The Competition Commission of India is finally ready to
regulate anti-competive companies. Dhanendra Kumar, a former
executive director of the World Bank, was appointed in March to
lead the five-member body as chairman.
India has never had an effective competition regulator
before, so many have high hopes for Kumar and his Commission.
Since parliament passed the Competition Act in 2002 India has
moved into the forefront of the emerging economies yet it is
the last of the major world's major economies to establish a
well-rounded, modern and functional competition regime.
Kumar is eager to have the Commission working effectively
within three months to enforce the Act. It will tackle major
anti-competitive practices such as abuse of dominance, cartels,
price-fixing, bid rigging, predatory pricing and combinations.
Here he discusses the Commissions pans for bringing competition
to the top of the agenda.
IFLR: What are the key challenges the CCI faces
and how will you address them?
Kumar: India was one of the first developing
countries to have an anti-monopoly law in the form of the
Monopolies and Restrictive Trade Practices Act. However, the
new law, the Competition Act of 2002, is a modern law and has
distinct features. It requires meticulous preparation before
being fully operational. The first OECD Economic Survey of
India from 2007 termed the law 'close to state-of-the-art'. The
World Trade Organisation (WTO) Trade Policy Review of India,
also from 2007 termed it as a modern law based on economic
The most important challenges in enacting the law are that
first and foremost, creating awareness among the stakeholders
that the new law is business friendly and is aimed at promoting
competition. It is a friend of the market. The most important
beneficiaries are the consumers. This has to be achieved
through a well formulated advocacy programme. The second
challenge is selecting and training professionals to assist the
Commission in its enforcement work.
While we have a number of reputable educational institutions
and research centres in law and economics, experience in
competition analysis is limited. This is especially true in the
area of economics. We need to initiate a process of selecting
young professionals and training them in competition analysis.
In this context we will also consider seeking assistance of
mature jurisdictions which have long experience in this
What stage are you at in formulating the competition
Establishing the Competition Appellate Tribunal (CAT) is a
necessary pre-requisite for starting enforcement action by the
Commission. The government is in the process of selecting the
chairperson and members of CAT, on an expeditious basis. The
selection committee has been constituted and advertisements
have been issued for the posts of chairman and members of the
How does the CCI plan to effectively enforce
Compliance with laws of the land is the duty of every
citizen and every enterprise. Ignorance of the law is not an
excuse. However, because the Competition Act is new, there is
need for creating awareness about the benefits of voluntary
compliance of the Act by enterprises. The Act itself explicitly
mandates competition advocacy. Under the advocacy programme a
booklet on 'Competition Compliance Programme for Enterprises'
has already been prepared and has been widely circulated among
enterprises. The booklet also highlights the costs of
non-compliance for enterprises.
Compliance may not be ensured by advocacy alone. Enforcement
action and the certainty of being caught and punished if you
violate the law would go a long way in ensuring compliance. The
law endows the Commission with sufficient powers of
investigation. It also includes sufficient penalty provisions.
In the case of cartels, for example, the Commission can impose
on each member of the cartel a monetary penalty of up to three
times the profit during the period of cartelisation or 10% of
the turnover during that period of cartelization.
The law also enables us to take a lenient view of cartel
members who come out to assist the Commission with evidence or
information against the cartel. The Commission is authorised to
impose 'lesser penalties' which can reach a 100% waiver of
penalty. This is expected to help in cracking cartels.
When will regulations of the Competition Act be
Draft regulations are in the final stages. Consultations
with stakeholders are complete and the Commission is having a
close look at them before finalising. These will then be
presented before Parliament.
What competition issues does the CCI plan to tackle
The Competition Act mandates the Commission to address
issues related to anti-competitive agreements and abuse of
dominant position by enterprises. It also envisages regulation
of combinations. Combinations involve mergers, amalgamations
and acquisitions above a very high threshold level of assets or
turnover of the combined entities as specified in the Act. All
the three issues would be addressed by the Commission in due
The first priority of the Commission is to set up the
infrastructure, both in terms of physical infrastructure and
recruitment of professionals.
With regards to enforcement, the priority for the Commission
would be cartels, which are a menace to the society. Cartels
are likely to be more prevalent and aggressive in times of
slowing demand. The dead-weight losses imposed on the economy,
on consumers and producers, by cartels are well-known. The
recessionary tendencies globally are also facilitating the
abuse of dominant position by enterprises. This will also be an
important focus for the Commission.
What is crucial to the CCI's success?
The Commission's ability to bring together a set of
professionals and train them and to create a good image for the
Commission among stakeholders will be most crucial to our
success in the very first year. Industry still seems to have
some apprehensions about what is in store under the
implementation of the Act.
We are initiating a dialogue with them. We will impress upon
them that this Commission is a friend of the market and that
competition benefits everyone, including consumers and
enterprises. The CCI will be a professional body, which will
dispose of cases quickly. We would, in fact, be happy if we do
not have to intervene at all, if competition prevails in the
market and there is no need for us to step in. Regulations that
are being finalised are available on our website and they are
designed to make the functioning of the CCI transparent and