MEDIA – December 2006

DCA-Plan panel turf war delaying Competition Policy road map
The Financial Express, December 25, 2006, New Delhi, India

'Consumers, suppliers should gain from retail sector policy'
The Hindu Business Line, December 05, 2006, New Delhi, India

Retail Policy Must Ensure Competition
Thesynergyonline News Service, New Delhi/Bignewsnetwork.com & Newkerala.com, Kerala/Nagalandpost.com, Nagaland, December 05, 2006

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DCA-Plan panel turf war delaying Competition Policy road map

The Financial Express, December 25, 2006, New Delhi, India

The tug-of-war between the department of company affairs (DCA) and the Planning Commission is threatening to delay the much-awaited National Competition Policy. In fact, the two agencies are now engaged in a turf war on who will prepare the policy statement and who will manage it.

Following the government’s efforts to draft a National Competition Policy, the DCA, along with the Competition Commission of India (CCI), took the initiative and set up an advisory committee under the chairmanship of Vijay Kelkar. On its part, the Planning Commission, after the Eleventh Plan approach paper was published, decided to establish a working group, chaired by CCI member Vinod Dhall, to finalise the government’s competition policy. Although the working group had a target date of October 31, it has not been able to meet it due to the turf war.

Interestingly, the study groups of the DCA and the Planning Commission have several common members including Pronab Sen, principal adviser of the Planning Commission; Pallavi Shroff of the corporate law firm Amarchand Mangaldas; Pradeep S Mehta, secretary general of the research and advocacy group: CUTS International; Jitesh Khosla, joint secretary at the ministry of company affairs; Mala Banerjee, president of Federation of Consumer Association West Bengal and Vinod Dhall.

Meanwhile, the DCA dragged its feet to allow CCI to share its output—which was being prepared by the latter— with the input of the Planning Commission’s working group.

Ironically, the complications have also resulted in delaying the completion of CCI’s report on the topic.

A Planning Commission official, however, said, “Work is at an advanced stage. The working group meeting has been convened to discuss the draft.” The Planning Commission working group is scheduled to meet on January 5, 2007.

This News item can also be viewed at:

http://www.financialexpress.com/fe_full_story.php?content_id=149905

`Consumers, suppliers should gain from retail sector policy'

The Hindu Business Line, New Delhi, December 05, 2006

Despite the Union Government's decision to go slow on allowing foreign direct investment in the retail sector, it continues to be in the news with the entry of bigwigs such as Reliance and the Bharti-Wal-Mart tie-up.

Keeping the rapid growth of the retail sector in mind, CUTS International, a research and advocacy group, has asked the Centre to adopt a proper policy and regulatory framework for the sector, which can ensure that competition in the retail arena benefits both consumers and suppliers.

Study results
"Our studies across rich and poor countries have shown that wherever big retail or supermarket chains operate, both consumers and producers get the short end of the stick, in the absence of proper regulation," said the CUTS Secretary General, Mr Pradeep S. Mehta, in an official release here.

Growth
The moot point is that the sector is going to grow even if there are concerns about the small traders being adversely affected. Small traders have some advantages though, like being conveniently located since large sections of the Indian population cannot afford to visit the large stores, he added.

"However, there has to be enough competition in the retail sector, not only to give a better deal to the consumers, but also, and probably more importantly, to protect the small and medium producers from the monopolistic anti-competitive practices of the giant retailers," said Mr Mehta.

This News item can also be viewed at:

http://www.thehindubusinessline.com/2006/12/05/stories/2006120505201000.htm

Retail Policy Must Ensure Competition

Thesynergyonline News Service, New Delhi/Bignewsnetwork.com & Newkerala.com, Kerala/Nagalandpost.com, Nagaland, December 05, 2006

The retail sector continues to be in news. Though the government has decided to go slow on allowing FDI in the sector, big things are happening, whether it is Reliance making foray into this emerging area, or Bharti joining hands with Wal Mart.

In a press release issued here today, CUTS International, a leading research and advocacy group has asked the government to adopt a proper policy and regulatory framework for the retail sector, which can ensure that competition is embedded in the sector, for the benefit of both consumers and suppliers.

"Our studies across both rich and poor countries have shown that wherever big retail or supermarket chains operate, both the consumers and producers get the short end of the stick, in the absence of proper regulation", says CUTS Secretary General, Pradeep S Mehta. CUTS works on competition and regulation issues around the world, through its multi-country projects and offices in London, Lusaka, Nairobi and Hanoi.

The moot point is that the sector is going to grow even if there are concerns about the small traders being adversely affected. However, it would not be prudent to stop growth of this sector just to protect small traders. Because this is the way things are going to move and should move in the long run. Though it is naďve to argue that the small traders will not be affected, the fear is often exaggerated.

Small traders have some advantages. Not only that they can be conveniently located, large section of our population cannot afford to visit the large stores. The large stores are good only for those who buy their household requirements on a weekly or even on a monthly basis. Unfortunately, many of our people do not have enough money to buy even for the next day!

"However, there has to be enough competition in the retail sector, not only to give a better deal to the consumers, but also, and probably more importantly, to protect the small and medium producers from the monopolistic anticompetitive practices of the giant retailers", said Mehta.

Globally, it has been found that they undercut the producers even though the consumers smile. In India, the producers are not only the big companies but also small producers and farmers.

Going slow on retail FDI can be a good strategy to promote competition in the sector in the long run. Though the sector is growing, there are not too many large players and hence immediate opening to FDI might mean that the market will be dominated by a few giants. By giving some time to the domestic retailers to grow and then opening up for FDI will ensure a more competitive market in the long run.

In the short to medium term, it must be ensured by the competition authorities that these domestic retailers do not abuse their market power, in the long run, it would better to allow the foreign retailers rather than relying on competition enforcement.

Care, however, has to be taken that these domestic retailers are not taken over by the global giants whenever we decide to open the sector for FDI. Otherwise, competition will suffer as we have seen in the soft drinks sector where we are stuck with just two players. Unfortunately, they prefer to compete in TV, newspapers or even in court rooms rather than in the actual market place.

The crux of the issue is that promoting and maintaining long run competition should be the objective of the retail sector policy.

This News item can also be viewed at:

http://www.thesynergyonline.com/breakingnews.htm 

www.bignewsnetwork.com/index.php/cat/1ea3511428f18ddd/

http://www.newkerala.com/news4.php?action=fullnews&id=61563

http://www.nagalandpost.com/businessdesc.asp?sectionID=27894