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Minimum Export Price

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(Created page with "<p>This is a widely known term and has been explicitly incorporated in competition legislation of various countries. It refers to an anticompetitive business practice in which ...")
 
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<p>This is a widely known term and has been explicitly incorporated in
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<p>Minimum Export Price (MEP)  is the price below which an exporter is not allowed to export the commodity  from India. MEP is  imposed in view of the rising domestic retail / wholesale price or production  disruptions in the country. MEP is a kind of quantitative restriction to trade.  As per a 2005 [https://books.google.co.in/books?id=b5jVAgAAQBAJ&pg=PA208&lpg=PA208&dq=Minimum+export+price+policy+by+countries&source=bl&ots=7A4MEH5Vif&sig=o-jb1tZ8JCoFeNgDL-ShMtJGcEE&hl=en&sa=X&ei=ktZkVdiWDsy2uASj24CIBA&ved=0CFoQ6AEwCQ#v=onepage&q=minimum%20export%20pri study  by OECD],  around 14 of the WTO members had adopted a Minimum Export Price Policy.</p>
competition legislation of various countries. It refers to an anticompetitive
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<p>  Government fixes MEP for the selected  commodities with a view to arrest domestic price rise and augment domestic  supply.&nbsp;This is intended to be imposed for  short durations and is removed when situations change. The removal of MEP helps farmers / exporters in realising better and remunerative prices and would also help in earning  valuable foreign exchange for the country.</p>
business practice in which a dominant firm may engage in order to maintain or
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<p>  For instance, minimum Export Prices (MEP) of  US$ 450/MT on Potato was imposed on 26th June, 2014 to augment  domestic supplies in view of rising retail and wholesale prices in domestic  markets. This continued till 20th February, 2015, for almost 8  months, uptill surplus supply of potato in the domestic markets and consequent  rapid fall in price (In domestic and retail) led to its removal by Department  of Commerce vide another Gazette Notification.&nbsp;</p>
strengthen its position in the market. Such business practices by the firm may
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<p> Generally, MEP imposition is restricted to essential commodities like  potatoes, Onions, rice, edible oils etc. </p>
be considered restricting competition in the market. The different types of  
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<p> Notifications on MEP issued by Department of Commerce may be seen from the website of [http://dgft.gov.in/ Director General of Foreign Trade (DGFT).] However, actual price fixing may be done by  other concerned agencies, like, say National  Agricultural Cooperative Marketing Federation of India Ltd. ([http://www.nafed-india.com/ NAFED]) in case of Onions. MEP decisions  are generally taken at the Cabinet level. The requests for changes in MEP are  brought to the Cabinet by the line ministries, such as the Agriculture  Ministry, who request for changes generally on ad-hoc basis. It is not a  formula based imposition. </p>
business practices that are considered as being abusive vary across countries as
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<p><strong>Legal  backing for MEP</strong><br>
well as on a case by case basis. The business practices which have been
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As per section 5 of the [http://dgft.gov.in/exim/2000/not/om199.htm The Foreign  Trade (Development And Regulation) Act, 1992,] the Central Government may,  from time to time, formulate and announce by notification in the Official  Gazette, the export and import policy and may also, in the like manner, amend  that policy.</p>
contested in actual cases in different countries, not always with legal success,  
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<p>  As  per the [http://agriexchange.apeda.gov.in/FTP/ftp2015-20E.pdf Foreign  Trade Policy] (FTP) of the Government, exports  and imports shall be free&rsquo; except when regulated by way of &lsquo;prohibition&rsquo;, &lsquo;restriction&rsquo;  or &lsquo;exclusive trading through State Trading Enterprises (STE).  Section 2.07 of the said policy narrates the  &ldquo;principles of restrictions&rdquo; for export and import.  The list of &lsquo;Prohibited&rsquo;, &lsquo;Restricted&rsquo; and  &lsquo;STE&rsquo; items can be viewed by clicking on [http://dgft.gov.in/exim/2000/downloadftp2015-2020.htm &lsquo;Downloads&rsquo;] at http://dgft.gov.in.</p>
have included the following but not limited to: charging unreasonable or excess
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<p> As per Section 2.39 of the said Foreign Trade policy all goods may be exported  without any restriction except to the extent that such exports are regulated by  Indian Trade Classification (Harmonised System) [ITC (HS)] of Exports and  Imports or by any other provision of Foreign Trade Policy (FTP) or any other  law for the time being in force. Generally, export policy, including Minimum  Export Price restrictions are outlined in [http://dgft.gov.in/exim/2000/downloadftp2015-2020.htm Schedule  2 of the ITC- HS]. Director General of  Foreign Trade (DGFT) may, however, specify through a public notice such terms  and conditions according to which any goods, not included in ITC (HS), may be  exported without an Authorisation.</p>
prices, price discrimination, predatory pricing, price squeezing by integrated
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firms, refusal to deal/sell, tied selling or product bundling and <i>pre-emption
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of facilities</i>.</p>
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<p>As part of liberalization and on recommendation of high powered Raghvan
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Committee, the Competition Act, 2002 was enacted in India. Before the
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commencement of the 2002 Act, this phrase was not relevant in Indian context.  
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Now, abuse of dominance is covered under section 4 of the Competition Act, 2002.  
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in India, which has come into force from May 20, 2009. Abuse of dominance in  
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Indian law has similar meaning as in other competition legislations. The said
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provision is applicable to all enterprises including public sector enterprises
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and Government. The said Act vests power in Competition Commission of India to
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investigate and inquire into instances of abuse of dominance and  
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correct/penalize enterprise behaviour and help establish a competitive market.  
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Commission has started receiving many cases relating to various aspects of abuse
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of dominance.</p>
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<p>Abuse is stated to occur when an enterprise or a group of enterprises uses
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its dominant position (As per Competition Act 2002, <i>dominant position is
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position of strength enjoyed by an enterprise in a relevant market, which
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enables it to operate independently of competitive forces prevailing in the  
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relevant market; or affect its competitors or consumers or the relevant market
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in its favour</i>) in the relevant market in an exclusionary or/and an
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exploitative manner. Such practices shall constitute abuse only when adopted by
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an enterprise enjoying dominant position in the relevant market in India.</p>
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==References==
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Competition Commission of India, Advocacy Booklet Series 5, Abuse of Dominance, March 2011
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==Contributed by==
 
==Contributed by==
* [http://www.ies.gov.in/myaccount-profile-view.php?memid=82 Dr. Seema Gaur]
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* [http://www.ies.gov.in/myaccount-profile-view.php?memid=338 Rosemary K. Abraham, IES(2006)] with inputs from  [http://www.ies.gov.in/myaccount-profile-view.php?memid=257 Dr. Anuradha Guru (IES 1999)]
*Email- [mailto:seema.gaur@nic.in seema.gaur@nic.in]
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*Email- [mailto:rosemary.a@nic.in rosemary.a@nic.in] and [mailto:anuradha_guru@rediffmail.com anuradha_guru@rediffmail.com]
  
[[Category:concepts|AbuseofDominance]]
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[[Category:concepts|MinimumExport Price]]

Latest revision as of 11:16, 19 April 2016

Minimum Export Price (MEP) is the price below which an exporter is not allowed to export the commodity from India. MEP is imposed in view of the rising domestic retail / wholesale price or production disruptions in the country. MEP is a kind of quantitative restriction to trade. As per a 2005 study by OECD, around 14 of the WTO members had adopted a Minimum Export Price Policy.

Government fixes MEP for the selected commodities with a view to arrest domestic price rise and augment domestic supply. This is intended to be imposed for short durations and is removed when situations change. The removal of MEP helps farmers / exporters in realising better and remunerative prices and would also help in earning valuable foreign exchange for the country.

For instance, minimum Export Prices (MEP) of US$ 450/MT on Potato was imposed on 26th June, 2014 to augment domestic supplies in view of rising retail and wholesale prices in domestic markets. This continued till 20th February, 2015, for almost 8 months, uptill surplus supply of potato in the domestic markets and consequent rapid fall in price (In domestic and retail) led to its removal by Department of Commerce vide another Gazette Notification. 

Generally, MEP imposition is restricted to essential commodities like potatoes, Onions, rice, edible oils etc.

Notifications on MEP issued by Department of Commerce may be seen from the website of Director General of Foreign Trade (DGFT). However, actual price fixing may be done by other concerned agencies, like, say National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED) in case of Onions. MEP decisions are generally taken at the Cabinet level. The requests for changes in MEP are brought to the Cabinet by the line ministries, such as the Agriculture Ministry, who request for changes generally on ad-hoc basis. It is not a formula based imposition.

Legal backing for MEP
As per section 5 of the The Foreign Trade (Development And Regulation) Act, 1992, the Central Government may, from time to time, formulate and announce by notification in the Official Gazette, the export and import policy and may also, in the like manner, amend that policy.

As per the Foreign Trade Policy (FTP) of the Government, exports and imports shall be free’ except when regulated by way of ‘prohibition’, ‘restriction’ or ‘exclusive trading through State Trading Enterprises (STE).  Section 2.07 of the said policy narrates the “principles of restrictions” for export and import.  The list of ‘Prohibited’, ‘Restricted’ and ‘STE’ items can be viewed by clicking on ‘Downloads’ at http://dgft.gov.in.

As per Section 2.39 of the said Foreign Trade policy all goods may be exported without any restriction except to the extent that such exports are regulated by Indian Trade Classification (Harmonised System) [ITC (HS)] of Exports and Imports or by any other provision of Foreign Trade Policy (FTP) or any other law for the time being in force. Generally, export policy, including Minimum Export Price restrictions are outlined in Schedule 2 of the ITC- HS. Director General of Foreign Trade (DGFT) may, however, specify through a public notice such terms and conditions according to which any goods, not included in ITC (HS), may be exported without an Authorisation.


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