Indian competition law

volga_volga

Can someone enlighten me on the status of the antitrust/competition law in India? I know there is Monopolies and Restrictive Trade Practics Act 1969, but is it a nominal law or it is being vigorously enforced?

many thanks

v-v

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manojb

Somewhere in between. The MRTP Commission has been big on unfair trade practices, but has not done much (nil) about monopolistic practices. There were plans to scrap the MRTP act and bring a Competition Act, but I don't know what the status is. As things stand now, there is almost no regulatory oversight with respect to mergers, etc. with the MRTPC refusing to act. They seem more concerned with run-of-the-mill stuff like false advertisements, etc.

edit: As mentioned in posts below, public sector undertakings are exempt from the MRTP act. Also, the Supreme Court has ruled that the MRTP commission does not have jurisdiction over unfair or monopolistic trade practices committed outside India evn though they might have a direct effect in India. Thus, the law is different from its US counterpart.

crvlvr

the govt runs the biggest monopolies (Indian Railways, ONGC etc) in india. and since independence, no other private enterprise has come close to becomming a nationwode monopoly.

Digital Drifter

err...which by the way is not an indictment of the Gov. there are certain industries which can /only/ be run by the GOI. water,elec,railways are key. They're basic necessities which left alone to private sector will be asset stripped for profits.

Case in point. Reliance energy in Bombay had only 30 /spare/ transformers for the whole city during the floods. The SEBs restored service faster than the private ones.

look at Amtrak, British rail companies and other privatised rail systems, it's awful from a financial perspective. they depend on G. handouts for survival.

I rather have a monopoly that /I/ can influence and mess with(Gov. controlled) than leave it to a private player.

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GoanCanuck

Agree wholeheartedly.

Nick-H

Oh yes, D D... the lessons of UK privatisation are there for all to see. But isn't India looking to go that way?

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rangss

Amtrak...isn't it a Government one?

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crvlvr

most privatizations of govt properties die a slow death when consumer behavior changes. the railways in most wester countries is a great example. As many people just don't travel as much by rail anymore. Thats the main reason for the their slow demise. A look at the car industry in india should suffice to assess the benefits of competition.

Futhermore, most govt run operations run inefficiently and at loss. Is it right to take tax payer's money and lose it runing a monopoly?
. all of these industries are privatized in the US. While utilities are regulated pby the Public Utilities Commission so that consumers are not gouged.

manojb

We all know what happened with electricity deregulation.

edwardseco

Not really, if you deregulate price but effectively forbid new entry the result is a wonderful bastard child of Republican and Democrat politics. But, it isn't deregulation..

crvlvr

as edwardseco states, the problem was not with the concept of dereuglation, but corrupt politicians. read more about it here - http://www.opensecrets.org/news/electricity.htm

one of the reasons the ex-governer was replaced by the governator in california

Railway

I was once talking to the TC (Indian Railways Ticket Collector), and he said that the defense relies so heavily on railways that privatization is ruled out. He thought, may be one or two private railways may be run, but unlike in U.S the routes will never be privatized.

Digital Drifter

<Rant mode.>

these are the times which make me boil. Before anyone drinks the
privatization kool-aid, one needs to ask what happens when things go
bad. You've already admitted to corrupt politicians and bad
regulation as reasons why things don't work out as they should.

Take your own example; cars in the USA. trains inter/intra city would
have been the best long term alternative for moving large numbers of
people effectively. But the advent of the cars and /deliberate/
strangulation of the rail system[1] has the US more dependant on oil
than ever before.

And the canard of inefficient and lossy operations? If you look at
the private sector Vs Gov. run enterprises, it won't show that much of
a variance; and you forget, the Gov. has a social responsibility in
it's actions(healthcare, leave, etc.; OTOH, you can settle for United
Pension & healthcare loss for the workers). Seen the discounts for
Senior citizens, disbaled people on the Indian Railways rule book?
You think the private sector will do that? Unless mandated by law?
but by your own words corruption will make sure things are always to
the private players advantage.

A private player is there for profit. and that's the only thing it
sees, not your health, your circumstances and certainly not your well
being.

Footnotes:
[1] See theory of GM buying railroad property in the 50s-60s

ilikeu

The Competition Act, 2002 is still to be notified and officers yet to be appointed. The MRTP Commission has lost its venom (counting its last days). As of now, there is no effective machinery to look at competition in India.

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drwho

Nothing wrong with Gov owned companies per say,problem with PSUs in India is the lack of autonomy of how the PSUs should function in a market-economy and the issue about subsidizes to sick PSUs.

One such institution that always have been misused by the politicans for a long time is the Indian Railways and ONGC/IOC.The Railways also has the largest single unionized work force in the nation, giving its workers a great deal of political power which is used to protect the size of the labor force, even when there is little productive work to be done.

Over the years, various classes of passengers, typically commuters and second class inter-city passengers etc. have been able to persuade the Central Government to distort the rate structure in their favor. The stated rationale for the intervention in passenger rates—"the nation needs to control passenger rates in order to control inflation ..."— was as predictable as the result: nothing positive was achieved because the resulting deficits were merely shifted from one agency budget to the other, and the management incentives of the Railway have been badly distorted.

PSUs can compete with private companies if you give them full autonomy .Temasek in Singapore (http://www.temasekholdings.com.sg/)is one example of how the big state owned companies and private companies can work in a market.

But with Gov in India running at 9% fiscal deficit (federal states + centre) running PSUs will be a tough job.All that tax-money for subsidize can go to the social sector (which is in even more bad shape than the PSUs) or servicing debt instead.

It cant be easy in a country where getting votes for election is the most important.