Journal of Competition Law and Economics Advance Access originally published online on July 16, 2008
Journal of Competition Law and Economics 2008 4(3):609-638; doi:10.1093/joclec/nhn021
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INDIA'S NEW COMPETITION LAW: A COMPARATIVE ASSESSMENT
Correspondence: E-mail: aditya{at}econdse.org
JEL Codes: K21, L40, O25
This paper critically examines India's new Competition Act. I begin by examining the working of its predecessor, the 1969 Monopolies and Restrictive Trade Practices Act. Earlier studies, as well as a survey of recent cases undertaken for this paper, show that most cases under that Act involved consumer complaints and contractual disputes unrelated to competition. Very few cartels were prosecuted, the development of a rule of reason for vertical agreements was hamstrung by the legislature, and merger review was terminated in 1991. Thereafter, judgments increasingly tried to enforce "fair" business conduct "in the public interest," often protecting competitors rather than competition. India thus has little relevant experience for the many technical economic criteria in the Competition Act. Although the new Act has several positive features, it is riddled with loopholes that might condone hard-core cartels, predatory pricing, and potentially anticompetitive cross-border mergers, while it also perpetuates the earlier tendency to penalize "unfair" behavior with no bearing on competition. I argue that several institutional limitations will also impair the Act's effectiveness and conclude with a plea for capacity building and phased implementation.
* Professor of Economics, Delhi School of Economics, University of Delhi, Delhi 110007, India. I would like to thank Avinash Sharma for excellent research assistance, Manish Agarwal and David Round for very helpful comments on earlier drafts, and the East Asian International Law and Policy Programme of the University of Hong Kong for financial support. The usual disclaimer applies.