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Optimal Organisational Design for Regulatory Bodies

Volume 19, Number 4 Article by Abhoy K Ojha December, 2007

Optimal Organisational Design for Regulatory Bodies: The Case of the Competition Commission of India :

The Competition Authority of India (CCI) is the principal regulatory body with overall jurisdiction over competition issues in India. Its primary foci are dealing with anti-competitive agreements and abuse of dominant position, regulation of combination, and advocacy, along with enforcement of its orders. The CCI is a unique organisation and cannot be a replica of any other regulatory body or competition authority. This paper draws on the literature on regulatory authorities and organisational theory, particularly the work of R Duncan, to suggest an optimal organisational design for CCI.

Economic thought on competition and methodologies evolve continuously. The state also plays a role in defining the extent to which competition is used as a tool to promote welfare. Finally, emerging technologies and business practices also change the context in which competition policies are enforced. The CCI should have an organisation structure that supports flexibility and adaptability; a professional staff that has the relevant skills and knowledge along with the ability to upgrade the same; and it should empower its professional employees to be effective. In order to function within the norms specified in the Competition Act, its external design should support strong relationships with other regulators in India and competition authorities abroad. Since the CCI will experience a relatively simple and static environment (despite diverse and complex goals specified in the Competition Act) it could adopt a functional structure for its internal design. In the next stage, where it will function in a more complex but segmented environment, it could transition to a divisional structure. In the long run, when it takes on all the responsibilities specified in the Act, and operates in a complex and dynamic environment, it should adopt the matrix structure as the permanent structural form.

Reprint No 07407d