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Competition panel to soon begin probe into cartels

Competition panel to soon begin probe into cartels
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First Published: Wed, Mar 11 2009. 01 15 AM IST
Updated: Thu, Mar 12 2009. 05 01 PM IST
New Delhi: Even as fears of cartelization rise in sectors such as civil aviation, Dhanendra Kumar, the new chairman of the newly constituted Competition Commission of India (CCI) said the body’s first priority after it starts operating in May would be to investigate takeovers, cartelization, and mergers and acquisitions (M&As) that could lead to the creation of monopolies.
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Kumar, however, said that India’s competition body would fast-track approvals of mergers, provided they conformed to the norms, a matter that had become a bone of contention between industry and government.
While declining to comment on the alleged cartelization in the airlines industry, he added that “CCI would first watch various moves, get the relevant data and will take any action if required after quickly analysing them.”
According to Kumar, efforts are on to get the commission operational as fast as possible; this includes setting up an appellate tribunal, the appointment of two more members and hiring 187-odd professionals.
Kumar and CCI member H.C. Gupta, former coal secretary, were sworn in on 28 February, and another member R. Prasad, former chairman, Central Board of Direct Taxes, was sworn in on 1 March. Two more members may join at the end of this month, Kumar said.
“We held our first formal meeting on 2 March and since then we are meeting very regularly... I feel the commission will be fully operational in two months time,” he said.
CCI assumed statutory powers to enforce anti-competitive practices in September 2007, when the amended Competition Act, 2002, was approved by Parliament. Since then it has been gearing up to start operations.
Now that CCI has begun functioning, India’s current competition body, the Monopolies and Restrictive Trade Practices Commission (MRTPC) will be wound up within two years.
A senior official in the ministry of corporate affairs, the administrative ministry that deals with CCI, also said the government would soon announce a competition appellate tribunal—to which appeals against CCI can be made—comprising a chairman and two other members.
G.R. Bhatia, partner at Luthra and Luthra Law Offices, said: “In order for CCI to be fully functional it is essential that the appellate tribunal is set up, all regulations be notified and the law made effective; it is also essential that all dimensions of competition law are enforced simultaneously.”
The provisions relating to competition law include anti-competition, abuse of dominant position, advocacy, and advisory services to the government and consumers.
Kumar also said the government has already begun the work on recruiting 124 professionals and 63 support staff.
“The government is hoping to fill a large number of such posts by inviting existing government officials on deputation, besides university professors and people from think-tanks.”
Till Kumar’s appointment, CCI, which comprised an acting chairman and a dozen-odd officials, largely played an advocacy and advisory role. It has been advising industry associations and bodies, including those of airline and shipping firms, to abstain from what may look like “cartelization”. It took up the issue with associations in the aviation and shipping segments, besides others.
Kumar said CCI will try to clear cases relating to M&As in a shorter time than what the law provides. The Competition Act has given CCI a maximum of 210 days to investigate matters relating to M&As.
Industry has been resisting CCI norms relating to M&As. Mint had reported on 11 June that CCI had relaxed the norms with only significant M&As requiring its approval.
Lalit Bhasin, a corporate lawyer, said CCI will not be fully functional till draft regulations are finalized. “The industry wanted some amendments to the draft regulations and the newly appointed members of the commission will have to apply their minds on what should be the set of regulations that will be conducive for the industry.”
“I feel new set of laws will only be finalized and notified when the new government comes to power. Till then things will be in a limbo,” he added.
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First Published: Wed, Mar 11 2009. 01 15 AM IST