Major Anti-competitive Practices in the Indian Economy

A good Anti-trust regulation must favor the innovation, entrepreneurship, future of society and enterprises rather than curruption and political favorism.

There are many loop-whole in Indian anti-trust law therefore companies take the advatage to abuse it such as Cartelisation, dominance and other abuses. 

Honestly speaking entire CCI (Competition Commission of India) regulation is too blurred to follow therefor monopoly practice is common in India (Indirectly) such as monopoly of MNCs & Healthcare companies and many other industry we can easily notice. See how CCI Function

The level of awareness of CCI policy issues is not very good. In general, it recorded that competition and regulatory authorities had been ineffective in checking anti-competitive practices.

Like any other regulation, implementation of CCI is another issue. It may possible that department is lacking the resources to implement it strictly but again lack of budget is showing the intension of Govt. on this issue.

Lets look some common anti-competition practice in India

Cartelisation 

The significance of cartels as a collusive weapon used by a group of firms against others as well as to exploit consumers is explained in detail in this report through illustration as well as analyses.

A classification of cartelising behaviour is presented and estimates of economic loss from known cartels serve to illustrate the danger that these pose for economic health. Important cases of cartel like behaviour in India, such as that in the cement industry, are pointed out. 

The oral and implicit nature of most cartel agreements is stressed – this characteristic makes it very difficult to apprehend wrongdoing firms. The provisions of the new competition law to tackle cartels are highlighted by the report, thereby helping to build awareness about the subject. 

These are a great improvement over the power given to the Monopolies and Restrictive Trade Practices Commission (MRTPC) to give ‘cease and desist’ orders – the MRTPC could only ask colluding firms to modify their collaboration so that it did not remain prejudicial to the public interest; no immediate punitive action could be taken. 

Such action could be taken only if the collusive agreement continued in its original form despite orders. Failures of the MRTPC to tackle evident cartelising behaviour are also highlighted.

Competition and Regulation in India, 2009 W 7 The CA02 marked a significant change from this lenient and ineffective treatment of cartels by laying down strict criteria to identify cartels – the presence of agreements, arrangements or understanding to control production/ distribution or limit price; and the use of identical terms of trade/prices. 

The one most known disadvantage that CA02 has vis-à-vis MRTPA – the inability to carry out dawn raids, i.e. unannounced visits to the offices of suspected cartel operators to seize documentary/electronic evidence of a cartel agreement. On the other hand, its provisions also imbue it with a certain advantage.

These include leniency provisions which imply that the first (or even the first two or three) out of colluding parties participating in a cartel to cooperate with an inquiry is (are) rewarded with a significant reduction in punishment. 

Abuse of Dominance 

The MRTPA punished large market shares or dominance. The report highlights that this is inappropriate in conditions when markets might be linked to each other or when the perceived contours of a market hide several segments, each dominated by a different firm. 

Moreover, it is quite possible for a firm to become dominant in a market on account of its superior productivity or the superior quality of its products, The report thus elaborates on the rationale for CA02 – it is not dominance per se that it is bad but its abuse that should be punished. 

The report then goes on to provide a clear definition/classification of abuses of dominance and their illustration in the international and Indian context: exploitative abuse (tying or bundling product sales, predatory pricing, IPR abuses etc.) and exclusionary abuse (competitors are prevented from market participation through exclusive dealing arrangements with distributors or exclusive agreements with input suppliers). 

A Campaign for State Level Competition Agencies 

The anti-competitive practices were rife at the local level and a central competition agency was ill-equipped to deal with such violations of competition law. It therefore called for state level competition laws and agencies better equipped to deal with local competition abuses as well as protect local consumer interest.

Other Sections 

Brief accounts were provided of the status of competition and regulation in two utility sectors: electricity and telecommunication as well as social sectors – education and health. In the former, barriers to competition were highlighted while in the latter anti-competitive practices and quality problems arising due to lack of regulation were emphasised.