Category: COMPETITION LAW

No competition no progress..! Is it???

In business, competition is never as healthy as total domination. It brings out the best in the products but worst in the competitors, to maintaining the balance is crucial for an equitable economic environment. Competition refers to a situation in a marketplace in which entities or sellers independently strive for the patronage of buyers in order to achieve their respective business objectives. We have been talking for ages about what is competition but never emphasized what is not competition in a marketplace. We have seen the dynamics of competition and economy how the competition plays a catalytic role in unlocking the potential of any economy.

With growing complexities of industrial structure and the greed for scaling heights for achieving maximum share in the market is inducing malpractices such as abuse of dominant position, bid rigging, unfair trade practices, and formation of cartels.

Abuse of dominance

The position of strength and power enjoyed by an organization in the market independently without competitive forces opposing, it basically exploits the consumers imposing them with imposing conditions in purchase or sale of goods/services, predatory pricing, limiting production or technical development, and creating barriers to entry.
Example – Predatory pricing is where the cost of goods/services is kept below the actual cost just to eliminate the competitors.
Telecom industry – Reliance Jio vs Bharti Airtel vs Vodafone Idea

Bid rigging and cartel

            Bidding as a practice is to secure goods/services on the most favorable prices and conditions to manipulate the market resulting in an anti-competitive bid called corruption in auctions. When competitors agree in advance as to who will bid for the contract more specifically to predetermine the winning bidder, agreements not to bid against each other and agreements to squeeze out outside bidders. It is a form of fraud and eventually harms the economy and public in long run. Mostly occurs in tenders or government tenders for the supply of tools or food rations etc
Example – Use of multiple directorships in companies to submit the bids for the same products resulting in cover bidding.

Cartel
Business cartels occur when competitors get together and agree not to compete against each other by fixing prices, dividing and sharing the market controlling the production and distribution of goods and services. The nature of a cartel is to raise prices above competitive levels resulting in harming the ultimate consumer as he is left with no choice.
Example – Cement industry.

Conclusion

Competition should not always be coupled with the rivalry between market players to attract customers rather adopt fair means to combat competition for better outcomes in the market.   
The pessimistic approach towards competition needs to be altered but that does not mean it shouldn’t have strict norms and regulations governing. It should not create division & animosity in the society rather should thrive for balance on economic grounds.

                                     

BY

KASTURI MORE

LLB 1st Year

YASHWANTRAO CHAVAN LAW COLLEGE, PUNE

THE (UN) LAWFUL DISSENT

Introduction

There has been a constant scuffle between Intellectual Property Law and Competition Law. Competition Law focuses on creating and maintaining a healthy Competition in the Market by preventing and disallowing anti-competitive activities. Intellectual Property Law provides for protection and exclusive rights to the Proprietor of Intellectual Property, thus creating a dominance or monopoly in the market. Though, there exists a contradiction between these Laws, one must apply the Doctrine of Harmonized Construction to achieve the maximum level of Consistency and avoid the construction leading to inconsistency.

Objective of the Legislations

The aim of the Competition Law is to promote healthy and fair Competition in the market. The Act seeks to achieve its objectives by prohibiting anti-competitive agreements, preventing abuse of dominance and creating awareness by imparting training. Intellectual Property Laws are drafted to grant protection to the people who take steps to create invention, innovation and new techniques. It provides protection and exclusive rights to the Proprietor. However both legislations have common objective to facilitate Consumer welfare and protection and to provide opportunities for Competition, Growth and Innovation.

 Statutory Analysis

  • Section 3 of Competition Act talks about Anti Competitive Agreements. It prohibits all the agreements which have or likely to have adverse effects of Competition in the market.
  • But Section 3(5) provides that nothing in Section 3 shall apply to Patents, Trademarks, Copyright, Design, etc. protection granted under Intellectual Property Law.
  • Section 4 of Competition Act talks about Abuse of Dominance by some market players. However at the same time, Competition Law does not prohibit the Dominance but Abuse of it by exploitative ways.
  • On the other hand, when it comes to IP Law, TRIPS Agreement provides for prevention of Abuse of dominant position by the IP Holders in the market. Article 31 of the TRIPS Agreement talks about Compulsory Licensing by Government. Compulsory Licensing prevents anti-competitive agreements, thus complementing the provisions of Competition Law in the interest of the public at large.

Judicial Analysis

Case:  Aamir Khan Productions Pvt. Ltd v. Union of India[1]

Facts:  UPDF (United Producers/Distributors Forum) and others formed a market Cartel in Films against Multiplex Owners. Since Multiplex Owners are totally dependent on the Films, this cartel came under Anti-competitive agreement. Thus CCI directed an enquiry into the matter, followed by which CCI also concluded the existence of abuse of dominance on behalf of UPDF, which was reported as a Cartel. CCI issued a show-cause notice to UPDF. But instead of replying to the same UPDF went to the High Court contending that the Films possess copyright protection and thus the Copyright Board has the jurisdiction in the respective matter.

The Court ruled that, Section 3 does not restrict the protection for infringement of IPR and hence CCI has the jurisdiction in all the matters which come under the jurisdiction of Copyright Board. Thus CCI has the power to deal with IPR matters.

Conclusion

Thus, Intellectual Property Law and Competition Law are not conflicting in nature but prove to be remedial and compatible for each other. Both legislations are complimentary and must be interpreted in a harmonized fashion. To minimize the contradiction further following steps can be taken –

1. Guidance to interpret Legislative provisions.

2. Intervention of Laws whenever necessary (Abuse of Dominance by Patent Holder- Compulsory Licensing)

3. Parallel understanding to secure a middle way in order to fulfill the objectives of both the Legislations.

BY

POOJA PATIL

B.A. L.L.B

ILS LAW COLLEGE, PUNE

[1] The High Court of Bombay- Writ petition no. 358 along with 526 of 2010