Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www-business-standard-com-nalsar.knimbus.com or the Business Standard newspaper
The Competition Commission of India (CCI) has finally got a new chairperson after a gap of seven months. Breaking another glass ceiling, for the first time a woman IAS officer, Ravneet Kaur, special chief secretary in the Punjab government has been appointed to head the top market regulator of India, ending the long wait. The Commission had been facing hurdles in proper functioning in the absence of a regular chairperson and the requisite quorum of members, as required under the law, although it did its best to keep running to the extent legally possible. It is now expected that it will be soon functioning at full steam.
I was reminded when I got appointed as CCI’s first chairperson in February 2009, on my return from the World Bank. I got several calls, congratulating me "hey, you got a new job, but what would you be doing, would you be conducting competitive examinations?" That was a time when many people did not have a clue about this body. However, since then CCI has come a long way, deciding several landmark cases, now regarded as one of the top market regulators globally and respected for the maturity of its decisions. After the appointment of key professionals, training and framing of regulations, CCI started its enforcement on May 20, 2009. May 20 is now commemorated as ‘Competition Day’ every year.
On this occasion, let us see what are its key achievements during these 14 years and challenges ahead?
CCI is the key market regulator for India, for all the sectors of economy, although there are other sectoral regulators. Even public sector undertakings (PSUs) and government departments for their economic activities come under its purview (Section 2h of Competition Act). It seeks to prohibit cartels and anti-competitive agreements (Section 3), abuse of dominant position (Section 4) and provides for regulation of M&A Combinations (Sections 5 & 6) above the stipulated thresholds. Under the Act, it is the mandated duty of the Commission (Section 18) to proactively work for promoting and sustaining competition in the market and eliminating practices having adverse effect on competition. Accordingly, it may have to intervene even suo motu wherever needed.
In composition (Section 8), the Commission ‘shall’ consists of a Chairperson and not less than two and not more than six members. These are to be appointed (Section 9) by the central government from a panel of names recommended by a selection committee headed by the Chief Justice of the Supreme Court of India or his nominee.
What has been done by CCI so far? Since its inception, it has reviewed around 1,225 antitrust matters (Section 3 & 4) and it has disposed of around 1,102 (92 per cent) cases till April 2023. These include intervention in diverse sectors such as real estate, financial markets, pharmaceuticals & healthcare, power, digital markets, media and entertainment, railways, cement, e-commerce, and public procurement. It has delivered verdicts in several landmark cases like in Google, Amazon, Flipkart, Facebook, automobile, cement and tyre companies etc. It has imposed penalties amounting to more than Rs. 17,000 crore commensurate with the violations involved. Many cases are in appeals with NCLAT and pending at various stages in Courts.
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Since its inception, CCI has reviewed 1,024 combination matters (Section 5 & 6) and disposed of 1,017 (99%) combination notices (till April 2023). What is remarkable is that over 95 per cent cases have been decided in less than 30 days, as initially stipulated. Not a single M&A case has been blocked or denied approval, although in a few cases, approval granted after structural or behavioural remedies, in consultation with the parties, for possible anti-competitive effect on markets.
During the pandemic, CCI has been adopting a stance of understanding and empathy to ensure that supply lines are maintained and parties, specially MSMEs are not put to any avoidable difficulties.
A number of procedural reforms have been undertaken to make things easier for parties and promote investments, including simplification of forms, introduction of a globally innovative ‘Green Channel’ route (regulation 5A) in August 2019 wherein straightforward cases are granted automatic approval, involving a total of 81 green channel cases so far. It is noteworthy that even during the last seven months, the Commission did not allow the lack of quorum to impede these pending approvals. After taking opinion from the Ministry of Law, CCI invoked Section 15 of the Act (lack of quorum not to effect) in according approval to all the pending M&A cases.
Besides enforcement, CCI has been adopting an approach of advocacy (Section 49). A number of market studies have been undertaken to analyse the functioning of markets in various sectors and existence of any anti-competitive conduct necessitating ex-ante course corrections. These included studies in e-commerce, telecom, pharmaceuticals, film distribution, cab aggregators etc.
CCI has also entered into MOUs with several of its peer agencies like FTC and DOJ of USA, Canada, EU, Russia, Australia, China, Brazil, Japan, South Africa etc. These are helpful in the evolving global nature of antitrust practices.
To enhance its footprints in India, CCI opened regional offices in Chennai (February 2021), Kolkata (May, 2022) and at Mumbai (October, 2022).
Competition Act is a dynamic law and needs to be kept updated with the changing nature of markets. During the last 14 years, with the advent of the digital economy, most markets have gone digital resulting in the need of updating the legal tools. Accordingly, the ‘Competition (Amendment) Act 2023’ has been passed by the Parliament and assented by the President making substantial changes in the law. These include introduction of negotiated settlements and commitments in accordance with the global best practices for ensuring quicker decisions and speedy market corrections, introduction of deal value threshold requiring prior approvals for deals value over Rs. 2000 crore, time-limit reduction for approving combinations (M&A) from 210 days to 150 days, penalty based on global turnover; enhanced penalty for making false statements, etc.
CCI is establishing a Digital Market Unit, a multi-disciplinary internal expert unit, for the digital economy. It would help as a “force multiplier” for the regulator, to effectively navigate the challenges in the digital space. It is in consonance with the recommendations made by the Standing Committee on Finance.
The government has also since mandated the CCI in December 2022, to examine the cases dealt with by the then National Anti-Profiteering Authority (NAA). Anti-profiteering related orders in sectors such as real estate and consumer goods are not expected to CCI.
The new challenges before CCI include dealing with pending orders and frame regulations for the newly introduced provisions such as negotiated settlements. It has also to scale up its oversight of the digital economy and attune with the upcoming digital legislations in a way to maintain upward growth of Indian economy
For a young institution dealing with complex techno-economic-legal cases of global ramifications, fourteen years is not a long period to acquire a global stature and acquire a seat on the high table of world anti-trust regulators, some of which are over 100 years old like in the USA and Canada. and earn respect for its decisions. CCI must be complimented for its stellar achievements. On its 14th Competition Day, it deserves to be applauded and given best wishes for the future.
(The writer is a former chairperson of CCI, ex-executive director for India in the World Bank, and chairman, Competition Advisory Services LLP)
(These are the personal opinions of the writer. They do not reflect the views of www-business-standard-com-nalsar.knimbus.com or the 'Business Standard' newspaper)