In Media : May 2010

Regulating competition
Business Line, May 21, 2010

Billionaire American business tycoon and philanthropist the late John D. Rockefeller is believed to have said, ‘Competition is a sin, and therefore you must destroy it.’ It was not surprising, therefore, that the company that the oil magnate founded, Standard Oil, attracted widespread criticism for its alleged monopolistic practices. Reportedly, this in turn resulted in the US Supreme Court finding the company guilty of anti-competitive activities and the anti-trust movement gaining huge importance in America as early as the beginning of the 20 {+t} {+h} Century.

In India, however, competition law started taking shape only much later when the Monopolies and Restrictive Trade Practices (MRTP) Act, 1969, came into force from June 1970. Following demands from several quarters for a more effective regulation of cartels and anti-competitive mergers and acquisitions as well as the recognition in policy circles that encouraging competition is more essential than curbing monopolistic practices, the MRTP Act was replaced by the Competition Act, 2002, and its amendment in 2007.


The focus now is on the next stage — the regulatory challenges involved in ensuring fair competition in India. Noting this, Mr N. K. Singh, Member of Parliament, Rajya Sabha, says in his foreword in the book ( Competition and Regulation in India, 2009 – Leveraging Economic Growth Through Better Regulation) that, “Establishment of a competition authority by itself does not resolve all problems relating to creation of competitive conditions.” He adds, “Regulation must also keep pace with innovation, not stifle an innovation culture.”

In the preface of the book, Mr Nitin Desai, former Under Secretary-General, United Nations, fittingly quotes Ms Neelie Kroes, former European Commissioner for Competition Policy, as saying on the importance and the need for competition policy that, ‘Competition encourages the innovations that creates jobs. It keeps a lid on prices. It reminds us that we have to work hard if we want to succeed.’


The book deals with industries such as power, port and civil aviation that are making some progress regarding modernising regulation as well as sectors such as agriculture and high education sector that are laggards in this regard. It also has recommendations for the improvement of regulations in these sectors.

The book states that these suggestions are aimed at increasing private participation and competition through establishment of a level-playing field; greater autonomy including security and tenure for regulators; and checks on product quality.

In spite of books like these and years of debate on regulation, India is no closer to solving some of the thorny issues which bedevil the regulatory agencies.

Readers who might be hoping that this book will provide some guidance will be mildly disappointed as it does not throw much light on the specific reasons for the Government inaction and fix responsibilities for it.

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