Competition in Infrastructure Sector - Competition Law - Lecture Slides, Slides of Competition Law and Policy

Download Competition in Infrastructure Sector - Competition Law - Lecture Slides and more Slides Competition Law and Policy in PDF only on Docsity! 1 Competition in Infrastructure Sector Docsity.com 2 Organisation of the Presentation • Competition- why and how? • Evolution of Competition Policy and Law in India • Competition in Infrastructure • Competition Law and Infrastructure • Competition Act, 2002 • Suggestions Docsity.com 5 Competition- why and how? Empirical evidence of benefits: • Australia: average household income up by A$ 7,000 p.a. (OECD/ APC study); gain 5.5% of GDP(Paul Crampton, OECD-IADB) • New Zealand/UK: added 2.5% to employment rate over 1978-1998(OECD) • USA: fall in real prices following de-regulation (OECD): raised productivity by 4% (Paul London) India: benefits visible since reforms (auto, white goods, consumer electronics, milk, etc) Docsity.com 6 Competition- why and how? Competition framework: • Competition policy: set of government and regulatory policies / laws that facilitate competition; need for legal framework • Competition law: to prohibit anti- competitive practices / activities Docsity.com 7 Competition- why and how? Competition Policy permeates various areas e.g.: • Industrial policy • Trade policy • Financial sector policies (interest rate, forex allocation, entry of banks, etc) • Privatisation (dis-investment) • State aid: subsidies, guarantees, tax incentives • Policy towards to SOEs (PSUs) Docsity.com 10 Evolution of Comp Policy and Law in India Some reform deficit areas: • Coal – Coal India ‘monopoly’ • Labour – exit barrier • FI restrictions e.g. retail, civil aviation • Insolvency law – litigation in courts • Professions – restrictive rules e.g. medical, legal, accountants • Infrastructure – rail, post, urban transport Docsity.com 11 Evolution of Comp Policy and Law in India Evolution of competition law: • MRTP Act, 1969 • Amendment of MRTPAct in 1984 • Amendment of MRTPAct in 1991 (economic reforms) • FM’s statement 1998; Raghavan Committee report 2000 • Competition Bill,2001 Docsity.com 12 Evolution of Comp Policy and Law in India Evolution of competition law: • Competition Act, 2002 in Jan03 • Competition Commission of India established Oct03 • Challenge in Supreme Court; judgment in Jan05 • Competition (Amendment) Act,2007 in Sep07 Docsity.com 15 Competition and Infrastructure • Competition principles apply across all sectors • However, certain features distinguish infrastructure sectors, e.g.:  Natural monopoly  Network effects  Switching costs  Heavy capital costs Docsity.com 16 Competition and Infrastructure Some infrastructure sectors also have individual characteristics that affect competition, e.g in electricity: • Cannot be stored • Relatively inelastic demand • Demand fluctuations - within day and inter- seasonal Docsity.com 17 Competition and Infrastructure Measures that promote competition: • Vertical separation (unbundling) of ‘natural monopoly’ from contestable parts • Horizontal separation to encourage inter se competition and ‘yardstick competition’ • Open access (essential facility doctrine) • Remove entry barriers; facilitate entry • Mitigate switching costs (number portability, bank account portability ?) Docsity.com 20 Competition law and Infrastructure  AOD Divestiture: UK Competition Commission’s interim order (2008) requiring BAA to divest Gatwick and Stanstead airports in London, and abide by behavioural remedies.  AOD: Energy company ENI fined EUR 290 mn for abusing its dominant position in gas transport through its subsidiary TTPC; also ordered it to allow transport of 6.5 bn c.m. per year and guarantee time bound completion of gas pipe expansion.  AOD: EC has objected (Dec08) to French state-controlled power giant EDF’s long term contracts for sale of electricity to customers  AOD: Aeroporto de Roma required to provide non-discriminatory access to rival caterers Docsity.com 21 Competition law and Infrastructure Cartel: Korea FTC imposed huge penalty (2003) on price cartel between telecom companies KT and Hanaro Telecom Cartel: French antitrust authorities slapped record fines amounting to Euro 534m on mobile operators Orange, SFR and Bouygues for illegally sharing sales data and conspiring to undermine competition Docsity.com 22 Competition Act 2002 Enforcement not commenced, but live concerns exist in markets: • Cartels alleged in shipping, steel, cement, Copper-T, explosives, civil aviation, brake linings • Abuse of Dominance alleged in coal, telecom, post, airports • M & As proceeding without prior review: civil aviation, cement, alcoholic beverages Docsity.com