HISTORY OF COMPETITION LAW IN INDIA

 The period extending from 1980s onwards was a crucial era for India.
 Since ancient times, India was a thriving economy with a significant presence in the
global market. However, the British colonization had severely affected the economic
capacity of the country.
 One of the main aims of the succeeding democratic governments was to uplift the
economy and aid in amelioration of India’s position in both the national as well as global
market.
 New Economic Policy, 1991 – LPG – thrust India into the limelight – some argue that
India was put into such precarious position prematurely and the consequences of the
same can be seen to affect our economic development even today.
 Nevertheless, India has managed to gain global recognition and has acquired market
dominance in many areas one of the chief contributors being pharmaceuticals, spices
etc.
 Post-independence – policies in India – command and control – government control and
intervention highly prevalent
 Free competition in fetters due to govt. policies and intervention
 1969 – MRTP Act – Monopolies and Restrictive Trade Practices Act – Competition was a
concept considered synonymous with monopolist behaviour and restrictive trade
practices
 Enactment of MRTP Act, 1969 was based on the socio – economic philosophy enshrined
in the Directive Principles of State Policy contained in the Constitution of India.
 1991 – NEP – LPG – free economy – free market principles
 MRTP ACT, 1969
 British regime – no concern regarding concentration of wealth and economic power– no
legislation to this effect – no govt power to control and check the same
 Indian govt. – deeply concerned with the control of concentration of wealth and removal
of economic disparities among people and which in fact is also in congruence with the
goals set out in the Constitution.
 Post independence India – democracy – just and human society – Art. 38, 39 of
Constitution -
 State shall strive to promote the welfare of the people by securing and protecting us
effectively, us it may, a social order in which .- social, economic and political shall inform
all the institutions of the national life, and the State shall in particular, direct its policy
towards securing the following:
 That the ownership and control of material resources of the community are so
distributed as as to sub serve the common good; and
 That the operation of the economic system does not result in the concentration of
wealth and means of production to the common detriment.
 MRTP Act – enacted to give effect to DPSP – curtail instances of concentration of wealth
 Since early 1950s – India – planned economic development
 Industrial Policy Resolution 1948 – after 1956 – emphasized growth, social justice and
self – reliance
 Economic activity – heavy govt. intervention and control
 Govt. licensing policy favoured big businesses
 Lack of proper licensing systems – licensing systems preferred bug business – led to
concentration of wealth
 Industrial licensing acted as a barrier for free entry into the market – emergence of
monopolies – instability in economy – anti competitive practices
 While drafting 3rd five year plan govt decided to review implementation of 1 st five year
plan with respect to increased national income and distribution of income – 3 studies
conducted
 1. Hazari Commission – Dr. R K Hazari – studied industrial licensing procedure under
Industries (Development and Regulation) Act, 1951 - The Committee concluded that
the working of the licensing system had resulted in disproportionate growth of some big
business houses in India. 'This finding was apparently not consistent with the DPSP
 2. Mahalanobis Committee – 1960 – study distribution and levels of income in the
country - noted that big business houses were emerging because of "Planned economy"
model practiced by the government and suggested the need to collect comprehensive
information pertaining to the various aspect of concentration of economic power.
 3. Monopolies Enquiry Commission – 1964 – Mr. Das Gupta – prompted by Mahalanobis
committee – enquire into the extend and effect of concentration of power in pvt hands,
prevalence of MRTP in imp. Sectors except agriculture – report presented in Oct 1965 -
 highlighting therein that there was concentration of economic power in the form of
product wise and industry wise concentration
 Also noted that a few industrial houses were controlling a large nurnber of companies
and that there existed in the country large scale Restrictive and Monopolistic Trade
Practices.
 As a corollary to its finding, the MIC drafted the Monopolies and Restrictive Trade
Practices Bill to facilitate that the operation of economic system doesn't result in the
concentration of economic power to the common detriment. The Bill also provided for
the control of monopolies and prohibition of Monopolistic and Restrictive Trade
practices, which are prejudicial to public interest.
 Bill – amended by Parliamentary Committee – enacted in 1969
 Drew inspiration from DPSP – based on US and UK laws

 The MRTP Act, 1969 underwent amendments in 1974, 1980, 1982, 1984, 1986, 1988
and 1991. The amendments introduced in the year 1982 and 1984 were based on the
recommendations of the Sachar Committee, which was constituted by the Govt. of India
under the Chairmanship of Justice Rajinder Sachar in the year 1977.
 The Sachar Committee pointed out that advertisements and sales promotions having
become well established modes of modern business techniques, representations through
such advertisements to the consumer should not become deceptive. The Committee also
noted that fictitious bargain was another common form of deception and many devices
were used to lure buyers into believing that they were getting something for nothing or
at a nominal value for their money. The Committee recommended that an obligation is
to be cast on the seller to speak the truth when he advertises and also to avoid half
truth, the purpose being preventing false or misleading advertisements.
 The late 1990s was an era of extreme industrialization, with India opening up her
economic market to indulge foreign trade and investment and gaining market influence
in other countries. While so, the MRTP Act was slowly becoming obsolete in many areas.
Increasing pace of economy called in the need for a better and more comprehensive
legislation addressing all aspects of competition. It was understood that simply curbing
the monopolies were not sufficient and that there needs to be a shift of focus to
promote competition instead.
 1999 – a high level committee was appointed under the chairmanship of SVS Raghavan
to study the existing competition structure and to suggest a new competition legislation
in par with international developments to suit the Indian standards.
 Raghavan committee recommended the enactment of a new competition law, namely
the Competition Act and the establishment of a new competition authority, the CCI. It
further recommended the repealing of the MRTP Act and winding up of the commission
along with suggesting further reforms in govt. policies.