Stronger competition laws on the cards

Live Mint, August 17, 2011

New Delhi: The ministry of corporate affairs (MCA) wants to strengthen and refine India’s competition laws now that the country’s antitrust regulator is fully functional.

The strategy involves the drafting of a competition policy, making any changes to laws and norms that government departments need to follow, said a ministry official, who did not want to be identified. Once in place, the policy will be a guide for the various ministries and state governments to follow on competition.

These proposals are being drawn up with the help of former Competition Commission of India (CCI) officials, a handful of lawyers and think tanks.

“India so far does not have a competition policy in place,” said the official cited above. “MCA wants to evolve a policy which is based on a vast consultative process. The ministry has, therefore, invited business and industry, economists and consumer associations on 17, 18 and 19 August, respectively, for brainstorming on what is required to be incorporated in the competition policy.”

The ministry has also posted a draft competition policy on its website, seeking comments from the public by 22 August.

“A competition policy would infuse the principles of competition in measures taken by the government in its policies and regulations, and set the required guidelines,” said Dhanendra Kumar, chairman of the committee set up for framing the national competition policy. “The competition law as regulated by CCI is a sub-set of such a policy.”

Kumar added that he plans to submit the panel’s report by October, although the government has given it time till December.

The government has been criticized for being anti-competitive in areas such as public procurement and the dominance of public sector undertakings in areas such as railways, coal and power, among others.

CCI has also been approached by private players for looking into monopolistic positions taken by govt-owned agencies.

Kumar, former chairman of CCI, also said the Competition Act, 2002, needs amendments with time. “We have, therefore, roped in lawyers to do that exercise simultaneously,” he said.

Besides, a dozen experts are being approached to suggest sector-specific policy changes that are required to adopt principles of competition.

“We’re studying various sectors and legislations where principles of competition need to be enhanced,” said Navneet Sharma, director of CUTS Institute for Regulation and Competition, who is also part of the panel with Kumar. “These include the Agriculture Produce Market Committee Act, which is outdated, regulations relating to tea auctions, regulations in the sugar industry, education sector, etc.”

Efforts to draw up a competition policy began in 2007 when CCI was still playing an advocacy role. CCI, which became fully operational in March 2009 with a chairman and five members, took its first cartelization case in May that year. It began handling mergers and acquisitions above a certain threshold in June this year after MCA notified norms relating to M&As in March.

Vinod Dhall, then acting chairman of CCI, made recommendations in 2007 on what a competition policy should comprise through a working group. The principles of this report were adopted by the Planning Commission and made a part of the 11th Plan document.

Some existing officials of CCI feel there is no need for a new competition policy and that the Dhall panel recommendations can be taken as the policy document. “As it is, most of the principles have been taken from the working group report by Dhall,” said a senior CCI official, who did not want to be named.

Amitabh Kumar, senior adviser (regulatory, competition and tax) at J. Sagar Associates, does not agree.

“There is need to have an actionable policy document approved by the cabinet to direct the ministries to implement a competition policy,” he said. “The working group report was incorporated in the 11th Plan document in a concise form and appears to be offering an outline of a national competition policy to be adopted by the government.” Kumar, assisting on the current draft policy, was also associated with the Dhall working group in 2007 as a CCI official. Dhall declined to comment for this story.

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