Contributed by Arjun Kapur

Introduction

In the modern world, Competition Law has already restrained businesses by ensuring that the competition is acceptable and fair for all participants in the market. The introduction of anti-dumping has significantly impacted fair competition in the market. Anti-dumping refers to a country’s attempt to prevent domestic competitors from dominating the market by charging a lower price abroad than at home. This practice effectively affects fair competition by exceeding the threshold limit of Appreciably Adverse Effects on Competition. Several critics say the anti-dumping statute is an extra-territorial application of competition law.

Regarding evolution, competition law has outpaced anti-dumping rules by a wide margin. At first, anti-dumping legislation and competition-related legislation were seen as complementary. The scope of competition law now includes foreign companies that impact the domestic market. Contrarily, WTO regulations are where anti-dumping measures first emerged. Anti-dumping rules are now used as a protectionist instrument to prevent market distortions.

The Need for an Anti-dumping Law

The anti-dumping law’s legal reasoning provides numerous economic and social justifications for preventing dumping. However, the idea of distributive justice spurred the creation of anti-dumping legislation.

Distributive justice ensures harmony between the various governments’ differing levels of authority. Such a power differential is significant for anti-dumping legislation because businesses may decide to benefit from it to create trade distortions. This is when anti-dumping regulations become of utmost significance. The anti-dumping law justifies the government’s anti-dumping duties to correct these trade distortions.

Anti-dumping is essential since there are no universal norms governing competition law. Aside from that, anti-dumping continues to be valuable due to the political impossibility of the international implementation of competition law.

Although both competition and anti-dumping laws originally had the same goal, the goals surrounding their application have changed over time, and current anti-dumping practices have started to encourage the kinds of unfair and anti-competitive behaviour they were intended to stop. This unintended consequence arises primarily from the strategic use of anti-dumping measures by specific industries and countries as a form of economic protectionism rather than a defence against genuinely unfair trade practices. For instance, domestic industries might lobby for anti-dumping duties on imports not because these imports are priced unfairly low but because the duties serve as a barrier to competition, allowing domestic producers to maintain higher prices and secure market share.

Because of the impact of anti-dumping laws, businesses have decided to seek protection from the imposition of anti-dumping duties to maximise their profits. However, if it does not amount to predatory pricing, the competition legislation encourages healthy price rivalry between the enterprises.

The goals of the ‘anti-dumping’ and ‘competition laws’ have gradually diverged, making it impossible for them to work harmoniously. According to several scholars, jurisprudence has expanded its territorial reach due to the development of national laws. The anti-dumping law has, therefore, outlived its usefulness. Anti-dumping has received harsh criticism, and it has also been referred to as a witches’ brew made up of power, corrupt politicians, and money.

Should the Anti-Dumping Law be replaced with a refined version of Competition Law?

There have also been arguments against doing away with anti-dumping laws. The suggestion made here is to start moving in the direction of free trade agreements. The development of free trade can benefit significantly from regional trade agreements. The same result can be obtained by eliminating tariffs and anti-dumping duties. Positive signs are emerging in that area as the general public begins comprehending the complexity of multilateral trade agreements. The number of regional trade agreements is also anticipated to increase significantly in the coming years.

While the Anti-Dumping Law exhibits protectionist behaviour, the Competition Law does not. These are similar in that they both contradict one another and cannot coexist at the same time. During the past several years, it has been suggested that anti-dumping and competition policies are replicas and complementary mechanisms and that one should be implemented before the other. Neither should be implemented at the same time. Anti-dumping measures are no longer often a means of reviving fair trade but rather a limited degree of a protective mechanism. It would be right to assume that the general standardization of competitive measures would naturally lead to the withdrawal of Anti-Dumping legislation.

From an economic perspective, there is insufficient evidence to support anti-dumping legislation because price discrimination between markets is a perfectly acceptable and legal way to increase profits. This line of reasoning holds that it is unjustified to criticize a particular export price only because it appears less expensive than pricing in other markets.

Domestic price discrimination, or a price disparity between a country’s domestic markets, is frequently not sanctioned. Considering that dumping duties alone abolish international price discrimination is debatably not financially sound. Out of all the numerous types of dumping, only a few instances of strategic dumping and predatory price dumping raise concerns about overall welfare.

Harmonizing the two regimes

Although it may initially appear that both policies overlap, the truth is significantly more nuanced. Despite deriving from the same tree, anti-dumping and competition laws have many similarities and distinctions in their goals and methods for achieving them.

Many legal academics have noted that government impositions of anti-dumping duties are frequently political. The manipulation of anti-dumping legislation must be kept to a minimum, and state authorities’ latitude must be constrained. In light of the preceding, it is recommended that explicit regulations be created and that the procedure for enforcing such a duty be made apparent.

The terms “anti-dumping law” and “competition law” are considered contradictions. Anti-dumping legislation is, in some ways, a protectionist measure for developing markets. As a protectionist tactic, it aims to defend domestic sectors from supposed foreign company incursion. Protection is given to the less productive industries during that process. The goal of competition law is the exact opposite of this.

It should be underlined that an improved anti-dumping policy is not the solution to the current issues. Numerous academics believe the anti-dumping regime’s ongoing problems can be solved by implementing an effective competition policy. The anti-dumping regime will be replaced with a competition framework, preventing anti-competitive domestic firms from distorting the market. The main difference between the two regimes’ approaches to avoiding market distortions is what causes friction between them.

Another issue with the anti-dumping law is that it only requires two elements to start an anti-dumping action. The process should begin with dumping. Second, harm needs to have been inflicted. These components are fundamentally deficient and give plenty of room for power abuse. The suggestion is that an anti-dumping case should only be pursued if it meets the requirements set forth by competition law. This action will prevent the misuse of anti-dumping authority. To prevent anti-dumping laws from being used as a political pawn. Furthermore, such action guarantees that anti-dumping proceedings are only brought when businesses misuse the market.

Price differences across borders are viewed as legitimate and valid economically. Numerous things can cause such changes in prices. Even the “foreign entity” dealing with the goods may not have control over such a scenario. In this liberalised market, imposing a penalty in such a circumstance would be highly unfair.

Conclusion

Despite the numerous flaws in anti-dumping regulations, it has been thought that it is impossible to abolish anti-dumping laws in the lack of a viable replacement available for various jurisdictions. Anti-dumping is a necessary evil to combat the problem of predatory pricing and cross-border price discrimination affecting multiple markets globally. The consumers of a product that the government has subjected to anti-dumping duty may suffer long-term effects due to anti-dumping laws, which is another problem.

However, using regional trade agreements can be the most effective approach to address the weak anti-dumping regulations in States. The Regional Trade Agreement will have the consequence of pressuring sovereign governments to cede their authority instead of more considerable public interest and market stability. However, it should be noted that regional agreements may only be able to address the issue of local abuse of anti-dumping laws and not the global issue.  According to international norms relating to Anti-dumping, a uniform set of regulations would deal with commodities coming into the country from other nations.

Many academics have urged replacing the anti-dumping statute with a robust competition law system as in other jurisdictions, notably the US and Europe. However, the jurisdiction and law governing competition statutes make such a step problematic.  The ideal solution to the conflict between anti-dumping and global competitiveness will be the global abolition of anti-dumping measures.