We need a competition law system that encourages rivalry

One of the major questions was on the purpose of that law. As India opened its economy a decade ago, it was felt that the earlier Monopolies and Restrictive Trade Practices Act, which was considered a bad one, did not keep pace with the times. Thus, like much of the world’s governance, we decided to restrict anti-competitive practices from focusing on curbing monopolies.

The natural question is what are the major problems the present Bill aims to solve and how. Given the irrelevance of assets and revenue in a digital economy, the Bill seeks to empower the Competition Commission of India (CCI) to review combination transactions exceeding a specified deal value, if any party has There is enough business operation, but with an undefined condition.

It also proposes to expand the scope of the meaning of “control” by including concepts such as “material effect”, which is again left to the imagination of the CCI. The competition regulator is also empowered to consider proposed commitments and settlements by alleged wrongdoers without trial, known in Western terms as plea bargaining. This is welcome, as it will reduce the burden on the CCI. Against that decision of the Central Government, it will also have the power to appoint its Director General, its Head of Investigation.

In effect, the Bill intends to enhance the discretion and powers of the CCI. One could argue that this is necessary to deal with increasing market uncertainty and the need to make effective and efficient decisions. However, this prudence is being sought at a time when concerns about degradation in the quality and performance of regulation of such non-elected regulatory agencies are at an all-time high. It is thus important that such powers are accompanied by adequate checks and balances in the form of effective transparency, accountability to Parliament and grievance redressal mechanism.

However, unlike the flagship legislation, the Bill fails to address the major concerns about the current state of the Indian economy, the role of competition in it. It is not that there is none. Twenty years is a long time to evaluate the performance of a law. The Competition Act may have been fully implemented only in 2007, but a lot of time has passed.

Despite being largely successful in addressing anti-competitive actions, the competition regime has failed to develop and establish a culture of competition across sectors and industries.

Despite three decades of liberalisation, there are many areas in which specific types of firms get undue preference over others. Those who want to compete fairly have to deal with prohibitive costs of land, capital, inputs, logistics, compliance, power and what not, making it uncompetitive.

Many industries still demand protections and concessions rather than compete with global firms, and will someday vote for import barriers to gain export opportunities in exchange for increased domestic competition. These demands are music to the ears of unelected bureaucrats who get high from discretionary power. The competition authority should not go down this path.

Conversely, every regulator should have an obligation to promote competition, barring competition and consumer interests. They should work to remove the hurdles faced by the firms. Regulators should not be able to exercise discretionary powers without proper explanation, and should always follow the principles of natural justice.

A leaf can be taken from the UK competition regime, whereby regulators in the sectors of energy, communications, financial services, payments, health, railways and aviation are governed by competition law. Appeals from the UK Competition and Markets Authority (CMA) and all regional regulators are heard in the UK by the Competition Appeals Tribunal, an independent judicial body that acts as an oversight body to promote competition across sectors. A similar model can serve India to foster a culture of competition.

Fortunately, while our bill does away with a wider governing board proposal, which would have added another bureaucratic layer and slowed down regulation, it still does not discuss important concepts such as the abuse of collective dominance. It has not warmed to the idea of ​​mandating consultations between competition and regional regulators even after more than 10 years of its proposal (made during discussions to amend the law in 2011). The UK Competition Network is an established forum for collaboration between the CMA and regional regulators to encourage stronger competition in the economy. Something similar has been proposed in the National Competition Policy (NCP) which is pending with the Ministry of Corporate Affairs of India since 2011.

A competition law system of our times must impose obligations to promote competition in all sectors. A good start might be to include this objective in the preamble of the law. Restoration of the Competition Appellate Tribunal and adoption of the NCP will help further this objective.

Amol Kulkarni contributed to this article.

Pradeep S. Mehta, Secretary General, Cuts International

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