Dumping Legal Defination

1. DUMPING LEGAL DEFINITION

2. The act of selling goods at less than fair market value, typically for the purpose of injuring a competitor and gaining market share.
3. The selling of large amounts of a stock, or stocks in general, at whatever market prices are in effect. For example, investors might dump stocks on hearing of an outbreak of fighting in some part of the world.
4. The selling of a product in one market at an unusually low price while selling the same product at a significantly higher price in another market. For example, a firm may sell a product in its home market at a price covering all costs, and then sell the product in a foreign market at a significantly lower price, covering only variable costs. See also antidumping
5. The sale of goods of one nation in the markets of a second nation at less than the price charged within the first nation. Dumping can eliminate competitors by undercutting their prices
6. Selling goods or commodities in another country at prices that are substantially below the going market price. International trade regulations attempt to prevent dumping. Violations may be reported to the World Trade Organization.
7. Selling a large amount of securities in a market with no concern for what effect that is likely to have on the price or the product
8. The selling of large amounts of a stock or stocks in general at whatever market prices are in effect. For example, investors might dump stocks upon hearing of an outbreak of fighting in some part of the world.
9. The selling of a product in one market at an unusually low price while selling the same product at a significantly higher price in another market. For example, a firm may sell a product in its home market at a price covering all costs and then sell the product in a foreign market at a significantly lower price covering only variable costs

Anti-dumping actions: Legal issues
If a company exports a product at a price lower than the price it normally charges in its own home market, it is said to be "dumping" the product. Opinions differ as to whether or not such practice constitutes unfair competition, but many governments take action against dumping to protect domestic industry. The WTO agreement does not pass judgment. Its focus is on how governments can or cannot react to dumping — it disciplines anti-dumping actions, and it is often called the "anti-dumping agreement". (This focus only on the reaction to dumping contrasts with the approach of the subsidies and countervailing measures agreement.)
The legal definitions are more precise, but broadly speaking, the WTO agreement allows governments to act against dumping where there is genuine ("material") injury to the competing domestic industry. To do so, the government has to show that dumping is taking place, calculate the extent of dumping (how much lower the export price is compared to the exporter’s home market price), and show that the dumping is causing injury or threatening to cause injury.

Dumping- Evolution of the term

It has long been customary to speak of one market as a ‗dumping ground‘ for the ―surplus‖ products of another market when the producers of the latter for any reason sell their commodities in the former at unusually low prices.
From this usage it was a natural outcome to speak of selling in a distant market at reduced prices as ―dumping‖, but the word used in this sense appeared not to have entered into the literature of economics until the first years of the twentieth century. In 1903 and 1904, the tariff question was the dominant political issue in Great Britain, and in a huge output of polemical literature which marked the tariff controversy. The term became well established and appeared with or without apologetic quotation marks in book after book.
The term ―dumping‖ has since found its way into the economic terminology of the French, German, Italian and probably other languages. Initially, it had a vague and uncertain meaning, and is still used indiscriminately for such diverse price‐practices such as severe competition, customs undervaluation, ―bargain‖, ―sacrifice‖ or ―slaughter sales‖, local price‐cutting and selling in one national market at a lower price than in another.
In recent years, however, the increased use of the term by academic economists with their creditable tendency towards the exact establishment of terminology and of the development of legislation dealing with dumping and allied price‐practices, which made necessary some measure of precision in the differentiation between various price practices, have both contributed to the consistency of the usage. Extensive variations in the use of the term both as to gist and implication are nevertheless still present.
According to Dale, the origin of the word ―dump‖ is uncertain. Its usage by the early nineteenth century had come to mean the act of throwing down in a lump or mass, as with a load from a cart, and it was then a natural extension to apply the word to the disposal of refuse and to describe as a dumping ground, a market for the disposal of surplus stock. During this time, ―dumping‖ was used in English language trade literature to illustrate loosely a situation in which goods were sold cheaply in foreign markets. Today, however, the term is used intentionally to signify the practice of price discrimination in international trade. The term was applied

persuasively to describe almost any situation in which goods were sold abroad at cheap prices, irrespective of the cause of the cheapness, the insinuation being that the goods were unwanted in their country of derivation and were exported only to get rid of them.
Economists have always defined dumping as transnational price discrimination where prices vary between national markets. Although economists still object in principle, they now accept that dumping may also be defined as transnational sale below costs. Deardoff admits this new ―definition‖: ―The definition has broadened over the years; some now consider dumping including ‗sales below costs‘, at least presumptively….this alternative criteria for dumping have gradually acquired elevated status of an alternative definition‖.
However, there is no correlation between price discrimination and sales below cost. Sales below cost may occur with or without discrimination and yet, on the other hand discrimination may take place without selling below costs. The term dumping is employed most often, even in careless business language to signify selling the same commodities at different prices in different markets. Commercially, the term is often uncritically extended to cover various types of sales at prices lower than those generally current, even if the prices are uniform to all purchasers.

Types of Dumping
1. Sporadic Dumping: Occasional sale of a commodity at below cost in order to unload an unforeseen and temporary surplus of the commodity such as cheese, milk, wheat etc. in the international market without reducing domestic prices.
2. Predatory Dumping: Temporary sale of a commodity at below its average cost or a lower price abroad in order to derive foreign producers out of business, after which prices are raised to take advantage of the monopoly power abroad.
3. Persistent Dumping: Continuous tendency of a domestic monopolist to maximize total profits by selling the commodity at a higher price in the domestic market than internationally (to meet the competition of foreign rivals).

2. Competition Act, 2002: Overview
Competition is now universally acknowledged as the best means of ensuring that consumers, even more so the ―aam aadmi‖ or ―common man‖, have access to the broadest range of services at the most competitive prices. Producers will have maximum incentive to innovate, reduce their costs and meet the consumers demand. Competition thus promotes allocative and productive efficiency. But all this requires healthy market conditions and governments across the globe are increasingly trying to remove market imperfections through appropriate regulations to promote competition.
The Preamble of the Competition Act, 2002:
An Act to provide, keeping in view of the economic development of the country, for the establishment of a Commission to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets, in India, and for matters connected therewith or incidental thereto.
The Act provides a very wide mandate for the Competition Commission of India to enforce. Apart from it rather broad objective, the Act contains provisions which have rather become standard in the competition jurisdictions all across the globe. These are the provisions relating to anti-competitive agreements, abuse of dominant position and regulation of combinations. In the respect of anti-dumping law the provisions relating to abuse of dominant position and anti-competitive agreements assume importance. In respect of dominant position it is pertinent to note that whereas dominance is not frowned upon by the Competition Act, 2002 abuse of dominance is certainly frowned upon by the legislation. Another significant feature in the context of these provisions of the Act is that anti-competitive agreements and abuse of dominance are to be prohibited by the orders of the Commission whereas the mergers are to be regulated by the orders of the e of Commission. This difference in law is of immense significance. Whereas the former two prevent enhancement of consumer welfare the latter drives economic growth. Hence, the distinction has been maintained.

Section 4 of Competition Act
In respect of abuse of dominant position, Section 4(2) enlists the circumstances when an enterprise shall be considered to be abusing 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-
(i) condition in purchase or sale of goods or service; or
(ii) price in purchase or sale (including predatory price) of goods or service; or
(b) limits or restricts-
(i) production of goods or provision of services or market therefor; or
(ii) technical or scientific development relating to goods or services to the prejudice of consumers; or
(c) indulges in practice or practices resulting in denial of market access; or
(d) makes conclusion of contracts subject to acceptance by other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts; or
(e) uses its dominant position in one relevant market to enter into, or protect, other relevant market

Abuse of Dominant Position
One of the most vigorous users of the predominant international trade defence measure, i.e. antidumping duty, India has an unenviable and unfortunate reputation for extreme protectionism being afforded to its domestic industries through the use of anti-dumping investigations and duties. Anti-dumping as an international trade defence measure is by definition protectionist of the Indian market and is based on the following three touchstones:
(i) that there is a significant difference between the normal value of a commodity or product and the price at which it is exported to India;
(ii) that the difference between the normal value and the export price to India greater than certain tolerances is per se evidence of dumping;
(iii) if this dumping causes or is likely to cause injury to the domestic industry, antidumping duties would be levied.
The effect of anti-dumping duty usually renders the export of the product to India economically unviable. Now, the touchstone of competition law is to avoid an appreciable adverse effect on a relevant market. Quite naturally, the availability of competing products, whatever their

source provides wider and more economic options to consumers in the relevant market for a product.
Let us consider a practical example. Two dominant Indian manufacturers of a product jointly have in excess of half of the domestic production of the product. Under the rules, a petition for imposition of antidumping duties can be filed by the two as being representative of the domestic industry in India. Let us assume that a few smaller domestic players and exports to India by foreign entities constitute the rest of the supply of the product to the market in India.
An overwhelming majority of the recommendations of the antidumping authority are to impose antidumping duties, and thus, knock exporters out of the Indian market. There is no substantive ideological divergence between anti-dumping law and competition law on the acceptability of the dominant nature of these petitioners. Nothing in competition law disapproves dominance itself.
But now to the anti-dumping investigation, this investigation will determine as to whether the users of the product manufactured by the two dominant companies in the market will be left with a reduced choice and constrain them to purchase willy-nilly from the two dominant companies.19

Section 18: Duties of the Commission
As stated in Section 18 of the Competition Act, 2002:
It shall be the duty of the Commission to eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade carried on by other participants, in markets in India: Provided that the Commission may, for the purpose of discharging its duties or performing its functions under this Act, enter into any memorandum or arrangement with the prior approval of the Central Government, with any agency of any foreign country.

Causes of Dumping
Dumpig usually occurs because of the following reasons:
(1) Producers in one country are trying to stay competitive with producers in another country,
(2) Producers in one country are trying to eliminate the producers in another country and gain a larger share of the world market,
(3) Producers are trying to get rid of excess stuff that they can't sell in their own country,
(4) Producers can make more profit by dividing sales into domestic and foreign markets, then charging each market whatever price the buyers are willing to pay.

3. Definition of exploitation of labour
Labour exploitation is work obtained from a person under threat (real or perceived) and which the person has not offered themselves voluntarily
(ILO, 1930).
Labour exploitation is also often an element of human trafficking. According to the Palermo Protocol to
Prevent, Suppress and Punish Trafficking in Persons, human trafficking is the combination of movement or harbouring of a person; use of deception or coercion; and placement into situations of exploitation (UNODC,
2004). Trafficking in persons, for all forms of exploitation including labour exploitation, is an international criminal offence. Commonly, this is often referred to as slavery.

Contributing Factors
The following factors contribute to the prevalence of labour exploitation and an individual’s vulnerability:
• high unemployment
• non-payment of minimum wages
• poverty
• crime rates
• discrimination
• corruption

Different forms of exploitative labour
Forced labour often occurs when employers take advantage of gaps in legislation to exploit vulnerable workers. Forced labour is not always included in state anti-trafficking legislation and so is under-represented in trafficking statistics. Forced labour does not always occur under the umbrella of transnational criminal networks, but instead may involve an individual who forces one or even hundreds of people into servitude.
Bonded labour, also referred to as debt bondage, occurs when a person has to work to pay back an inherited debt, or when a debt is incurred as part of the terms of employment. Often debts are due to economic shocks where an individual or family have to borrow from moneylenders and employers to pay forculturally important events such as a funeral, weddingor dowry. Economic shocks can also be caused by crop failure or the sudden death of the main breadwinner. The worker’s labour becomes repayment for an initial loan.
The circumstances of the bonded labour may become additionally exploitative when the value of the work is greater than the loan. Bonded labour is illegal in most countries, however sometimes these laws are inadequate and/or not enforced.
Involuntary domestic servitude occurs when a domestic worker becomes ensnared in an exploitative situation from which they are unable to escape. The exploitation can include inadequate wages and working conditions; however, it is also the real or perceived restriction of freedom, trapping the individual in servitude through violence, coercion, physical, sexual and emotional abuse, physical barriers etc. (Director
General, 2005). Domestic servitude is largely hidden and hard to uncover because it generally occurs in private homes. This kind of work is largely unregulated by public authorities.

4. Minimum wage law
Minimum wage law is the body of law which prohibits employers from hiring employees or workers for less than a given hourly, daily or monthly minimum wage. More than 90% of all countries have some kind of minimum wage legislation
Until recently, minimum wage laws were usually very tightly focused. In the U.S. and Great Britain, for example, they applied only to women and children. Only after the Great Depression did many industrialized economies extend them to the general work force. Even then, the laws were often specific to certain industries. In France, for example, they were extensions of existing trade union legislation. In the U.S., industry specific wage restrictions were held to be unconstitutional. The country's Fair Labor Standards Act of 1938 established a uniform national minimum wage for nonfarm, nonsupervisory workers. Coverage was later extended to most of the labor force
A minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell their labor. Although minimum wage laws are in effect in many jurisdictions, differences of opinion exist about the benefits and drawbacks of a minimum wage.
Supporters of the minimum wage say that it increases the standard of living of workers, reduces poverty, and forces businesses to be more efficient. Opponents say that if it is high enough to be effective, it increases unemployment, particularly among workers with very low productivity due to inexperience or handicap, thereby harming less skilled workers and possibly excluding some groups from the labor market; additionally it is less effective and more damaging to businesses than other methods of reducing poverty.

The first moves to legislate wages did not set minimum wages, rather the laws created arbitration boards and councils to resolve labour conflicts before the recourse to strikes.
• In 1896, New Zealand established such arbitration boards with the Industrial Conciliation and Arbitration Act
• In 1899, the colony of Victoria, Australia established similar boards
• In 1907, the Harvester decision was handed down in Australia. It established a 'living wage' for a man, his wife and two children to "live in frugal comfort"
• In 1909, the Trade Boards Act was enacted in the United Kingdom, establishing four such boards
• In 1912, the state of Massachusetts, United States, set minimum wages for women and children
• In the United States, statutory minimum wages were first introduced nationally in 1938
• In the 1960s, minimum wage laws were introduced into Latin America as part of the Alliance for Progress; however these minimum wages were, and are, low

Arguments in favour of Minimum Wage Laws
Supporters of the minimum wage claim it has these effects:
• Increases the standard of living for the poorest and most vulnerable class in society and raises average.
• Motivates and encourages employees to work harder
• Stimulates consumption, by putting more money in the hands of low-income people who spend their entire paychecks.
• ncreases the work ethic of those who earn very little, as employers demand more return from the higher cost of hiring these employees.
• Decreases the cost of government social welfare programs by increasing incomes for the lowest-paid.
• Encourages people to join the workforce rather than pursuing money through illegal means, e.g., selling illegal drugs
• Encourages efficiency and automation of industry.
• Removes low paying jobs, forcing workers to train for, and move to, higher paying jobs
• Increases technological development. Costly technology that increases business efficiency is more appealing as the price of labour increases.
Arguments against Minimum Wage Laws
Opponents of the minimum wage claim it has these effects:
• As a labor market analogue of political-economic protectionism, it excludes low cost competitors from labor markets and hampers firms in reducing wage costs during trade downturns. This generates various industrial-economic inefficiencies.
• Hurts small business more than large business.
• Reduces quantity demanded of workers, either through a reduction in the number of hours worked by individuals, or through a reduction in the number of jobs.
• May cause price inflation as businesses try to compensate by raising the prices of the goods being sold.
• Benefits some workers at the expense of the poorest and least productive.
• Can result in the exclusion of certain groups from the labor force.
• Small firms with limited payroll budgets cannot offer their most valuable employees fair and attractive wages above unskilled workers paid the artificially high minimum, and see a rising hurdle-cost of adding workers.
• Is less effective than other methods (e.g. the Earned Income Tax Credit) at reducing poverty, and is more damaging to businesses than those other methods.
• Discourages further education among the poor by enticing people to enter the job market.
• Discriminates against, through pricing out, less qualified workers (including newcomers to the labor market, e.g. young workers) by keeping them from accumulating work experience and qualifications, hence potentially graduating to higher wages later. (This may be a reason why trade unions press for minimum wages, i.e. to protect older workers on the job from the competition of younger, cheaper workers on the job market, for a given level of productivity.)