Relevance: Mains: G.S paper III: Economy
Protecting the interest of consumers at large by ensuring healthy competition in the economy.
Context
The Competition Commission of India (CCI) completed 10 years of enforcement of the Competition Act in May 2019. It has been a long and fruitful journey for the CCI, in which many milestones were achieved through its market-correction initiatives touching upon multiple sectors, ranging from cement to pharmaceuticals.
Within a decade, the CCI has made its presence felt around the globe and partnered with various international competition agencies. However, apart from looking at successes, a 10-year period of enforcement has also provided an opportune moment for undertaking a review of the working of the Act and the CCI under it, to analyse the shortcomings, if any, and to adapt for future challenges.
With these objectives in mind, the government, through the ministry of corporate affairs, constituted the Competition Law Review Committee (CLRC), which submitted its report
This report provides a roadmap for the competition law regime in India. Among the changes proposed in the regulatory architecture under the Act, it seeks to introduce a governing board comprising a chairperson, six whole-time members excluding the chairperson, and six part-time members, two of whom would be ex officio members and the remaining eminent people.
This board’s functions will be quasi-legislative, policy decisions and a supervisory role. The CCI would be enabled to delegate functions and allocate responsibilities to its members and officers along with setting up of performance reviews and performance standards for the organisation.
The office of director general is recommended to merge with the CCI and the proposal includes having regional CCI offices across India. Another key element is that of ensuring financial autonomy of the CCI through a grant of one-time corpus fund, the power to charge ad valorem fee for combinations.
Regarding the functioning of the CCI, a key new change suggested is the pursuance of settlements and commitments as mechanisms for enforcement of the Act. A settlement is a package that may have a monetary amount and other measures such as suspension of business activities that is arrived at to settle the allegations made before the CCI, without an adjudication process.
A commitment is a pre-emptive measure that states the steps a party will take in the future, and approval is sought from the corresponding regulator to ascertain that the party will be permitted by the regulator to act as it has proposed.
A detailed process for these measures would be stated in the subordinate legislation. In the substantial provisions, the report seeks to amend some definitions under the Act about cartels and consumers, provisions dealing with anticompetitive agreements, and those related to abuse of dominance, among others, to make these more comprehensive.
For dealing with combinations and mergers, material influence is to be introduced for determining control for certainty in the ascertainment of control regarding mergers and acquisitions and enlisting of minority rights, and the constitution of material influence in subordinate legislation.
To cater to combinations that arise via the Insolvency and Bankruptcy Code and to fast-track other combinations, a green channel has been formulated to provide automatic approval for certain combinations through self-assessment and pre-filing with the CCI.
A green channel is a notified set of procedures for faster approval of combinations that is facilitated by consultations with the CCI and self-assessment based on criteria that have been recommended to be as objective as possible.
The CCI has proactively put in place the aforementioned green channel through its existing regulations. To proscribe misadventures, the imposition of the penalty for incorrect and incomplete information is permissible under Section 44, with enhancement if necessary.
The report is an exponent of the view that the Act in its current form is broad enough to include data within the ambit of price and to include the possibility of abuse of large amounts of data in the purview of abuse of dominance.
The report also reflected on ensuring ways to address new challenges like a ‘hub and spoke’ cartel and other agreements of the new age that might not be strictly horizontal or vertical agreements.
The Union government has been requested to formulate new thresholds for combinations based on certain factors that should ideally be stated in the Act. An attractive proposition is the contemplation of a new index, similar to the Ease of Doing Business, for states to rank them on the competitiveness of their laws and policies, and an amendment in Section 49 to make a cyclic review of their laws and references to the CCI for the same as something to be done with proclivity.
It is hoped that with these proposed changes, the Act will prove to be an effective tool of realising the dream of making India a $5-trillion economy, and protecting the interest of the consumers at large by ensuring healthy competition in the economy, leading to efficiency and sustainable economic growth.