The term “Globalisation” has been interpreted by many as it suits them to advance their arguments. But in the context of our economic activities it mainly connotes freeing the economy from the shackles of self-imposed set of rules and regulations which discouraged competition and created an artificial market and prevented its healthy development. One of the dominant economic themes in the last quarter of the twentieth century has been the process of globalization and a progressive international economic integration of the world economy which aims at expanding international flows of trade, finance, and information in a single integrated global market. Thus the process is characterized by an increasing degree of openness in the attitude of different countries. The conviction in having a globalized market lies in the fact that free flows of trade, finance and information ensure optimum outcomes which are more beneficial for humanity. Now the question that needs to be addressed : Is unbridled competition is at all beneficial for the society?
A free enterprise economy presupposes competition which acts as a driver and is believed to hasten the pace of economic development. The idea of competition has a powerful influence on the way we think about our society, the manner we organize things and the we run our economic and personal lives. Competition is an essential element in the efficient working of markets which encourages all the economic entities to achieve optimum efficiency and ensures that the consumers ultimately benefit by being able to buy the best goods at the best price.
When we discuss the importance and relevance of competition it is imperative to study the whole gamut of it. While the competition of a fair nature is always desirable for the healthy functioning of a market-driven economy . But unfair competition introduces some artificial elements which disturb the normal functioning of a free market. The competition even in the laissez-faire era envisaged some degree of self-regulation. In our times the governments have tried to regulate competition by enacting a set of laws. Unfair competition consists in the acts like price fixing, deliberate manipulation in production to influence the market price of a product, predatory pricing, discriminatory pricing, tie-up sale, resale price maintenance etc which are injurious to the interest to consumers and customers and need to be curbed.
With the coming into being WTO and India becoming a member of it, the government has announced several measures like liberalization of the trade policies, relaxing FDI norms and deregulation in certain spheres which open up the field of competition to the whole world. And the need to control competition or rather unfair competition the government enacted the Competition Act , 2003. Although it not fully notified and the Monopolies Restrictive Trade Practices is still in existence which has been the main legislation to deal with unfair competition.
The objectives of the Competition Act are to prevent anti-competitive practices, to facilitate , promote and sustain competition, to protect the interests of the consumers and ensure freedom of trade. There are provisions to set up a commission to be named as Competition Commission of India which would strive to achieve the objectives as mentioned earlier and prohibit anti-competitive agreements and abuse of dominance. It would also regulate combinations which may take the form of mergers, amalgamations or acquisition through a process of inquiry. The Commission would direct its efforts towards educating the general public on competition issue s and create awareness in this regard.
The agreements which are termed as anti-competitive would come within ambit of inquiry , are agreements which limit production and supply; agreements to allocate markets; agreements to fix price; bid rigging or collusive bidding; conditional purchase or sale ( Tie-up ); exclusive supply and distribution arrangements; resale price maintenance; refusal to deal.
The Commission is also empowered to deal with cases which arise out “dominance”. It is a position of strength which is enjoyed by certain big houses and taking advantage of their dominance they operate independently of the competitive forces and rig the market in their favour. Abuse of dominant position influences the normal function of the competition resulting in unfair competition among firms and exploitation of consumers. Imposing unfair conditions or price, predatory pricing, applying dissimilar conditions to similar transactions, limiting production can be cited as the instances of abuses of dominant position.