and the United States

The Lackadaisical Position of Competition Law in India and the United States

In an economic structure, a state can play numerous roles. The three that can be identified as most essential are: (1) producer of marketable goods and services; (2) supplier of “public goods” and “merit goods” like primary education and public health; and (3) regulator of the system. The diminishing role of the state as a producer of marketable goods and services and the growing role of the market in such areas concurrently boosts the role of the state as a “regulator” and “facilitator.” The regulatory role is essential to ensure competitive conditions in the market are maintained and that everyone follows the elementary rules of the game. The yield and efficacy linked to markets can only be procured if the market remains competitive. Competition laws across the world, therefore, seeks to: a) bar anti-competitive agreements, including associations that tend to regulate prices, bound, govern, or stake markets, or marks bid-rigging; b) bar exploitation gained through dominant position, unfair or biased prices, or conditions, including predatory pricing, restraining or confining production or denying of market access; and c) regulate groupings, i.e., mergers, acquisitions, etc., which may cause a substantial hostile effect on competition. As always, there is a typical debate between the behavioral and structuralist approaches. Market concentration and barriers to entry are two crucial elements of market structure. An action by a firm that increases either of the two will be deemed, under the structuralist approach, as violative of the maintenance of competition. Conversely, the behavioral approach gazes at the conduct of the firm instead of structural infringements. The structuralist approach reduces the cost of enforcement as it eliminates the requirement to demonstrate that an arrangement is harmful. Though, there is no approach through which

competition or regulatory authority can get away minus establishing that a specific action has had a hostile effect on

competition. Establishment of the fact defining what activities and under what conditions will they constitute abuse of the principles of competition is necessary.

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Regulatory Sovereignty in India: Indigenizing CompetitionTechnology Approaches, ISAIL-TR-001

The other problem is on how to achieve stability between

industrial policy and competition policy. Many debates highlight that global size players like national champions are necessary to be able to contest in the international economy, while others argue that fleet-footed players will also be able to compete in the global economy. For national champions, the instances from post-war Japan and Korea can be referred to, which secured their domestic commerce by tariff protection, regulated entry, and consequently formed national champions. However, with decent retrospection, it can be observed that they endorsed a huge number of domestic companies in sectors such as steel, automobiles, and electronics, thus creating healthy competition at home. This made the Korean and Japanese manufacturers become competitive in the international economy. However, the circumstances have transformed enormously since then because now the competition is aided by international organizations like the World Trade Organisation (WTO), etc., countries cannot take analogous tactics in raising their industrial sector. Local firms face competition at the domestic level, and only those that win are able to compete internationally, or else if the state has to stretch extra security or leverage for them, it may result in crony capitalism. While the competition authorities happen to preserve competition, for various sectors, regulatory authorities have also come to conquer an important place.

Historically, the Indian economy was regarded as significant because the association of government was manifested by supremacy over the large state-owned public sector enterprises. India embarked on the track of economic reforms during the 1990s when it shifted to market-driven economic policies. The drive of reforms was to preserve and endorse competition as a means to confirm effective sharing of resources, thereby ensuing in the best probable choice of quality, satisfactory supplies to consumers, and at the lowest price.

Above all, contrasting many other reforming economies, India adopted a mixed-economy approach, which means where the public sector competes with the private players, instead of offering the public sector entities like airlines, telecom, etc., to the private sector entirely. However, there are exceptions like the

electricity sector, among others, that are being introduced steadily. At one end of the band, we have one of the lowest rates in the telecom sector, where there is a large number of private players. On the other end, we have the electricity sector, where there is barely any competition and thus reduced growth and an enormous supply shortage. This enigma raises two critical

issues: first, competitive neutrality or providing a level playing field, and second, the intersection of the competition authority and sectoral regulators.

Since the dawn of economic reforms, there have been substantial deviations in our policy arena, most of which included more and improved dependence on market forces. Along with policy changes, we have also espoused a new competition law as a supplement to our market-oriented economic reforms. Furthermore, we have regulatory laws in a number of sectors opened up for private players that were previously kept back for the public sector. The rise in interest in regulatory and competition laws reflects the extensive modifications that have been taking place in the policy pattern. The enactment of the competition law is not without its difficulties. Be with respect to anti-competitive agreements or the manipulation through dominant position or mergers and acquisitions, the serious question to examine is if a specific verdict or act has had the effect of reducing competition. When and if the competitive markets cannot exist, the regulatory authorities’ command is to ensure competitive outcomes are achieved to the scope as possible. Infrastructure sectors like energy fall in this class, largely. States largely use regulation with a wide-ranging and extensive meaning to accomplish a comprehensive non-market idea like confirming universal and equitable access, consumer protection, and maintaining standards for safety and well-being. Additionally, it recognizes and addresses subsidies and crosssubsidies in the delivery of services. This, nevertheless, is a probable zone of political intrusion. The government time and again finds means to get around regulator’s recommendations in relation to subsidies if they are politically problematic. Besides political interloping, the presence of a huge number of sectoral regulators in conjunction with a competition authority raises the matter of intersection and struggle.

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Regulatory Sovereignty in India: Indigenizing CompetitionTechnology Approaches, ISAIL-TR-001

US competition policy, on the other hand, stems from laws passed at varied times in the history of the United States, and consequently, the objectives of these statutes are not alike. Overall, US antitrust policy is principally aimed to guard consumer welfare, i.e., yield a range of products at reasonable prices, with meek elements of impartiality or right of firms to be at liberty of coercion and of hostility to immense focuses on economic power. Through much of its past, US administrative agencies and courts were not very profound to claims of proficiency as they assumed that a vigorously competitive market would spontaneously be resourceful. Nonetheless, various modern analysts believe that efficacy claims are expected to be given more weight in the future. Refined economic scrutiny is the heart of American antitrust enforcement. ‘Industrial policy’ is defined by them as manifest efforts to build up domestic firms that would serve specific goals rather than focus on competition and proficiency. Objectives like successfully contending in international markets have not had much sway on US antitrust law. Hardly ever does industrial policy distresses like promoting research and development impact competition rules. Similarly, those concerns rarely outmanoeuvre antitrust policy entirely. Primarily, competition has been the industrial policy of the United States. In the US, free movement of goods was realized through a sensitive construal of the commerce clause provisions of the US Constitution that successfully shattered local or regional preferences and state barriers. US enforcement of competition policy is both intricate and litigation-oriented. The statutes are, in most cases, succinct, and the law has been made through legal interpretation. Occasions for the federal government to enact a law or regulate policy by decree or guidelines are restricted.

However, difficulties in the American competition policy stem from the fact that there are countless sources of enforcement and by-law. At the central level, two agencies, the Antitrust Division of the Department of Justice and the Federal Trade Commission (FTC), have corresponding jagged jurisdiction. Nonetheless, the FTC has no criminal prosecution authority, the two agencies’ policies are not

always harmonious. States and private parties damaged in their

business and property also have access to the courts, and they commonly bring cases that go outside or are blatantly fickle

with predominant federal policy.

Lastly, competition policy is every so often prejudiced by the protectionist efforts of the Department of Commerce and the International Trade Commission, and procedures and subsidies that develop from an extensive range of departments and agencies, like, the Department of Defence pertaining to the defence industry and the Federal Communications Commission with regard to telecommunications. Establishing a competition authority by itself does not decipher all the hitches pertaining to the conception of competitive conditions. Unless there is a strong political will, even the

competition and the regulatory authority possibly will not

be able to function meritoriously. However, in order that competition may win through competition and regulatory laws need to be complemented by a fitting Competition Policy that guarantees a complete play of competitive forces. Such a policy must administer all Government policies so that there is no anticipated or accidental hostile impact on competition. Altogether, there must be no barriers to entry. In some parts, minimum criteria for entry could be recommended. These prescriptions, however, should strictly be in the nature of practical standards. To legislate clear directives for regulators and the competition authority can also be effective. It is paramount to leave the determination of competition principles to the competition authority. Across sectors, some common principles of competition must prevail.

Comparison with the European Union’s Competition Policy

It is the job of the European Commission to enforce European Union competition legislation. Regulation 1/2003, Article 4, Chapter II, gives the commission the authority to apply Articles 81 and 82 of the Treaty establishing the European Community. As a result of an investigation or on its own, the Commission may order the companies and associations of companies in question to stop violating Article 81 or Article 82 of the treaty by a decision. These remedies may include any behavioral or structural measures appropriate to the infringement committed and

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Regulatory Sovereignty in India: Indigenizing CompetitionTechnology Approaches, ISAIL-TR-001

required to effectively stop it. This is the objective for which they are imposed on them.

For urgent situations where significant and irreversible harm to competition might result, the Commission may impose interim remedies based on a prima facie finding of violation. The Commission is also entitled to issue interim measures.

Comparison with Indian Laws – transnational application Due to ambiguity in legislation about the scope of the laws' jurisdiction, the EU devised several doctrines to broaden and exercise its power over other countries. The "Single Economic Entity Doctrine" is one of them. An organization's parent firm and its subsidiary are treated as one for the purposes of applying competition legislation under this theory. In A Ahlstrom Oy v. Commission (1993), often known as the "wood pulp case," the Implementation doctrine was used for the first time, laying out the EU's fundamental approach to extraterritorial jurisdiction.

EU does not officially acknowledge US effects doctrine even though it is closely connected to European Union implementation doctrine. However, Article 102 of the TFEU, which deals with abuse of dominant market position, was violated in the case of Intel Corp. v. European Commission (2017).

The MRTP Act lacked an unambiguous clause allowing extraterritorial jurisdiction, like antitrust legislation in the US and EU. But Section 14 of the Act said that an order might be issued under the Act for any activity outside of India that impacts Indian competition and is monopolistic, restricting, or unfair. Section 14 of The Competition Act of 2002, on the other hand, made it unlawful to operate a business in the United States.

According to Competition Commission of India v. Steel Authority of India Limited and Another (Supreme Court of India, 2011), all actions before the Commission must be concluded "most quickly" and in a period even less than the demanding decisional limits stipulated in the applicable legislation. This mandate may be difficult or impossible for the Commission to carry out, and the Supreme Court may have a tough time enforcing it. That's been

the case in the United States. The courts in the United States do not have the authority to compel the government to act quickly. However, despite having authority and responsibility to impose statutory deadlines on agency activities, US courts have been unable to do so successfully.

The country's competitiveness criteria vary along with the international economic climate. Because society is not static, the law must be as well for a dynamic society to exist. Although our

2002 Competition Act attempted to curtail anti-competitive practices in our country, so far it has been unsuccessful. Because of this, our competition law needs a few tweaks to reflect the current state of the market. A few of these are as follows:

• The Commission would save time by including the idea of commitments in the Competition Act. However, even if the

Commission is made up of experts, establishing an independent advisory committee would aid in its efficient operation. The Commission does not have the authority to examine the company accused of anti-competitive behaviour; if this authority is not granted to the Commission, the inquiry processes may be tainted. As a result, the commission should be endowed with such authority.

• It is possible for India to make excellent use of the CCI's rulemaking authority by establishing regulations that define in detail how the CCI decides whether a certain form of activity is in violation of the CA. In several factual scenarios, guidelines like the FTC/DOJ merger guidelines may be highly useful in helping the public understand what the CCI is doing and forecast how the CCI would examine a certain kind of activity.

To empower COMPAT to pay treble damages to private parties damaged by CCI-determined CA violations, India should investigate revising the CA. U.S. competition law's triple damage remedy serves as a significant deterrence for companies contemplating breaking the law.

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