UPSC Prelims 2012 · CSAT

Question 38: Reading Comprehension

Passage beginning “The need for Competition Law becomes…” — Passage – 3 · as printed by UPSC

What is the inference from this passage ?

aForeign investors and multinational companies always dominate the domestic market.

bIt is not in the best interests of the domestic economy to allow mergers of companies.

cWith competition law, it is easy to ensure a level playing field between domestic and foreign firms.

dFor countries with open economy, Foreign Direct Investment is essential for growth.

AnswerUPSC’s answer is (c).

The passage argues that an effective competition law can prevent most of the harm from takeovers and mergers by foreign companies, and that multinationals look to the competition authority to treat local and foreign firms evenly. Of the options, (c) is closest: competition law is the tool for securing a level playing field. The others overreach: the passage says FDI is not always pro-competitive, not that MNCs always dominate, that all mergers are bad, or that FDI is essential for growth.

Why each option is right or wrong

(a) Wrong. The passage says FDI is not always pro-competitive, so domination is possible but not certain.
(b) Wrong. It warns of harmful mergers and acquisitions, not that every merger is against the economy's interest.
(c) Right. Competition law is the means to a level playing field; 'easy' is generous, but this is the best-supported inference.
(d) Wrong. The passage does not say FDI is essential for growth.

Answer: UPSC’s key. Explanation: written by UPSC Grade, not by UPSC.

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Source: UPSC, Civil Services (Preliminary) Examination 2012, General Studies Paper II (CSAT), Series A. The paper on upsc.gov.in.