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Competition Law: Regulatory conflicts to ease in redrafting

The government is planning a major overhaul of the competition law, likely bringing in a framework to ensure greater synergy between sector regulators, including RBI, Sebi, Trai and Irdai, and the Competition Commission of India (CCI), a senior official told FE. The idea is to remove any overlapping role among watchdogs on regulating competition in a relevant market to ensure faster clearances to large merger acquisition (MA) deals and better curtailment of anti-market behaviour. A review The government spared small deals from the CCI ambit last year. Companies need not notify the CCI if the assets of the target firm is This substantially reduced the work load and prompted the government recently to cut the strength of the CCI board from seven to four, including the chairman. Corporate affairs secretary Injeti Srinivas is learnt to be spearheading this initiative. The move assumes significance, as companies For instance, analysts said, in a case filed with the CCI by Consumer Online Foundation against Tata Sky and some others around 2011, CCI But the CCI made it clear that competition-related matters squarely fall within its ambit. Vinod Dhall, former chief of the CCI, said: Such conflicts are in fact wholly unnecessary and often arise from a misunderstanding of the competition law; the government can consider amending the Competition Act to prevent such conflicts and encourage or mandate mutual consultation between the sector regulators and the CCI. However, the competition law So, the role of the CCI and sector regulators are, in fact, complementary and not contradictory. The CCI is sort of a generalist, focussed mainly on preventing anti-competitive behaviour across sectors, while the sector regulator is a specialist. As for MA deals, they currently require the approval of both the CCI and sectoral regulators, apart from complying with relevant sections of the Companies Act. While the CCI has in recent years improved its record in clearing deals The CCI examines if a particular deal has potential to distort competition in a relevant market and spur monopoly, among others. Manoj Kumar, partner and head (MA and Insolvency Resolution Services) at consultancy firm Corporate Professionals Capital, said: Also, several acquisitions are now happening through the insolvency resolution process but there is no clarity with respect to the applicability of the CCI norms on such cases. Some analysts said it has effectively reduced the deterrent effect of the CCI penalty. The government may, therefore, consider amending the Act so that the cap on penalty of 10% of the total turnover is restored, although there should be enough built-in provisions to guard against its misuse. The Competition Act, 2002, as amended by the Competition (Amendment) Act, 2007, bars anti-competitive agreements, abuse of dominant position by enterprises and regulates combinations (acquisition, acquiring of control and MA) that cause or likely to stoke appreciable adverse effect on competition within India. It has replaced the Monopolies and Restrictive Trade Practices Act, 1969.