anti-dumping duty and competition law in india

TABLE OF CONTENTS.no. Particulars Page no.

1. List of Abbreviations used 22. Introduction 33. Dumping 44. Anti-dumping 45. Difference between Normal Custom duty

and Anti-Dumping duty4

6. The legal framework for Anti-dumping measures in India

5

7. Justifications for antidumping duty 58. WTO and Anti-Dumping Agreement 69. Competition Law in India 610. Conflict between anti-dumping law and

competition law8

11. Overlaps 912. Antidumping and Competition Provisions

in Free Trade Agreements/Regional Trade Agreements

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13. Conclusion 1214. References 14

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List of Abbreviations usedAbbreviati

onFull Form

GATT General Agreement on Trade and TariffWTO World Trade OrganizationMRTP Monopolies and Restrictive Trade PracticesCCI Competition Commission of IndiaDGAD Directorate General of Anti-Dumping and Allied

DutiesFTA Free Trade Agreement

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1. Introduction

The dumping subjects are one of the hottest topics in theinternational trade scene because of its multitude possibleapproaches and actors who are involved. Dumping occurs when aforeign producer sells a product in a country at a price thatis below that producer's sales price in the “home market”, orat a price that is lower than the cost of production. This isan unfair trade practice which can have a distortive effect oninternational trade as it keeps competitors out of aparticular market. Dumping can only occur at places whereimperfect competition and where the markets are segmented in away such that domestic residents cannot easily purchase goodsintended for export1. Dumping can be defined in various ways,but most generally accepted approach is: price discriminationbetween national markets2 as defined by Jacob Viner. Accordingto Viner, anti-dumping can lead to a predatory dumping whichis to sell products in foreign market lower than the home

1 Alexandru Moldovan, Antidumping and trade diversion in the United States of America (2013)2 Jacov Viner, Dumping: A problem in International Trade (1923)

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market price, then that company would push its competitors inthe foreign market. Consequently, it can raise the priceabnormally high and set monopoly to make its loss. Anti-dumping measures rectify the situation arising out of thedumping of goods and its trade distortive effect. It isessentially a mechanism of defence provided for under ArticleVI of GATT 1994 which allows all member countries to applyanti-dumping measures wherever warranted for protecting theirdomestic industry from unfair Competition. India is availingof this facility like all other member countries of the WTO.Anti-dumping duty is recognized as an instrument for ensuringfair trade and is not a measure of protection per se for thedomestic industry. It provides relief to the domestic industryagainst the injury caused by dumping. Anti-dumping hasacquired a special significance primarily as a means ofchecking unfair trade practices and promoting faircompetition. It is a subtle measure of protection which comesunder the non-tariff barriers and is product and sourcespecific. Antidumping duties were initiated with the intentionof nullifying the effect of the market distortions created dueto unfair trade practices adopted by aggressive exports. Theyare meant to be remedial and not punitive in nature. A harmfulto the domestic producers as their products are unable tocompete with the artificially low prices imposed by theimported goods. As a method of protection to the domesticindustries, anti-dumping duties are thus levied on theexporting country which has been accused of dumping goods inanother country. The analysis of the objectives of the twosets of laws as expressly stated in the legislations in Indiareveals that prevention of unfair business practices is commoninterface between the two. While competition laws areprimarily aimed at protecting and promoting competition inmarkets, antidumping laws are aimed at remedying the injury tothe domestic industry which may arise due to dumping, which inessence amounts to protection of competitors. The analysis ofthe objectives of the two sets of laws as expressly stated inthe legislations in the subject countries reveals that

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prevention of unfair business practices is common interfacebetween the two. While competition laws are primarily aimed atprotecting and promoting competition in markets, antidumpinglaws are aimed at remedying the injury to the domesticindustry which may arise due to dumping, which in essenceamounts to protection of competitors

2. Dumping Often, dumping is mistaken and simplified to mean cheap or lowpriced imports. However, it is a misunderstanding of the term.Dumping, in its legal sense, means export of goods by acountry to another country at a price lower than its normalvalue. Thus, dumping implies low priced imports only in therelative sense (relative to the normal value), and not inabsolute sense. In simple parlance, the normal value is theselling price of the product in the exporting country. Importof undervalued products to evade customs duty or throughillegal trade channels like smuggling does not fall within thepurview of anti-dumping measures.

3. Anti-dumping Dumping is said to have taken place when an exporter sells aproduct at a price less than the price prevailing in itsdomestic market. However, the phenomenon of dumping is per senotCondemnable as it is recognized that producers sell theirgoods at different prices to different market. It is also notunusual for prices to vary from time to time in the light ofsupply and demand conditions. It is also recognized that pricediscrimination in the form of the dumping is a commoninternational commercial practice. It is also not uncommonthat the export prices are lower than the domestic prices.Therefore, from the point of view of anti-dumping practices,there is nothing inherently illegal or immoral about thepractice of dumping. However, where dumping causes orthreatens to cause material injury to the domestic industry ofIndia, the Designated Authority initiates necessary action for

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investigations and subsequent imposition of anti-dumpingduties.

4. Difference between Normal Custom duty and Anti-Dumping duty

Although anti-dumping duty is levied and collected by theCustoms Authorities, it is entirely different from the Customsduties not only in concept and substance, but also in purposeand operation. The following are the main differences betweenthe two: -

Conceptually, anti-dumping and the like measures in theiressence are linked to the notion of fair trade. Theobject of these duties is to guard against the situationarising out of unfair trade practices while customsduties are levied as a means of raising revenue and foroverall development of the economy.

Customs duties fall in the realm of trade and fiscalpolicies of the Government while anti-dumping measuresare trade remedial measures.

The object of anti-dumping is to offset the injuriouseffect of international price discrimination whilecustoms duties have implications for the governmentrevenue and for overall development of the economy.

Anti-dumping duties are not necessarily in the nature ofa tax measure in as much as the Authority is empowered tosuspend these duties in case of an exporter offering aprice undertaking. Thus such measures are not always inthe form of duties/tax.

Anti-dumping duties are levied against exporter / countryin as much as they are country specific and exporterspecific as against the customs duties which are generaland universally applicable to all imports irrespective ofthe country of origin and the exporter.

5. The legal framework for Anti-dumping measures in India Sections 9A, 9B and 9C of the Customs Tariff Act, 1975 asamended in 1995 and the Customs Tariff (Identification,

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Assessment and Collection of Anti-dumping Duty on DumpedArticles and for Determination of Injury) Rules, 1995, framedthere under form the legal basis for antidumpinginvestigations and for the levy of anti-dumping duties inIndia. The Directorate General of Anti-Dumping and AlliedDuties (DGAD) in the Ministry of Commerce and Industry(Department of Commerce) is responsible for Anti-Dumping andCountervailing Duty actions in India in consonance with WTOand the National Law. DGAD initiates investigations on thebasis of prima-facie evidence of dumping, injury and causallink thereof. The domestic industry has to make available afully documented petition before the case can be taken onrecord. During such documentation, the Officers in theDirectorate assist the domestic industry. After initiation ofinvestigation, the Designated Authority is required to followspecified procedures to give a fair opportunity to all theinterested parties domestic as well as foreign to defend theircases. Besides examination of voluminous trade data, the pricetrends, normal values, product analysis etc., theInvestigating Officers are required to carry out detailedverifications to analyse cost in the domestic industry, aswell as prices indicated by exporters in the exportingcountries. The findings-provisional as well as final-arerequired to be supported by sufficient evidence and cogentfinancial analysis. DGAD is endeavoring that preliminaryfindings are recommended after the completion of 60 days fromthe initiation of investigation. Final findings are to begiven within 12 months of initiation of the case. Aftercompletion of investigations, DGAD recommends Preliminaryfindings/Final findings to Department of Revenue, Ministry ofFinance, which notifies the imposition of Anti-Dumping Duty.The law provides that an order of determination of existence,degree and effect of dumping is appealable before the Customs,Excise and Service Tax Appellate Tribunal (CESTAT). However,as per the judicial view, only the final findings/order of theDesignated Authority/Ministry of Finance can be appealedagainst before the CESTAT. No appeal will lie against the

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Preliminary findings of the Authority and the provisional dutyimposed on the basis thereof. The Appeal to the CESTAT shouldbe filed within 90 days from the date of issue of thenotification by the Central Government imposing anti-dumpingduty.

6. Justifications for antidumping duty In free trade, firms are allowed to charge different rates indifferent markets. The result would be that firms would chargelower prices in foreign markets and higher prices in domesticmarkets, leading to material injury to the domestic producers.Had price discrimination taken place by a monopoly firm withinone economy, the government would have intervened to stopconsumer exploitation by enforcing an Act similar to the MRTPAct, in India. Hence, in the international context, it is theanti-dumping duty that protects the domestic producersinitially and consumers in the long run. The duty is justifiedbecause in case of many industries the startup period is longand start-up costs are also high. Once these firms are forcedout of the market as a result of dumping by exporters, it isvery difficult for them to restart when the same exportersraise prices. Usually, the intentions of charging such lowprices to foreign consumers is to be able to wipe out thedomestic industries and eventually acquiring monopoly power inthe foreign market (i.e. using predatory pricing). Thus it ison this ground that the anti-dumping duties have beenjustified. The main intension is to protect the domesticindustries.

7. WTO and Anti-Dumping AgreementThe Agreement on Implementation of Article VI of the GeneralAgreement on Tariffs andTrade 1994 governs the application of antidumping measures byMembers of the WTO. The provisions of the Agreement were firstnegotiated during the Kennedy Round (1967) and latersubstantially revised during the Tokyo Round (1979) of GATTnegotiations. Anti-dumping measures are unilateral remedies

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which may be applied by a Member after an investigation anddetermination by that Member; in accordance with theprovisions of the Agreement, that an imported product isdumped and that the dumped imports are causing material injury3 to a domestic industry producing the like product. TheAgreement sets out rules for the conduct of anti-dumpinginvestigations, including initiation of cases, calculation ofdumping margins, the application of remedial measures, injurydeterminations, enforcement, reviews, duration of the measureand dispute settlement. The Agreement applies to trade ingoods only. Trade in services is not covered by thisagreement. The Agreement provides for the right of contractingparties to apply anti-dumping measures, i.e. measures againstimports of a product at an export price below its normal valueif such dumped imports cause injury to a domestic industry inthe territory of the importing contracting party4. Inparticular, the Agreement provides for greater clarity andmore detailed rules in relation to the method of determiningthat a product is dumped, the criteria to be taken intoaccount in a determination that dumped imports cause injury toa domestic industry, the procedures to be followed ininitiating and conducting anti-dumping investigations5, and theimplementation and duration of anti-dumping measures6. Inaddition, the Agreement clarifies the role of disputesettlement panels in disputes relating to antidumping actionstaken by domestic authorities.

8. Competition Law in India In India, competition Act, 2002 was enacted and implemented,with an objective of ‘protection and promotion of competition

3 Broadly, injury may be analysed in terms of the volume effect and priceeffect of the dumped imports. The volume effect of dumping relates to themarket share of the domestic industry vis-à-vis the dumped importsfrom the subject country/ies while with regard to the price effect, theDesignated Authority shall considerwhether there has been a significant price under cutting by the dumpedimports as compared with the price of the like product in the domesticmarket, or whether the effect of such imports is otherwise to depressprices to a significant degree or prevent price increase which otherwisewould have occurred to a significant degree.4Article 3.5 of GATT5 Article 6 of GATT6 Article 11 of GATT

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in market and consumer welfare’. The Indian Competition lawcontains an additional objective of ‘competition advocacywhich is not specifically stated in any other country’scompetition legislation. The Competition Act, 2002 repealedthe MRTP Act, 1969 and the focus was shifted from stopping themonopolistic practice to encouraging the competition inmarket.The Act provides a very wide mandate for the CompetitionCommission of India to enforce. Apart from it rather broadobjective, the Act contains provisions which have ratherbecome standard in the competition jurisdictions all acrossthe globe. These are the provisions relating to anti-competitive agreements, abuse of dominant position andregulation of combinations. In the respect of anti-dumping lawthe provisions relating to abuse of dominant position andanti-competitive agreements assume importance. In respect ofdominant position it is pertinent to note that whereasdominance is not frowned upon by the Competition Act, 2002abuse of dominance is certainly frowned upon by thelegislation. Another significant feature in the context ofthese provisions of the Act is that anti-competitiveagreements and abuse of dominance are to be prohibited by theorders of the Commission whereas the mergers are to beregulated by the orders of the e of Commission. Thisdifference in law is of immense significance. Whereas theformer two prevent enhancement of consumer welfare the latterdrives economic growth. Hence, the distinction has beenmaintained.

(i) Section 4 of Competition Act In respect of abuse of dominant position, Section 4(2) enliststhe circumstances when an enterprise shall be considered to beabusing its dominant position. It states:(2) There shall be an abuse of dominant position under sub-section (1), if an enterprise,-(a) directly or indirectly, imposes unfair or discriminatory-

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(i) condition in purchase or sale of goods or service; or(ii) price in purchase or sale (including predatoryprice) of goods or service; or

(b) limits or restricts-(i) production of goods or provision of services ormarket therefor; or(ii) technical or scientific development relating togoods or services to the prejudice of consumers; or(c) indulges in practice or practices resulting in denialof market access; or(d) makes conclusion of contracts subject to acceptanceby other parties of supplementary obligations which, bytheir nature or according to commercial usage, have noconnection with the subject of such contracts; or(e) uses its dominant position in one relevant market toenter into, or protect, other relevant market.

(ii) Abuse of Dominant Position One of the most vigorous users of the predominantinternational trade defence measure, i.e. antidumping duty,India has an unenviable and unfortunate reputation for extremeprotectionism being afforded to its domestic industriesthrough the use of anti-dumping investigations and duties.Anti-dumping as an international trade defence measure is bydefinition protectionist of the Indian market and is based onthe following three touchstones:(i) that there is a significant difference between the normalvalue of a commodity or product and the price at which it isexported to India;(ii) that the difference between the normal value and theexport price to India greater than certain tolerances is perse evidence of dumping;(iii) if this dumping causes or is likely to cause injury tothe domestic industry, antidumping duties would be levied.The effect of anti-dumping duty usually renders the export ofthe product to India economically unviable. Now, the

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touchstone of competition law is to avoid an appreciableadverse effect on a relevant market. Quite naturally, theavailability of competing products, whatever their source,provides wider and more economic options to consumers in therelevant market for a product. Let us consider a practicalexample. Two dominant Indian manufacturers of a productjointly have in excess of half of the domestic production ofthe product. Under the rules, a petition for imposition ofantidumping duties can be filed by the two as beingrepresentative of the domestic industry in India. Let usassume that a few smaller domestic players and exports toIndia by foreign entities constitute the rest of the supply ofthe product to the market in India. There is no substantiveideological divergence between anti-dumping law andcompetition law on the acceptability of the dominant nature ofthese petitioners. Nothing in competition law disapprovesdominance itself as long as it is good. But in case the anti-dumping investigation takes place. This investigation willdetermine as to whether the users of the product manufacturedby the two dominant companies in the market will be left witha reduced choice and constrain them to purchase willy-nillyfrom the two dominant companies. The nature of anti-dumpingproceedings, the costing method usually resorted to by thepetitioners, and the reluctance of foreign exporters todisclose sensitive costing information most often means thatestablishing a proper normal value and that there is nodifference between the normal value and the export price toIndia is not possible.

(9) Conflict between anti-dumping law and competition law

The very conflict that both the laws pose to have is in termsof goals which the respective laws seek to achieve on one handthe goal of competition law is to promote competition, itattaches sanctions to only such price discrimination whichadversely affect competition in markets; even if that impliesthat some competitors may be harmed in the process. On theother hand antidumping law while addressing ‘price

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discrimination’ does not take into account competitionconcerns and its stated goal is to protect “domestic industry”and in fact ends up as an instrument to protect competitors.Thus it seems to be in direct conflict with Competition Law.Competition and antidumping laws were initially thought to becomplementing each other. Over the years however, thisposition has changed. First, competition laws have widenedtheir reach to include conduct of firms who are outside thejurisdiction, which affect the national market. Secondcompetition law has evolved much faster than anti-dumpinglaws. By contrast Anti-dumping laws have evolved within theshackles of the WTO Agreement and have become a protectionisttool in several jurisdictions, with the result that in someextreme instances it impairs competition rather than promotesit. Indeed now the ultimate objectives are quite differentwith competition law aimed at protecting consumers’ interestsand antidumping law designed to safeguard firms’ businesses.Still, the two sets of laws were originally meant tocomplement each other, and they are intended to act upon thesame market distortion7. Some commentators have even arguedthat the two laws can sometimes work at cross purposes ascompetition laws are aimed at curbing the market power ofdomestic producers, whereas antidumping law attempts to usemarket power in order to shift rents away from foreigners.45Antidumping laws were initially enacted to address thesituation of ‘international ‘price predation’ and wereconsidered as extension of competition laws. However over theyears the focus of antidumping law seems to have changed andantidumping laws as they exist today do not seem to beconcerned with the issue of predatory pricing. To this extentit can be said that antidumping law no longer addressescompetition related concerns and since it seems to attachsanctions to every instance of international pricediscrimination which can be shown to cause injury to the

7 Ian Wooton and Maurizio Zanardi, “Trade and Competition Policy: Antidumping versus Anti-Trust”

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domestic industry, it could very well be in conflict withcompetition law.While competition laws are primarily aimed at protecting andpromoting competition in markets, antidumping laws are aimedat remedying the injury to the domestic industry which mayarise due to dumping. It can be concluded that the modernantidumping laws of today in essence provide for protection ofcompetitors. Several authors have commented on the divergence ofantidumping laws from their original objectives8. The“evolution” in its objectives has resulted in a change in theway that antidumping laws are being used and has consequentlychanged their ultimate effect on the market and on competitiveconditions. For example, while the objectives behind earlierantidumping laws ensured that healthy price competitionbetween corporations was encouraged as long as predatorypricing was avoided, today the mere presence of increasinglyprotectionist antidumping laws has resulted in a change in theeconomic behavior of firm wherein instead of profitmaximization through healthy price competition, firms chooseto seek protection or undertake steps that are more likely tolead to the imposition of an antidumping duty on imports. Onthe other hand, competition laws continue to encourage pricecompetition within firms in a market as long as it does notresult in predatory pricing, with a view to maximizingconsumer welfare and protecting the conditions of competition.In other words, the change in the objectives for whichantidumping and competition laws are being used today has alsoin some instances changed their interaction from complementaryto conflicting.

(10) Overlaps

8 For instance, Shanker Singham, A General Theory of Trade and Competition - Trade Liberalization and Competitive Markets, Cameron May, 2007

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There is also a tendency to confuse competition law andantidumping law and to regard them as if they are the same. Nodoubt, the two concepts interrelate and also often dointerface9.However, they do differ, both practically and conceptually.While competition law is concerned with ensuring that theactivities of business undertakings do not damage thecompetitive process, antidumping laws target allegedly‘unfair’ trading practices of foreign companies accused ofexporting (or ‘dumping’) products into other countries atprices below the cost of production, or below the pricecharged in domestic or third markets10. In the modern era,while competition law concentrated on the pursuit of economicefficiency, addressing problems associated with concentratedeconomic power, antidumping law was intended to create apolitically popular form of contingent protection that bearslittle, if any, connection to the prevention of monopoly. Thepolitical constituency for antidumping law is not anantimonopoly constituency, but one for the protection ofindustries facing weak markets or long term decline11. As hasalso been argued, the ‘unfairness’ to which antidumping law isdirected – prices that are too low – is generally seen incompetition law as evidence of the proper working of thecompetitive process, and as a phenomenon beneficial to theconsumers whom competition law fundamentally protects12. Moresuccinctly, competition law favours a dynamic, ever changingmarket of robust competitors; antidumping favours a morestatic model of the market to protect investors and workersfrom changes generated from abroad13. Despite these underlying

9 Peter D. Ehrenhaft, “Is Interface of Antidumping and Antitrust Laws Possible?” (2002) The George Washington International Law Review, vol. 34, No. 2,10 Claude Barfield, “Antidumping Reform: Time to Go Back to Basics” Barfield, (Oxford, Blackwells Publishing, 2005)11 AO Sykes (1998), “Antidumping and Antitrust: What Problems Does Each Address?”, in RZ Lawrence (ed.), Brookings Trade Forum: 1998 (Washington, DC: Brookings Institution12 Peter D. Ehrenhaft13 Peter D. Ehrenhaft

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differences between competition and antidumping laws, thereare types of dumping which if they occur, could definitely bedealt with under the competition laws because they have thecharacteristics of anti-competitive nature. These arepredatory dumping, and strategic dumping14, both variants ofmarket power dumping. Thus, although competition laws andantidumping laws serve historically different functions andaddress different constituencies, in some aspects they dointermingle. There have therefore been calls in some quartersfor antidumping laws to be replaced altogether by competitionlaws and measures, though these calls are roundly rejected insome quarters too. It should also be noted here thatsometimes, anti-dumping measures could actually, thoughunintendedly, be employed in a way that they would go contraryto the rules of competition. It is possible for inefficientlocal companies to respond to legitimate foreign competition,not by increasing the efficiency of their operations, but bypersuading their governments to restrict foreign competition.The weapon of choice here tends to be antidumping law sincethese companies, having powerful connections, are able to maketheir governments utilise the authority offered by the WTOAntidumping Agreement of 1994 to impose arbitrary and punitivetariff measures on the threatening goods and services, andthat would effectively scuttle the foreign competition. Thisis an unwelcome irony that individuals and interest groups whoare committed to competition should watch out for and guardagainst.Issues regarding the areas of overlap

(i) Predatory PricingUnder competition law ‘predatory pricing’ is understood as adeliberate strategy, adopted usually by a dominant firm, todrive competitors out of the market by setting very low pricesor selling below the firm’s incremental costs of producing theoutput (often equated for practical purposes with averagevariable costs) with intent to eliminate competition or

14 Claude Barfield

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eliminate competitors. Once the predator has successfullydriven out existing competitors and deterred entry of newfirms, it can raise prices and earn higher profits15.‘Dumping’ is a type of international price discrimination,wherein an exporter sells an article at “prices lower thanthose charged to domestic buyers, taking into account theconditions and terms of sale.” As per the definition of‘dumping’ as contained in the WTO Antidumping Agreement (aswell as the national antidumping legislations in the subjectcountries), the limited requirement for ‘dumping’ to becondemned and sanctions to be attached against is that, the‘export price’ of the product alleged to be dumped should beless than the price at which it is sold in the domestic marketof the exporting country and that it should cause ‘materialinjury’ to the domestic industry for the ‘like product in theimporting country. Thus anti-dumping law is neither concernedwith the requirement of ‘dominance’ nor ‘intention’, unlikecompetition law wherein both these factors are as importantconditions as the instance of ‘price discrimination’.

(ii) Price DiscriminationBoth anti-dumping and competition law seek to address theissue of ‘price discrimination’. Antidumping law seeks toaddress all those forms of price discrimination, which causeor are likely to cause material injury to the domesticindustry. Competition law on the other hand seeks to addressonly such price discrimination, which is ‘unfair’ or‘discriminatory’ (including predatory) in nature and has an“appreciable adverse effect” on the market. Under competition law only such price discrimination, whichadversely affects competition in markets and thus has negativeconsumer welfare impacts, is prohibited by competitionstatutes. Under competition law such price discrimination isusually referred to as ‘unfair’ or discriminatory pricing anda particular instance of price discrimination does not attractsanctions if it can be shown that it is adopted to meet

15OECD glossary of terms

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competition and does not affect the conditions of competitionin an adverse manner. This requirement therefore involves anexamination into welfare effects of the price discriminatoryconduct. Certain instances of price discrimination such aspredatory pricing have been assumed to affect competitionnegatively and cannot be justified on the grounds that theyhave been ‘adopted to meet Competition.In anti-dumping law price discrimination is synonymous with‘dumping’. Jacob Viner defined dumping as “pricediscrimination between national markets.” In internationaltrade dumping is said to occur when the sale of products forexport is at “prices lower than those charged to domesticbuyers, taking into account the conditions and terms of sale.”According to Article VI, GATT 1994, a product is said to bedumped when its export price is less than its normal value,that is, less than the sale of a like product in the domesticmarket. The effect of the instance of ‘price discrimination’under anti-dumping is examined with the narrow parameters of‘injury’ only to the ‘domestic industry’ and once dumping andinjury have been established, then the examination does nottake into account broader economic concerns, such asconsumer’s interest, the interests of other users of theproduct and the like whilst imposing an anti-dumping duty16.With regard to the practice of antidumping law in India, it isnoted that though consideration of public interest in anantidumping investigation is not mandatory, but in limitedinstances even notwithstanding the positive recommendation bythe Designate Authority/ Ministry of Commerce, the Ministry ofFinance has not imposed anti-dumping duties and this may bedue to public interest considerations. The process however isneither formal nor transparent.

16 However to the limited extent that antidumping rules in India as well as other countries such as USA prescribe the ‘lesser duty rule’ (i.e. if a duty lesser than the margin of dumping is sufficient to remedy the injury to the domestic industry then the antidumping duty should be the lesser of the two), which inherently take account of consumer interest to some extent.

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(11) Antidumping and Competition Provisions in Free Trade Agreements/Regional Trade Agreements

A few studies have, introduced the idea of replacingantidumping with competition laws, especially in free tradeagreements (FTA)17. It has been suggested that the abolition ofanti-dumping laws in favour of harmonized antitrust lawsenhances economic welfare, and offers a practical solution tothe global increase in anti-dumping actions. A uniformstandard of competition policy can be applied to regulate asingle market, regardless of the nationality of each producer.In this way, price discrimination will be examined under thenational competition law (or possibly international law in thefuture); as long as it is acceptable under the competitionrules, no litigation will be initiated against it18. There arecurrently four regional trade agreements, in which the membercountries have abolished the application of antidumpingmeasures amongst themselves: the European Union (EU); theEuropean Economic Area (EEA), which came into force in 1994 bythe treaty signed between the EU and the European Free TradeAssociation (EFTA); the Closer Economic Relations Agreement(CER) between Australia and New Zealand; and the 1996 Canada-Chile free trade agreement. In case of MERCOSUR19, membercountries are eventually expected to phase out antidumpinglaws in favour of harmonized competition law regime, but havenot yet done so.

(12) Conclusion The main objective of Anti-Dumping Law is to protect domesticindustries. Does it mean that less efficient industries mustbe protected? In fact according to Competition Act, 2002 lessefficient industries should shut-down and exit market if they

17 The Relationship Between Competition Policy and Anti-Dumping Law: The Canadian Experience, a study by Lecenomics Inc.18 Hang Zeng, “Antidumping and Competition: the Case of China”, 200519 Also known as Southern Common Market, is a Regional Trade Agreement (RTA)among Brazil, Argentina, Uruguay and Paraguay, founded in 1991 by the Treaty of Asunción, which was later amended and updated by the 1994 Treaty of Ouro Preto

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cannot compete. Anti-Dumping Law has a protectionist flavourwhich Competition Law has not. These both contradict, theycannot exist together; they are oxymoron.Over the past years it has been suggested that anti-dumpingmeasures and competition measures are mirror images,complementary mechanisms, and that one should take place ofthe other. Anti-Dumping measures are, therefore not normally ameans of restoring fair trade (although sometimes may be).Rather they are protective mechanism. It would be veryoptimistic to assume that the elimination of Anti-Dumpingmeasures would easily follow from the widespreadinstitutionalization of competitive measures. Being a part ofa developing nation if I would have to choose betweenelimination of anti-dumping measures in exchange ofimplementing competition rules it will be a wonderful bargain.From the point of view of economics, there is no reason tosupport any anti-dumping law, since price differentiationacross markets is a legitimate and a perfectly rational,sensible and legitimate profit-maximization action. Under thisline of argument, there is no justification for condemningcertain export prices simply because they happen to be lowerthan prices in other markets. Domestic price discriminationi.e., differences in pricing between one country‘s domesticregional markets, normally is not penalized. There arguably isno economic reason for treating ―international‖ pricediscrimination any more harshly by imposing dumping duties. Ofthe different categories of dumping, only predatory pricingdumping and most instances of strategic dumping raise overallwelfare concerns. Yet, these two forms of dumping pertainlargely to the theoretical realm, as most anti-dumping casesin the real world do not involve dumping as defined by thesetwo categories and even Competition Act is there to look aftersuch predatory pricing.Above all, if antidumping were to be a tool against unfairtrade as it was initially meant to be, it would be essentialto reconsider the definition of dumping and think carefully

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what is fair and what is not. Is it fair enough to accuse andpenalize someone just because prices are not equalized?But before the things got worse reform is necessary. Theserules and policies are needed to be amended and a lot can bedone. More transparent process of investigation is desirable:one needs to know in details how a constructed price iscalculated. Material injury requires more careful scrutiny: isinjury caused by dumping or just by higher competition?Consumers' welfare also has to be taken into account, not onlyin text but also in practice.One of the major proposals could be replacement of anti-dumping with competition principles. One of the major concernsof dumping is predatory dumping i.e. a type of anti-competitive event in which foreign companies or governmentsprice their products below market values in an attempt todrive out domestic competition. This may lead to conditionswhere one company has a monopoly in a certain product orindustry. The function of Competition Commission of India isto take necessary action to address such an issue instead oflevying anti-dumping duties.There is a need to review Anti-Dumping Law. Also there is aneed to bring this issue in competition policy because draftcompetition policy does not directly resolve this issue.In order to give protection to domestic infant industriesthere is a need to make provision for such reform inCompetition Act or there is a need to interpret or expand thephrase, ensure freedom of trade carried on by otherparticipants‖ as stated in Section 18 of Competition Act,2002. Ideally these duties should be abandoned but no countrywill do so till it is being implemented in other countries.Thus the problem is needed to be solved at multilateral level.It is difficult to create a new framework altogether for thisissue. Therefore it will be better to do some changes inexisting framework so that it is beneficial for the wholeeconomy. There should be working group meetings on matters of

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concern (dumping and competition). The change should maximizethe welfare of Indian economy.

References AO Sykes (1998), “Antidumping and Antitrust: What

Problems Does Each Address?” in RZ Lawrence (ed.),Brookings Trade Forum: 1998 (Washington, DC:BrookingsInstitution)

Alexandru Moldovan, Antidumping and trade diversion inthe United States of America (2013)

Cadot Oliver, Grether Jean-Maries and Melo de Jaime,“Trade and Competition Policy: Where do we stand?”Journal of World Trade, Vol. 34, No. June.

Claude Barfield, “Antidumping Reform: Time to Go Back toBasics” Barfield, (Oxford, Black wells Publishing, 2005)

Haberler, Gottifried Von, The Theory of InternationalTrade with its Application to Commercial Policy.Translated by Alfred Stonier and Frederic Benham, NewYork: Macmillan, 1937.

Handbook on Anti-Dumping, Ministry of Commerce,Government of India

Hang Zeng, “Antidumping and Competition: the Case ofChina”, 2005

Ian Wooton and Maurizio Zanardi, “Trade and CompetitionPolicy: Antidumping versus Anti-Trust”.

Jose Taraves de Araujo, Jr., Anti-dumping in theAmericas, 9, OAS Trade Unit Studies, 2001

Jacov Viner, Dumping: A problem in International Trade(1923)

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Shanker Singham, A General Theory of Trade andCompetition - Trade Liberalization and CompetitiveMarkets, Cameron May, 2007

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anti-dumping duty and competition law in india

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