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Domestic companies seeking CCI protection against MNCs

Alleging that multinationals are gradually eating up their market share, more and more small companies are moving the Competition Commission to seek relief from alleged predatory business practices.

business Updated: Jul 18, 2010 11:09 IST

Alleging that multinationals are gradually eating up their market share, more and more small companies are moving the Competition Commission to seek relief from alleged predatory business practices.

Of the 94 complaints received by competition watchdog CCI in the past one year after the body became fully functional, a good number were from small domestic manufacturers against the practice of multinational corporations gaining monopoly through extensive mergers and acquisitions, an official source said.

One such case pertains to glass manufacturers who approached the CCI against a big MNC, he said, without naming the company. It was alleged that the MNC had entered India by acquiring a domestic firm in the 90s, and later made a slew of acquisitions to establish itself as the sole supplier of glass tubes and other products.

"Though the acquisition occurred much before the CCI was formed, it would be interesting as the case also establishes some of the ideas that form the background of the mergers and acquisition provisions that we (CCI) are trying to bring out," the official said.

The CCI became fully functional in May last year, with the appointment of chairman Dhanendra Kumar and other members of the commission.

The Competition Act 2002 empowers the watchdog to deal with cases relating to anti-competitive behaviour and abuse of dominance. However, the M&A norms, which mandate companies above a certain turnover threshold to seek the CCI's approval before taking over a company, still remains to be notified.

The CCI was set up with the aim of preventing practices that impair competition, protect interests of consumers and ensure freedom of trade carried on by different market participants.

Another such case, the official said, pertains to a multinational pharma company that had initially tied up with local magazines and journals for advertisement of its products.

Later, the MNC prohibited journals from accepting printing advertisements of other pharma companies. The journals had to follow the terms as the MNC gave them huge revenue through advertisements, the official said.

A similar complaint, he said, was lodged by medicine shopowners who had complained about restrictive conditions being imposed by industry associations. The conditions, it was complained, were affect the pricing of drugs and profit margins of shopowners.

One of the conditions imposed by the association, which demands a big membership fee, was that only member-stockists would be allowed to sell medicines directly to nursing homes.

Even companies were restricted from selling medicines directly to nursing homes.

The commission has already initiated a probe against anti-competitive practices by large companies and trade associations.

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