contravention of the provisions contained in subsection (1) of section 3 or sub-section (1) of section 4 either on its own motion or on receipt of any information, accompanied by such fee as may be determined by regulations, from any person, consumer or their association or trade association; or a reference made to it by the Central Government or a State Government or a statutory authority. The Commission shall, while determining whether an agreement has an appreciable adverse effect on competition under section 3 and section 4 shall have due regard to factors mentioned in Section 19.
Ø Inquiry into Combination by Commission - The Commission may, upon its own knowledge or information relating to acquisition referred to in clause (a) of section 5 or acquiring of control referred to in clause (b) of section 5 or merger or amalgamation referred to in clause (c) of that section, inquire into whether such a combination has caused or is likely to cause an appreciable adverse effect on competition in India. However the Commission shall not initiate any inquiry under this sub-section after the expiry of one year from the date on which such combination has taken effect. For the purposes of determining whether a combination would have the effect of or is likely to have an appreciable adverse effect on competition in the relevant market, the Commission shall take into consideration all or any of the factors mentioned in Section 20.
Ø Commission has powers of civil court - The commission shall have, for the purpose of discharging its functions under this Act, the same power as are vested in a civil court under CPC, 1908, while trying suits in respect of following matters namely summoning and enforcing summoning and enforcing the attendance of any person and examining him on oath; requiring the discovery and production of documents; receiving evidence on affidavit; issuing commissions for the examination of witnesses or documents; subject to the provisions of sections 123 and 124 of the Indian Evidence Act, 1872 (1 of 1872), requisitioning any public record or document or copy of such of record or document from any office.
Ø Execution of orders of commission imposing monetary penalty - In the event that a party fails to pay monetary penalty imposed by Competition Commission, the same can be recovered as specified under regulations to be made by Commission. The penalty can also be recovered in accordance with provisions of Income-Tax Act by making reference to concerned income tax authority.
Ø Compensation in case of contravention of orders of Commission - In the event that any person suffers any loss or damage if an enterprise violates directions given by Commission or contravenes decision or order of Commission, the aggrieved person can make application to CAT for compensation. Thus compensation can be awarded only by CAT and not by CCI.
Ø Penalty for not giving notice under Section 6(2) - In the event that any person or enterprise, who or which proposes to enter into a combination fails to give notice to the Commission under Section 6(2) of the Act, the Commission shall impose on such person or enterprise a penalty which may extend to one percent of the total turnover or the assets, whichever is higher, of the combination.
Ø Penalty for failure to comply with directions of Commission and Director General - In the event that any person fails to comply with a direction given by Commission under Sections 36(2) and 36(4) or by the Director General while exercising powers of investigation referred to in Section 41(2), CCI shall impose on such person a penalty of rupees one lakh for each day during such failure continues.
Ø Penalty for making false statement or omission to furnish material information - If any person, being party to a combination, makes a statement which is false in any material particular or knowing it to be false or omits to state any material particular, knowing it to be material, such person shall be liable to a penalty which shall not be less than rupees fifty lakhs but which may extend to rupees one crore, as may be determined by Commission.
Ø Lesser penalty if full disclosure made, in case of cartel - The Commission may, if satisfied that any producer, seller, distributor, trader or service provider included in any cartel, which is alleged to violated section 3, has made a hill and true disclosure in respect of the alleged violations and such disclosure is vital, impose a lesser penalty as it may deem fit than leviable under this Act or the rules or regulations.
Apart from this Commission may call upon experts from the field of economics, commerce, accountancy, international trade or any other discipline to assist commission in the conduct of inquiry before it. CCI can pass final order as well as interim order. However it cannot review its own order it can only rectify it.
Appointment and Function of Director General:
The Central Government shall appoint a Director General for assisting CCI in conducting inquiry into contravention of any provisions of the Act or to perform other functions as provided by or under the Act. The director shall, when so directed by the commission, assist the Commission investigating into any contravention of the provisions of this Act or any rules or regulations made there under. The Additional, joint, Deputy and Assistant Director General or such officers or other employees so appointed shall exercise his powers and discharge his functions, subject to the supervision and direction of the Director General. The Director-General shall have all powers as are conferred upon the commission under section 36(2).
Competition Appellate Tribunal
Formation and Functioning of CAT:
Earlier when Competition Act 2002 was enacted there was no mention of Competition Appellate Tribunal. It was only after the filing of case Brahm Dutt v. Union of India the Competition (Amendment) Act 2007 provided for the establishment of CAT. It is a quasi judicial body and consists of Chairperson and not more than two other members appointed by Central Government. The Chairperson shall be person who is or has been judge of S.C or C.J of H.C. Member of CAT shall be a person of ability, integrity and standing and who has special knowledge of and professional experience of not less than 25 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 C.G, may be useful to the appellate tribunal.
The proceedings before CAT are deemed to be judicial proceedings. Appeal against the order of the CCI can be filed before CAT and provisions with respect to the same are provided in Sections 53A to 53U. The CAT will hear and dispose of appeals against order of CCI and adjudicate claims for compensation and pass orders for recovery of compensation. The compensation can be claimed under Section 42A or 52Q(2) of the Competition Act. The appeal can be filed by C.G, S.G or enterprise or any person who is aggrieved by decision, direction or order of CCI. Appeal should be filed within 60 days. The tribunal will give opportunity of hearing to other party and then will pass the order. Copy of order will be sent to the parties to appeal and CCI. CAT can review its own decisions. In case of contraventions of CATS order without reasonable grounds, punishment of imprisonment up to 3 yrs and penalty up to Rs. 1 crore can be imposed by CMM, Delhi. Appeal against CATS order can be made to S.C within 60 days.
Enforcement of Competition law in EC, U.K and comparison with India
Enforcement Mechanism in EC :
European Commission is responsible for enforcing EC competition law. Article 4, chapter II of the Regulation 1/2003 provides for the powers of the commission for the purpose of applying Article 81 and 82 of the treaty establishing the European Community. Where the Commission, acting on a complaint or in its own initiative, finds that there is an infringement of Article 81 or of Article 82 of the treaty, it may by decision require the undertakings and associations of undertaking concerned to bring such infringement to an end. For this purpose, it may impose on them any behavioural or structural remedies which are proportionate to the infringement committed and necessary to bring the infringement effectively to an end. Here complaint can be lodged by natural or legal persons who can show a legitimate interest and member states.
Commission is also empowered to provide interim measures in case of urgency due to risk of serious and irreparable damage to competition, the Commission, acting on its own initiative may by decision, on the basis of a prima facie finding of infringement, order interim measures. Where the commission intends to adopt a decision requiring that an infringement be brought to an end and the undertakings concerned offer commitments to meet the concerns expressed to them by the commission in its preliminary assessment, the commission may by decision make those commitments binding on the undertakings. Such a decision may be adopted for a specified period and shall conclude that there are no longer grounds for action by the commission.
The Regulation also provides for an Advisory Committee and the Commission is to mandatorily consult Advisory Committee on Restrictive Practices and Dominant Positions prior to taking any decision under Article 7, 8, 9, 10, 23, Article 24(2) and Article 29(1). The Commission shall take utmost account of the opinion, delivered by the Advisory Committee. It shall inform the Committee of the manner in which its opinion has been taken into account.
Where the trend of trade between Member States, the rigidity of prices or other circumstances suggest that competition may be restricted or distorted within the common market, the Commission may conduct its inquiry into particular sector of economy or into a particular type of agreements across various sectors. The Commission may request the undertakings or associations of undertaking concerned to supply information necessary for giving effect to Article 81 and 82 of the Treaty. The Commission may publish a report on the result of the inquiry and invite comments from interested parties.
In order to carry out the duties assigned to it by the Regulation, the Commission may, by simple request or by decision, require undertakings and associations of undertaking to provide all necessary information. Further the Commission may interview any natural or legal person who consents to be interviewed for the purpose of collecting information relating to the subject matter of an investigation. The commission may also conduct all necessary inspections of undertakings and associations of undertakings and for conducting such inspection the officials are empowered to enter any premises, land and means of transport of undertaking and associations of undertaking. Further if a reasonable suspicion arises that books related to the business and to the subject matter of the inspection are being kept in any other premises, land and means of transport, including the homes of directors, mangers and other members of staff of the undertakings and association of undertakings concerned, the commission by decision order an inspection to be conducted in such other premises, land and means of transport. Article 23 of the regulation provides for fines which can be imposed by the Commission. The Commission can also impose periodic penalty payments not exceeding 5% of the average daily turnover in the preceding business year per day and calculated from the date appointed by the decision, in order to compel them to comply with decision under Article 7, 8, 9, 17, 18(3) and 20(4).
Regulation also talks of Professional Secrecy and therefore information collected pursuant to Articles 17 to 22 shall be used only for the purpose for which it is acquired. However the decisions of Commission with respect to fine or periodic penalty payment are always subject to review by Court of Justice and it may cancel, reduce or increase the fine or periodic penalty payment imposed.
Comparison of Enforcement Mechanism of EC and India:
It is true that the Competition Act of India is based on EC law and U.K law to a very large extent but there are certain differences which are there between the enforcement mechanism of EC and India. Following are few of them:
Regulation1/2003 of EC provides for Article 9 whereby if the undertakings concerned offer commitments to meet the concerns expressed to them by the Commission in its preliminary assessment, the Commission may by decision make those commitments binding on the undertakings. Such an exercise amounts to saving of time of the commission. However the Competition Act 2002 does not provide for any such mechanism.
Article 14 of the Regulation provides that the Commission should before taking any decision should consult Advisory Committee on Restrictive Practices and Dominant Position. The Committee consist of members who are competent in competition matters. However there is no such provision for consultation in the Competition
Act but Section 17 of the Act provides that the Commission can appoint experts and professionals for the proper functioning of the commission.
Further Article 20 and 21 of the Regulation provides the Commission with the power to inspect the undertakings and the associations of the undertakings and for this purpose the officer so authorised can enter the premises of the undertaking, examine the books and other related records, seal the business premises etc. Further the Commission can also inspect any other place apart from undertaking premises like homes of directors, managers and other member staff of the undertakings. But in Competition Act no such provision for inspection is provided. The Commission can only order the Director General to investigate and Director General while make investigation has power similar to Commission provided under Section 36(2).
Apart from the imposition of penalty under Article 23, 1/2003 Regulation of EC also talks of concept of periodic penalty which provides for compelling the undertaking to abide by the decision given by the commission under Article 7, 8, 9, 17, 18(3), 20(4) but no such compelling mechanism is provided under the Indian Competition Act.
Also there is provision of professional secrecy in the Act of EC which is not provided therein in Competition Act of India.
Hence above were some of the major differences between the enforcement mechanisms of EC and India.
Enforcement Mechanism in U.K:
The Competition Law enforcement authorities in UK are Office of Fair Trading (OFT), Competition Commission, Director General and CAT. Enforcement mechanism of India is to a very large extent based on the enforcement mechanism of U.K.
The power of investigation and enforcement under the Act is conferred on the Director General of Fair Trading and are contained in chapter III of the Act. During the course of the investigation he may require by a notice in writing any person to produce to him specified documents or to provide him with specified information, which he considers relates to any matter relevant to the investigation. Director may issue interim directions during his investigation when he has reasonable grounds to believe that the prohibition under Chapter I and II has been infringed. He may act under this section only when he thinks that it is a matter of urgency for him to act for preventing serious, irreparable damage to a particular person or category of person or of protecting the public interest. Appeals against the decision of director can be made to the Competition Commission. The provisions
with respect to competition commission and appeal are provided in Chapter IV of the Act and provisions with respect to director are provided under Chapter III.
Further under the OFT instead of continuing with an investigation accept such binding commitments offered to it by a person or persons as it considers appropriate. The Competition Act of U.K protects certain type of communications made during the Director’s investigation as privileged communications and a person cannot be compelled to disclose or produce such communication. Apart from this any officer of the Director or OFT is authorised to enter premises for inquiry with or without warrant. The provisions for penalty on infringement of prohibition under Chapter I and II are provided under Section 36 of the act.
Comparison of Enforcement Mechanism of U.K and India:
Though India follows the same line of enforcement authorities in India still there are few difference between the enforcement mechanism of competition law between U.K and India. They are as follows:
Indian Competition Act though talks about investigation but unlike U.K Competition Act it does not talks about the power of the enforcement authority to enter the business premises as talked about in Section 27 and 28 of the U.K Competition Act. Non inclusion of such provision in Indian Competition Act can affect the investigation process to very large extent.
The concept of privileged communication as provided under Section 30 of the U.K Competition Act is also not included in the Indian Competition Act. This non inclusion can affect the right of the undertakings or legal or natural persons who are undergoing investigation.
In India we have sectoral regulators as well as Competition law enforcement authorities, now it raises a serious concern as to the fact of handling of affairs of cross sectoral issues. For example undertaking may be regulated by one agency on a certain aspect and by CCI on the competition aspects. In such situations businesses are afraid that in such instances there may be conflicting directions from different regulators. There are also fear that they need to comply with double regulations will result in increased business costs. In India there is no framework for coordination between the sectoral regulations and the Competition Commission of India. On the other hand in U.K a number of sectoral regulators have power to apply the Competition Act concurrently with OFT. The Competition Act 1998 (Concurrency) regulations 2000 have been made for the purpose of coordinating the exercise of the concurrent powers and the procedures to be followed. For example in U.K they have concurrence party, where all regulators and the competition authority sit and decide on the best agency to deal with the case.
Hence above were some of the difference between the enforcement mechanism in India and U.K.
With the change in the International economic environment the competition standards of the country also changes. Society is not static and hence for a dynamic society the law must also be dynamic. Our Competition Act of 2002 though has tried its level best to curb the anti competitive arrangements in our country but as of now it has not succeeded in it. Hence our competition Act requires few amendments in it to satisfy the present scenario of competition in market some of them are as follows:
· The inclusion of concept of Commitments in the Competition Act would amounts to saving of time of the Commission.
· Though Commission itself consist of Experts but Setting up of an independent Advisory Committee would help in proper functioning of the Commission.
· The power to inspect the undertaking which charged of committing anti competitive activities is not provided to the commission, if such power is not given to the commission then it might vitiate the investigation proceedings. Hence such powers should be provided to the commission.
· The concept of privileged communication as provided under Section 30 of the U.K Competition Act is also not included in the Indian Competition Act. This non inclusion can affect the right of the undertakings or legal or natural persons who are undergoing investigation.
· In India there is no framework for coordination between the sectoral regulations and the Competition Commission of India. In such situations businesses are afraid that in such instances there may be conflicting directions from different regulators.
· Further the Indian Competition Act does not talk about the concept of Professional Secrecy; this might also affect the rights of the individuals as well as undertakings.
Hence above were few of the amendments that if we make to our Competition Act it would become a comprehensive legislation which will function in the interest of the country as well as the concerned parties.
 Paul A. Samuelson & William A. Nordhaus: Economic, 16th Ed. 1998, p 54, (Tata McGraw – Hill Publication Co. Ltd., New Delhi).
 Section 8(1) of the Competition Act.
 Sections 19, 20, 26, 29 and 30 of the Competition Act
 Section 21(1)of the Competition Act
 Section 21(2) Proviso of the Competition Act
 Section 60 of the Competition Act
 Section 61 of the Competition Act
 Section 36(2) of the Competition Act
 Section 43A of the Competition Act
Section 46 of the Competition Act
 Section 17(3) of the Competition Act
 Section 33 of the Competition Act
 Section 38 of the Competition Act
 Section 16(1) of the Competition Act
 Section 41(3) of the Competition Act
 AIR 2005 SC 730
 Article 7 Regulation 1/2003
 Article 8 Regulation 1/2003
 Article 9 Regulation 1/2003
 Article 14 Regulation 1/2003
 Article 17 Regulation 1/2003
 Article 18 Regulation 1/2003
 Article 19 Regulation 1/2003
 Article 20 Regulation 1/2003
 Article 21 Regulation 1/2003
 Article 28 Regulation 1/2003
 Article 32 Regulation 1/2003
 Section 25 – 41of the Competition Act, 1998, UK
 Section 35 of the Competition Act, 1998, UK
 Section 46 of the Competition Act, 1998, UK
 Section 31A(2) of the Competition Act, UK
 Privileged Communication means a communication (a) between a professional legal advisor and his client, or (b) made in connection with, or in contemplation of, legal proceedings and for the purposes of those proceedings, which in proceedings in the High Court would be protected from disclosure on grounds of legal professional privilege.
 Section 30 of the Competition Act, UK
 Section 27, 28 and 28 A
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