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published on 22 February 2023 | reading time approx. 3 minutes
In the context of investments in India, antitrust law in India often appears to play a secondary role. This impression is supported by the fact that the Indian economy is “dominated” by very large Indian conglomerates. In a country where companies like Tata, Adani, Bajaj and Reliance dominate the economic landscape, the impression of ineffective competition law is created. However, this is not the case.
Indian antitrust law is governed by the Competition Act, 2002 (the “Act”). The Act prohibits any agreement between companies, individuals or associations that could have an adverse effect on competition. The term “agreement” is interpreted very broadly.Section 3 (3) of the Act defines so-called hardcore cartels. Interestingly, the so-called “bid rigging” and “conclusive rigging” are also included in the ambit of hardcore cartels. In doing so, it even goes so far as to assume a competition-restricting effect. Whether this can be interpreted as a shift in the burden of proof is debatable. In view of the fact that India is currently tendering out a massive number of infrastructure projects, the “hardcore cartel” is definitely of high practical relevance.Section 4 of the Act regulates the prohibition of abuse of a dominant position. Section 4 (2) of the Competition Act defines standard examples of conduct that may constitute an abuse of a dominant position. The legal structure of Indian antitrust law is very similar to European legislation in the field of antitrust law. The interpretation and application of antitrust regulations and patterns of behavior in violation of antitrust law are also strongly based on the European application of the law. For example, a large international IT company recently accused the Indian antitrust authority of largely “copying” the line of argumentation of the EU Commission. The Indian application of the law is also dogmatically oriented to the European application practice – especially in the area of determining the relevant product market definition.
As stated above, antitrust law in India is, on the one hand, a relatively young piece of legislation. On the other hand, India's overall economic picture is shaped by a dominant squad of Indian global market leaders. The business practice embedded in the Indian DNA, partly contradicts the antitrust law logics. Thus, territorial agreements, price adjustments and similar patterns of behavior contrary to antitrust law are in part classified as socially and economically adequate behavior in India. After the introduction of the new Indian antitrust law, there was astonishment in the business and consulting community, particularly to the effect that price agreements are actually pro-competitive, because they do not lead to price increases.It is still quite common for competitors to openly exchange information in association meetings about economic parameters which, from a European perspective, already trigger an offense relevant under antitrust law.To make matters worse, there is a perception in India that antitrust law is only relevant to large corporations. This impression is based on the fact that antitrust authorities in India currently tend to focus on large corporations. However, with India's current strong economic growth, it is not far-fetched that antitrust authorities will also turn their attention to smaller market players.
German companies in particular, with their outstanding technologies, can relatively quickly achieve an antitrust-relevant market position. Therefore, and irrespective of the economic position in the Indian market, they should ensure antitrust-compliant behaviour in India. Considering the mixed situation described above, effective compliance management systems (CMS) and regular expert training are a good and indispensable start.
Rahul Oza
Partner, Office head
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