India: Anti Dumping Law And Competition Law : A Case Of Intersecting Lines

Last Updated: 19 February 2019
Article by Rishab Khare

Introduction

In the present world, Competition Law has already shackled the hands of businessman by making the competition fair and reasonable for all the players in the market. After the coming of concept of Anti- Dumping1, fair competition in the market has also been affected a lot. Anti-Dumping means the export country charging a lower price than what it charges at his home country, thus trying to remove the domestic market players as in to dominate the market, and thus effectively affecting the fair competition in market by reaching the threshold limit of Appreciably Adverse Effect on Competition. Several commentators have observed that anti-dumping law was extra territorial application of competition law.2

Competition law has surpassed the anti-dumping laws by leaps and bounds as far as its evolution is concerned. Initially, anti-dumping law and competition law were considered to be complimenting each other.

Competition law has taken into its' ambit those firms outside its jurisdiction which effect the national market. Whereas, the genesis of anti-dumping laws can be traced to WTO provisions. Anti-dumping laws are now used as a protectionist tool to avoid market distortions.

The jurisprudence behind the anti-dumping law justifies the prevention of dumping on various economic and social grounds. However, the concept of distributional justice is the primary reason behind the development of anti-dumping law. In other words, anti-dumping law seeks to achieve distributive justice. The objective of distributional justice seeks to maintain balance between the varying degrees of power among the different states. Such power imbalance is relevant for the purpose of anti-dumping law as firms may choose to take benefit of such imbalances in order to give effect to trade distortions. This is where the antidumping laws achieve supreme importance. Antidumping law justifies the imposition of anti-dumping duty by Government to undo these trade distortions.

In absence of common rules on competition law makes anti-dumping a necessity.3 Apart from the same, antidumping still holds its' value in light of the fact that international application of competition law has not been politically feasible.4

"While both competition and anti-dumping laws originated with the same objective (e.g. the Antidumping law of 1916 in the USA which was clearly meant to address competition concerns arising out of the practice of 'transnational price predation) the objectives surrounding the use of antidumping laws have since evolved and modern antidumping practice has come to actually facilitate the kind of unfair and anti-competitive behavior it was intended to prevent."5 The effect of anti-dumping law has resulted in the firms choosing to seek protection against the imposition of anti-dumping duty for profit maximization. Whereas, the competition law seeks to promote healthy price competition between the firms as long as it does not constitute predatory pricing.

The gradual evolution of objectives of anti-dumping law and competition law has resulted in both the set of laws being conflicting rather than being complimentary. Several authors have observed that with growth of national laws, jurisprudence has attained extra territorial reach. Thus, the anti dumping law has overlived its' utility.6 Being extremely critical of antidumping , it has also been compared to witches' brew that comprises of money, bad politics and power.7

Public Interest under the two regimes: The Way Forward ?

The effect of duty imposed under anti-dumping regime is to ensure the transfer of finances from local community to the domestic producers of a like product. Economists argue that since consumption often exceeds output for an imported good, consumers lose more than what the producers tend to gain.             

Picking up the cue from European Union, Brazil and Korea, public interest test should be incorporated as far as anti-dumping rules and regulations are concerned. The effect of public interest test in anti-dumping regime has been that it introduces competition concerns into the anti-dumping regime. Anti-dumping law focuses upon protecting the interest of the domestic producers. However with insertion of the public interest clause, the public interest shall include in its' ambit consumer interest. The interpretation and implementation of this clause can give effect to the governments imposing duty in consumer interest.

WTO agreement provides for inclusion of such considerations, "The authorities shall provide opportunities for industrial users of the product under investigation, and for representative consumer organizations in cases where the product is commonly sold at the retail level, to provide information which is relevant to the investigation regarding dumping, injury and causality."8 The Competition Act, 2002 as well as the erstwhile, Monopolies and Restrictive Trade Practices Act, 1969 prescribes for this public interest test.

In Haridas Exports v. Float Glass Manufacturers Association9, "Import of material at prices lower than prevailing in India cannot per se be regarded as being prejudicial to the public interest. If the normal or export price of any goods outside India is lower than the selling price of an indigenously produced item then to say that the import is prejudicial to the public interest would not be correct. The availability of goods outside India at prices lower than those which are indigenously produced would encourage competition amongst the Indian industry and would not per se result in eliminating the competitor, as was sought to be submitted by the respondents."

Apart from the above, bilateral trade agreements can be used to address the issues pertaining to competition law. Inclusion of provision of competition law in free trade agreements. The inclusions of such provisions are often preceded by removal of rules on anti-dumping.

Judicial Position vis-à-vis interaction between Competition Law and Antidumping law

While dealing with the question of difference in jurisdiction between MRTP Act, 1969 and Custom Tarrif Act, 1975; the Hon'ble Supreme Court observed in the case of Haridas Exports v. Float Glass Manufacturers Association10:

"The jurisdiction of the MRTP Commission, in our opinion, is not ousted by the Antidumping provisions in the Customs Act. The two Acts operate in different fields and have different purposes. The grievance of the respondents is that import is being made at predatory prices. The challenge is to the actual import. But allowing such a challenge will amount to giving the MRTP Commission jurisdiction to adjudicate upon the legal validity of the provisions relating to import, which jurisdiction the Commission does not have. It is not a Court with power of judicial review over legislative action. Therefore, it would have no jurisdiction to decide whether the action of the Government in permitting import of float glass even at predatory prices is valid or not. The Commission cannot prohibit import, its jurisdiction commences after import is completed and any restrictive trade practice takes place."

However, in jurisdictions such as United States and European Union, primacy is given to antitrust laws over anti-dumping laws. In a case of United States of America v. SKW Metals and Alloys INC., and Charles Zak11, the three largest producers of ferrosilicon came together in order to establish a cartel. Using the nuances of anti-dumping regime, this cartel was able to impose anti-dumping duty on any exporter. Eventually, anti-dumping duty was imposed upon a brazillian exporter. The conspiracy was exposed and the participants of the cartel were brought to book. The participants suffered several civil and criminal consequences. The International Trade Commission revoked its' anti-dumping orders after serious conduct and allegation of perjury was made against the cartel members.

The above authorities indicate that if the imposition of anti-dumping duty creates marketing distortion, it shall not be levied.

Replacement of Anti-Dumping Law with a refined version of Competition Law

There also have been arguments against abolishing anti-dumping. It is hereby suggested that steps should be initiated in the direction of free trade agreements. Regional Trade Agreements can go a long way in developing free trade. The same can be achieved by removing the imposition of anti-dumping duty along with tariff elimination. There are positive indications in that regard as the world at large has started understanding the complexities of multi trade agreements. Also, it is expected that there will be a decent growth in the number of regional trade agreements in the times to come.

The main aim of the Anti-Dumping Law is to conserve and protect the interest of the domestic industries.

Does it mean that the industries which are less efficient should also be protected? In fact as in reference to Competition Act, 2002 less efficient industries should close down with immediate effect and exit the market if they are not able to compete and trade with the other players in the market12. The competition law doesn't have a protective attitude whereas the Anti-Dumping Law has protectionist behavior. Both of these contradict each other, they cannot co-exist together at the same time; they are analogous13. Over the past few years it has been advised that anti-dumping measures and competition measures are replicas, and that too of the complementary mechanisms, and that one should take place of the other and both shall not take place simultaneously. Anti-Dumping steps are, henceforth not generally a way of revitalizing fair trade (although sometimes may be), rather they are somewhat up to a particular extent, of protective mechanism. It would be very confident to presume that the withdrawal of Anti- Dumping14 measures would smoothly follow from the widespread standardisation of competitive measures.

From the economics point of view, there is no sufficient ground to second any anti-dumping law, since price discrimination across the markets is a legitimate and exactly rational, shrewd and legitimate profit-enhancing action. Under this line of altercation, there is no rationalization for criticizing certain export prices only because they appear to be lower than the prices in other markets. Domestic price discrimination i.e., change in pricing between one country's domestic markets, generally is not penalized. There is debatably no fiscal sense for looking upon-international price discrimination strictly by striking dumping duties. Out of the altogether different categories of dumping, only predatory pricing dumping and many instances of strategic dumping boosts overall welfare concerns.15

Conclusion and Suggestions : Harmonization of the two regimes

While at first sight there appears to be an overlap between both policies, the reality is much more complicated. Anti-dumping and Competition Law, though coming from a same tree, have a lot of similarities and differences at the same time as far as their motives and ways to achieve them are concerned.

It has been observed by various legal scholars that impositions of anti-dumping duties by government are often political in nature. There is a need to minimize the manipulation of antidumping laws and limit the discretionary powers of the state authorities. In light of the same, it is hereby suggested that express rules are enacted and the process of imposing such duty should be made transparent.16

Anti-dumping Law and Competition Law are concerned as oxymoron to each other. On one hand Anti-dumping law is a protectionist tool17. Being a protectionist tool, it seeks to protect the domestic industries by the so called invasion by the foreign companies. However in that process, protection is granted to the less efficient industries. This is exactly the opposite of the objective of competition law.

How competition law and anti-dumping law affect each other's' functioning can be understood from the following example. Determination of "relevant market" can be used as "domestic industry" for the purposes of imposing anti-dumping duty. In a case of simultaneous investigations, credibility of investigation agencies may be highly jeopardized. It is highly possible that finding in one investigation by one investigative agency can be used by the other investigative agency without verifying the facts for itself.

It also needs to be noted that a refined version of anti-dumping regime is not the answer to the existing problems. As several scholars have observed that an effective competition policy is the answer to the existing issues that have plagued the anti-dumping regime. The result of replacing the anti-dumping regime with a competition regime will be that the anti-competitive domestic producers shall not be able to cause market distortions. The primary reason of the conflict between the two regimes is that they use different modes to achieve the same goal i.e. avoiding market distortions.

Also, the other concern with the anti-dumping law is that there are only two ingredients required to institute a case of anti-dumping. Firstly, there should be dumping. Secondly, there should be injury caused. These ingredients are insufficient in nature and also, they leave a lot of scope for abuse of power.

It is hereby suggested that a case of Anti-dumping should be proceeded with only if it fulfills the criteria under competition law. This step shall ensure that no abuse of anti-dumping powers takes place. It is to ensure that anti-dumping policies are not rendered as a political tool. Moreover, such step will ensure that the antidumping cases are instituted only when there is abuse of market by the companies.

From the point of view of economics, price difference across borders is considered to be legitimate and valid. Such price difference can arise due to a lot of factors. Such factors may not even be in the control of the "foreign entity". Slapping penalty in such a case is highly unfair in today's' liberalized world.

Despite the various shortcomings of anti-dumping laws, it has been felt that it is not feasible to strike off anti-dumping regulation in absence of any effective alternative. Anti-dumping is a necessary evil in order to counter the issue of cross border price discrimination and predatory pricing. Another way by which the conflict between anti-dumping law and competition law can be mitigated is by way of introducing International Competition Law framework.

Another issue with anti-dumping law is that it may have far reaching consequences on the consumers of the product that has been subjected to antidumping duty by the Government.

However, the most potent way of countering that shortcoming of anti-dumping law could be to make use of regional trade agreements. The effect of Regional Trade Agreement shall be that it will push the sovereign states to relinquish their powers. It shall be the first step in the direction of eliminating the anti-dumping provisions.

Many scholars have suggested replacing the antidumping law with an effective competition law regime. However, the problem associated with such a step is the issue of jurisdiction. Firstly, if a country believes that the other country is dumping its' goods in its territory, it shall have to investigate in the other homeland. This power doesn't exist in reality.

Also, many of the states do not have a strong and effective competition authority. Many of them are inexperienced and in the learning phase.

Footnotes

1 Study on Anti-Dumping and Competition Law, http://www.cci.gov.in/ sites/default/files/1 Study on Anti-Dumping and Competition Law, http://www.cci.gov.in/ sites/default/files/Antidumping_20090420151657.pdf accessed on March 11, 2018

2 Knorr Andreas, "Antidumping rules versus competition rules', Institute for World Economics and International Management, Universitat Bremen

3 Hoekman, Bernard, "Free Trade and Deep Integration: Antidumping and Antitrust in Regional Agreements", World Bank and CEPR, 1998

4 In this regard, OECD (2000) notes that it "does not retain options that have been discarded in joint discussions as unrealistic, such as full harmonisation of competition laws, or an international antitrust authority with supranational powers."

5 Supra Note 1

6 Knorr Andreas, "Antidumping rules versus competition rules', Institute for World Economics and International Management, Universitat Bremen

7 Finger, J. Michael, Editor, "Antidumping How It Works and Who Gets Hurt", Ann Arbor" University of Michigan Press, 1993

8 Article 6.12 of the WTO, Anti-dumping Agreement

9 2002 (145) E.L.T. 241 (S.C.), para 54.

10 2002 (145) E.L.T. 241 (S.C.)

11 United States Court of Appeal for the Second Circuit, Nos. 547, 569, 703 -- August Term, 1998

12 Business Week, December 2, 1991: 38-9. Restricting imports of machine tools had different but equally adverse consequences. See The New York Times, October 7, 1991: D1,D4.

13 Finger J.M., Francis Ng and Sonam Wangchuk (2000) ' Antidumping as safeguard policy' presented at the University of Michigan, Gerald R.Ford School of Public Policy and Japan Economy Program conference, Oct 5-6,2000.

14 Edwin Vermulst, The WTO Anti-dumping Agreement (OUP 2005) 324

15 Vermulst,E 1997,'Adopting and implementing Anti-dumping Laws-Some suggestions for Developing Countries', Journal Of World Trade, vol 31, no:2,pp 5-24

16 Greg Mastel, Anti-Dumping Laws and the U.S Economy (Economic Strategy Institute, 1998) 211

17 Bhattacharjea A. (2000a) : Predation, protection and the public interest' Economic and Polictical Weekly, Dec 2, 2000, 4327-4336.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions