Saturday, December 9, 2023

The Competition Enforcers: The Competition Act of India Is Unconstitutional

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Over at, Thomas Sowell takes apart the EU case against google. EU has accused google of not granting on its platform, the same access to rivals’ search engines as it grants to its own.

When all else fails, competition is the last bogey socialists use to control market. According to them, it is their duty to ensure competition. This they do by putting restrictions on the companies which seem to get ahead of others, by some arbitrarily decided margin. They also claim to ensure fair trade practices, without ever defining what is fair. Governments deal in lawful and unlawful, they do not, must not, and can not deal in fairness/unfairness. Because fairness is in the eye of beholder.

It is akin to saying that in a 100 m race, the winner must not be allowed to get ahead of the runner up by a pre set margin. Or if somebody is too good a runner, it is unfair to others, or if a Basketball player is too tall, it is unfair to those who are short.

And to make general public agree to this attack on free market, the socialists bring out another bogey: of monopoly. According to them, if a firm is allowed to get too big, it may finish all its rivals, and then rig the market. Firstly, history shows us that monopolies are possible only in a regulated market in which a firm uses state power to deny license to rivals. In free market, if a commodity becomes too profitable, more people immediately start producing it. And in any case, government always exists. If at all the end-of-world scenario painted by the socialists comes about, government can straight away nationalise the monopoly. All company laws, in all countries give government that power.

We in India also have our own Gods of Competition: the Competition Commission of India. It is unconstitutional, arbitrary, and anti-free market. It is against fundamental right of two citizens trading between them on mutually agreeable terms. It regulates mergers, and has same effect as all regulations do, and that is strangulating the free market.

Sections 3(1), 4 (1) & (2), 6(1), 18, 19(1) and 28(1) of the Competition Act should be enough to strike down the whole law. A law has to be a clear cut statement of what a citizen can not do, and if he does, what will be the penalty. A law that gives some bureaucrat power to decide, without any objective criterion, whether an action is lawful or not, is not a law but abuse of law. The Competition Act of India is a gross interference in the Right to trade of free born human beings. It is because of such laws that businesses do not get set up in India, and we remain a third world poverty ridden basket case.

Following are the excerpts from Thomas Sowell’s article:

“European anti-trust regulators are giving us another free lesson in confused thinking by filing anti-trust charges against Google, on grounds that its searching facilities give preferential treatment to Google’s own searching services over other competing searching services.

The European Union’s commissioner for competition explained the basis for the complaint against Google: “We have a focus on a certain conduct, a certain behavior which, if our doubts are going to be proven, we would like to change because we believe that it hampers competition.”

Some of us think laws should be clear-cut statements of what you can and cannot do. Indicting people under laws that can lead to fines in the billions of dollars over what “we believe” or what international bureaucrats have “doubts” about is not really law. It is an exercise of arbitrary power, based on whatever subjective notions are in vogue among government bureaucrats.

The history of American anti-trust law shows too many similar vague and confused notions masquerading as law. The idea that the accused must prove their innocence, under the “rebuttable presumptions” of the Robinson-Patman Act of 1936, was a forerunner of the same mindset under later “disparate impact” theories in civil rights law.

What such fancy words boil down to is that very little evidence is required to shift the burden of proof to the accused, in defiance of centuries-old legal traditions that the accuser has the burden of proof in criminal cases and the plaintiffs have the burden of proof in civil cases. Otherwise, any fact or theory that sounds plausible to legal authorities is enough to force the accused to prove a negative or lose the case.

Such violations of the legal standards used in most other cases are usually inflicted on those who have already been demonized and whose guilt has been assumed and punishment is fervently desired, such as big business, employers accused of discrimination or men accused of rape.

Google is accused of running its Internet search programs in such a way that they are more accessible to the public than other search programs available through Google. Since people can search through other sources besides Google, it is not at all clear why Google cannot run its own operation for its own benefit, while others run their operations for their own benefit.

The whole point of competition in the market is to create economic efficiency which, by its very nature, means eliminating the less efficient producers. Confusion about the difference between maintaining competition and maintaining competitors has long plagued anti-trust law on both sides of the Atlantic. But Americans seem in recent years to be recognizing the difference.

In Europe, there still seems to be a notion that big companies with many customers should help their smaller competitors survive — especially if the big companies are American and the smaller companies are European. In other words, Google should be run in such a way that competing search programs are as prominently featured as Google’s own search program.

Whatever the case that could be made for this argument, as a matter of manners, noblesse oblige or whatever, people in charge of anti-trust law are not in charge of manners or noblesse oblige. Law is too serious to be subordinated to fashionable notions or political expediency.” (from the article)


Read the whole article here.

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