Restrictive Trade Practices Research Articles

CRITICAL ANALYSIS OF MERGERS AND ACQUISITIONS WITH REFERENCE TO RECENT TRENDS

Mergers and Acquisitions (M&A) are increasingly being used all over the world to improve the competitiveness of companies by gaining more market share, widening the portfolio to reduce business risk, entering new markets and geographies, and capitalizing on economies of scale, etc. In India, too, they have become a matter of everyday occurrence. They are the subject of interest counting for different individuals, such as business executives who are looking for potential merger partners, investment bankers who manage mergers, lawyers who advise the parties, regulators concerned with stock market operations and growing business sectors in the economy, and researchers who want to understand these concepts better. It is also said that a lot of mergers are simply acquisitions. One company purchases another and integrates it into its own business model. Many statistics on mergers are presented for the combined mergers and acquisitions (M&A) that are occurring as a result of this misuse of the term merger, because of which mergers and acquisitions can be treated as the same even though they are different from each other. The trend of merger and acquisition in India began in 1988 when Swaraj Paul attempted a hostile takeover of DCM Ltd. and Escorts Ltd.[1] at a time when the only mergers in India were friendly family mergers or friendly deals with pre-negotiated terms. These mergers were few due to the unfavourable provisions of the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act, 1969).

Legal and Economic Perspective of the Consumer Protection Act, 2019 in India: An Overview

The industrial revolution in the international trade and commerce has brought a boom in the corporate sector, which results in a diversity of consumer goods to achieve the needs of the consumers and a mass of services have been made accessible to the consumers. But this industrial revolution had some disadvantages to the customer as it affected the business sovereignty. After independence, many laws were enacted in India for safeguarding innocent customers from unfair and restrictive trade practices sort of a false and dishonourable description regarding the character and quality of the goods. The year of 1986 witnessed, in the history of consumerism, the enactment of the Consumer Protection Act. The first ever legislation in India of its kind which solely aimed at the suffering taken consumers who are the victims of the unfair trade practices and sub-standard services rendered to them. The Objective of the Consumer Protection Act is to provide simple and speedy disposal to the cases by providing quasi-judicial machinery for the redressal of consumer disputes. After the restructuring of new Act, more consumer rights have been provided under clause (9) of section 2 of the consumer Protection Act, 2019. With the advancement of technology, it is obvious that electronic media has an important place in business world. The provision of e- commerce has also been inserted in the Act after reframing the Consumer protection act. The new Act provides for separate provisions for each thing and is well framed Act that makes it more proper. The new chapters that have been added to this act, work as a proper criterion for deciding the offences and penalties. The increase in the fiscal value along with the time needed a rise in the value of fine too. The new Act proposes effective measures and tightens the existing rules to further safeguard consumer rights. Introduction of a central regulator, strict penalties for misleading advertisements and guidelines for e-commerce and electronic service providers are some of the key highlights.

The legal regime of competition in India

Abstract The study of the competition legislation in India has as justification the fact that the indian economy has one of the biggest growth rates in the world, India being the biggest democracy in the world. At the beginning, India had its own competition law, called the Monopolies and Restrictive Trade Practices Act 1969 (MRTP Act). After the initiation of economic liberalization in 1991, it became imperative to put in place a competition law regime that was more responsive to the economic realities of the nation and in accordance with international practices. In 2002, the Indian Parliament voted for a new law, Competition Act, to regulate business practices in India. The Competition Act has as its goal to regulate three types of conduct (anti-competitive agreements, abuse of a dominant position and combinations). The Competition Act was amended by the Competition (Amendment) Act in 2007 and 2009. The Competition Act has also created a new enforcement body, the Competition Commission of India (CCI), which is responsible for the enforcement of the Competition Act. According to the provisions of the Competition Act, is allowed to make an appeal to the Competition Appellate Tribunal (COMPAT) against the decisions of the CCI. A further appeal from the decision of the COMPAT may be submitted before the Supreme Court of India. In the same, the Competition Act is taking into consideration its enforcement with the aid of mutual international support and enforcement networks across the world.

M&As by Business Groups and Market Competition: A Study of Tata Steel

This article examines the involvement of business groups in consolidation activity. An important component of the Monopolies and Restrictive Trade Practices Act was “the concentration of economic power in the hands of a few” which has been de-emphasized as per the amendment made in 1991. The new Competition Act mainly deals with the case-by-case analysis of market competition rather than ownership concentration. The competition regulation in its current form is mainly focusing on the concept of “economic efficiency” and not addressing the “social fairness” concept. The involvement of business groups in consolidation activities results in multiplier effects as they are already part of a diversified and well-structured umbrella of business with horizontal and vertical linkages. This article observes the active involvement of big business groups in mergers and acquisitions (M&As) activity across various product lines. Further, many such M&As are leading to capacity expansion not only in various overlapping products (i.e., horizontal linkages) but also in the vertical line of business, in which the affiliate firms of the group are engaged. This may be beneficial to the group as a whole since the cost of intermediary inputs supplied to various affiliate firms can be reduced. The study points to consider the “ownership and group effect” and the resulting synergy creation more carefully while assessing competition.

The challenges of anti-competitive practices and consumer protection in Nigeria

This article critically examines the concepts and the challenges of price mechanisms, anti-competitive practices and consumer protection in Nigeria, and considers ways of promoting and protecting the interests of consumers in respect of products and services. The article evaluates and defines the concept of price mechanisms, and the concept of the consumer who needs to be protected. It discusses anticompetitive practices, such as monopolies, mergers and acquisitions, and restrictive trade practices, resale price maintenance agreements, misleading advertising, false sales and market values. It considers the protection of consumers and the legal frameworks applicable to the subject. In conclusion, the article recommends appropriate measures and a proactive, pragmatic approach to tackling the menace of false market sales and restrictive trade practices by calling on stakeholders and the government to regulate monopolies, mergers and uncompetitive business practices which are detrimental to the interests of the consumer. It calls for controls and restrictions on unfair trade practices and appropriate sanctions so that those who persistently prejudice consumers in this way are brought to book.

“If competition has any virtue, we ought not to have a system that stifles it”: Competition in London Clearing Banking, 1946–1971

Concentration in many industries has increased markedly in recent decades in the United States, although in Europe it has been stable or has even decreased. Where concentration has increased, the question arises as to how to measure the extent of competition (or the degree to which it is contestable) in a market in which there are relatively few competing firms, over the long term. This article explores competition in clearing banking in the UK from 1946 to 1971. This period is of interest in the context of industry concentration because clearing banking was relatively concentrated and, it has long been argued, uncompetitive. The article evaluates competition from four perspectives. First, it considers the competitiveness of London clearing banking from a quantitative perspective. Next, it evaluates competition through the lens of competition policy, particularly the extent to which monopoly, mergers, and restrictive trade practices existed in clearing banking. Third, the conclusions of the National Board for Prices and Incomes’ report into bank charges in 1967 are considered. Finally, it explores the extent to which the clearing banks were open to and embraced change, and were innovative, assuming that these qualities are more likely to be present when there is competition among banks. It questions key aspects of the dominant interpretation of clearing banking as uncompetitive and slow to innovate.

Industrial subsidy policy and the optimal level of specialization

Despite compelling rationale based on the theory of comparative advantage for free trade, many countries adopt restrictive trade practices. In this paper we investigate this puzzle in a stylized two-country two-good Ricardian model of international trade. Governments can offer protection to domestic industries via industrial subsidy policy in this model. We prove the existence of a Nash equilibrium in the two-player game where industries choose the level of specialization. We determine the necessary conditions for complete specialization in (a) the free-trade regime; and (b) the protectionist regime implemented through industrial subsidy policy. Our results show that if the government intends to promote complete specialization, then a high degree of comparative advantage and a large elasticity of substitution between export and import goods are required. Empirical evidence on these two parameters indicate that complete specialization is unlikely to survive in the protectionist regime.

Economic development through the dairy sector: analyzing the legal protection frameworks

The paper discusses the important role played by the dairy sector in Kenya with respect to economic development from which the economic and social rights can be realised. In doing so the paper defines an elaborate structural framework within which the sector is managed from the level of production of milk to marketing and sale of dairy products. Various laws and policies that govern the sector are highlighted most of which have interventions to the existing challenges that affect the sector. The paper highlights a number of threats to the sector which if not addressed within the given protection frameworks can lead to collapse of the industry. One of the major threats identified is the low price at which milk is sold by the farmer despite there being high consumer prices. Such low returns to the farmer adversely affect the welfare of the affected communities. The paper attributed the problem of low prices to the oligopolistic tendencies in the sector that have resulted in monopolization of prices. Dumping of milk products was also identified as a major threat which has also contributed to low prices of milk to the farmer. The paper recognizes that the elaborate legal protection frameworks in place can be utilized to regulate such restrictive trade practices and further protect the dairy sector which is still developing.

A Jurisprudential Study of Antitrust Laws and Its Impact on the Indian Market

Competition is a dynamic term whose definition changes according to the circumstances. In the field of economics, healthy competition among industries is known to be the driving force behind innovations/improvisations of products. Competition among industries needs to be checked and regulated from time to time. Monopolies and Restrictive Trade Practices act was the first competition regulation that came into power, post-independence. The Monopolies and Restrictive Trade Practices Act, after the incorporation of Liberalization, Privatization, and Globalization, became redundant as it could not stand the test of time and failed to achieve its objectives. After globalization, when the competition in the markets surged, it became necessary for the legislators to regulate the competitive structure of the industries in order to protect the interest of the consumers. The unreliability of the Monopolies and Restrictive Trade Practices Act became the reason for the Government to set up a committee, headed by S. V .S. Raghavan, to tailor a law as per the developing nature of the Indian economic structure, after which the Competition Act was brought into force. A comparative study of both; the Monopolies and Restrictive Trade Practices Act, and the Competition Act, brings forth; the reasons behind the fallacy of the past regulation, and the changes brought into the current legislation. This paper is also supported by various judgments that helped in shaping the competition regulations. The goal of this study is to educate and provide its reader with a more distinct view of the development of Competition regulations in India post-independence. It is anticipated that this paper will provide readers with a brief understanding of the evolution of competition regulations in India.

The industrial policy as a driver of the Indian economy’s development

The aim of this research is the Indian industrial policy in 1950-2010s, its main direction and perspectives of its future evolution. The methodological basis of the study is such methods as induction and deduction, analysis and synthesis. The systematic approach to the overall study of the Indian economy and the Indian industrial policy in particular has become the base of this research. The author thoroughly analyses its main specific features during the pre-reform period, as well as identifies the causes and the nature of its transformation at the beginning of the 1990s. At the same time the author underlines that taking into account the national-specific features of a mixed society, the industrial policy of the prereform stage facilitated the successful holding of industrialization during which the industrial sector has become the fastest growing sector of the Indian economy. The author underlines the main directions of the New Industrial Policy, 1991 , among which the most important ones are the following: abolition industrial licensing, the reduction of the public sector in the national economy, amendment of Monopolies and Restrictive Trade Practices Act, 1969 , attraction of foreign direct investment and advanced technologies, liberalization of industrial policy at the local level and the replacement the Foreign Exchange Regulation Act, 1973 , by the Foreign Exchange Management, 1999 . Apart from that the author examines the most representative theories of the Indian economists (R. Agraval and C. Rangarajan) which made a significant contribution to working out the industrial policy in 1990s. The author also draws attention to the main elements of a future ready industrial policy discussed in India at the present time. The author stresses that for all its diversity at different stages of socio-economic development the Indian industrial policy always based on both the economic and social components (the New Industrial Policy, 1991 , also added the ecological component). It means that accelerating the annual economic growth rate, the Indian industrial policy has contributing to solving a wide range of social tasks - from the creation of new jobs to poverty and undernourishment alleviation. The article also presents statistical data on the dynamics of gross domestic savings and gross domestic capital formation in the Indian economy, annual average economic growth rates in India from 1990-1991 to 2016-2017 financial year as well as the Indian GDP by industry of origin in 2000-2017.

Complete Specialization and Government Intervention in International Trade

Despite compelling rationale based on the theory of comparative advantage for free trade, many countries adopt restrictive trade practices. In this paper we investigate this puzzle in a stylized two-country two-good Ricardian model of international trade. Governments can offer protection to domestic industries via industrial subsidy policy in this model. We prove the existence of a Nash equilibrium in the two-player game where industries choose the level of specialization. We determine the necessary conditions for complete specialization in (a) the free-trade regime; and (b) the protectionist regime implemented through industrial subsidy policy. Our results show that if the government intends to promote complete specialization, then a high degree of comparative advantage and a large elasticity of substitution between export and import goods are required. Empirical evidence on these two parameters indicate that complete specialization is unlikely to survive in the protectionist regime.

Competition law enforcement in India: issues and challenges

In the first three decades of independence, India followed a path of planned economic development, characterized by controls and licensing. The resultant market structures were ones where competition was muted. The Monopolies & Restrictive Trade Practices Act (MRTP Act) enacted in 1969 focused on control of monopolies and concentration of economic power. The economic reforms initiated in 1991, resulted in opening-up of the Indian economy through removal of controls. This transition necessitated the Indian markets to gear up to face competition both from within and outside. The MRTP Act, a product of the licensing and controls regime, became redundant in the post liberalization era. After the adoption of the New Economic Order, it became imperative to make a shift from curbing monopolies to promoting competition. Accordingly, the Competition Act, 2002 (Act) was enacted to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers, and to ensure freedom of trade carried on by other participants in markets in India. Though the Act was enacted in 2002, the Commission got its enforcement powers in 2009, and since then up to 31 March 2017, it has reviewed over 868 antitrust cases. It has issued orders in 654 cases. The merger review provisions kicked in from 2011. The Commission has since then cleared over 490 merger filings out of 506 filed till March 2017.

Market concentration and labour employment in Indian organized manufacturing, post-reforms

The post-reform ‘Free market enterprise’ systems and forms of governance adopted in Indian manufacturing have been widely debated and argued to be associated with a jobless manufacturing growth. The study uses market concentration and monopoly power indices, post-reforms, to determine the level of competition and labour exploitation. A panel data regression with employment as the dependent variable has found: Free market enterprise has a semi-definitive impact on the employment of labour. The variables: (1) market concentration leads to an increase in the level of employment and wages. However, (2) monopoly power leads to a decline in the level of employment and an indefinite effect on wage growth. This study is significant in understanding jobless growth and the idea of capital reorganization and labour substitution. The study could relate to formulation of the antitrust policies and restrictive trade practices of monopolies in coherence with labour welfare.

A critical analysis of competition policy of India

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.

Resurrecting 'A Comprehensive Charter of Economic Liberty': The Latent Power of the Federal Trade Commission

After decades of virtual invisibility, monopoly and oligopoly are attracting the attention of leading political and public figures again. Corporate control of markets is now seen as an important source of economic and political ills in American society. These evils include not just higher prices for consumers, but also increased economic inequality and a compromised democracy. This corporate domination of the economy and politics was not inevitable, dictated by impersonal forces such as “globalization” or “technology.” On the contrary, it is the result of conscious policy choices initiated in the late 1970s and 1980s that succeeded in focusing antitrust law on the narrow concept of economic efficiency and establishing legal standards friendly to powerful businesses. The weakened antitrust laws have given large corporations freedom to dominate markets through mergers and exclusionary and other restrictive trade practices. The Supreme Court has the power to undo these changes but an antitrust revival through the common law process is uncertain and, at best, sure to be protracted. Advocates of renewed antitrust enforcement should instead look to the Federal Trade Commission. The Commission has broad power to remake antitrust policy under the FTC Act’s prohibition on unfair methods of competition. In using this power, the FTC should reject the ahistorical efficiency model for antitrust and embrace the political economic goals articulated by Congress when it created the Commission in 1914. These goals of protecting consumers, maintaining open markets, and promoting dispersal of private power remain as relevant as ever. To restore competitive market structures and advance the vision of Congress, the FTC should establish a series of presumptions against competitively suspicious practices and restructure persistent or otherwise seriously harmful monopolies.

Anti-Monopoly and Competition Laws - Impact on the Indian Pharmaceutical Industry

Background: Competition is a process of economic race between market participants to draw clients. The Indian competition law establishment is an early administration. Before the enactment of the Competition Act in May 2002, Monopolistic and Restrictive Trade Practices (MRTP) Act was the active law that managed certain parts of the opposition. Objective: This manuscript highlights the purpose of competition laws for grappling with the monopolies and restrictive trade practices with a particular focus on pharmaceuticals. Conclusion The Competition Act highlights the main features of new competition law which put back the old MRTP act and also lets in the proscription of anti-competitive treaties, prevention of misuse of dominance and combinations which prove detrimental to the competition in the market.

Regulating Unfair Trade Practices: an Analysis of the Past and Present Indian Legislative Models

The Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act) which for the first time incorporated detailed provisions as to unfair trade practices (UTPs) in India has now been repealed and succeeded by the Consumer Protection Act, 1986 which has included the same substantive definition of UTPs. This article analyses the law as to UTPs under the repealed MRTP Act including the cases decided thereunder and compares it with the structure of the Consumer Protection Act with the objective of evaluating whether the present Consumer Dispute Redressal Agencies under the Consumer Protection Act have adequate substantive provisions and effective procedural competence to ward off UTPs. Our analysis of legislative provisions and decided cases shows that the present system of protection against UTPs under the Consumer Protection Act is blighted by a strict and restrictive definition of consumer; lack of in-house enquiry and investigation system, incompetency of traders and trade associations to pursue cases, and lack of inherent power of the Consumer Dispute Redressal Agencies to suo motu take up matters. The article uses analytical and statistical methods to quantify, in terms of actual effect, these drawbacks which significantly hamper the present system and suggests various means to improve the functioning of the system so as to effectively deal with UTPs.

Consumer Grievance Redressal under Consumer Protection Act 1986 with Special Focus on Medical Services in India

The growing economy with great influx of trade and commerce resulted in plethora of avenues not only for marketing and selling of goods but also services. The increasing use of products and services has undoubtedly led to dissatisfaction among consumers with regard to the specification, the quality, the pricing and the intended use of the products as well as the services. This often demanded for a speedy and appropriate mechanism and forum to redress the grievances of the consumers that got to be reflected through legislation acknowledging consumer’s rights. The consumer protection has got its due acknowledgement in United States in the Federal Trade Commission Act. The section 5 of the 1938 Amendment gave broader interpretation to the meaning of “unfair meaning of completion.” The section reads as follows: “Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are declared unlawful.”The ruling of the Federal Trade Commission as well as the Supreme Court through judicial pronouncements have included trade practices that are capable of deception and against public policy as unfair trade practices and to be dealt accordingly for the protection of the consumers. Similarly in United Kingdom, the enactment of Fair Trading Act 1973 marked the beginning of recognition of the rights of Consumers. The Act defined ‘consumer trade practice’ to mean any practice that is carried on for the time being in connection with the supply of goods or services to the consumers. In Australia, part V of the Restrictive Trade Practices Act, 1974 deals with the provisions of Consumer protection. Any offence in contravention of part V of the Act is punishable with heavy fine and the Federal Court of Australia has power to grant injunction in such matters.

Genesis of Competition Law in India

After the advent of Independence in 1947, India, for the better part of half a century thereafter, adopted and followed policies comprising what are known as “Command-and-Control” laws, rules, regulations and executive orders.The Competition law of India, namely, the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act) was one such. It was in 1991 that widespread economic reforms were undertaken and consequently the march from “Command-and-Control” economy to an economy based more on free market principles commenced its stride. As is true of many countries, economic liberalisation has taken root in India and the need for an effective competition regime has also been recognized.In the context of the new economic policy paradigm, India has enacted a new competition law called the Competition Act, 2002 (Act, for brief). The MRTP Act has converted into the new law, Competition Act, 2002. The new law has repealed the extant MRTP Act. This paper, therefore, addresses both the enactments and also outlines the logic behind the development.

MRTP Commission and Competition Commission of India

A commission known as the Monopolies and Restrictive Trade Practices Commission was established under MRTP act, 1969. The MRTP Act, 1969 also provides for appointment of a Director General of Investigation and Registration for making investigations for the purpose of inquiries by the MRTP Commission and for maintenance of register of agreements relating to restrictive trade practices.Competition commission of India establish under Indian Competition Act, 2002. This administrative is more proactive than reactive for the administration of the competition policy. The CCI is working more effectively under the new Act. This paper is an attempt to examine the working of both the commissions.