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LATEST NEWS UPDATES | Unfair competition

Unfair competition

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published Published on Nov 19, 2009   modified Modified on Nov 19, 2009

The government is reportedly toying with the idea of restricting the mandate of the Competition Commission of India (CCI) to sectors where it would not come in conflict with an existing sectoral regulator. That is a ridiculous idea, and the government should not waste time on it.

The proposal has been floated by some powerful people, including those in sectoral regulators, and are keen to protect their fief and perhaps even enlarge it. Competition matters should not be decided by sectoral regulators, but mainly and solely by the CCI. This does not mean we are suggesting that the CCI should be converted into a super-regulator.

Rather, decision-making would be better informed and sound if the CCI draws upon the understanding, expertise and opinion of the sector regulators such as the Telecom Regulatory Authority of India (Trai) and the Reserve Bank of India (RBI) on specific issues concerning the industry when it presides over a case of M&A or violation of fair play.

Even as that be the case, the CCI should be strengthened to incorporate multi-disciplinary expertise that will enable it to act independently (not necessarily autonomously) to consider the impact of inter-play of market forces on society at large. Sector regulators would tend to take a myopic and, perhaps ill-informed, view on such issues.

In any case, the mandate of the sector regulators includes tariff setting, ensuring high standards of service and protecting the health of the sector. This is enshrined in the constitution of regulators such as Trai and the State Electricity Commission. In sectors such as telecom, even the ministry sets conditions for allowing consolidation; and Trai has recently questioned the need for many of these restrictions.

Clearly, attempts are underway to thwart CCI from playing its stated role. The government would be better advised to foil such moves by announcing a timeline for notification of merger control provisions of the Act (Sections 5 & 6), continuing with its October 14 Ordinance for immediate winding up of MRTP Commission and transferring undecided cases to Competition Appellate Tribunal and National Consumer Disputes Redressal Commission in a move to strengthen the competition panel. 


The Economic Times, 19 November, 2009, http://economictimes.indiatimes.com/opinion/editorial/Unfair-competition/articleshow/5245100.cms
 

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