People of the same trade seldom meet together, even for merriment and diversion but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices observed ADAM SMITH in the WEALTH OF NATIONS in 1776.
As markets become more international and the pace of technological change quickens, because of liberalization and globalization the challenges become more complex. Sound economic analysis is necessary to take the right cases and the right decisions. It is crystal clear that sound economic analysis is central to competition policy. It is equally true that competition policy shapes fundamental economic decisions on investment, on consolidation and most significantly on pricing. Understanding the laws that affect you is an important part of running successful business. In plain simple terms, competition law aims to promote healthy competition; it bans competitive agreements, such as agreements to fix prices and makes it illegal to abuse a dominant market position and to protect interests of consumers. It is of significance that though the Competition Act, 2002, provides definition of various expressions, it does not define “competition”. The preamble of the Act states that it is enacted to prevent practices having adverse effect on competition, to promote and sustain competitions in markets.
The Word Bank, in 1990 adopted the following definition of Competition.
“Competition is a situation in a market in which firms or sellers independently strive for the buyers’ patronage in order to achieve a particular business objective for example, profits, sales or market share.”
In 1980, less than 40 countries had Competition Laws. However today more than 100 countries have competition laws and the number is increasing.
In the celebrated anti-trust case, United States v. Topco Associates. Inc. 405 US 596, it was held that “Anti-trust Laws are the Magna Carta of free enterprise. They are as important to the preservation of economic freedom and our free enterprises system as the Bill of Rights is to the protection of our fundamental personal freedoms”.
In the pursuit of globalization, India has opened its economy primarily removing controls and resorting to liberalization. Consequently, the market in India should be geared to face competition from within the country and outside to take care of the needs of the trading, industry and business associations. When the Central Government decided to enact a law on competition, the need to have a strong legal system was highlighted and it was stated that a world class legal system is absolutely essential to support an economy that aims to be world class. India needs to take a hard look at its commercial laws and the system of dispensing justice in commercial matters. Recently the idea of having courts dealing with commercial disputes expeditiously was discussed. With this idea in the background, the Competition Act, 2002 came to be enacted.
The Competition Act contains an interesting provision called “Competition Advocacy” (Section 49). It was felt necessary that all the stakeholders dealing with Competition laws should be made aware of the scope and ambit of the said laws. The Bar plays an important role in the administration of laws. Its role is more profound so far as the Competition laws are concerned. Therefore the International Conference being organized by the Competition Laws Bar Association is a step in the right direction.