Historical Evolution of Competition Law in India
The development of competition law in India has been influenced by the nation’s economic policies, international factors, and legislative reforms designed to promote a fair and competitive marketplace. At first, India got into a socialistic economic model with a lot of big government involvement into businesses, really limited private sector and very strict trade regulations. As the economy advanced bit by bit, its legal framework for regulating competition changed accordingly[1]. Thus, moving from an old law called the Monopoly and Restrictive Trade Practices Act introduced in 1969 to the current Competition Act replaced it in 2002.
Prior to independence, India possessed a largely uncontrolled economic landscape in which business giants functioned with no constraints. Following independence in 1947 the government embraced a planned economy based on socialist principles and it became state owned for the important industries. In the 1950s and 1960s, there started to be a number of concerns over very powerful people squeezing economic resources and running stuff in a way that harmed competition among companies[2]. This resulted in the implementation of the Monopolies and Restrictive Trade Practices (MRTP) Act, 1969, marking India’s initial effort to regulate anti-competitive conduct.
The main purpose of this Act is to limit the amount of economic power collected by large companies and to stop them from engaging in monopolistic and unfair business practices. It was put in place based on recommendations of both the Mahalanobis Committee of 1964 and the Monopolies Inquiry Commission of 1965 and both committees stressed really strongly that regulation supervision is necessary to guard against exploitative business maneuvers. The Act set up a Commission MRTP to oversee compliance and enforce restrictions.
Monopolistic Restriction and Trade Prevention, and makes sure everyone follows the rules. Well, overall, the law ended up being quite narrow and restrictive compared to being supportive or promoting friendly competition. It really focused mostly on making sure big companies didn’t bully smaller companies and run rough because monopolies are just tough to deal with. They didn’t focus as much on making market strengths more spread out for everyone.
One of the biggest problems of the MRTP Act was its antiquated economic strategy. The Act functioned under the notion that all large firms were inherently monopolistic and damaging to the economy. It lacked the required measures to counter current anti-competitive behaviours such as cartels, abuse of dominance, and anti-competitive mergers. Additionally, its enforcement mechanism was inadequate, as the MRTP Commission did not have sufficient investigating and punitive powers.
The big economic changes in ’91 marked a really important turning point for India’s competition law system. Indian government reforms called Liberalization, Privatization and Globalization are moving markets toward openness and away from regulation. The reforms have cut trade barriers, opened markets to international businesses and attracted more investment from private sector players[3]. This transformation needed a more dynamic competition law to police anti-competitive activity in a liberalized economy. With globalization, India began attracting foreign firms, and Indian industries faced growing rivalry. But the MRTP Act just wasn’t very good when considering the challenges that go with a highly market-driven economy[4]. Issues such as predatory pricing, bid rigging, price-fixing cartels, and misuse of dominant positions were not effectively handled under the current legal system. Recognizing those limitations, the Indian government started looking into ways to improve conditions for competition policy about a decade ago and they hired Mr. Raghavan to form a committee to help them fix what they viewed as flaws in that system.
The Raghavan Committee Report (2000) stressed the need for a contemporary competition legislation that accorded with worldwide norms. The research found critical flaws in the MRTP Act and advocated replacing it with a new, comprehensive legislation that focused on increasing competition rather than just preventing monopolies. Based on these proposals, the Competition Act, 2002, was adopted, signifying a paradigm shift in India’s approach to competition law[5].
[1] Agrawal, Aishwarya. “Evolution of Competition Law in India.” LawBhoomi, 7 June 2024. https://lawbhoomi.com/evolution-of-competition-law-in-india/.
[2] University of Mumbai, SYBA Political Science III Study Material, University of Mumbai, 2021, available at: https://archive.mu.ac.in/myweb_test/SYBA%20Study%20Material/pol_sc-III.pdf (last visited on 13 April. 2025).
[3]Soumi Bandyopadhyay, ‘From MRTP to Competition Act: An Evolution of Competition Laws in India’, 2(3) Journal of Legal Research and Juridical Sciences 1027 (2023).
[4] Ranjan, Sangya, Monopolies in Indian Economy: Reasons for Shift from MRTP to Competition Act, 1(2) Int’l J. of Multidisciplinary Educational Research 531-538 (2012).
[5] Raghavan, S.V.S. (2000). Report of the High-Level Committee on Competition Policy and Law. Government of India.