New Delhi: Dhanendra Kumar, chairman of the Competition Commission of India, or CCI, retires from the post on 5 June, having assumed office in February 2009. Prior to that, Kumar was executive director at the World Bank in Washington, representing India, Sri Lanka, Bangladesh and Bhutan between 2005 and 2009. Belonging to the Indian Administrative Service, Kumar has served in various Central and Haryana government departments. He spoke in an interview about India’s nascent competition law, controversies surrounding it and its future. Edited excerpts:
The Competition Commission has come a long way from how it was conceived initially. Is there a sense of achievement?
I demit office at the end of this week with a sense of accomplishment which, of course, is a result of a team work. In the last two-and-a-half years or so that I have been here, we have tried to establish an organization which is now being considered as comparable with the best in the world. And in this short time we have been able to establish an infrastructure, systems and procedures.
We have recruited over 100 people, strictly on merit, both through direct recruitment and deputation. The written test for direct recruitment was done by the National Law School, Bangalore. We got these people extensively trained from experts from the US such as officials from the Federal Trade Commission (FTC), the European Commission, and also some other agencies such as OECD (Organisation for Economic Co-operation and Development).
We have formulated our regulations after intensive consultation with stakeholders, particularly the mergers and acquisitions (M&As) regulation which comes into effect from 1 June. These have been carried out with intensive and open consultation, particularly with the industry and global investor community.
We have achieved during this period what possibly could have been achieved in such a limited time.
So how many people do you have in your M&A cell?
It is not in silos that we are operating. The total strength of CCI is available to them, depending on the work load that will be coming up. We have reasonably good number of people but much larger number of people have been trained in M&A.
CCI had a good beginning as far as cases relating to handling cartelization and abuse of dominant positions are concerned. Where do you see this trend going, especially when compared with some global markets, where big cartels have been busted?
Every economy and every market is different. We have to cater to Indian conditions, the needs of the Indian market, the psychology of Indian consumers. We have been trying to concentrate more in areas where there could be adverse impact on consumers at large.
In many of these cases, we have even taken suo moto notice. Ultimately, it would be the common man that will remain in our focus.
But there are some jurisdictional issues here—whether a common man should approach the CCI or consumer courts. In the past there have been cases like this. How will CCI resolve this?
The two are essentially different. The consumer courts deal with individual consumer cases, and their total methodology and systems are different. Competition Act deals with competition in the market that affects consumers. So in a way it is like a class action rather than an individual action or grievance. The market per se is what we have to look at and I think people do realize that.
Some companies are moving to the high courts, the Supreme Court or the Compat (Competition Appellate Tribunal) even before CCI orders are passed. Are these stumbling blocks for CCI?
These are not stumbling blocks. We respect the superior courts’ judgements and their guidance. In a way, many of these have been landmark judgements taken for us. The judgement of the honourable Supreme Court in September 2010, for example, which clearly spelt out the jurisdictions or jurisprudence on the issue. Many of the judgements of high courts, similarly. I am very happy to say almost 97-98% of cases so far handled, on procedure, or on final orders, have been decided in favour of the Competition Commission, which has vindicated (us) that the procedure that we have followed is correct, legally. And we are very sensitive that we follow the provisions of the Act. In the beginning, when an agency is coming up, it is important that correct procedures are laid down, and that there are no short cuts. Gradually, now everybody is realizing, and procedures are becoming clearer.
This September 2010 case that you mentioned is the one relating to Steel Authority of India Ltd and Jindal Steel and Power Ltd?
Correct, that is the most important and landmark judgement till date which clearly spelt out the jurisprudence on competition, by the Supreme Court.
There has been wide criticism that merger regulations were diluted at the behest of industry, as also the corporate lawyers. Do you agree?
No, I don’t agree. We had to formulate our regulations within the framework of the Act. So this subordinate legislation (merger regulation) could not have diluted the main provisions of the Act. They only governed the operational procedures of the Act. So our total attempt was to make regulations and operational procedures as customer- friendly and investor-friendly as we could, within the ambit of the Act. There were a number of legitimate concerns.
But I am happy to say the final regulations effective 1 June have been widely welcomed all over India; in fact, also all over the world.
Do you think there are any grey areas? Such as joint ventures (JVs), which currently are part of section 3 and 4 (dealing with cartelization and abuse of dominant position)? Corporate lawyers feel they should be part of M&As.
At this stage of M&A review, it is difficult to define clearly, in black and white, what would be the status of JV situations. It depends on the nature of the JV concerned. It could be a JV that has arisen between two horizontally placed companies which could have the impact of adversely affecting competition. Or it could be a case of JV which can enhance productivity or technological efficiency. There are a number of factors which need to be seen. It’s difficult to give a right definition at this stage. Gradually, we will come up with more.
So far the government’s monopoly has not been challenged. How do you think CCI will handle such cases?
No, that’s not true. Quite a few cases have been filed against many government departments and public sector undertakings. Cases came against the ministry of finance, railways and even external affairs. The commission has taken the correct view in all these cases as per the provisions and spirit.