Final Report - World Trade Organization

In a globalising world it may be a good idea to allow
foreign companies with a clear locus standii to lodge
a complaint. Moreover, in some situations especially
in small economies there may be no domestic players
and only foreign suppliers. For example most of the
goods supplied in Nepal and Bhutan are from India.
Thus, it would be logical to allow Nepalese and
Bhutanese companies and/or consumers to bring
forward complaints before the Indian competition
authority to maintain competition in their markets.
Currently both Nepal and Bhutan do not have a
competiton regime.
Another important aspect of legal provisions that was
highlighted is the issue of sanctions or remedies
suggested in the law. In some countries the levels of
penalty are so low that they cannot act as a deterrent.
For example, in India the competition authority has
power to issue ‘cease and desist’ order only. There
is no risk at all and one can continue rent-seeking
behaviour through anti-competitive practices till the
time it is caught and the CA asks the offending firm
to stop. Similar problems exist in other countries like
Pakistan, Sri Lanka and Kenya where the levels of
fine were fixed long time ago and have not been
revised to take care of inflation, or catch up with the
trends in other countries.
Under the EU and US laws, firms can be fined upto
10% of their annual turnover, when prosecuted for
cartelising. A similar provision has been made in the
new Competition Act, 2002 of India.
6.2 Research & Investigation Capacity
Investigative capacity of the competition authority is
one of the important aspects of competition law
enforcement in a country. However, it seems to be
quite inadequate in most of these countries. It has
both quantitative and qualitative dimensions. The
quantitative inadequacy is quite apparent in most of
these countries. Pakistan has only five professional
staff and India has only 23. While Tanzania has only
one professional staff member, Zambia’s strength of
five maybe quite comfortable considering the small
size of the economy. South Africa and Kenya have
relatively better-sized professional staff. However,
the existence of good strength in professional staff
does not guarantee that the authority has good
investigative capacity.
The professionals in most competition authorities are
not trained well. It is difficult to recruit well-trained
people in these countries and hence the need for
training can hardly be over emphasised. However, it
is sad to note that even the business of recruitment
in the CAs is not taken seriously. The case of a high
ranking investigating officer in the Indian CA is
possibly most illustrative in this regard. The officer
concerned, while talking to one of the researchers
of the 7-Up project, observed, “I was with the
Department of Company Affairs, performing purely
administrative duties, but suddenly I was transferred
here. Neither I had any knowledge of competition
law and experience in investigation, nor I intend to
learn all these.”
It is quite obvious that the issue of building
investigating capability has never been taken seriously
in India. This has led to a situation where the
infamous cement cartel could not be busted despite
repeated complaints and enough prima facie
evidence. The lack of research and investigation
capability became evident also in the ANSAC case.
The case was handled without adequate investigation
and proper argumentation and interpretation of the
legal provisions in the country. The decision of the
MRTPC was mainly based on the decision of the
EU in a similar case involving ANSAC.
The question of extra-territorial jurisdiction that
became important in the case was not given due
consideration by the MRTPC. The Indian law is not
very clear on the issue and hence open to
interpretation. The argument that similar actions are
being taken in other jurisdictions cannot hold much
water. The MRTPC did not do enough homework
and it could not be proved whether the activities that
ANSAC indulged into India, amounted to a restrictive
trade practice (predatory pricing). As a result the
Supreme Court finally went against the order of the
MRTPC in the case causing embarrassment to it.
In Pakistan the Monopoly Control Authority took
initiative to investigate the merger of Glaxo
Laboratories Pakistan Limited and Wellcome
Pakistan Limited. But MCA failed to take any action
and the case was abandoned halfway. The reason
provided by the MCA for this abandonment is that
calculating market shares of individual products with
the identification of their substitutes as required in
the case was a complicated case and the MCA did
not have qualified and trained staff for this exercise.
Similarly, the Kenyan CA found it difficult to identify
the relevant market and dithered into sub-optimal
decisions. For example, SmithKline Beecham Limited
notified the CA about its plan to acquire Sterling
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