Competition policy


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Competition policy

  1. 1. Members  Ankit Poonia  Ankit Sharma  Ankita Agarwal  Ankita Ahuja  Ankita Bhargava  Anuradha Randar  Anusha Anshul Singh Katiyar  Apoorva Bhadwiya  Anmol Sharma
  2. 2. Submitted to:Ms. Neha Dixit
  4. 4. The Monopolies And Restrictive Trade Practices Act,1969 is an important piece of economic legislation designedto ensure that the operation of the economic system does notresult in the concentration of economic power to thecommon detriment.The act came into force from 1st June, 1970, and has beenamended in 1991.
  5. 5.  To ensure that the operation of the economic system does not result in the concentration of economic power in hands of few, To provide for the control of monopolies, and To prohibit monopolistic and restrictive trade practices.
  6. 6.  It means in order to maximize profit and to increase market power, certain business firms unreasonably charge high prices to prevent competition in the production & distribution of goods by adopting unfair trade practices. It is a trade practice which represents the abuse of the market power by charging unreasonably high prices.
  7. 7.  Regulation of production and fixing the term of sale. Prohibiting any action that restricts competition. Fixing standards for goods produced.
  8. 8. A trade practice which restricts or reduces competition may be termed as Restrictive Trade Practices and it harm the consumer interest.Because of their adverse effect on the consumer and public interest, they are sought to be regulated in almost every country of the world.
  9. 9.  The practice shall not be repeated. The agreement shall be void and shall stand modified in such a manner as may be specified in the order.
  10. 10. Unfair trade practice means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair or deceptive practice.
  11. 11.  The practice shall not be repeated. Any agreement relating to such an UTP shall be void or shall stand modified in such a manner as may be directed by the commission.
  12. 12.  The MRTP Act was severely criticized because of its growth defeating provisions. Therefore, the High Level Committee on Competition Policy and Law has recommended that a new law called the Indian Competition Act may be enacted and the MRTP Act may be repealed.
  13. 13. CompetitionLiterary meaning: a contestable situation wherepeople fight for superiority.In market economy, competition is a processwhereby firms fight against each other forsecuring consumers for their products
  14. 14. An Act(enacted in December, 2002) to provide, keeping in view of the economic development of the country, for the establishment of a Commission: to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers to ensure freedom of trade carried on by other participants in markets, in India, and for matters connected therewith or incidental thereto.
  15. 15.  Competition policy => government measures directly affecting both Firm Behavior and Industrial structure. A competition policy should include both: i) Economic policies adopted by Government, that enhance competition in local and national markets, and ii) Competition law designed to stop anti-competitive business practices.
  16. 16. Benefits to Consumers A fair deal in the market place with: The best possible choice of quality The lowest possible prices, and Adequate supplies of commodities.
  17. 17. Benefits to Efficient Producers A safeguard against practices that could drive companies out of business. Lower entry barriers to promote entrepreneurship and growth of SMEs. Efficient allocation and utilization of resources ensures more output and employment. Control of international unfair competition and restrictive business practices, such as international cartels
  18. 18. Components of competition policy Competition Policy Competition Law Government Policies Private ActionsDeregulation Consumer Industrial and Policy PolicyPrivatization Regulations Governing Trade Policy Capital and FDI
  19. 19. Competition law is the enactment of that policy and achieves its objectives in three ways:(1) prohibiting anti-competition agreements and practices that harm free trade and competition;(2) preventing abuse of dominant position and anti- competitive practices that lead to such a dominant position;(3) regulating mergers and acquisitions.
  20. 20. Anti-Competitive Regulation of Mergers to Abuse of a Prevent Tactics to Gain Agreements Between Firms Dominant Excessive Dominance in a ( Collusion) Market Position Market Applies to:•Import cartels • Predatory pricing•Price fixing •Total unification•Market sharing • Price of the companies•Bid rigging discrimination involved•Limiting production•Refusal to buy or • Excessive pricing •Buying ofsupply sufficient shares in•Tie-in arrangements a company so as to•Exclusive-dealing • Abuse of have a say in•Resale price intellectual property policy formulationmaintenance monopoly•Territorial allocation
  21. 21.  According to Ruman, “Foreign direct investment is the ownership and control of foreign assets. In pratice, FDI usually involves the ownership, whole or partial of a company in a foreign country. This is called foreign subsidiary. This ongoing company.”
  22. 22. Direct PortfolioInvestment Investment
  23. 23.  FDI brings Capital New technology and methods Increasing the skills of labour pool Expand various networks export expansion Foreign exchange earning Increase the domestic economy Significant growth Competitive market structure
  24. 24.  FDI interferes in the national politics More focus on high profit areas rather than to the priority sectors Undermine national interests Foreign investors sometimes engage in unfair and unethical trade practices.
  25. 25. Home country  Outward FDI encouragement  Risk reduction policies (financing, insurance, tax incentives)  Outward FDI restrictions  National security, BOPHost country  Inward FDI encouragement  Investment incentives  Job creation incentives  Inward FDI restrictions  Ownership extent restrictions (national security; local nationals can safeguard host country’s interests
  26. 26.  Synergy between Government Action and Competition Assess all laws and government policies on the touchstone of competition All government policies should have an explicit statement about the likely impact of the policy on competition Governments at the union and the state level should frame and implement policies by acknowledging the market process Government should evolve a system of ‘competition audit’ which could be applied to all existing and future policies