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Towards a Functional National Competition Policy for India

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Competition policy is an integral part of economic policy. The main objective of competition policy and law is to preserve and promote competition as a means to ensure efficient allocation of resources in an economy, resulting in the best possible choice of quality, the lowest prices and adequate supplies to consumers. To put it differently, ensuring competition is just a means to achieve the above-stated objectives.

There are complex inter-relationships between competition and other public policies. This factor has a direct bearing on the extent to which competition policy objectives can be pursued without being constrained by or conflicting with other public policy objectives. Thus, even in the absence of a competition law or a stated competition policy, many of the related concerns can be addressed, at least partially, if there are other policies, which are favourable to competition.

Different government policies such as trade policy, industrial policy, regulatory reforms, etc. may encourage or adversely affect competition and hence consumer welfare, particularly, in the context of the present globalising environment. In addition sector-specific policies on health, electricity, telecommunications, financial services etc., also affect competition in the economy. Thus, although a competition law may be quite narrow in its scope, competition policy is much more broad and comprehensive in its scope and tries to bring harmony in all the Government policies that may encourage or adversely affect competition and consumer welfare.

India does not have a competition policy but only a competition law, first in the form of the Monopolies and Restrictive Trade Practices (MRTP) Act, 1969 and now the recently enacted Competition Act, 2002. Concerns have been expressed that a lack of awareness about competition policy, and the nature and extent of prevalence of different types of anti-competitive practices in India will pose a major challenge.

Unfortunately, there has not been much research on competition issues in India. In the past, efforts have been made by the Indian Institute of Management, Ahmedabad and CUTS, Jaipur. While the IIMA study did not go beyond policy level, a study by CUTS done under the 7-Up Project [1] revealed a crying need to do deeper research in some sectors, which display typically anti-competitive behaviour: cement; trucking; services such as cable TV etc.


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