Competition Laws in India - COMPETITIONLAWSIN INDIA...

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COMPETITION LAWS IN  INDIA
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Competition Is “a situation in a market in which firms  or    sellers  independently  strive  for  the  buyers’ patronage in order to achieve a  particular  business  objective  for  example, profits, sales or market share” 
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Contd… Is  the  foundation  of  an  efficient  working  market  system,  which  has  several  advantages  over  a  planned  economy  and  constitutes  the  pre-condition  which prevents freedom of decision and action of self  interested  individuals  or  entities  from  leading  to  anarchy or chaos but rather to economically optimal  socially fair and desirable market results. Competition leads to greater dynamic efficiency in the  economy by bringing about innovation, technological  development,  lower  price  and  better  quality  and  service for the consumer.
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WHAT IS COMPETITION POLICY? Competition in economic parlance signifies a market  structure  involving  a  large  number  of  players  such  that no single player is in a position to significantly  influence the market. At  the  other  extreme  is  ‘Monopoly’  where  a  single  firm rules the market and earns super normal profit  by controlling output and/or supply and by charging  higher than cost of production from the consumers At the intermediate level is ‘Oligopoly’ where a few  market players are available. Oligopolists manage to   control the market by colluding among themselves  since  none  of  them  alone  may  be  in  a  position  to  control  the  market.  Such  collusions  are  generally  tacit.
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Contd…  It is not necessary that there are a large number  of  producers/suppliers  to  have  competition  conditions. A  single  producer  can  exist  and  provide  a  competitive  atmosphere  provided  entry  of  new  firms is easy and not costly. Entry barriers can be due to the market position  of  incumbent(current)firms,  legal  barriers  or  strategic barriers Incumbent firms may use their power as “first  Movers” to block entry. Legal  barriers  include  licensing  and  other  Government regulations
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Contd… Strategic  barriers  are  generally  erected  by  incumbent  firms  in  the  form  of  artificial  and  sudden price reduction with a view to thwarting  new entry. Contestability  of  markets  ensure  competitive  conditions in the market. Competition is expected to enhance allocated and  productive efficiency so as to maximize economic  welfare.
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