LLM Notes: Exclusion of Public Utilities from MRTP Act

 Legal Provision and Scope

• Section 3 of the Monopolies and Restrictive Trade Practices (MRTP) Act, 1969, excluded public utilities such as government undertakings, government companies, and statutory corporations from its regulatory framework.

• This exemption was intended to exclude sectors like electricity, water, telecommunications, and railways, deemed essential services under state control.

Rationale for Exclusion

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LLM Notes: Exclusion of Public Utilities from the MRTP Act under Indian Law

 Introduction

The Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act) represented India's first comprehensive competition law framework, yet it contained significant exclusions for public utilities and government enterprises. These exclusions reflected the prevailing economic philosophy of post-independence India, where state control over commanding heights of the economy was considered essential for achieving developmental objectives.

Legal Framework of Exclusions under MRTP Act

Section 3: Core Exemption Provisions

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LLM Notes: From Exemption to Inclusion: How the Competition Act Transformed the Legal Framework for Public Utilities in India

 The transformation of India's competition law landscape represents one of the most significant regulatory shifts in the country's economic history . At the heart of this transformation lies a fundamental change in how public utilities and government enterprises are treated under competition law . While the Monopolies and Restrictive Trade Practices (MRTP) Act of 1969 largely exempted public utilities from its purview, the Competition Act of 2002 brought about a paradigmatic shift by subjecting these entities to competition law scrutiny . This article examines this crucial transition and its far-reaching implications for India's public utilities sector.

The MRTP Act Regime (1969-2009): A Shield for Public Utilities

Broad Exemptions Under Section 3

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LLM Notes: From MRTP Exemptions to Competition Act Coverage: The Paradigm Shift in Indian Public Utility Regulation

 The Monopolistic and Restrictive Trade Practices (MRTP) Act of 1969 contained several provisions relevant to public utilities, though it largely exempted government-controlled enterprises from its scope while establishing frameworks for essential services.

Key Provisions of MRTP Act

The MRTP Act was enacted to ensure that the operation of the economic system does not result in concentration of economic power in the hands of few, provide control of monopolies, and prohibit monopolistic and restrictive trade practices. The Act addressed three main types of practices:

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When parties can approach court even in presence of arbitration agreement?

Arbitration is increasing method of dispute resolution. With increasing number of cross border transactions and international trade contracts, arbitrability of arbitration agreements now holds a prominent place in resolution of international and domestic arbitrations.

In India, traditionally the parties move to court when the the dispute relating to an arbitration agreement arises

The Golden Rule is that if the dispute is covered by an Arbitration agreement, the said dispute should be resolved by Arbitration. However, there are following exceptions to this Rule. 
 1. If a party institute an action in the Court in respect of a dispute, which is covered by an arbitration agreement, the Court may continue with the said action if the other party doesn't object to the Court's jurisdiction.
2. If there is an immediate urgency, the Court may hear the case. (Textile v Hydro Industries)
3. If the dispute is in respect of Oppression and Mismanagement under the Company law, the Court may hear the action.
4. The Court may hear disputes in respect of unjust enrichment and compensation for improvements.
5. The Court may also hear disputes which are not covered under the Agreement and the Arbitration Clause.
6. The Court may hear disputes if non parties to arbitration agreement are involved.
7. The Court should hear dispute if dispute arising out of arbitration agreement in criminal in nature.
8. The Court should hear if dispute is relating to status such as divorce, judicial separation, restitution of conjugal rights, child custody etc.
9. The Court should hear dispute if it is relating to competition law, insolvency, winding up, bribery, corruption
10. The Court should hear dispute if it is relating to   guardianship matters.
11. The Court should hear dispute if it is relating to testamentary matters.
12. The Court should hear dispute if it is disputes relating to trust.

Points 1-5 have been contributed by Mr. Yasith Hirimburegama, Lawyer based in Sri Lanka. 

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How to determine relevant market for purpose of competition Act?

 The word 'market' used therein has reference to 'relevant market'.
As per sub-section (5) of Section 19, such relevant market can be
relevant geographic market or relevant product market. The
factors which are to be kept in mind while determining the
relevant geographic market are stipulated in sub-section (6) of
Section 19 and the factors which need to be considered while
determining the relevant product market are prescribed in
sub-section (7) of Section 19. These two sub-sections read as
under:
“(6) The Commission shall, while determining the
“relevant geographic market', have due regard to
all or any of the following factors, namely:-
(a) regulatory trade barriers;
(b) local specification requirements;
(c) national procurement policies;
(d) adequate distribution facilities;
(e) transport costs;
(f) language;
(g) consumer preferences;
(h) need for secure or regular supplies or
rapid after-sales services.

(7) The Commission shall, while determining the
“relevant product market”, have due regard to all or
any of the following factors, namely:-
(a) physical characteristics or end-use of
goods;
(b) price of goods or service;
(c) consumer preferences;
(d) exclusion of in-house production;
(e) existence of specialised producers;
(f) classification of industrial products.”
It is for this reason, the first and foremost aspect that needs
determination is: 'What is the relevant market in which
competition is effected?”
31) Market definition is a tool to identify and define the boundaries of
competition between firms. It serves to establish the framework
within which competition policy is applied by the Commission.
The main purpose of market definition is to identify in a
systematic way the competitive constraints that the undertakings
involved face. The objective of defining a market in both its
product and geographic dimension is to identify those actual
competitors of the undertakings involved that are capable of
constraining those undertakings behaviour and of preventing

them from behaving independently of effective competitive
pressure.
Therefore, the purpose of defining the 'relevant market' is to
assess with identifying in a systematic way the competitive
constraints that undertakings face when operating in a market.
This is the case in particular for determining if undertakings are
competitors or potential competitors and when assessing the
anti-competitive effects of conduct in a market. The concept of
relevant market implies that there could be an effective
competition between the products which form part of it and this
presupposes that there is a sufficient degree of interchangeability
between all the products forming part of the same market insofar
as specific use of such product is concerned.
32) While identifying the relevant market in a given case, the CCI is
required to look at evidence that is available and relevant to the
case at hand. The CCI has to define the boundaries of the
relevant market as precisely as required by the circumstances of
the case. Where appropriate, it may conduct its competition
assessment on the basis of alternative market definitions. Where
it is apparent that the investigated conduct is unlikely to have an
adverse effect on competition or that the undertaking under

investigation does not possess a substantial degree of market
power on the basis of any reasonable market definition, the
question of the most appropriate market definition can even be
left open.
33) The relevant market within which to analyse market power or
assess a given competition concern has both a product
dimension and a geographic dimension. In this context, the
relevant product market comprises all those products which are
considered interchangeable or substitutable by buyers because of
the products' characteristics, prices and intended use. The
relevant geographic market comprises all those regions or areas
where buyers would be able or willing to find substitutes for the
products in question. The relevant product and geographic
market for a particular product may vary depending on the nature
of the buyers and suppliers concerned by the conduct under
examination and their position in the supply chain. For example,
if the questionable conduct is concerned at the wholesale level,
the relevant market has to be defined from the perspective of the
wholesale buyers. On the other hand, if the concern is to
examine the conduct at the retail level, the relevant market needs
to be defined from the perspective of buyers of retail products.

34) It is to be borne in mind that the process of defining the relevant
market starts by looking into a relatively narrow potential product
market definition. The potential product market is then expanded
to include those substituted products to which buyers would turn
in the face of a price increase above the competitive price.
Likewise, the relevant geographic market can be defined using
the same general process as that used to define the relevant
product market.
35) Bearing in mind the aforesaid considerations, we concur with the
conclusion of the Tribunal. It is the notion of 'power over the
market' which is the key to analysing many competitive issues.
Therefore, it becomes necessary to understand what is meant by
the relevant market. This concept is an economic one.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 6691 OF 2014
COMPETITION COMMISSION OF INDIA 
V
CO-ORDINATION COMMITTEE OF
ARTISTS AND TECHNICIANS OF W.B.
FILM AND TELEVISION AND ORS.
Dated:MARCH 07, 2017.
Citation:AIR 2017 SC 1449

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