In any economy, for the welfare of consumers competition is very necessary. In absence of competition, enterprise start taking undue advantage of their monopolistic position and start exploiting consumers. Advantages of competition are many. Good examples in India are telecom and Civil aviation. Now we are not to wait for hours for trunk calls by paying hundreds of rupees. Moreover even a middle class person can travel by air. Thanks to Competition and liberalisation.
In India MRTP Act was dealing with the Monopolistic and anti competitive practices in India. But after the Economic Liberalization it started becoming outdated. After some years Competition Act of 2002 was passed. It would replace MRTP Act altogether in two three months. As per Competition Act 2002 there are three types of anti competitive practices:
Anti Competitive agreements.
Abuse of Dominant Position.
Acquisition and merger.
Most dangerous form of anti competitive practice is cartel. Cartel is an association of Producers, traders and service providers etc who amongst themselves enter into an agreement to control prices, production etc.
Now competition commission can :
1.pass Cease & Desist order
2.Can levy penalty
- upto 10% of average turnover during the last three years.
-In case of cartels it can levy penalty upto 10% of Turnover or profit earned during each year of continous of such cartel.
It can also pass a modification order following whcih the agreement no longer remains anti competitive.
But in India there is no provision for imprisonment.
In USA, Competition Authority can pass imprisonment order for up to one year for any anti competitive practice.
Now lets hope that Competition Commission would succeed in moving out anti competitive tendencies.
CAclubindia
