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Competing
fairly
Editorial in
Hindu dated June 17, 2009 with reference to CUTS work
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The
recent entry into force of the key provisions of
the 2002 Competition Act — that was mired in
controversy over the constitutionality and
composition of the Competition Commission of India
(CCI), the watchdog — takes India a step closer to
integration into the global anti-trust regime,
with potentially far-reaching implications for the
objective of growth with equity. The decision to
defer the application of regulations pertaining to
Mergers and Acquisitions (M&As) however
underscores the concern that the participation of
Indian firms in international consolidations
should not be hampered for want of professional
expertise and procedural clarity under the new
law. The 2002 enactment is premised on the
recognition that a monopoly and a dominant
position in the market are, per se, not
detrimental to competition or the public interest
and, to that extent, it constitutes a
forward-looking departure from the extant
Monopolies and Restrictive Trade Practices (MRTP)
Act where the accent was on curbs on monopolies.
The focus of the CCI’s latest enforcement is on
anti-competitive agreements and any abuse of
dominant position, manifest in the denial of
market entry, collusive price fixing, and
undermining consumer interest. The measures could
have an impact on the cable television, steel,
transportation, and drug retail sectors which,
according to a Consumer Unity Trust Society
report, came under the dominance of cartels in
the wake of the recent wave of consolidation,
resulting in such unfair practices as setting
prices above market rates and undercutting.
Although following a 2007 amendment, the CCI has
been stripped of some of its judicial and punitive
powers, it can impose on individual members fines
of up to three times the profit, or 10% of the
turnover during the period of cartelisation, and
even reward whistleblowers. The relatively low
financial threshold limits to file transactions
involving M&As, in comparison with requirements in
the European countries and the United States, and
the 210 days-long assessment period have evoked
concern about the volume of applications as well
as protracted delays in obtaining clearances for
new deals. The coming years will determine whether
the political commitment to an open and
transparent market economy can triumph over strong
protectionist pressures in the current global
recession. At home, the stakes are far too high to
allow anti-competitive forces to thrive for want
of a clear consensus and the will to put in place
an effective enforcement mechanism.
This editorial can also be viewed at:
http://www.hindu.com/
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