CCI needs to be aggressive to leave its imprint on markets, say experts

Come May, the Competition Commission of India (CCI) will enter the 10th year of its existence. The Competition Act was passed in 2002 in a bid to regulate the market economy. In fact, experts have called the competition law the Magna Carta or constitutional document of the market economy. However, it took another seven years (May 2009) for the Commission to start functioning. 

Many practitioners are of the view that the Commission has done exceedingly well but some procedural concerns continue to plague its operations.  

A look back 

“The CCI has definitely been able to establish itself as a credible and extremely important institution. It has passed some landmark judgments which are on a par with judgments being dealt with globally,” says Vaibhav Gaggar, managing partner at law firm Gaggar and Associates, who has represented the Commission in several cases. Dhanendra Kumar, former chairperson of the CCI, points out that the Commission’s orders have resulted in an amendment in market practices. Kumar cites the example of the real estate sector, where the CCI had asked for a sector-specific regulator in one of its orders. The Real Estate Regulatory Authority is an outcome of the same, he adds. 

However, not everyone agrees with this opinion. "The Commission’s credibility is lost in the manner of treatment it has received from the app­ellate tribunal as well as Supreme Court," acco­rding to Rahul Singh, director at the Insti­tute of Competition Law and Economics, and As­s­o­ciate Professor of Law, Nati­onal La­w School of India Univ­ersity, Beng­aluru.
“The CCI is at a massive fork in the road. It has to seriously think through issues that have cropped up until now and see what direction it wants to take,” says Singh. Experts point out that a lot of decisions by the CCI get overturned by the appellate tribunal on procedural concerns.  This, however, is not a criticism against the Commission but the legislation and the general enforcement structure, according to Avirup Bose, associate professor for competition law and policy at Jindal Global Law School and former expert consultant at the CCI.

Personnel problem

A significant concern raised by most experts relates to the composition of the Commission and the appointments made to the body. “You need to put together a bunch of people who are passionate about the competition law. If not all, at least half the members should be experts,” says Singh. Appointing bureaucrats as members of a technical economic regulator can be problematic. This trend, however, extends beyond the CCI and plagues all regulatory authorities in the country, according to Bose. 

Experts point out that established regulators like the Securities and Exchange Board of India (Sebi) and the Telecom Regulatory Authority of ­India (TRAI) have an institutional memory. While the CCI is trying to build such institutional memory, this cannot happen overnight.

Role of the government 

Many competition law practitioners say the government’s ambivalent attitude towards the functioning of the Commission has not helped matters. “The cumulative sense is that the government does not care about the competition law,” says Singh. Besides the issue of appointments, there has been a significant change in the competition regime over the last year or so. First, the Competition Appellate Tribunal (Compat) was merged with the National Co­mpany Law Appellate Tribunal (NCLAT). Rece­ntly, the government decided to ‘rightsize’ the Commission by limiting the number of members to four, including the chairperson, for faster hearings and disposal of matters. Kumar, however, is willing to give the benefit of doubt to the government.  “It would have to be seen whether this new arrangement results in quick decision making,” he adds. Bose points out that the government has neither cut the Commi­ssion's funding nor any of its powers. The impact of merging the Compat with the NCLAT still remains to be seen. Singh doesn’t see a great change in the manner of hearings as even the Compat was not an expert body.

Road ahead

Even as opinions remain divided on the nature of work the CCI has done in the last nine years, experts agree that the fair market regulator needs to up its play going forward. “The CCI needs to continue doing what it’s done but more aggr­e­­ssively and at a much quicker rate. They need to significantly bolster the investigative arm in terms of numbers and training,” says Gaggar. Experts want the regulator to start a lot more suo motu actions in industries where anti-comp­etitive activities occur or are known to occur. 

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel