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Reflecting on Competition Commission of India

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July 26, 2019

What is the issue?

  • The Competition Commission of India (CCI) turned a decade old recently.
  • In this backdrop, here is an overview of CCI's performance and an assessment of the challenges ahead.

What is CCI?

  • The Competition Commission of India (CCI) is India’s competition regulator.
  • The Competition Act, 2002 was passed by the Parliament in the year 2002, and was given President's assent in 2003.
  • It was subsequently amended by the Competition (Amendment) Act, 2007.
  • In accordance with the provisions of the Amendment Act, the CCI and the Competition Appellate Tribunal have been established.
  • The provisions of the Act relating to anti-competitive agreements and abuse of dominant position were notified on May 20, 2009.
  • The Act -
    1. prohibits anti-competitive agreements and abuse of dominant position by enterprises
    2. regulates combinations which causes or are likely to cause an appreciable adverse effect on competition within India
  • [Combinations include acquisition, acquiring of control and M&A (Mergers and acquisitions)]
  • It is the duty of the Commission to -
    1. eliminate practices having adverse effect on competition
    2. promote and sustain competition
    3. protect the interests of consumers
    4. ensure freedom of trade in the markets of India
  • CCI now consists of a Chairperson and 6 Members appointed by the Central Government.

How has CCI's role been?

  • The CCI has made course corrections across sectors, including entertainment, pharmaceuticals, public procurement, transport, and construction.
  • It has also held individuals i.e., both current and former employees, to be liable for their conduct.
  • As part of its successful advocacy rollout, the CCI has passed 9 leniency orders.
  • The leniency regime is where a cartel member points out or owns up to irregularities and gets away with a smaller penalty.
  • [A cartel is an association of manufacturers or suppliers with the purpose of maintaining prices at a high level and restricting competition.]
  • The leniency regime, as a whistleblower’s tool, has given a boost to the CCI’s cartel enforcement.
  • This is particularly after the amendments in 2017, which removed the cap on the number of leniency applicants.
  • The CCI, in the 8 years of the Indian merger control regime, allayed industry concerns of M&A timelines being impacted.
  • It has done this by expeditiously clearing over 650 merger notifications with an average disposal time of 23 days in 2018.

What are the challenges ahead?

  • Dealing with antitrust issues involving new age economy and evolving ways in which business is done globally is a key challenge ahead for the CCI.
  • [Antitrust laws/competition laws are statutes to protect consumers from predatory business practices.]
  • Antitrust regulators around the world are grappling with tools of analysis to examine issues involving the digital economy.
  • These include the algorithm pricing, big data, or mergers where data and not turnover are of real relevance.
  • It calls for hiring data scientists to work with competition regulators.
  • Also, moving away from traditional measures of market share only to parameters which include access to data, network effects, and multi-sided markets is essential.
  • In this regard, the US appears to be moving towards an EU type competition model.
  • In this, new age economy companies will be scrutinised for market power and abuse of dominance.
  • E.g., recently, the US House Judiciary Committee initiated an investigation to assess the effectiveness of current antitrust laws in regulating technology companies
  • The Government of India has also set up the Competition Law Review Committee.
  • This includes a working group on ‘new age markets and big data’ to examine the issues relating to the digital economy.

What is the way forward?

  • The CCI has the ability to levy the highest economic penalties in India.
  • It is statutorily mandated to prevent practices that have adverse effect on competition.
  • However, the wide mandate exercised by the CCI emphasises the need for the formulation of penalty guidelines by the regulator.
  • This is crucial now to serve as a barometer to guide industry.
  • The CCI has nationwide relevance and in particular, a majority of the CCI’s matters originate in Mumbai.
  • Given this, the Central Government should consider setting up benches of the CCI to expeditiously decide on competition cases.
  • This is also imperative in the interest of facilitating wider access to justice and ease of doing business in India.

 

Source: Business Line

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