Regulation of Anti-Competitive Practices and Trade Secret Laws under Competition Legislation of India: A Paradigmatic Analysis

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1 Regulation of Anti-Competitive Practices and Trade Secret Laws under Competition Legislation of India: A Paradigmatic Analysis By Zafar Mahfooz Nomani and Faizanur Rahman Indian industrialists, fearful of the power of multinational corporations, which have become active in India s economy in very significant numbers since the beginning of the process of liberalization, had also demanded legislative action to ensure a level playing field. It is generally opined that the Competition will bite you if you keep running, and if you stand still, they will swallow you. The competition attracts as magneting factor for economic rivalry between market and customers besides increasing economic efficiency and equally prone to volatility and collusive behaviour. This has underlined the need for competition law to control anti - competitive behaviour. The paper locates anti-competitive practices prevalent under trade secret regime and logically connects to innovation laws and competition legislation of India. This seems germane in the context of globalized, liberalized and competitive oriented Indian economy. The regulation of anti-competitive practices necessitated institutional support and adjudicatory mechanism. Since India responded to globalization, the Monopolies and Restrictive Trade Practices Act, 1969 has become obsolete. In the backdrop of international trade and intellectual property laws shifted focus from curbing monopolies to promoting competition. As a natural corollary of this, the Government decided to enact a renovate innovation and competition law by dealing with unfair competition or antitrust issues The Competition Act, 2002 fulfill the World Trade Organization mandate. The paper locates anti-competitive practices prevalent under trade secret regime and logically connects to innovation laws and competition legislation of India. Thus the paper provides a holistic picture of the evolution and developments of competition law and examines anti-competitive agreements, abuse of dominance, acquisitions, and mergers to have a successful competition regime in India. I. Regulation of Anti-Competitive Practices The business thrives on intense competition and dynamic of market environment. The Liberalization Privatization Globalization (LPG) reduced governmental control and witnessing aggressive competition and economic efficiency. 1 This necessitated rehabilitation of monopolies and restrictive trade practices laws in India and fostered the competition law. India s Competition Act, 2002, enacted to fulfill the twin objectives of regulation of anti-competitive practices and give effect to the World Trade Organization (WTO) Agreements. To appreciate evolution and development of Indian competitive legislation, it is imperative to look in to Monopolies and Restrictive Trade Practices Act, The MRTP Act was framed to deter and also dismantle any concentration of economic power to the common detriment, for the control of monopolies, for the prohibition of monopolistic and restrictive trade practices. The Act provided for the formation of a MRTP Commission. This Commission dealt with the functional aspects of the Act and implemented its provisions. 2 The MRTP Act was periodically amended as and how deemed appropriate. The working of the MRTP Act found inadequate for fostering competition in the market and eliminating anti-competitive practices in national and international trade. To provide impetus to liberal trade, the Government of India in October 1999 appointed a high level committee on Competition Policy and Law popularly known as the Raghavan Committee to advise on the competition law. The MRTP Act was found inadequate to deal with anti-competitive practices in an era of globalization and liberalization. The Raghavan Committee recommended that the MRTP Act is short of addressing competition and anti-competitive practices. The Committee concluded that there was a need for new competition legislation, whereafter the MRTP Act would be repealed and the MRTP Commission to be wound up. The new competition law would not cover unfair practices since such practices came under the purview of the Consumer Protection Act, This altogether led to formation of the Competition Commission of India (CCI) under the Competition law. All monopolistic trade practices and restrictive trade practices cases pending before the MRTP Commission would be taken up by this new Commission. Associate Professor, Department of Law, Aligarh Muslim University, Aligarh (U.P.) <zafarnomani@rediffmail.com> Assistant Professor, Department of Law, Aligarh Muslim University Centre, Murshidabad (WB) E- mail:<faizan.faizylaw@gmail.com>

2 The Competition Act, 2002 was stalled by public interest litigation relating to certain issues concerning the Competition Commission of India 3, challenging the constitutional validity of the Act. The Supreme Court has recommended changes to be incorporated in the Act, before it can be enforceable. In the backdrop of Supreme Court ruling the Government then has proposed to amend the Competition Act, 2002 which inter alia led to bifurcating Competition Commission and a Competition Appellate Tribunal in This is supplemented by Ministry of Corporate Affairs, has issued a notification in 2009, whereby the most controversial the Monopolies and Restrictive Trade Practices Act, 1969 stands repealed and is replaced by the Competition Act, 2002, with effect from September 1, The notification mandated that MRTP Commission will continue to handle all the old cases filed prior to September 1, 2009 for a period of 2 years. It will, however, not entertain any new cases from now onwards. Anti competitive agreements (Section 3) and Abuse of dominant power (Section 4) has already come into force on vides notification dated , while merger control became effective from June 01, In the recent years, the CCI has analyzed and ruled on various provisions of the Act in several orders and in the process, highlighted the lacunae where the Act could possibly be amended. On December 10, 2012, the Indian government introduced the Competition (Amendment) Bill, 2012 in the parliament. This Bill aims to modify certain provisions of the Act as well as insert some new provisions to meet the evolving needs of industry. The Bill still has to be debated and passed by two houses of the parliament before it becomes law. 5 II. Competition Law Framework The legislative history of anticompetitive practices received impetus in the wake of the post liberalized economy. The post WTO resulted in shift from monopolistic and restrictive trade practices regime to highly competitive and liberalized environment. The enactment of Competition Act, 2002 prevented practices having adverse effect on competition to promote and sustain competition in markets. It also protects the interests of consumers and to ensure freedom of trade carried on by other participants in markets. The Act cast duty of the Commission to eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade carried on by other participants, in markets in India. 6 A combined reading of the preamble and Section 18 of the Act envisage Competition Commission of India and the Enforcing tribunal. 7 In the words of the Supreme Court, the objectives of Competition Law appear as under: The main objective of competition law is to promote economic efficiency using competition as one of the means of assisting the creation of market responsive to consumer preferences. The advantages of perfect competition are threefold: allocative efficiency, which ensures the effective allocation of resources, productive efficiency, which ensures that costs of production are kept at a minimum and dynamic efficiency, which promotes innovative practices. 8 The court understanding of three-fold advantage seems progressive in bringing changes in behavioural approach and structural approach followed under previous legal regime. The regulation of Merger and Amalgamation (M&A) has returned to the scope of Indian competition law, although the new law sets rather high turnover thresholds for combinations to fall under its purview. The new law has extraterritorial reach. This provision is based on effects doctrine in preference to conduct doctrine. Thus, actions or practices taking place outside India but having an appreciable adverse effect on competition in the relevant market in India would come within the ambit of the Act. 9 The new competition law, the Competition Act, 2002, is arguably a better piece of legislation as compared to its predecessor, the MRTP Act. The new law provides for a modern framework of competition is typically concerned with three issues: firstly, anti competitive agreements that have the object or effect of preventing, restricting or distorting competition; secondly, abusive behaviour by a monopolistic or dominant firm with significant market power that could be harmful to consumer welfare; and thirdly mergers that would reduce rivalry between firm in the market, again with detrimental consequences for consumer welfare. 10 The extended feature of the system of competition law is the establishment of a competition advocacy role for competition authorities to create public awareness on the benefits of competition and the role of competition law. III. Anti-Competitive Agreements The paradigmatic structure of regulation of anti-competitive practices in India is ingrained under Section 3 of the Act. It prohibits agreements which restrict the production, supply, distribution, acquisition or control of goods or provision of services, which cause or are likely to cause an appreciable adverse effect on competition within India. Further Section 3(2) provides that any agreement in contravention of this provision shall be void.

3 The ambit and need of the provision is to be examined, it sets out the general prohibition of any agreement having an appreciable adverse effect on competition ( AAEC ) within India. Agreements entered into between enterprises or associations of enterprises, or persons or associations of persons or enterprises (including cartels) that directly or indirectly determine purchase or sale prices; limit or control production, supply, markets or technical development, investment or provision of services; directly or indirectly result in bid rigging or collusive bidding; or share the market or source of production by way of allocation of geographical area of markets or the type of goods or services or the number of customers in the market are presumed to have an adverse effect on competition and are considered to be per se illegal. There is a presumption that such agreements would have an appreciable adverse effect on competition: 11 However, such presumption is not applicable in case of any agreement entered into by way of joint ventures if such agreement increases efficiency in production, supply, distribution, storage, acquisition or control of goods or provision of services. Such an agreement is void as a matter of law. The framework of analysis for determining whether an agreement has an AAEC is different for hard core horizontal agreements (between competing firms) and vertical agreements (between firms that are active at different levels of an industry) and other horizontal agreements. The Act states explicitly that egregious horizontal agreements i.e., price-fixing, output restrictions, market-sharing, bid-rigging are presumed to give rise to an AAEC. This approach is in line with the severe anti-cartel enforcement policy of antitrust authorities world-wide. Other categories of horizontal agreements are analyzed under a rule of reason, balancing the benefits arising from the agreements against the restrictions on competition. This applies also to joint ventures that can be proven to be efficiency-enhancing; these will not be presumed to give rise to an AAEC even if involving competitors and hard-core restrictions. Section 3(4) deals with vertical agreement. It lists, in particulars, five categories of vertical agreements, namely, (a) tie-in-agreement; (b) exclusive supply agreement; (c) exclusive distribution agreement; (d) refusal to deal; and (e) resale price maintenance; which would be in contravention of subsection (1) if these cause or are likely to cause appreciable adverse effect on competition in India. The approach for all vertical agreements is uniform: these are to be analyzed under a rule of reason in order to determine whether they give rise to an AAEC. This softer treatment acknowledges that vertical can have beneficial aspects as well, and these need to be weighed against the harmful effects to see if the agreement is on balance anti-competitive. The harmful effect may include restrictions on intra-brand competition, foreclosure of competition, and compartmentalization of markets, and the pro-competitive effects can include efficiency gains, increase in inter-brand competition, and preventing of free-riding. Section 3 (5) provide exemption to the general rule. The prohibition does not apply to reasonable conditions in agreements that aim to protect certain intellectual property rights (for instance patents, copyrights and trademarks). Similarly, although agreements relating to the export of goods are capable of being prohibited under competition laws outside India, they are unimpeachable under the Indian Act. The law will need to develop on how these rules are to operate in practice. The remedies that can be ordered by the Commission in case of contravention of Section 3 (relating to anticompetitive agreements), has been provided in Section 27 of the Act. The Competition Commission of India (CCI) can enjoin an infringing party from continuing or re-entering an illegal agreement and, in addition, impose upon such a party fines not exceeding 10 per cent of the average turnover for the last three financial years. 12 For any firm, such a sanction is considerable. The fact that in addition to firms individuals may also be held liable for competition law violations is significant and expected to incentives compliance. The CCI can impose any other related order or direction. In respect of cartels, sanctions are potentially even more severe: the CCI may impose on each cartel member a penalty for each year of the cartel of up to three times its profits or 10 per cent of its turnover, whichever is higher. 13 Any contravention of the CCI s orders can entail imposition of further penalties, and ultimately, the CCI can file a complaint against contravention of its orders in the criminal court, which, in turn, may order additional fines and even a prison term up to three years. 14 The Act includes a leniency programme, in the case of a cartel. The CCI will operate a leniency programme to firms that disclose evidence and information on cartels to the CCI under this programme can obtain reduced fines or avoid fines altogether 15. It is worth noting that the leniency provision may save the cooperating party from a larger penalty, but it does not protect the party from a claim for compensation for loss or damage

4 suffered by a person on account of the alleged violation by the party, or from any other direction or order of the Commission. 16 IV. Abuse of Dominance The provisions of Competition Act (CA), 2002 dealing with abuse of dominance draws heavily from European Community (EC) jurisprudence on the topic and Article 82 of the EC treaty. Abuse of dominant position by an enterprise or a group is also prohibited under the Act. An enterprise or group must evaluate whether it has a dominant position in the market, and whether it has abused its dominance. The key questions to be addressed are: (i) what is dominant position; and (ii) what type of behavior constitutes abuse of dominant position. Dominant position refers to a position of strength wherein the enterprise has gained such a position in the market by way of big market share or otherwise that he is able to play independent of market forces. It refers to the position where the player can manipulate the markets. The competition act does not prohibit the dominant positions as was the case in MRTP act but it prohibits the abuse of the same. The Act under Section 4 (1) prohibits abuse of dominant position by any enterprise. The term dominant position has been defined in the Explanation (a) below Section 4 (e) which states that the dominant position means a position of strength, enjoyed by an enterprise, in the relevant market in India. Such a position enables a firm to: - (i) operate independently of competitive forces prevailing in the relevant market; or (ii) affect its competitors or consumers or the relevant market in its favour. Dominant position defined in Explanation (a) relates to the relevant market and it is therefore necessary first to determine the relevant market in which the dominant position is alleged. The term relevant market itself has been defined in Section 2 (r) relevant market means the market which may be determined by the Commission with reference to the relevant product market 17 or the relevant geographic market 18 or with reference to both the markets. Once the relevant market has been determined, the next stage would be to inquire whether the enterprise enjoys a dominant position. The Act specifies twelve factors which shall be taken into account by the Commission either individually or cumulatively while determining the question whether an enterprise enjoys a dominant position 19 : Any compliance program must run a diagnostic analysis to determine which of these factors the company may be at risk of infringing at a given point in time. Although the definition of dominance does not correspond word by word 20 with the definition given in the jurisprudence of the European Court of Justice, the CCI is expected to interpret the concept according to this jurisprudence. Dominance is not incriminating on its own: a firm holding such a position must have engaged in conduct characterized as an abuse. In this regard, the Act contains an exhaustive list of potentially prohibited practices. According to the Section 4(2), abuse of dominance by an enterprise or a group has been defined in the Competition Act to include directly or indirectly imposing unfair or discriminatory conditions or prices in purchase or sale of goods or services; restricting or limiting production of goods and services, or the market, or limiting technical or scientific development relating to goods or services to the prejudice of consumers; indulging in practices resulting in denial of market access; or using dominance in one market to move into or protect other market. All the sanctions described in the case of anticompetitive agreements are available to the CCI against abuse of dominance. If the CCI is satisfied that there has been an abuse dominance, it may issue a cease and desist order i.e. it can direct the enterprise to desist from practices which constitute such abuse and impose a penalty of up to 10 percent of the average turnover of last three preceding financial years. 21 In addition, the CCI can impose structural remedies: it can order division of a dominant firm with a view to ensure that the undertaking does not abuse its dominant position. 22 It appears that such an order can be only corrective, not pre-emptive, i.e., the CCI must identify an ongoing abuse before ordering division of a dominant enterprise; however, the direction in which the law will develop has to be watched. V. Regulation of Merger and Amalgamation One of the biggest threat to competitions is the mergers and acquisition activities by which the factors governing the competition in the market are grabbed by a few or a single enterprise. But not all the combinations (mergers & acquisitions) are within the purview of the Act, it specifies a limit beyond which all

5 the desired combinations need to be approved by the competition commission to see the light of the day. The Act regulates the various forms of business combinations and not prohibits their formation. Under the Act, no person or enterprise shall enter into a combination, in the form of an acquisition, merger or amalgamation, which causes or is likely to cause an appreciable adverse effect on competition in the relevant market and such a combination shall be void. 23 But, all combinations do not call for scrutiny unless the resulting combination exceeds the threshold limits in terms of assets or turnover as specified by the Competition Commission of India. The Commission while regulating a combination shall consider the following factors 24 : (i) actual and potential import competition, (ii) barriers to entry, (iii) the degree of market concentration; (iv) degree of countervailing power in the market; (v) the likelihood that the combination would allow the parties to significantly and sustainably increase prices or profit margins, (vi) the extent of likely effective competition (vii) the extent to which substitutes are available or likely to be available in the market; (viii) the market share, in the relevant market, of the persons or enterprises in a combination, individually and as a combination (ix) the likelihood that the combination would result in the removal of a vigorous and effective competitor in the market; (x) the nature and extent of vertical integration in the market; The analysis also includes consideration of whether one of the firms in the combination is a failing business and the nature and extent of innovation. In addition, the Commission must consider the possible benefits that might flow from the combination that would contribute to economic development and whether the benefits outweigh the adverse impact of the combination, if any. These factors are an indication of a rule of reason approach. 25 The threshold limits varies according to whether the combination is by an enterprise or by a group 26, and also varies according to whether enterprise or group has assets or turnover only in India or has these worldwide. The threshold limits have been prescribed for the purpose of combination under the Competition Act. 27 Such threshold limits contemplates an essential Indian nexus. The Act sets a threshold below which a merger, acquisition or acquiring of control is not regarded as a combination and is therefore outside the merger regime of the Act The threshold is fairly high and is defined in terms of assets or turnover. The threshold varies according to whether the combination is by an enterprise or by a group, and also varies according to whether enterprise or group has assets or turnover only in India or has these worldwide. Assets or Turnover is displayed in the table given below: Operations No Group Group India Total value of assets more than Rs.1000/- crores or turnover of Rs.3000/- crores Total value of assets of more than Rs.4000/- crores or turnover more than Rs.12000/- crores. India Outside India or Aggregate value of assets more than $500 mn (including at least in India Rs.500 cr.) Or turnover more than $1500mn (including at least turnover of Rs.1500 cr. in India.) Aggregate value of assets of more than $2 bn (including at least assets of Rs.500 cr. in India) or turnover of $6 bn (including Rs.1500 cr. turnover in India). In order to proceed with a combination, prior approval of the CCI is required. This is a pre-emptive measure so that combination does not end up in a potentially abusive position because subsequent unbundling can be difficult and costly. Such pre-emptive measure avoids any uncertainty pertaining to validity of a combination. But such control over merger or acquisition leads to delays, especially as the approval process is time consuming. The procedures and time limits for a Commission inquiry into a combination are set forth in detail in the Act under Section 29 & 31. Thus, the Act does not seek to eliminate combinations but only aims to eliminate their harmful effects. VI. Articulation of Competition Advocacy In a country where the competition culture is relatively weak, competition advocacy acquires a great significance in creating general awareness about the benefits of competition and the role of competition law, as well as in influencing government policy in a more pro competition direction. In line with the High Level Committee s recommendation, the Act extends the mandate of the Competition Commission of India beyond

6 merely enforcing the law. The Regulatory Authority under the Act, namely, Competition Commission of India (CCI), in terms of the advocacy provisions in the Act, is enabled to participate in the formulation of the country s economic policies and to participate in the reviewing of laws related to competition at the instance of the Central Government. Section 49 of the Act provides that in formulating a policy on competition (including review of laws related to competition), the government may make a reference to the Commission for its opinion, though the opinion is not binding on government. Further, the Act requires that the Commission shall take suitable measures, as may be prescribed, for the promotion of competition advocacy, creating awareness and imparting training about the competition issues. 28 Thus, Competition advocacy has created a culture of competition. There are many possible valuable roles for competition advocacy, depending on a country s legal and economic circumstances. The institutional framework is the key to successful implementation of any law and competition law is not an exception to the general rule. 29 In India, the Act has basically created three enforcement institutions namely: (1) Competition Commission, (2) Director General and (3) Competition Appellate Tribunal. The details of institutional framework, how the CCI is inter dependent on a host of other institutions and what is imperative of all to do, in order to achieve the intent and purpose of law, is narrated herein below:- VII. Administrative Mechanism & Structure The administrative structure for the promotion of competition is augured through Competition Commission of India. The Commission was established on 14 th October, 2003 and started accepting cases under the Act after 1 st September, 2009, is an expert body which functions as a regulator for preventing anti-competitive practices in the country and also has advisory and advocacy functions. 30 CCI is a quasi-judicial and corporate body, having perpetual succession and a common seal with power to acquire, hold and dispose of property, both movable and immovable and can contract in its own name 31. In the discharge of its functions, the CCI shall be guided by the principles of natural justice, and has the power to regulate its own procedures. The commission consists of a chairperson and not less than two and not more than six other members appointed by central government. 32 The Commission is vested with both regulatory and quasi-judicial powers to eliminate practices having AAE on competition, promote and sustain Competition, protect interests of consumers, and facilitate competition advocacy and spread awareness. The Commission has suo moto power to enquire whether any anti-competitive agreement or abuse of dominant position may cause or has caused an appreciable adverse effect on competition. The CCI may, if it is satisfied that a prima facie case exists, direct that an investigation into any alleged anti-competitive conduct be caused, either on its own on the basis of information and knowledge in its possession, or on receipt of a complaint from any person 33, or on receipt of a reference by the Central or State government or a Statutory authority. 34 With these powers, the Commission would not be hamstrung to act against cases of infringing conduct if instances come to its attention through any source, formal or informal. Further, the CCI can intervene effectively as it can direct any enterprise or their association to discontinue their anti-competitive conduct and can demand the production of specific documents and information from an enterprise. 35 Thus, the CCI can make the cost of infraction high to deter such illegal conduct. The CCI may, if it finds after enquiry that an agreement is anti-competitive, or that its action constitutes abuse of dominance, pass an order directing the offender to discontinue such agreement or abuse of dominant position. It may impose such penalty as it may deem fit, which shall not exceed 10% of the average of the turnover for the last three preceding financial years, upon each of such persons or enterprises that are parties to such agreements or abuse. If such an agreement has been entered into by a Cartel, the CCI may impose upon the offending party a penalty up to three times its profits for each year of the life of such agreement or 10% of its turnover for each year of the life of the agreement, whichever is higher. The Commission can also issue directions that such agreement shall be modified to the extent and in such manner as may be specified. It may also issue directions to the concerned parties for payment of costs and for obeying the orders as the Commission may pass. The Commission may also pass such other orders or issue such directions as it may deem fit. The mandate of the Competition Commission extends beyond the boundaries of India. It has been explicitly provided that acts taking place outside India but having effect on competition in India also fall within the ambit of the Commission. 36 The Commission has been vested with the powers of a civil court while trying a suit, including the power to summon and examine any person on oath, requiring the discovery and production of documents and receiving evidence on affidavits. 37 To complement and supplement the domain of the CCI in

7 determining and eliminating anti competitive practices, the Act specifically prohibits civil courts to entertain any suit or proceeding which the Commission is empowered to determine. 38 The jurisdiction of Competition Act extends to all the sectors of the economy and sector regulated by sector specific laws. Hence within the purview of the Act the CCI can make reference to a statutory authority 39 or receive reference from statutory authority. Further where in the course of a proceeding before any statutory authority an issue is raised by any party that any decision which such statutory authority has taken or propose to take, is or would be, contrary to any of the provisions of this Act, then such statutory authority can make a reference in respect of such issue to the commission. 40 The statutory authority can also make the reference suo motu to Commission. 41 The CCI can pass final order as well as interim order. 42 However it cannot review its own order it can only rectify it. 43 VIII. Resolution of Competition Dispute The resolution of competition dispute is administered through appointment and function of directorate of competition and appellate tribunal. The director general (DG) is an investigation arm of the CCI in conducting inquiry into contravention of any provisions of the Act. This act as watch dog and perform other functions as provided by or under the Act. 44 The director shall, when so directed by the commission, assist the Commission investigating into any contravention of the provisions of this Act or any rules or regulations made there under. Although, the CCI is not bound by the findings in the report of the DG, it is obligatory for the CCI to refer the matter for investigation to the DG and seek an investigation report once it forms a prima facie opinion that a case of infringement of Section 3 or 4 has occurred. 45 In case of enquiries into combination, the report from DG may be called upon by the CCI. 46 The DG can also investigate the conduct of related entities, of course, with the authorization from the CCI. The Additional, joint, Deputy and Assistant Director General or such officers or other employees so appointed shall exercise his powers and discharge his functions, subject to the supervision and direction of the Director General. 47 The Director-General shall have all powers as are conferred upon the commission under section 36(2). 48 The Competition Appellate Tribunal (CAT) as an appellate mechanism hears all appeals against the order of the CCI. It is a quasi judicial body and consists of Chairperson and not more than two other members appointed by Central Government. 49 The CAT shall not be bound by the Code of Civil Procedure, 1908 but by the principles of natural justice and any rules made by the Central Government. However, CAT will have all the powers of a civil court. The proceedings before CAT are deemed to be judicial proceedings. 50 The appeal against the order of the CCI can be filed before CAT and provisions with respect to the same are provided in Sections 53A to 53U. The CAT will hear and dispose of appeals against any direction issued or decision made or order passed by the CCI 51 and adjudicate claims for compensation and pass orders for recovery of compensation. 52 The appeal can be filed by Central Government, State Government or enterprise or any person who is aggrieved by decision, direction or order of CCI. Appeal should be filed within 60 days. The tribunal will give opportunity of hearing to other party and then will pass the order. Copy of order will be sent to the parties to appeal and CCI. 53 CAT can review its own decisions. In case of contraventions of CATS order without reasonable grounds, punishment of imprisonment up to 3 yrs and penalty up to Rs. 1 crore can be imposed by Chief Metropolitan Magistrate (CMM), Delhi. 54 Every order made by the CAT shall be enforced in the same manner as if it were a decree of a court in a suit. 55 Appeal against CATS order can be made to Supreme Court within 60 days from the date of receipt of an order of the CAT. 56 IX. Trade Secrets and Competition Laws IPRs are considered mother of enterprise but they dampen competition. The amalgamation of Trade secret and competition law took new turn in the new regime of IPR. The Trade Related Aspect of Intellectual Property (TRIPS) Agreement in Article 40 deplored the practices and conditions prevalent in the licensing of IPRs which restrain competition, an adverse effect on the trade and dissemination of technology. The member countries are authorized by article 40(2) to prevent or control the practices or conditions that may constitute an abuse of the IPRs having an adverse effect on competitors in the relevant market. Each member is entitled to specify practices or conditions associated with IP licensing which may, in particular cases, constitutes abuse of IPRs. 57 When IP right holders fix unreasonably high prices compared to the cost of production resulting into large monopoly profits, necessarily it is a case of unjust enrichment; and an abuse of IPR. There is a carte blanche for the government to make any legislation necessary to prevent the abuse of IPRs through suitable change in Trade secret and competition law.

8 Article 8(2) of TRIPSAgreement, 1994 is more explicit in recognizing competition practices which unreasonably restrain trade. The provision clearly establishes that the TRIPS do not interfere with measures taken by Government against anti-competitive, dominant or monopolistic conduct of right-holders. The Competition Act, 2002 directs all enterprises not to enter into an agreement which causes or is likely to cause an appreciable adverse effect on competition within India. 58 The agreement may be with regard to production, supply, distribution, storage, acquisition or control of goods or provision of services. All such anti-competitive agreements are declared to be void. 59 It also lays down the agreements which are presumed to have an appreciable adverse effect on competition. The law gives limited exemption 60 to IP right holders from the provisions of Section 3, to take all or any steps to vindicate any of the IP rights granted through six named enactments. It permits IP right holders a) to engage in a conduct including entering into anti-competitive agreements to restrain any infringement of IP rights, or b) to impose reasonable conditions as may be necessary for upkeep of the rights which are conferred on the IP right- holder, under six statutes named therein. The saving clause says that nothing in this section shall restrict the right of any person to restrain any infringement of, or to impose reasonable conditions, as may be necessary for protecting any of his rights which have been or may be conferred upon him under Copyright Act, 1957, Patent Act, 1970, Trade and Merchandise Marks Act, 1958 or now the Trade Marks Act, 1999, Geographical Indications of Goods (Registration and Protection) Act, 1999, Designs Act, 2000, Semi-conductor Integrated Circuits Layout- Design Act, In the conclusion it lays down that the right of any person to export goods from India to the extent to which the agreement relates exclusively to the production, supply, or control of goods or provision of services for such export. In this context Raghavan Committee seems relevant, which stated as follows: All forms of IP have the potential to raise competition policy/law problems. IP provides exclusive rights to the holders to perform a productive or commercial activity, but this does not include the right to exert restrictive or monopoly power in the market or society But at the same time there is a need to curb and prevent anti-competition behaviour that may surface in the exercise of IPRs. The dichotomy between IPRs and Competition law need to be appreciated in the context of anti-competitive trade practices and consumer interest. The exercise of IPRs has to be in a manner which promotes competition as also upholds reward in the form of IPR for human creativity, effort and investment in the subject matter of IPRs. The exclusive rights granted under IPRs should not be allowed to become tools to justify anti-competition behaviour or trade practices that are clearly detrimental to public interest. Therefore, the CA, 2002 has to fulfill the aspirations of consumers from operations of anti-monopoly legislation or curbing unjust enrichment or curbing predatory practices that are particularly allowed to the governments against IP right-holders. 61 X. Conclusion and Summation A perusal of Monopolies and Restrictive Trade Practices Act, 1969 and Competition Act, 2002 has compels a complete overhaul to marks a landmark shift in approach towards regulating business in India at par with UK, USA and EU in free market. The competition law regime promoted competition, prevented anti competition practices and protected consumer interest by ensuring freedom of trade. The enactment of the Competition Act is a commendable step in fostering open market economy, liberalization and bringing paradigm shift in policy and law. However, the reform in competition laws on anti-competitive business practices seems to be an onerous. The Competition administration mechanism from the perspective of free market functioning in India resulted in a stagnation of the corporate legal framework. Thus the reforms need to be undertaken to boost lucrative market to foreign enterprises and the Competition Act would help in reinforcing that belief. The competition legislations should provide for good corporate governance, governmental freedom, consumer and public interest to meet the needs of the global business community. Endnote

9 1 Poorvi & Madhooja, Competition Law and Intellectual Property Laws, available at < 2 Amitabh Kumar, Evolution of Competition law in India, in Vinod Dhall (ed.), Competition Law Today (New Delhi, Oxford University Press, 2007), pp Brahm Dutt v. Union of India MANU/SC/0054/2005: AIR 2005 SC Competition (Amendment) Act, Amendment in Section 66 and Repeal of Ordinance 6 of 2009 [Act no. 39 of 2009] 5 Dhruv Suri, Proposed amendments in the Competition Act: A positive step forward? E-Newsline January, 2013 available at < 6 Section 18 of Competition Act, Vinod Dhall, The Indian Competition Act, 2002, in Competition Law Today (New Delhi, Oxford University Press, 2007), pp Judgment in Civil Appeal No of 2010 pronounced on 9th September, Pradeep S Mehta and Manish Agarwal, Time for a Functional Competition Policy and Law in India : Mainstreaming competition principles into policy and legal framework is pro-development, CUTS International 2006, available at 10 Richard Whish, Control of Cartels and other Anti-Competitive Agreements, in Vinod Dhall (ed.), Competition Law Today, (New Delhi, Oxford University Press, 2007), p Section 3 (3) of the Competition Act, Section 27 (a) & (b) of the Competition Act, Proviso to Section 27 (b) of the Competition Act, Section 42 (2) & (3) of the Competition Act, Section 46 of the Competition Act, < 17 Section 2 (t) of the Competition Act, 2002 defined relevant product market as a market comprising all those products or services which are regarded as interchangeable or substitutable by the consumer, by reason of characteristics of the products or services, their prices and intended use 18 Section 2 (s) of the Competition Act, 2002 states that the relevant geographic market means a market comprising the area in which the conditions of competition for supply of goods or provision of services or demand of goods or services are distinctly homogenous and can be distinguished from the conditions prevailing in the neighbouring areas. 19 Section 19 (4) of the Competition Act, 2002 states factors namely, : (i) market share of the enterprise, size and resources of the enterprise; (ii) size and importance of the competitors, (iii) economic power of the enterprise, including commercial advantages over competitors; (iv) vertical integration of the enterprises or the sale or service network of such enterprises; (v) dependence of consumers on the enterprise; (vi) monopoly or dominant position whether acquired as a result of any statute or by virtue of being a Government company or a public sector undertaking or otherwise; (vii) entry barriers, including barriers such as regulatory barriers, financial risk, high capital cost of entry, marketing entry barriers, technical entry barriers, economies of scale, high cost of substitutable goods or service for consumers; (viii) countervailing buying power; (ix) market structure, and size of market; (x) social obligations and social costs; (xi) relative advantage, by way of the contribution to the economic development, by the enterprise enjoying a dominant position having or likely to have an appreciable adverse effect on competition; and (xii) any other factor which the Commission may consider relevant. 20 Within the terms of this prohibition, an enterprise is regarded as dominant when it enjoys a position of strength enabling it either to operate independently of the competitive pressure existing on the relevant market, or to affect its competitors or consumers in its favour. 21 Section 27 (a) (b) of the Competition Act, Section 28 (1) of the Competition Act, Section 6 (1) of the Competition Act, Section 20 (4) of the Competition Act, Vinod Dhall, Essays on Competition Law and Policy Available at < 26 Group means two or more enterprises which, directly or indirectly, are in position to exercise 26% or more of voting rights in other enterprise or appoint more than 50% of members of the board of directors in the other enterprise control the management or affairs of the other enterprise (Explanation (b) to S 5) 27 Section 5 of the Competition Act, Section 49 (3) of the Competition Act, G.R. Bhatia, Institutional Framework under the Indian Competition Act, 2002, available at 30 Rini Mitra, Enforcement of Competition Law in India: A Comparative Analysis with U.K & EU, available at < &-eu html> 31 Section 7 (2) of the Competition Act, Section 8 (1) of the Competition Act, 2002

10 33 Person here includes an individual, Hindu Undivided Family (HUF), company, firm, association of persons (AOP), body of individuals (BOI), statutory corporation, statutory authority, artificial juridical person, local authority and body incorporated outside India. A consumer is also a person who buys for personal use or for other purposes. ( Section 2 (l) of the Competition Act ) 34 Section 19 (1) of the Competition Act 35 Ravi Singhania and Sunil Kumar Competition Compliance Programme in India available at < 36 Section 32 of the Competition Act, Section 36 (2) of the Competition Act, Section 61 of the Competition Act, Section 21A of the Competition Act, Section 21 (1) of the Competition Act, Section 21 (2) Proviso of the Competition Act, Section 33 of the Competition Act, Section 38 of the Competition Act, Section 16 (1) of the Competition Act, Section 26 (1) of the Competition Act, Section 29 1 (A) of the Competition Act, Section 16 (2) of the Competition Act, Section 41 (2) of the Competition Act, Section 53C of the Competition Act, Section 53O of the Competition Act, Sub-sections (2) and (6) of Section 26, Section 27, Section 28, Section 31, Section 32, Section 33, Section 38, Section 39, Section 43, Section 43a, Section 44, Section 45 Or Section 46 of the Act, Section 42A or 52Q (2) of the Competition Act, Section 53B of the Competition Act, Section 53Q of the Competition Act, Section 53P of the Competition Act, Section 53T of the Competition Act, Ashwani Kr Bansal, Economic vs. Morality of IPRs: Strengthen Competition Act, 2002, in Journal of Constitutional and Parliamentary Studies (Vol.40, July Dec 2006), pp Section 3 (1) of CA, Section 3 (2) of CA, Section 3 (5) of CA, See Article 8 (2) & 40, TRIPS Agreement, 1994