Volume 19, Number 4 Article by Subhashish Gupta December, 2007
Competition Policy and Law: Academic Perspective :
With the advent of liberalisation in India in the 1990s there has been considerable change in attitudes towards the free market and competition. The passing of the Competition Act in 2002, replacing the Monopoly and Restrictive Trade Practices (MRTP) Act, and the government’s decision to set up a competition authority, namely the Competition Commission of India, to replace the old MRTP Commission is evidence of this change. However, the process is still evolving and the Competition Act is now being amended. Researchers are sceptical about what competition has to offer developing countries. Issues such as building staff and institutional capacity, relationship with regulatory bodies and the legal system have to be resolved.
In this context, IIMB Management Review invited a panel of experts to review the issues surrounding Competition Policy and the Competition Act in India.
Mr Vinod Dhall, Member and Chairperson, Competition Commission of India (CCI), explained the background of the Competition Act of 2002 in the context of the MRTP Act, its goals and its role. Other than addressing anti-competitive agreements, abuse of dominance and mergers, the CCI has to undertake advocacy, awareness building and training. He elaborated on how the CCI is performing in its many roles.
Dr Rahul Singh, Assistant Professor of Law, National Law School of India University, in debating whether business and competition law were friends or foes, concluded that a clearly drafted, unambiguous Competition Law will encourage innovation and fair competition, address anti-competitive practices and ensure consumer welfare. If India aspires to be a contender in the global forums, it will have to take cognisance of international competition laws.
The deficit the country faces in all forms of energy necessitates competition in that sector, according to Dr S K Sarkar, Director, Regulatory Studies and Governance Division, The Energy and Resources Institute. The limited competition in India’s energy sector can be attributed to six sets of issues: structural issues – the dominance of the public sector in the generation, transmission, distribution and trading of electricity, in coal and gas; policy and regulatory issues; barriers to entry, such as inappropriate pricing and lack of transmission capacity in the electricity sector; the lack of a level playing field; abuse of dominance, particularly in the coal sector; and institutional issues such as the lack of a formal mechanism of interaction between the CCI and the energy regulators on competition issues.
Mr Subir Roy, Associate Editor, Business Standard, brought up the question of whether competition in the media makes for unbiased information, the issues of predatory pricing and excessive competition. Dr S Chakravarthy, Member, Monopolies and Restrictive Trade Practices Commission, in elaborating the genesis of the MRTP Act of 1969 and the transition to the Competition Act, 2002, explained that while the MRTP Act was anti-monopoly and anti-dominance, it also restricted growth; the new Act prohibits abuse of monopoly, size and dominance.
IIMB’s Prof Deepak Kumar Sinha, taking a corporate strategy view of competition policy and law, as against the economic view, emphasised the importance of training prospective managers in competition law, citing the experiences of Microsoft and IBM as examples of different approaches. A good way to begin working on competition policy would be to define an efficiency policy.
The panel also discussed several associated issues such as whether the Competition Act was pro-consumer, the reason for the high threshold in the notification of mergers, whether free markets were pertinent in a country like India at all, and the opposing pulls of economics and law in the Competition Act.
Reprint No 07407a&b
