India’s consumer protection and anti-trust legislation, the Competition Bill, which was to be passed in the ongoing Budget session of Parliament slated to end on 22 May, is being delayed and has been referred to a group of ministers (GoM).
The delay has to do with a debate on the punitive powers of the Competition Commission of India (CCI), which will replace the Monopolies and Restrictive Trade Practices Commission and prevent cartelization and the creation of monopolies, and look out for the interest of consumers. The current Competition Act says that CCI can punish and penalize companies that do not comply with its orders on anti-competitive behaviour. The GoM will decide whether these punishments can be handed out by CCI itself or by the chief metropolitan magistrate (CMM).
“This decision (to clear the Bill) was taken by the cabinet last week. But the cabinet has made it clear that the GoM will just look into this one aspect,” said a senior official at the ministry of company affairs (MCA) who did not wish to be named.
“According to the Bill, CCI must refer companies that violate its orders to the CMM. According to the original Act, CCI could impose penalties or order civil imprisonment up to one year,” said another MCA official who, too, didn’t wish to be identified.
The GoM will examine whether the CMM can do this; the CMM essentially deals with criminal cases while cases emanating from non-compliance of CCI orders are civil in nature.
“The reason why the cabinet feels that these cases should be referred to the CMM is because criminal cases are disposed of more speedily than civil cases. Civil cases may sometimes take 5-7 years to get settled,” said the first official. Since the government is keen on the creation of the Competition Commission, the cabinet wants to make sure that its orders are effectively enforced, he added.
According to Anand Pathak, a corporate lawyer, the government’s move to involve the CMM is a step towards making the punishment for anti-competitive behaviour more rigorous. “Even in the European Union, cases of violating orders of competition authorities are considered civil offences and not criminal. If this (the move to refer cases to the CMM) is implemented, it will not be good news for the industry,” he said.