Competition Commission short of hands, goes slow on cartel busting

Competition Commission short of hands, goes slow on cartel busting
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First Published: Mon, Nov 09 2009. 12 16 AM IST

Questioning authority: Kingfisher Airlines has filed a writ petition in the Bombay high court challenging the jurisdiction of the Competition Commission to conduct an inquiry against airlines. Mint
Questioning authority: Kingfisher Airlines has filed a writ petition in the Bombay high court challenging the jurisdiction of the Competition Commission to conduct an inquiry against airlines. Mint
Updated: Mon, Nov 09 2009. 12 16 AM IST
New Delhi: India’s six-month-old competition watchdog doesn’t have enough staff to tackle cases.
The Competition Commission of India, probing complaints against companies such as HDFC Bank Ltd, Jet Airways (India) Ltd and even a division of the ministry of external affairs, hasn’t been able to make much progress.
Questioning authority: Kingfisher Airlines has filed a writ petition in the Bombay high court challenging the jurisdiction of the Competition Commission to conduct an inquiry against airlines. Mint
It also seems headed for long-drawn battles with some companies that are challenging its authority.
CCI has had nine cases pending since May, when it started operating.
“There are just 15 of us handling everything, from administration to looking into cases,” said a senior official familiar with the developments. “In fact, in two cases, the director general (DG) of CCI has asked for extension of three months each for investigation.”
The complaints pertain to cartelization or the abuse of a dominant position intended to eliminate or deter a competitor. Mint couldn’t independently verify the nature or the accuracy of the charges.
“The main reason for cases not being disposed of is lack of officials at CCI,” said a senior official at the ministry of corporate affairs (MCA), CCI’s parent ministry. “Besides, handling such cases need expert hands and the ministry will soon appoint experts from legal, economic and finance backgrounds at different levels to help handle cases of cartelization.”
CCI is armed with more powers than its predecessor, the Monopolies and Restrictive Trade Practices Commission (MRTPC) but has been strapped for staff.
It had planned to hire at least 240 professionals in economics, finance and law in the first year.
“Unlike that under MRTPC, CCI has the power to impose penalty and give leniency to the whistle blower, who deviates from the cartel and informs the competition authority,” said G.R. Bhatia, partner at Luthra and Luthra Law Offices. “In fact, I would say if nine cases have come to CCI, that itself suggests people are developing faith in CCI. But then I also feel cracking the first case and imposing deterrence on companies forming cartels will take time.”
The lack of manpower and expertise have even precluded the ministry from notifying sections relating to mergers and acquisitions (M&As), the ministry official said. Once notified, the CCI would have to look into M&As above a set threshold and give its approval.
The commission has now advertised vacancies for six senior posts, including the positions of director, joint directors and deputy directors. “Even the director general, who is supposed to deal with the cases, is just an acting DG (K.K. Sharma),” said another CCI official.
Graphics: Yogesh Kumar / Mint
For at least two years after it got statutory powers, CCI could play only an advisory role as it looked to hire a chairman and five senior members, delaying the start of its operations.
While there is a staff crunch, senior advocate Anand S. Pathak says there are other issues to be dealt with.
“For every cartelization case, there need to (be) at least six-seven persons looking into the intricacy of cartelization. And CCI is definitely short on that,” said Pathak. “However, I also feel CCI needs to get aggressive on the first few cases. If they are referred to Competition Appellate Tribunal (CCI cases can be appealed against at the tribunal) which feels the cases were not deserving enough or some such thing, CCI will take much longer establishing its credibility.”
Kingfisher Airlines Ltd has challenged the CCI’s move for an inquiry against airlines.
“Kingfisher Airlines has filed a writ petition in the Mumbai high court challenging the jurisdiction of the Competition Commission to go into this matter, inter alia, on the ground that the said commission cannot go into matters prior to the relevant sections of the Competition Act being notified,” a spokesman said in an email.
Jet Airways says it has responded to CCI’s queries.
“At present, the operational alliance between Jet Airways and Kingfisher Airlines is a simple interline arrangement, like any other two domestic carriers,” said Saroj K. Datta, executive director, Jet Airways. “It will take some time to evolve a larger operational alliance.”
Jet and Kingfisher, the country’s largest private airlines, had entered into an operational alliance late last year for working together in areas like fuel management, ground handling and for cross-selling of flight inventories.
As for LIC Housing Finance Ltd, which is facing a probe along with Deutsche Postbank Home Finance Ltd, Housing Development Finance Corp. Ltd and HDFC Bank Ltd, director and chief executive R.R. Nair said: “We said (in the reply to the CCI) that the prepayment charge is necessary because we borrow money factoring in the period of the loan. A 10-year loan is more expensive than a one-year loan and we borrow according to our asset-liability balance, so if a customer decides to prepay, it creates a gap of 2-3%, which then has to be paid.”
Executives at Deutsche Postbank Home Finance, Housing Development Finance Corp. and HDFC Bank declined to comment.
The Travel Agents’ Federation of India (Tafi) also questioned CCI’s authority.
“The matter is way outside the purview of CCI as it is about expulsion of a member from Tafi who, in turn, complained about (travel agents) boycotting Singapore Airlines that is not paying us agency commission,” said a senior official with the organization.
On another complaint of cartelization by direct-to-home (DTH) television providers, a spokesperson for Reliance Big TV, part of Reliance Communications Ltd belonging to the Reliance-Anil Dhirubhai Ambani Group, said all the companies in the case had responded to CCI’s notice and haven’t been asked for further clarification.
A senior executive at Zee Entertainment Enterprises Ltd, which owns Dish TV India Ltd, a DTH company, said CCI’s notices were in response to a petition filed by a consumer activist who complained that set-top boxes were not inter-operable as mandated by law.
“We have already replied to the CCI. We have even gone and shown our set-top boxes to them. We were asked about our customer base and the number of boxes we have leased and rented. We have shared all the information with CCI. We are now waiting to hear from them,” the executive added.
A spokesperson for Tata Sky, a joint venture between the Tata group (which holds 80%) and Star Group (which owns 20%), said, “We abide by all inter-operability laws laid down for the DTH industry.”
The other company clubbed in the case, Sun Direct TV Pvt. Ltd, a part of the Chennai-based regional broadcaster Sun TV Network Ltd, did not reply to emails and calls about the CCI investigation.
CCI is also investigating a dispute between theatre owners and movie makers that’s already been resolved, and another case involving power utilities. The forums of the theatre owners and movie makers could not be reached for comment.
As for the utilities, a spokesperson representing both BSES Rajdhani Power Ltd and BSES Yamuna Power Ltd said: “There is no investigation. There is a request for a copy of DERC (Delhi Electricity Regulatory Commission) regulations and orders vis-a-vis providing electricity connections, notices, installation of meters by consumers, etc. This would be complied with.”
Email queries and phone calls to North Delhi Power Ltd remained unanswered.
CCI is also investigating complaints by tour operators Cox and Kings India Ltd and its subsidiary Quoprro Global Services against the Consular Passport and Visa Division, a body under the ministry of external affairs. Mint could not verify the nature of the complaint. An official at the ministry of external affairs’ public relations department said the office was not aware of any letter from CCI.
Shuchi Bansal, Tarun Shukla, Joel Rebello, Utpal Bhaskar, P.R. Sanjai and Ishita Russel contributed to the story.
sangeeta.s@livemint.com
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First Published: Mon, Nov 09 2009. 12 16 AM IST