Society’s desire to ensure market player(s) do not behave contrary to an economically efficient outcome is the fundamental objective of competition law. Economic efficiency is the objective of all competition regulation and it applies to all industries and markets. The light of competition law is intended to reduce the abuses of corporations holding dominant positions and agreements between corporations that raise prices, lower quality, dampen innovation and reduce consumer choice.
Ignoring the merits or otherwise of the CCI action against the NSE, it is clear that the CCI is not reluctant to apply the Competition Act to well known and established market players. The CCI’s action appears to be a deliberate flexing of the regulator’s muscles despite the inherent complexity in the law. Whether or not the CCI ultimately is successful in its case, my recommendation for Indian corporations is that the wake-up call has been sent out and corporations will need to consider their market presence and their activities on the market to ensure they are not at risk of CCI action. Hence it all will lead to a healthy competition law regime.
Mergers and acquisitions can be a way for corporations to gain market power other than by just organic growth, whether or not this outcome is sought by the parties. At some point this market power may reach a level where the corporation can act contrary to an economically efficient outcome for society. Under the Competition Act the relevant test is whether a transaction is likely to have an appreciable adverse effect on competition. Most transactions would not meet this test but the CCI needs to catch transactions that might do. As matters currently stand, transactions creating non-material market shares have a less onerous form to complete, which is a welcome recent development under the implementing regulations. The CCI would also have to deliver on its promise to clear nonproblematic transactions within the 30 day time period. There may in fact be a chilling effect on competition if transactions were to be abandoned and the resulting benefits to the society lost if the competition laws and CCI were not in tune with the market realities.
Kiran Desai is widely regarded as one of Europe’s leading legal practitioners in the areas of national and international competition law. He also advises clients on EU constitutional and administrative law, regulatory law, trade law and EU government affairs. Kiran has been representing clients on these and related topics for 20 years, practicing first in London and, since 1993, in Brussels. He joined Mayer Brown in 1987 and was named partner some ten years later. In 2006, Kiran was recognized in The Legal Media Group’s Guide to the World’s Leading Competition and Antitrust Lawyers. He is also recognised in the Legal Business Report’s European Legal Experts 2008 in its Belgian EU and Competition lawyers section.
www.grandmasters.in | 8 Years & Counting
www.rcls.in | 8 Years & Counting
www.itlegalsummit.com | 8 Years & Counting
www.bfls.in | 8 Years & Counting
www.maels.in | 8 Years & Counting
www.plcs.co.in | 8 Years & Counting
Copyright © 2020 Lex Witness - India's 1st Magazine on Legal & Corporate Affairs Rights of Admission Reserved
