India’s economic liberalization efforts starting in 1991 aimed to reduce government control over the economy and encourage competition. The existing Monopolies and Restrictive Trade Practices (MRTP) Act of 1969 was found inadequate in addressing the complexities of a globalized market. Therefore, the High-Level Committee on Competition Policy and Law, chaired by industrialist S. V. S. Raghavan, was established by the Department of Company Affairs in 1999 to propose a modern competition law aligned with international standards but suited to Indian conditions. Members included K. B. Dadiseth (Chairman, Hindustan Lever Limited, Mumbai); Rakesh Mohan (Director General, National Council of Applied Economic Research, New Delhi); H. D. Shourie (Consumer Activist, New Delhi); S. Chakravarthy (Retired Member, MRTPC, New Delhi); Sudhir Mulji (Economic Journalist, Mumbai); P. M. Narielvala (Chartered Accountant, Calcutta); Pallavi Shroff (Advocate/Solicitor, New Delhi); and G. P. Prabhu (Joint Secretary, DCA and Member-Secretary).

The committee’s findings highlighted several anticompetitive practices in the market, such as abuse of dominance, restrictive trade practices, and problematic mergers. It noted that economic reforms had transformed market dynamics, necessitating a robust legal framework to prevent monopolistic behavior. The study of international competition laws informed the committee’s recommendations to align India’s policies with global best practices. The report emphasized the need for a new regulatory body, the Competition Commission of India (CCI), to enforce the law, advocate competition, and educate stakeholders. This body was envisioned to be independent, transparent, and composed of experts from diverse fields to ensure comprehensive oversight.

The recommendations were comprehensive, covering various aspects of competition policy. Key proposals included the establishment of the CCI as an autonomous authority to ensure unbiased regulation and effective enforcement. The new Competition Act would replace the MRTP Act, focusing on preventing anticompetitive agreements and abuse of dominance and regulating mergers through mandatory prenotification. Consumer protection was emphasized, with provisions to prevent unfair trade practices like predatory pricing. The committee also recommended integrating competition policy with trade and industrial policies to promote overall economic efficiency. Additionally, state monopolies and public sector enterprises were to be subject to competition law to prevent monopolistic practices. The CCI was tasked with advocating competition policies and educating stakeholders to promote a culture of fair competition. Transparency and independence were underscored to ensure credible and effective regulation, free from political and budgetary influences. These measures aimed to create a competitive market environment, fostering efficiency, innovation, and consumer welfare in India.

The report also published supplementary notes by members Dr. S. Chakravarty and Dr. Rakesh Mohan and notes of dissent by Sudhir Mulji and P. M. Narielvala. Chakravarty emphasized the need for a gradual and flexible introduction of competition policy. He argued that sudden enforcement could adversely affect small-scale industries and vulnerable sectors like food security and defense, so he advocated a transition period of 7 to 10 years to allow domestic firms to adapt  to the policy and improve efficiency. Chakravarty also highlighted the importance of providing cheaper credit to domestic producers to enhance their global competitiveness.

Mohan expressed concerns about the discretionary powers vested in the CCI. He suggested that the report should be debated publicly to refine recommendations and ensure broader acceptance. Mohan recommended that the CCI initially focus on advocacy for three to five years before assuming full regulatory powers, allowing time for proper staffing and training and the economy’s maturation. He stressed the need for a systematic approach to implementing competition law to avoid hindering entrepreneurial spirit and economic growth.

Sudhir Mulji and P. M. Narielvala presented dissenting views on the proposed premerger-notification requirement. Mulji criticized the committee’s reliance on international models, arguing that India’s focus should be on promoting market freedom and tolerating certain excesses to stimulate economic dynamism. Narielvala contended that premerger notifications were unnecessary and could hinder the formation of large, competitive Indian firms. He emphasized that whether a merger would be damaging could not be judged ex ante, and ex post provisions existed to deal with any damage. The economic context in India, unlike in developed countries, necessitated encouraging mergers and amalgamations to strengthen domestic companies against global competition.

The report of the committee led to the enactment of the Competition Act of 2002, which replaced the MRTP Act of 1969. This new legislation aimed to address contemporary economic realities and effectively regulate anticompetitive practices. The Competition Act laid the foundation for establishing the CCI, an autonomous body tasked with enforcing competition laws, promoting competition, protecting consumer interests, and ensuring freedom of trade in Indian markets. The CCI was granted wide-ranging powers to investigate, penalize, and adjudicate cases involving anticompetitive practices such as cartels and monopolistic behavior. The act continues to contain provisions requiring preapproval of mergers above a certain threshold, indicating that the dissenting notes were ignored.

The report highlighted the limitations of the MRTP Act in addressing modern market dynamics, recommending a new Competition Act to prevent anticompetitive practices and establish an independent regulator. These reforms aimed to foster fair competition, protect consumers, and enhance economic efficiency in a liberalized market.