Competition Law Should be Robust

In the past seven years, the country's youngest regulator- the Competition Commission of India - has seen many of its headline-hogging orders make corporate India take note of fair trade regulations. There have also been challenges to its jurisdiction.
About Competition Act, 2002:

• The main legislation governing competition in India is the Competition Act, 2002 which repealed the Monopolies and Restrictive Trade Practices (MRTP) Act, 1969 and provided for a modern framework of competition protection. The main objectives of the Act are:- (i) to provide for the establishment of a commission to prevent practices having adverse effect on competition; (ii) to promote and sustain competition in markets in India ; (iii) to protect the interests of consumers; (iv) to ensure freedom of trade carried on by the participants in the markets in India and for related matters.
• Competition refers to a market situation in which sellers independently strive for buyer's patronage in order to achieve the business objectives of profits, sales or market share. In other words, it is the act of competing by an enterprise against other business enterprises for the purpose of achieving dominance in the market or attaining a reward or goal. It is the foundation on which a market system works. For market economy to function effectively, this competition has to be free and fair. Such a competition:- stimulates innovation and productivity and thus leads to the optimum allocation of resources in the economy; guarantees the protection of consumer interests; reduces costs and improves quality; accelerates growth and development and preserves economic and political democracy.
• In the absence of adequate safeguards, enterprises may undermine the market by resorting to unfair practices for their short term gains. As a result, market-distortionary practices and anti-competitive forces may restrict the working of healthy competition in an economy. Thus, there arises the need to have a proper regulatory environment which can ensure a healthy competition so that all business enterprises can grow and expand and stimulate economic development of the country. Accordingly, Government has formulated a Competition Policy which protects the interests of consumers and producers by promoting and sustaining a fair competition. As per the provisions of the Competition policy, the Government of India has enacted the Competition Act.
• Under the Act, an autonomous body called Competition Commission of India (CCI) has been set up with regulatory and quasi-judicial powers. To build and further strengthen the capacity of the functionaries of the Commission, the Competition Commission of India has established a Competition Forum with eminent personalities in the field of law, economics, finance, public administration, management and such other fields as are deemed appropriate.

Analysis:
India's nascent competition law is currently in its seventh year - the Competition Act, 2002, came into force in May 2009. So it is possibly the right time to look at ways to make the competition law more effective.
Since 2009, the commission has handled 688 anti-trust cases, and around 370 combination matters. It has cracked down on cases of cartelization (in the case of cement and airlines companies), abuse of market power (those involving NSE, DLF, Coal India), and looked at monopolistic mergers and acquisitions.
It is easy to criticise a regulator or authority, and the Competition Commission of India (CCI) has had its fair share of criticism, including from the Appellate Tribunal. However, the CCI's work has definitely had an impact on consumers - from home buyers, who now are unafraid of developers, to movie goers, who are no longer held to ransom by distributors. Therefore, a foundation has been set and awareness built, but now the time has come to set the house in order.
Competition commission of India is facing shortage of manpower. In 2014, according to the Ministry of Corporate Affairs, the nodal ministry for CCI, the regulator and Director General (DG)'s office had the strength of 84 and 19, as against the sanctioned posts of 156 and 41, respectively.
Another issue facing the DG office is the absence of institutional memory. The commission has very few permanent staff with most officers investigating a case being on deputation for three years.
There can be possible steps to address this problem like: Cartels are most damaging to consumers. Unfortunately, the CCI's enforcement activity in this sphere has been wanting, largely as a result of poor evidence being collected. In order to ensure an effective anti-cartel regime, it is essential to have a strong and robust leniency programme. The CCI's existing programme is unpredictable and does not incentivise whistle blowers. In past cases, even the identity of the whistleblower has not been protected. In contrast, in the EU, for example, over the last three years, all cartel decisions have emanated from leniency applications. The advantage of an effective leniency regime is that it provides smoking gun evidence, ensuring a finding of breach. Therefore the CCI must rejig its leniency programme and follow international best practices.
The number of cases in the recent past that had been set aside by the Competition Appellate Tribunal (COMPAT) for a failure by the CCI to adhere to basic natural justice norms is staggering. The CCI must not resort to short cuts disregarding the rights of the defence, after all it has wide ranging powers that have to be exercised lawfully.
If these and other measures are adopted, the day is not far when a consumer will obtain compensation for anti-competitive conduct and the CCI will be considered an effective authority.
Therefore in order to solve this problem, Efforts should be made to recruit or engage domain experts/professionals on a contractual basis with a view to professionalising the working of the commission and its offices. There is also a need for a strong, effective leniency programme.Another area where the CCI needs to re-think is the role of the competition laws in the overlap between IP laws and competition laws. There is an enormous burden on the CCI to eliminate adhoc-ism and consistently issue well-reasoned orders.
 

By: Vishal