1. Why should consumers be
interested in a competition law?
Pradeep S. Mehta
National Conference on
"Competition Regime – Benefiting the
Consumer"
20th October 2010, New Delhi

2. What is Competition?
 The process of rivalry between firms striving to
gain sales and make profits
 Motive: self-interest, but outcome mostly
beneficial for the society
 Competition is not just an event, but a process
 It is not automatic – needs to be nurtured
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3. Types of Competition
 Price Competition: Winning customers by
lowering price
 Non-price Competition: Winning customers by
advertising, offering after-sales-services, using
sale promotion tools, etc.
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4. Ways of Competition
 Fair Competition: Fair means such as producing
quality goods, becoming cost-efficient, optimising
the use of resources, best technology, research &
Development, etc.
 Unfair Competition: Unfair means such as fixing
price with the rivals, predatory pricing,
disparaging or misleading advertisements, etc.
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5. Benefits from Competition
 Efficiency
 Innovation
 Check on concentration
 Economic growth (wealth and job creation)
 Consumer welfare gains:
 Lower prices,
 Better quality,
 Freedom of choice and
 Easy access
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6. Competition Law
 Aims to protect process of competition and not
competitors
 Consist of a set of rules to curb Anti Competitive
Practices (ACPs)
 Sets up the Competition Authority:
 Competition Commission of India (CCI) and
 Competition Appellate Tribunal (COMPAT)
 Over 120 countries have adopted Competition Law
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7. Myths & Realities
 Myth: Competition policy and law will allow
foreign firms to come in and undermine domestic
firms.
 Reality: Effect of foreign entry depends upon
capabilities of domestic firms. Competition Law
protects domestic firms from ACPs of foreign
firms.
Example: Multinational Vitamin Cartel case.
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8. Myths & Realities
 Myth: Competition policy and law are the tools for
rich and urban societies.
 Reality: Poor do benefit from action against
competition abuses, if they can access justice.
Example: Rukmini Devi in Rashmi, Chittorgarh
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9. Myths & Realities
 Myth: Competition law and policy works for the
rich and affluent sections only.
 Reality: Competition law and policy can also
benefit the poor
Example: Tied selling at government ration shops
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10. Evolution of Competition Law in India
 The first legislation Monopolies and Restrictive
Trade Practices Act, 1969, proved inadequate.
 The Competition Act 2002, was subsequently
enacted due to strong lobbying by the consumer
movement, lead by CUTS in 1990s.
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11. Action Components of Competition Law
 Anticompetitive practices, such as Cartels
(Section 3)
 Abuse of Dominance (Section 4)
 Mergers and Acquisitions (Section 5 & 6)
 Competition Advocacy (Section 49)
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12. Collusion and other ACPs (Sec 3)
“Our competitors are our friends, our customers are
the enemy”-Archer Daniels Midland!
 Cartel is an agreement between firms to act in
concert on prices, production levels or territories.
E.g. Cable TV in cities
 Other anti-competitive practices, such as tied
sales
E.g. Gas connection and gas stoves
Razor blades with sugar
School uniforms and stationery
Branded medicines/tests
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13. Abuse of Dominance (Sec 4)
 Dominance means having authority or control.
 Cause of concern is not dominance but its abuse.
 Abuse of Dominance:
1. Exploitative practices: excessive pricing,
discrimination or tied selling or IPR abuses
Eg. Monsanto-Mahyco pricing of Bt Cotton seeds
2. Exclusionary practices: predatory pricing and
refusal to deal.
Eg. Truck unions not allowing non-member trucks
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14. Combinations (Sec 5 & 6)
 Combinations include mergers: a fusion between
two or more firms.
 Takeover/acquisition: purchase of all or sufficient
number of shares of other firm(s).
 Cause of concern is not Combinations but its
likelihood to result in monopoly or dominance in
market.
Eg. Recent takeover of Indian pharma companies
without any merger review
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15. Competition Authority
 Two tier agency created as per the provisions of
the Competition Act, 2002
 Competition Commission of India (CCI)
 Competition Appellate Tribunal (COMPAT)
 CCI assisted by the Director General
 COMPAT hears appeals and can also provide
compensation
 Ultimate appeal at the Supreme Court
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16. Other functions of CCI
 Perform the function of competition advocacy
effectively and promote competition culture
E.g. RBI favouring public sector banks
 Cooperation with other regulatory agencies
E.g. With sector regulators on competition issues
 Cooperation with other competition agencies
E.g. With competition agencies abroad
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17. Challenges for India
 Absence of competition culture
 Lack of competent and experienced staff
 Government support is not always assured
 Vested interests (political-economy aspects)
 Lack of clarity on overlap between the
competition authority and sector regulators
 Role of consumers/civil society
 Weakness in dissemination/communication
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18. 18
Anti Competitive
Practices restricting ACCESS
access
Poor quality
Competition goods/services by a firm QUALITY
abusing dominant
Authority’s position Consumer
Enforcement
Actions Welfare
Tied-selling restricting
consumer choice CHOICE
Anti Competitive
Practices leading to PRICE
excessive prices
Welfare
Competition Enforcement and Consumer

19. Conclusions
 Competition enforcement leads to consumer
welfare directly and indirectly
 Stakeholders need to recognise their role in
promoting competition
 Policymakers/Government need to prioritise
competition reforms
 CCI to remain independent
 CCI to create a public buy in
 Consumer movement: natural allies of a
competition regime
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20. THANK YOU!
psm@cuts.org
www.ccier-cuts.org
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