Single Economic Entity Doctrine in India

Does the Competition Act 2002 contemplate exclusion of Single Economic Entity Doctrine? Single Economic Entity doctrine entails that a single economic unit acts as one in a marketplace, regardless of its corporate form. Therefore, it ought to be treated as a single unit for antitrust law and policy (for instance, a parent company and its subsidiaries cannot collude with each other). The American and EU jurisdictions have evolved sophisticated tests to assess whether the corporate bodies together form one economic entity or not. The doctrine and the tests are applied by Indian competition authorities as well. However, the Indian Competition Act defines ‘enterprise’ as a firm or person acting in a market either directly or indirectly through its units, divisions or subsidiaries. In a recent case before Competition Appellate Tribunal, it was submitted that since the definition of ‘enterprise’ is provided for in the law, so long as the elements of the definition (which do not include direction and control test as required by single economic entity doctrine) are satisfied, it means that there is only one economic unit, and it ought to be treated as one. This paper examines the veracity of this submission and the implications that would entail if such a submission were to be accepted.