Every nation should properly control the competition of the market since it could not be resulted

into an unfair competition. A nation can control over the unfair conditions of the market only if it has
a stringent Competition law. But a stringent competition law of a country should also promote the
fair competition of the market which would be helpful for every market member to endure in the
market.

The Sherman Act of the US 1890, Competition Law of European Community and the Competition Act
1998 of the UK are some important documents of the global competition law. The history of the
competition law started from the evolution of the Sherman Act in US. So it was the first act which
regulated the competition of market. The competition act of the European Community also plays a
significant role in the global market as it organizes the competition of the entire European Market.
The Competition Act of the UK is also an important competition legislation which provides an
effective machinery to regulate the competition.

So these all the legislation creates a major part of the international competition environment. This
particular paper endeavours to analyse these particular laws in respect of some particular principle
of the competition law.

COMPETITION LAW IN UK:

The domestic competition law in the U.K. has undergone significant changes after passing of the
Competition Act, 1998 which has come into force on March 1, 2000. This Act has been enacted
keeping in view of the provisions of articles 81 and 82 of the EC Treaty. Part 1 of the Competition
Act, 1998 is divided into 5 chapters. Chapter I deals with Agreements (including prohibition of
agreement); Chapter II relates to abuse of dominant position; Chapter III concentrates on
investigation and enforcement; Chapter IV deals with Competition Commission and Appeals;
Chapter V devotes on miscellaneous matters. There are several Schedules to the Act. Wide powers
are given to the Office of Fair Trading (OFT) regarding supply of information, conducting on-the-spot
investigations and imposition of fines. The Act requires the OFT and the sectoral regulators to
publish guidance as to how they well apply the Act in practice.

The Indian Competition Act, 2002 also has similar provisions in Chapter II of the Act on prohibition of
certain agreements, abuse of dominant position and regulation of combination, in Chapter III of the
Act Competition Commission of India including powers of investigation and execution of orders of
the Commission. Chapter VIIIA of the Act of 2002 contains provisions relating to Competition
Appellate Tribunal and Chapter IX deals with miscellaneous matters. Thus, the provisions of the
Indian Competition Act, 2002 have some bearings on the provisions of the U.K. Competition Act,
1998.

The Enterprise Act, 2002 added further changes to the U.K. Competition Law including the
introduction of a new merger control regime, a new system of market investigation references, the
establishment of a criminal cartel offence and the possibility of disqualification of directors of
companies that infringe the competition law. Further changes were introduced on the Competition
Act, 1998 in view of the application of the E.C. Modernisation Regulation by the Competition Act,
1998 and other Enactments (Amendment) Regulations, 2004. The provisions of the Competition Act,
1998 are substantially modelled on Articles 81 and 82 of the EC Treaty.

COMPETITION LAW IN U.S.A:

U.S. competition law is commonly traced to the passage of the Sherman Act in 1890, although a few
state antitrust laws preceded it and the act itself was something of a codification of the common
law. The strict doctrine of early common law invalidating all restraints of trade was prevailing in the
U.S.A. until the turn of the century. The doctrine has been relaxed in view of the public interest in
permitting certain protective covenants. The fixed rules as to the conditions for restraint on the
freedom of contract were upheld by both English and American Courts until the introduction of the
modern view of the validity of agreement on the test of reasonableness of the restraint. All
combinations or agreements which unreasonably suppress competition or retrain trade are illegal
and void at common law as against public policy regardless of declared purpose.(Bruces Juricas v.
Amarican Can Co., 22 So.2d 461)

The federal law for the first time on the subject of monopolies and unlawful restraint or trade
embodied in the Sherman Anti-Trust Act (1890). The Congress may make exceptions to the
provisions of the Act by placing the machinery of price fixing in the hands of public agencies, or by
singling out for separate treatment a particular industry and thereby removing the penalties of the
Act, or it may suspend the operations of the Act within the prescribed limitations temporarily or
permanently; but such exemption is not to be amplified by the reasonable intendment of its
language The Act is both penal and remedial for damages in nature.

The main aim of the Sherman Anti-Trust Act is the preservation of a system of free competitive
economic enterprise and the protection of the public against the evils incident to monopolies and
contracts or combinations tending directly toward unreasonable suppression or restraints of inter-
state trade or commerce. The power of the State legislatures to deal with anti-trust subject matter
and to prohibit unlawful combinations to prevent competition and in restraint of trade, and to
prohibit and punish monopolies has been upheld by the court.

The Clayton Act, 1914 makes it unlawful for any person engaged in commerce to lease or sell goods,
machinery, etc. on condition, agreement or understanding that the lessee or purchaser shall not use
or deal in goods or machinery of a competitor or seller or lessor where the effect of competition
may be substantially to lessen competition or tend to create a monopoly.(Barber Colman Co. v.
National Tool Co., CCA Ohio, 136) The Clayton Act and the Sherman Act are separate acts and
remain so in spite of certain clauses of Clayton Act, which refer to the both. The Clayton Act
supplementing the Sherman Act and various other federal statutes having the same general purpose
as the Sherman Act, but designed to reach restraints on inter-state trade or commerce not covered
by the Sherman Act, have from time to time been enacted by the Congress.
 ANTI-COMPETITIVE AGREEMENTS:

INDIA: Section 3(1) prohibits and declares void any agreement between enterprises in respect of
production, supply, distribution, storage, acquisition or control of goods or provision of services,
which causes, or is likely to cause an appreciable adverse effect on competition within India. There
are no statutory illustrations of anti-competitive practices or conduct. This section is very general
and broad in scope.

Section 3(3) specifies certain anti-competitive agreements that may be entered into or practices that
may be carried on, by enterprises supplying similar or identical goods or services or cartels. Under
this section, those agreements or practices carried on by that class of enterprises are presumed to
have an appreciable adverse effect on competition. They are per se violations of the Act.

Section 3(4) deals with what are termed as vertical restraints. These are restrictions amongst
enterprises at different stages of production chain in different markets. This would cover supply of
goods as well as services. Vertical restraints are to be examined under the rule of reason. The
appreciable adverse effect on competition has to be established in each case.

Section 3(5) provides certain exceptions from Section 3. The first set of exceptions protect the right
of an owner of any of the intellectual property rights under the enactments listed in the subsection,
to restrain any infringement of any of his rights, or to impose reasonable restrictions necessary to
protecting any of those rights. Also excepted under Section 3(5) are the terms of an agreement
relating exclusively to the export of goods or supply of services abroad.

UK: COMPETITION ACT 1998 (UK) The prohibition in chapter (I) of part (I) is in respect of
agreements decisions and concerted practices, between or by undertakings or association of
undertakings, which are implemented in the UK and the object or effect of which is the prevention,
restriction, distortion of competition in the UK. The chapter I prohibition is in S.2 of the Act, which
sets out virtually identical provisions to those in Art. 8119. The principal difference is that S.2 refers
to agreements, etc, which are implemented and affect trade in UK. Consistency of interpretation
with community law is ensured y S.60 of the Act. This provides that the determination of any
question under the prohibitions should be consistent with the treatment of the corresponding
question arising under the Community law.

Since anti-competitive behaviour between companies may occur without a clearly delineated
agreement, the prohibition covers not only agreements but also decisions by associations of
companies and concerted practices. There is an illustrative list of practices which would infringe the
prohibition. Under the prohibition, the anti-competitive nature of the agreement is to be judged
according to its effects or intended effects on competition. This is in contrast to the form-based
approach in the older restrictive trade practices legislation which is limited to cover agreements
which could be registered because they meet certain specified form-based criteria. The law gives the
Office of Fair Trading (OFT) extensive powers to investigate and take action. Penalties can include
large fines, disqualification of directors and even imprisonment. In addition, customers and
competitors may be able to sue you.
USA:
US ANTITRUST LAWS: Every contract, combination in the form of trust or otherwise, or conspiracy, in
restraint of trade or commerce among the several States, or with foreign nations, is declared to be
illegal by the Sherman Antitrust Act (1890). But the Supreme Court has explained, the problem is
that Section 1-cannot mean what it says. The statute says that every contract that restrains
trade is unlawful. But . . . restraint is the very essence of every contract; read literallywould
outlaw the entire body of private contract law.(National Society of Professional Engineers v.
United States, 435 U.S. 679, 687-88 (1978))

Under U.S. antitrust law the price fixing, whether called cartelization, bid-rigging, or something else,
it is automatically unlawful. The same broad condemnation includes all naked horizontal agreements
to raise prices or reduce output, or to divide markets. These are said to be unlawful per se,
meaning that they cannot be defended on the grounds that the parties lacked market power or
did not have any actual impact. (United States v. Socony-Vacuum Oil Co., 310 U.S. 150 (1940))

A landmark case in this progression is Broadcast Music, Inc. v. CBS 441 U.S. 1 (1979). The big music
licensing houses (ASCAP and BMI) had created blanket licenses that proved so popular that the vast
majority of music licenses were with ASCAP or BMI, not with individual composers. The court of
appeals held that this near-complete elimination of price competition was price fixing and illegal
per se. The Supreme Court reversed. In the Courts new treatment, price fixing became less a
factual assertion that started the analysis, and more the legal conclusion announced after the
analysis. The inquiry needed in order to characterize conduct is whether the practice facially
appears to be one that would always or almost always tend to restrict competition and decrease
output, . . . or instead one designed to increase economic efficiency and render markets more,
rather than less, competitive.

ABUSE OF DOMINANT POSITION:

INDIA: Section 4 prohibits certain practices that are considered to be abuse of a dominant
position by an enterprise. Some of them are: imposition of discriminatory prices or trading
conditions or predatory prices, limiting supply of goods or services, denial of market access, using a
dominant position in one relevant market to enter into, protect, other relevant market. A dominant
position in substance means the capacity of an enterprise to act independently of competitive forces
prevailing in the market or to affect the relevant market in its favour. A dominant position is usually
acquired by an enterprise over a period of time and factors such as state of technology, barriers to
entry, scale of operations, etc., influence the achievement of a dominant position. The market share
of an enterprise does not, as under MRTP Act, 1969, determine the dominant position of an
enterprise, though it is one of the factors to be considered, along with other factors, including the
market shares of its competitors. The basic position is that there is no violation of the Act by an
enterprise by the mere fact of its enjoying a dominant position. It is only the abuse of that position
by any one of the anti-competitive practices set out in this Section is prohibited.
UK: The Competition Act 1998 provides the prohibition in respect of the abuse of dominant
position in Chapter (II) S.18 of the Act. Section 18(1) provides that any conduct on the part of one or
more undertakings which amounts to the abuse of dominant position in a market is prohibited if it
may affect the trade within the UK. Consistency of the interpretation with Community Law is
insured by S.60 of the Act.

Section 18(2) provides an illustrative list of the conduct that could be prohibited under Section 18(1)
of the Act. Section 18(3) defines dominant position within the United Kingdom and the United
Kingdom means the United Kingdom or any part of it. Lord Simon said in the House of Lords that
there must be dominance within the United Kingdom, although the geographical market in which
that dominance is held could be larger than the United Kingdom.

In Better Care Group Ltd. V. Director-General of Fair Trading (2003) ECC 40: (2002) CAT 7, it was
held while interpreting the expression undertakings by the Competition Appellate Tribunal that
Chapter II on prohibition on abuse of dominant position could apply to a public-sector body.

USA: The Clayton Anti-Trust Act (1914) in USA deals with discrimination in price, services or
facilities. Section 13 of the Act provides that it shall be unlawful for any person engaged in
commerce, either directly or indirectly, to discriminate in price between different purchasers of
commodities of like grade and quality where such commodities are sold for use, consumption or
resale within the United States or any territory thereof or the District of Columbia or any insular
possession or other place under the jurisdiction of the United States and where the effect of such
discrimination may be substantially to lessen competition or tend to create a monopoly in any line of
commerce, or to injure, destroy or prevent competition with any person.

Under the Sherman Anti-Trust Act (1890) price fixing agreements are per se, unreasonable restraints
of trade, and when affecting prices of articles moving in inter-State commerce, are forbidden,
regardless of the purpose or intent of such agreements or the manner in which they fix the price.
The offense of monopoly under S.2 of the Sherman Act has two elements, United States v. Grinnell
Corp., 384 U.S. 563, 570-71 (1966): (1) The possession of monopoly power in the relevant market
and (2) The wilful acquisition or maintenance of that power as distinguished from growth or
development as a consequence of a superior product, business acumen, or historic accident.

The standard phrasing of the offense of attempted monopolization comes from Spectrum Sports,
Inc. v. McQuillan, 506 U.S. 447, 456 (1993), when the Supreme Court summarized the lower court
holdings: Consistent with our cases, it is generally required that to demonstrate attempted
monopolization a plaintiff must prove (1) that the defendant has engaged in predatory or
anticompetitive conduct with (2) a specific intent to monopolize and (3) a dangerous probability of
achieving monopoly power.

COMBINATION/ACQUISITION

INDIA: COMPETITION ACT, 2002 Combination as defined under Section 5 includes merger of
enterprises and their acquisitions. The acquisition of shares, voting rights, assets of another
enterprise above certain prescribed threshold levels of value or control over another enterprise and
merger of enterprise where the relevant assets exceed the prescribed value are covered by Section
5. Section 6 prohibits any combination that causes, or is likely to cause, an appreciable adverse
effect on competition within the relevant market in India. It declares such a combination would be
void. Section 6 sets out the procedures for the regulation of combinations. In a given case, a merger
could be a certain way of eliminating a competitor. It should be noted that prior to the introduction
of this Act, there was no specific provision under the Companies Act, 1956 prohibiting anti-
competitive mergers or acquisitions.

UK: UK merger control basically contained two institutions, the Office of Fair Trading (OFT) and the
Competition Commission (CC). Mainly there are three stages involved under the merger control
provision of the 2002 Act. Those three conditions are following:
a) Referral

b) Investigation and report

c) Remedial action

The basic procedure is that the OFT will make a merger investigation reference to the CC. After a
period of investigation the CC will compile a report and has a duty to take action to remedy any
adverse effects in the competition which it identified in the report.

USA: The original Sherman Act proved a feeble tool with which to resist anticompetitive mergers,
prompting Congress specifically to address mergers in 1914 in Clayton Act Section 7.

Section 7 was further strengthened by an important amendment in 1950, such that today it prohibits
mergers and acquisitions where in any line of commerce in any section of the country, the effect . .
. may be substantially to lessen competition.