The proposed new Competition Law in India has become mired in controversy due to ignorance, confusion and resistance by the protectionist and right-wing elements. This matter was carried in the Financial Times, while all Indian newspapers carry it regularly. Herewith please find copy of a news item in the FT and a rejoinder letter published by CUTS in the FT for your information. More on it in further bulletins.

ASIA-PACIFIC: Indian cabinet passes competition bill

Financial Times; Jun 27, 2001

The Indian cabinet yesterday approved a controversial bill designed to protect consumer interests from monopolistic companies, in the face of strong opposition from anti-reform elements in the government.

The competition bill will be introduced in parliament at the start of the monsoon session, which begins on July 23.

Arun Jaitley, justice and company affairs minister, said: “There are three main ingredients of the bill – checking the abuse of anti- competition agreements and the abuse of a dominant position, and regulating the procedure related to acquisitions and mergers.”

The approval of the proposed bill is seen as a move forward by the government with its second-generation of economic reforms. The second wave of reforms, following the first begun in 1991, seemed to have stalled after a series of scandals weakened the government’s pro- reform camp headed by Prime Minister Atal Behari Vajpayee.

The bill, if it becomes law, will replace the Monopolies and Restrictive Trade Practices Act of 1969 and will call into being a new regulatory body, the Competition Commission of India (CCI).

“The principal object of the CCI will be to ensure competition,” said Mr Jaitley. All mergers and acquisitions where the assets of one company exceeds Rs10bn (Pounds 150m) or where turnover exceeds Rs30bn will be examined by the regulator.

The bill has been opposed by members of the trade and industry ministry, who claim it favours multinational corporations because, they say, it was framed under pressure from the World Trade Organisation and the European Union.

India has a strong lobby, both in and out of government, led by the rightwing Hindu revivalist groups, which are against liberalisation and the spread of globalisation and which advocates a return to the isolationist principles of swadeshi, or self-reliance.

LETTERS TO THE EDITOR: Ministry and consumers back India’s strong competition law
Financial Times; Jul 9, 2001

From Mr Pradeep S. Mehta.

Sir, Consumers and consumer groups are overjoyed with the new bill on competition brought forth in India (“Indian cabinet passes competition bill”, June 27) as the existing competition law, the monopolies and restrictive trade practices act, is hopeless for the purposes of regulating anti-competitive behaviour of both domestic and foreign enterprises. Indeed there is a strong lobby in India against liberalisation but there is an equally strong lobby for it.

The consumer movement in India has been lobbying for a new competition law ever since the reforms were introduced in 1990. For your correspondent to say that “it has been opposed by members of the trade and industry ministry, who claim it favours multinational corporations because, they say, it was framed under pressure from the World Trade Organisation and European Union”, is absurd for two reasons.

First, the ministry does not have “members” but ministers and civil servants; second, the government of India is in favour of a strong competition law, precisely to check the anti-competitive acts of multinationals and domestic enterprises. Even the prime minister of India has stated so publicly.

Indeed, there is pressure from the European Union and others on issues such as investment rules, on which India has been unable to agree because there is no evidence to show that any multilateral rules will lead to higher flows to developed countries.

On the contrary, India and many multinational corporations are strongly interested in the movement of people, so that labour can move as freely as capital.

Pradeep S. Mehta, Secretary-General, CUTS

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