Competition Act 2002: Genesis, Objectives & MRTP Act Repeal
1. Genesis & Economic Context of Indian Competition Law
Following independence, India adopted a socialistic command-and-control economic model with industrial licensing. To prevent the concentration of economic power in private conglomerates, Parliament enacted the Monopolies and Restrictive Trade Practices Act 1969 (MRTP Act).
However, the landmark economic liberalization of 1991 opened Indian markets to foreign direct investment (FDI), multinational corporations, and global trade under World Trade Organization (WTO) frameworks. The MRTP Act proved obsolete because:
- It was inherently suspicious of large corporate enterprise size rather than market conduct.
- It lacked provisions to penalize global cartels, bid-rigging, and cross-border anti-competitive mergers.
- It lacked modern economic analytical tools (e.g., relevant market definition, rule of reason).
In October 1999, the Government of India appointed a high-level committee chaired by S.V.S. Raghavan to design a contemporary competition law regime. Following the Raghavan Committee Report (2000), Parliament enacted the Competition Act 2002 (Act No. 12 of 2003), and dissolved the MRTP Commission.
2. Cardinal Differences: MRTP Act 1969 vs. Competition Act 2002
- Focus: Curbing monopolies and concentration of economic power.
- Criteria: Based on size of assets and turnover (punished being big).
- Combinations: Mandatory prior government permission for expansions.
- Offences: Narrow focus on Monopolistic, Restrictive, and Unfair Trade Practices.
- Remedies: Cease-and-desist orders; no hefty financial penalty powers.
- Focus: Promoting and sustaining healthy market competition.
- Criteria: Based on market conduct and abuse, not corporate size alone.
- Combinations: Regulates mergers only if exceeding high asset thresholds.
- Offences: Anti-competitive agreements, Abuse of dominance, Cartels.
- Remedies: Heavy financial penalties up to 10% of global turnover.
3. Four Core Statutory Objectives (Preamble)
The Preamble to the Competition Act 2002 outlines its four foundational statutory objectives: