Competition Commission of India (CCI) set up under the Competition Act of 2002 by the Union government is currently 'involved in preparatory work to lay the foundation and draft guidelines' for it to become fully operational to become a professional organisation.
Delivering a lecture recently at the 47th Director's Power Breakfast Series organised jointly by Mahendra & Young Knowledge Foundation (MYKF) and the Institute of Financial Management and Research (IFMR), Chennai, Vinod Dhall, officiating chairman, CCI, said the Centre has proposed amendments to make the regulatory entity a separate board and transferring judicial powers to an appellate tribunal attached to CCI.
'The role of CCI is more like a referee to oversee that everyone plays according to the rules. We would strike a good synergy with the market and the economy in trying to understand what is good behaviour in industry and business, rather being an inspector-raj body with intrusive powers,' informed Vinod Dhall. With 8-member working staff, CCI has undertaken a suo motu study on industry verticals like trucking, cement, steel and retail food as part of understanding the structure of the economy.
The Competition Act 2002 which came into effect on January 2003 envisaged a commission that could eliminate practices having adverse effects on competition in industry, protected consumers' interest and ensured freedom of trade carried on by various entities in the country. 'Main features of the Act are it prohibits anti-competitive agreements, prevents the abuse of a dominant position of a company, regulation of mergers and acquisitions, besides advocating competition to Central, State departments, regulatory and statutory authorities through sustained programmes,' he elaborated.
Prevalence of cartels were common in homogenous industries like cement, steel and timber, even as more countries have taken cognisance of this practice as 'criminal offence', and came within the ambit of anti-competitive agreements as formulated in the Act. 'However, in India cartels are treated as civil offence involving a penalty of 10 per cent of the turnover or three times of illegal profits whichever is higher,' Vinod Dhall said.
As against much tougher laws and regulations in Western countries on mergers, 'we have a liberal regime in which the threshold limit for notification of mergers to CCI was over Rs 1,000 crore of net asset income or a turnover of Rs 4,000 crore of the combining entities,' he informed.
With such a high ceiling for merger notifications, most of the mergers and acquisitions fell outside the ambit of regulation, like the recent take over of Shaw Wallace by United Breweries, resulting in the latter gaining 64 per cent market share in liquor business.
In a market economy, Vinod Dhall expressed free and fair competition generation innovation, leading to higher productivity and efficiency which accelerated economic growth. If CCI protected businesses against anti-competitive practices ensuring a level playing field, it also offered consumers lower prices, wide choices and better services, he explained.
The new Competition Act which would be amended in the coming session of Parliament advocated fair competition in a liberalised regime, as against the former MRTP Act (Monopolies and Restrictive Trade Practices Act) which was based on a command and control regime with no power to impose penalties on defaulting companies.
This is cache, read story here
