Flexible features in new Competition Bill

By Our Special Correspondent

NEW DELHI, JUNE 28. The new draft Competition Bill cleared by the Cabinet on Wednesday provides for a Director-General to assist the Monopolies and Restrictive Trade Practices Commission but unlike in the MRTP Act, he will not have the power to initiate investigations suo motu.

According to the Law Ministry, the proposed Competition Law aims at doing away with the earlier rigidly- structured MRTP Act, and in contrast is flexible and behaviour- oriented. Besides, the earlier legislation is based on size as a factor while the new law is based on structure as a factor. The MRTP Act had 14 offences listed while the new law has four offences which negate the principles of natural justice. The older Act provides for registration of agreements as compulsory while the new one has no such requirement.

In addition, the combination regulation mentioned in the bill ensures that competition is not reduced. The MRTP Act could only pass ``cease and desist'' orders and did not have any other powers to prevent or punish while the new law contains punitive provisions. The proposed Competition Law seeks to regulate cartels of foreign origin but the earlier Act did not vest the MRTP Commission with powers to probe foreign cartels in a direct manner. The concept of ``group'' under the MRTP Act had wider import and was unworkable, while the concept has been simplified in the proposed law.

Clarifying the provisions of the new Law, the Ministry says it provides for a competition fund to be used for promotion of competition advocacy, creating awareness about competition issues and training in accordance with the prescribed rules. Besides, most pending cases pertaining to unfair trade practices will be transferred to the consumer courts.

Broadly, the new law proposes to curb practices which will have an adverse effect on competition apart from establishing a Competition Commission of India. These include anti-competitive agreements, abuse of dominant position and elimination or reduction of competitors in the market through mergers and acquisitions.

In the case of anti-competitive agreements, the CCI can impose a penalty or an amount up to 10 per cent of its average turnover in the last three years of the offence. Abuse of dominance will also be considered a crime, according to a clarification issued by the Law Ministry.

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Section  : National
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