Should the CCI be abolished?

Business Standard, April 06, 2011

By Pradeep S Mehta

The competition law needs to be amended to enable the Commission to work in an autonomous manner, without explicit and implicit government control

Yes and no. The current avatar of the Competition Commission should be overhauled keeping in mind some critical aspects and the Competition Act should be buttressed to ensure that it is effective and its utility is not questioned.

First, the procedure for selecting the chairman and members of the Commission needs to be re-examined. It should be ensured that it does not create parking lots for retirees from the government but attracts people who have the capability, competence and commitment to discharge the role that is envisaged for the Commission — which is to promote a healthy culture of competition in the country. Experiences from around the world tell us that one needs “champions” to take forward such regulatory bodies. Alas, this is not the case currently.

However, the opportunity to select a person with the required expertise and vigour to chair the Commission is now coming up. The search for a new chairman is on since the incumbent is demitting office in June. Can the selection committee not look for a person who is a trained economist or a lawyer or even a young civil servant with an understanding and experience of dealing with economic laws? Candidates should be in their early fifties and not in their sixties. This is not to say that retired civil servants cannot make champions. T N Seshan’s seminal contribution in cleaning up the election scenario as the chief election commissioner is an example. However, that was an exceptional case.

Second, the competition law needs to be amended to ensure its independence. This will be vital in attracting competent people who are willing to leave their comfortable jobs to join the body. For example, successful lawyers do join the bench at a considerable loss of income because the judiciary is empowered to work without fear or favour. The other incentive is the prestige that comes with judgeship.

Third, the law needs to be amended to enable the Commission to work in an autonomous manner. At present, the law allows explicit and implicit government control in terms of several functions, including staff appointments. The Indian Institute for Management, Bangalore, had done a study for the Competition Commission of India (CCI) suggesting good remuneration packages for engaging professionals. Unfortunately, the current recruitment drive is witnessing secondments from civil services, which do not necessarily provide the best people to deal with a new economic law.

It is not only CCI but all our economic regulators that suffer from these maladies. Most of them are beholden to the government, which controls them through various means, including foreign travel. In all such cases, foreign travel is an imperative to advance their knowledge – which is currently very low – and build contacts to deal with cases. Recently, many regulators have been pulled up by the Comptroller and Auditor General (CAG) for holding on to their surplus moneys, when the government had asked them to transfer it to the Consolidated Fund of India. Overall, the government oversight is so overwhelming that a former regulator once remarked at a Consumer Unity & Trust Society (CUTS) conference that they are but Joint Secretary (Regulation).

Fourth, overlap issues between the CCI and sector regulators need to be resolved permanently so that the integrity of our economic governance system is not suborned. For instance, why should the Reserve Bank of India alone deal with banking mergers, when it is a prudential regulator? Or for that matter why should the electricity regulator or the petroleum regulator deal with anti-competitive practices in their regulated sectors. They can certainly deal with ex-ante structural issues and technical issues but ex-post anti-competitive practices should be dealt with by CCI. However, they can certainly consult each other on a mandatory basis, and thus avoid jurisdictional gridlock. The relevant laws need to be amended.

There are other issues as well that need to be dealt with to make CCI a livewire agency with a good public buy in. Let us not throw the baby out with the bathwater.

—Secretary General, Consumer Unity & Trust Society International

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