Why in news?
The Union Cabinet recently approved rightsizing of Competition Commission of India (CCI) by halving the number of its members.
What is the recent decision?
- CCI currently has a chairperson and 6 members.
- With the recent downsizing, it will now have a chairperson and 3 members.
- The decision is in pursuance of the Government's objective of 'minimum government, maximum governance'.
What are the proposed reasons?
- Workload - The assets and turnover threshold for mergers and acquisitions (M&A) deals that would need CCI approval has been raised recently.
- The raised threshold and low coverage would reduce the workload of the CCI.
- Time - The corporate affairs ministry had also contended that the reduction would speed up the CCI’s work.
- Few members would lead to faster turnaround in hearings that is expected to result in speedier approvals.
- This is because all members in office have to sign on to an order, and 4 members would facilitate this faster than earlier 7.
- Decision making - Downsizing especially reduces the scope for dissenting judgments.
- DG's Office - The director-general’s office, the CCI’s investigation arm, with just 14 people, is undoubtedly understaffed.
- It urgently needs more people to perform this critical role.
- It is argued that CCI's downsizing could help expand the director-general’s office.
- Besides, competition regulators in advanced jurisdictions in UK, US, Australia and Japan also have minimum possible members.
Will downsizing benefit CCI?
- Process - In CCI's case, the downsizing may prove counterproductive due to various factors.
- The paperwork and processes that are required for companies to file for approvals remain voluminous.
- How efficiently can a small CCI take up these is highly uncertain.
- Decision making - If 7 members widened the scope for dissent, a quorum of 4 hardly diminishes it.
- The question of a possible 2:2 tie and a deadlock in decision remains unaddressed.
- Moreover, the law defines the chairperson as a member.
- So the issue of a casting vote becomes contentious.
- Composition - Technology is adding manifold degrees of complexity to commerce.
- The global dimension of business today also requires sectoral expertise.
- Global M&As may have unique local consequences or standard global practices may impact Indian consumers differently.
- Given these, general expertise in corporate and M&A law increasingly demands specialist knowledge to supplement.
- Thus, fewer CCI members may not provide scope for the addition of sector experts.
- Sector experts working on a rotating roster of cases may serve the cause of the competition regulator better than a reduced CCI.
- DG's Office - The two i.e. the CCI and the DG’s office have distinct functions.
- So it is difficult to see why expanding one should prevent enlarging the other.
- In all, in CCI's case, a reduction in members is less likely to serve the perceived cause of efficiency.
Source: Business Standard
