A critical analysis of competition policy of India

Abstract

During economic reforms of 1990 in India, it was observed that ‘Monopolies and Restrictive Trade Practices (MRTP)’ has become out dated in context to international economic development relating to competition law and a new law which may reduce monopolies and promote competition was required. After 1990s, India witnessed a drastic increase in international trade laws. During this period, there was great increase in the volume and value of trade in goods and services, in cross border merger and acquisition (M&A) and in ‘foreign and direct investment’. With the passage of time, restriction on foreign direct investment(FDI) reduced and Competition Act came into force to replace MRTP Act, 1969. With effect from September 1, 2009, Government of India through ministry of external affairs notification repealed the MRTP Act. Enactment of competition law was with the purpose of providing a completion law which could meetand suit to changed economic demand of India and world. Keeping in mind these scenarios, the Competition Act was enacted to provide a competition law regime that would meet and suit the demands of the changed economic scenario in India and abroad. As we know that the MRTP Act was a gloom reminder of ‘licence raj or licence quota – permit system'the need was to do away with it. With the announcement, new economic policy chapter III of MRTP Act which was dealing with the restrictions on M&A policy was made inoperative. However, the cases which were filed prior to September I, 2009 were still in the purview of MRTP commission and the MRTP commission was debarred from dealing with new cases. The author wishes to analyse the provisions relating to M&A transaction (Sections 5 and 6 of new Competition Act dealing with regulation of combination) notified by Competition Commission of India in 2011. The question is to be analysed ‘whether new provisions of Competition Act will be applicable in the matters where conclusive agreement has been signed before notification of 2009 but transaction has not been completed’. The author specially wants to analyse the transitory transactions in this regard.