Former India policymaker flags governments preventing competition – CUTS competition conference

Policy and Regulatory Report , March 19, 2018

Governments and laws are preventing competition in many areas, said Montek Singh Ahluwalia, former deputy chairman of India’s Planning Commission speaking on the adverse impact of policy-led distortions to competition.

Many jurisdictions around the world are promoting and implementing policies that erect protectionist barriers to promote growth and inclusion, Ahluwalia said. He said that the US government is intervening “big time” in this way.
Last week the US White House blocked semiconductor maker Broadcom’s attempted USD 121bn hostile bid for Qualcomm, citing national security concerns related to the race against China to develop 5G wireless technology.

On 8 March US President Donald Trump imposed import tariffs on steel and aluminum.
Ahluwalia’s remarks were made as part of the keynote address he delivered at the International Conference on Competition and Development, organised by CUTS International in New Delhi on Monday (19 March). Addressing the issue of political economy aspects of competition and development, Ahluwalia said that an ‘intellectual climate’ change has occurred where arguments for protectionism are being advanced to justify growth and inclusion. The brunt of the harm will be borne by consumers and businesses in the long-run, he said.

While competition authorities cannot stop other countries from exercising their sovereign rights, they should denounce anticompetitive government actions and note their lack of power to address the concerns.

India’s Essential Commodities Act 1955, which grants power to the state to impose stock limits in the event of prices “sky-rocketing”, is a classic case where “competition is not being allowed to play its proper role”, Ahluwalia said. He further cited the price control imposed the pharmaceutical industry under the Drug Price Control Order. While the idea behind this was aimed at making products more affordable, it is not clear whether such a practice improves competition, he said. Imposing price restrictions could drive out competitors from the market should they find it not economical to supply products at the specified price levels, he explained.

Competition authorities could play a much more constructive role in casting their net over a broader set of issues and help frame competitive market structures across sectors of the economy, even if legally speaking they cannot do much, Ahluwalia said.
by Freny Patel, Shivendra Kumar and Indra Budiari in New Delhi

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