1

Competition Commission of India

Practices & Implications

Saurabh Thadani Saurabh Juhunjhunwala Srikanth Kumar Konduri

10FN-102 10FN-104 10FN-109

Need for Competition Law

Competition: Increases efficiency Encourages innovation Enhances consumer welfare wider choice, lower prices, better quality Conducive to economic and political democracy Apprehension of market failure has prompted 100 countries to enact modern competition laws

Features
Prohibits Anti-Competitive Agreements Prohibits Abuse of Dominant Position Provides for Regulation of Combinations Mandates Competition Advocacy

Total Value = US $ 58.3 billion

source: iitrade.ac.in

Objectives of CCI
Make the markets work for the benefit and welfare of consumers, to achieve objectives of Competition Act 2002. Ensure fair and healthy competition in economy for faster and inclusive growth and development of economy. Implement competition policies with an aim to effectuate the most efficient utilization of economic resources. Develop and nurture effective relations with sectoral regulators to align sectoral regulatory with competition law. To establish and nurture competition culture in Indian economy.

Armed with more teeth than MRTP

Source: Livemint.com, April9, 2010

New Merger Control Regime in India

Combinations include mergers & amalgamation acquisition of shares, assets above thresholds Competition Commission of India can: Approve Approve with modifications Not approve If no order within 210 days, the combination deemed to have been approved Regulations give shorter time limits- stage I Approval with Structural and/or Behavioural remedies

Thresholds* in INR and $

Review Period(s)

Indian time caps not very different from major jurisdictions

MCX SX Ltd. Vs NSE of India Ltd.

In 2008, NSE and MCX launched currency derivatives trading In Nov 2009, MCX SX accused NSE of using its dominant position to prevent competition Penalty levied on NSE 5% of Avg. turnover of last 3 years Rs. 55.5 Cr. (on 24 June, 2011)

10

May 11 2011 : CCI Probes fare rise during Air India Pilots strike
Stranded passengers faced the dilemma of shelling out between 50% and 75% more money on bookings with other airlines. Airlines keep on resorting to such practices: Delhi-Mumbai fares last Diwali Ticket prices to Chandigarh during WC semi-final Need to protect interest of passengers and proactively address any sudden and unreasonable spikes, empower consumers with an informed choice.

11

2007: Year of Mergers in Air Transport Industry

Looks at the issue of competition at air transport and airports. Jet-Sahara : April 2007 : 30% market share, 50% domestic traffic, predatory pricing and unhealthy competition. (Deal Value = Rs. 1450 Cr.) Kingfisher-Deccan : May 2007 : Removing a vigorous competitor from the market through a merger. Air India Indian Airlines : April 2007 : The Government expects that the merger will save around Rs 5000 crores annually, improved efficiency and economies of scale.

12

CCI keeps an eye on following

Increasing concentration in the post merger scenario. There is an evidence of price parallelism. Indian Airlines losing market share to two private players Jet and Kingfisher post merger. Air India Indian Airlines : Merger will not be effective unless backed by overhaul of operations and a strong professional staff. Possibility of a failing business looms large in this sector due to rising fuel prices and intense price competition.

13

Competition Law overrules IP

July 13, 2011 managingip.com
Imposed a nominal penalty of Rs. 100,000 over each of the 27 cinematograph producers for conspiring to exploit multiplex owners. CCI concluded that case did not involve infringement of rights of producers by Multiplex owners under the copyright act. CCI revealed that subsequent to dispute, price of ticket charged for movies at multiplexes had increased, which was ultimately borne by the consumers.

14

Policy Implications
nishithdesai.com , May 13, 2011
Takes away the advantage that parties could have had in presetting the timeline for transaction. Acquirer of a listed company is at disadvantage due to conflict between securities law and combination regulations.
Acquired should pay interest in case approval from CCI is not obtained within statutory time period required to complete open offer Acquirer may face the risk of insider trading if unpublished price sensitive information is disclosed for complying with CCI

Considering a span of 7 months for fetching CCI clearance, Current provisions do not allow withdrawal of applications and might be detrimental in the event of change in market conditions by that time.

15

16

CCIs true spirit if applied?

As Google launched Google+ on June 29th, CCI could get Facebook to pay compensation to Google. RIL should worry about its foray into Financial Services & Retail, because its a dominant company in view of its size. Bajaj Auto should be concerned about launching its car because its a dominant player in 2-wheelers. CCI is probably legitimizing the cartelization HT, June 29th

17

May the Mindless Mystery fades out