An overview of provisions relating to competition laws & consumers protection laws in India
“The main objective of the Competition Law is to promote economic efficiencies using competition as one of the means of assisting the creation of market responsive to consumer preferences.” – Supreme Court of India
Competition can be defined as a process wherein cost efficient production is achieved in a structure having reasonable number of players (producers and consumers) with simple entry and exit procedures and where exists a close substitution between products of different players in a given industry.
Competition refers to a market situation in which sellers independently strive for buyer’s patronage in order to achieve the business objectives of profit, sales turnover and market share. In other words, it is the act of competing by an enterprise against other business enterprises for the purpose of achieving dominance in the market or attaining a reward or goal. It is the foundation on which a market system works. For market economy to function effectively, this competition has to be free and fair. Such a competition stimulates innovation and productivity and thus leads to the optimum allocation of resources in the economy; guarantees the protection of consumer interests; reduces costs and improves quality; accelerates growth and development and preserves economic and political democracy.
In the absence of adequate safeguards, enterprises may undermine the market by resorting to unfair practices for their short term gains. As a result, marketdistortionary practices and anti-competitive forces may restrict the working of healthy competition in an economy. Thus, there arises the need to have a proper regulatory environment which can ensure a healthy competition so that all business enterprises can grow and expand and stimulate economic development of the country. Legislation of an effective competition law should contain short term and long term policy options that can regulate the competition leverage to run the economy on a safe track with sustaining speed.
Most competition laws seek to increase economic efficiency, enhance consumer welfare, ensure fair trading, and prevent abuse of market power. The three areas of enforcement that are provided for in most competition laws are–
(i) Anti-competitive agreements
(ii) Abuse of dominance, and
(iii) Mergers which have potential for anti-competitive effect.
The reasons for adoption of competition laws vary across countries; these are usually on account of concerns about high level of market concentration, formation of cartels, state monopolies, privatization and deregulation, meeting with the requirements of bilateral and plurilateral trade agreements and in addition, to take care of cross border competition dimensions and concerns.
To READ MORE download free e-book written by CA Rajkumar S. Adukia, which covers the following topics :-
2. Historical background of Competition Law
3. Evolution of Competition law in India
4. Monopolies and Restrictive Trade Practices Act, 1969 – An overview
5. Consumer Protection laws in India
6. Competition Policy
7. Competition Act, 2002 – An overview
8. Analysis of key concepts and issues of competitive law
a. Anti-Competitive Agreements
b. Abuse of Dominant Position
c. Regulation of Combinations
d. Competition Advocacy
9. Competition Commission of India (CCI)
10. Competition Appellate Tribunal
12. Important Cases
13. Competition legislations in other countries
14. Professional Opportunities
15. Important websites