Competition commission of India’s first five years..

Nice to read an article which talks about an institution which is largely ignored from discussion- Competition commission of India.

CCI recently completed its five years and the author reviews this period. As per the author, CCI has done a great job in such quick time:

India was relatively late to the antitrust table – it was one of the last major economies to introduce a modern competition law regime. Although, India’s Competition Act was enacted in 2003, its enforcement was delayed by legal challenges and legislative processes. The CCI, which became fully functional from May 20, 2009, has since then reshaped ways of doing business in India.

Indian economic regulators have a reputation for being bureaucratically obtuse and functionally opaque. However, the experience of practitioners of Indian competition law has been different. Practitioners have often commended the CCI for its economic pragmatism, with one Indian lawyer describing the CCI to have taken a “quantum leap forward” in its case selection and the quality of legal and economic analysis. Arvind Panagariya, a professor of Economics at Columbia University, has described the CCI as a “game-changer”. Given CCI’s mandate to regulate almost every aspect of Indian business and its capacity to inflict jaw-dropping financial penalties, it certainly has the resume for being the most powerful regulator of the Indian economy.

Within this short span of time, the CCI has reviewed anti-competitive practices in diverse sectors such as stock exchanges, infrastructure, travel, automobile, real estate, pharmaceuticals, financial services, publishing, manufacturing, mining and entertainment, and it has gone on to impose more than Rs 8,000 crore in financial penalties, including imposition of approximately Rs 18.25 crore in personal fines on senior officers of erring enterprises. But the CCI is not a trigger-happy regulator and has often considered the nascent law as a mitigating factor for inflicting lesser penalties.

The CCI’s overarching aim, mirroring those of other mature competition law agencies, is to create and sustain competitive markets and protect the interest of Indian consumers. In these five years, the CCI has worked to achieve this mandate. Whether it is challenging the abuse of dominance of economic giants such as  (the world’s largest real estate developer in the),  (the world’s largest coal producer), the  or investigating cartels in key economic sectors, including cement, sugar, steel and tyre, the CCI has demonstrated its commitment to make markets more efficient and competitive. Such enforcement actions have jump-started the process of cleansing Indian businesses of its entrenched disruptive trade practices, setting the stage for India’s transition to a more mature and better-managed economy. Several Indian trade bodies have already started urging their members to adopt internal competition law compliance codes and legislative efforts have been initiated to make competition law compliance a pre-requisite for Indian companies to get listed on stock exchanges.

There have been issues typically on turfwar with other sectoral regulators:

However, the CCI’s relationship with other sectoral regulators of India has not been always positive. Several sectoral regulators such as the Telecom Regulatory Authority of India, Central Electricity Regulatory Commission and Reserve Bank of India, taking advantage of their overlapping jurisdiction with the CCI, have attempted to chip away the CCI’s mandate, not realising that the CCI’s oversight can be beneficial to enhance competitiveness for their respective sectors. Such regulators have attempted to draft regulations and adopt policy initiatives, in addition to hectically lobbying the government to virtually eliminate the CCI’s regulatory oversight in their respective sectors.

In order to restrict such sectoral backlash against the CCI, the government has proposed amendments to the Competition Act that make it mandatory for sectoral regulators to refer matters to CCI, if the decision taken by such sectoral regulator raises any competition issue. While we wait for such amendments to be implemented, the CCI seems to have kept the Indian economic actors on an efficiency-based diet, setting the stage for an economic revival under the new government.

I guess it is a matter of time before CCI is as feared in businesses as we see in case of US and EU.

One hopes to read more research papers evaluating CCI’s role as an institution.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.


%d bloggers like this: