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.
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.
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