(Photo: Mint)
(Photo: Mint)

Opinion | The problem of excessive purchasing power in politics

Rival parties could try complaining to the Competition Commission against ‘buyer dominance’

A recent report by the Association for Democratic Reforms (ADR) suggests that over the period 2016-18, one political party received more than 90% of all corporate donations. The consequences of this skewed distribution include unequal access to chartered planes and front pages of newspapers for election advertisements. A level-playing field requires a more equitable distribution of the means to campaign, or regulation against the misuse of such an asymmetry.

The chartered air travel industry serves customers on a first-come first-served basis and, understandably, tried to cash in on the once-in-half-a-decade opportunity of this year’s parliamentary elections. Its services are a critical input for election campaigns, given the size of the country and the limited number of star campaigners. In the short run, supply cannot increase in response to excess demand. A dominant buyer with access to funds and a first-mover advantage can potentially foreclose the market to other buyers. As early as January 2019, the Opposition Congress expressed alarm at the non-availability of chartered planes. According to a March 2019 report in The Economic Times, there were 275 registered civilian helicopters in the country, of which only 75 were available for commercial hire. The report added that the Bharatiya Janata Party (BJP) had hired almost half of those.

The fact that the Opposition complained about the non-availability of chartered flights long before the election schedule was declared suggests that the BJP had monopsony power, i.e. it was a dominant buyer. This had a direct adverse effect on the other buyers, who were at a competitive disadvantage in reaching voters. There is also an indirect impact on a third party outside this market, i.e. voters, insofar as they could not properly assess the alternatives offered by other political parties whose star campaigners were unable to reach them.

Our other example comes from the February 2018 assembly elections in Nagaland. Until 1 February, it was not clear if its state polls would be held because of a civil society campaign to postpone them. Most parties declared their candidates just ahead of 7 February, the last date for filing nominations. Days later, an alliance of the BJP and Nationalist Democratic Progressive Party (NDPP) rolled out the most expensive newspaper ad campaign in Nagaland’s history that stood out for its scale as well as for testing the limits of the Election Commission’s guidelines. Writing for The Hoot, Vikas Kumar examined advertisements that appeared in The Morung Express and Nagaland Post, the two leading English dailies of Nagaland. On each day between the last day for withdrawing nominations and the last day for campaigning (12-25 February), Morung carried ads of the BJP-NDPP alliance on its front pages, including three full-page, seven half-page, and four quarter page ads. Nagaland Post carried three full-page ads on page two and 11 half-page ads of the alliance on its front pages. The alliance also placed ads on other pages of these newspapers. In contrast, the Naga People’s Front released full-page ads between 20 February and 25 February on pages 11 and 12 of the Morung and pages five and seven of Nagaland Post. Once again, a critical input to election campaign, namely, the front page of newspapers was almost exclusively accessed by the party with deeper pockets.

Conventional remedies include approaching the Election Commission, which can only regulate the quantum of resources used but not how they are used, or calling for a new law governing election funding, which is unlikely to find favour with dominant parties. Parties could possibly also approach the Competition Commission of India under Section 3(4)(b) of the Competition Act 2002 that prohibits agreements involving “enterprise or association of enterprises or person or association of persons" such as “exclusive supply agreement" that foreclose competition by restricting other potential purchasers from accessing the product or service in question, and also Section 4(2)(c) that prohibits the abuse of dominance by an “enterprise or group" resulting in denial of market access to competitors. The proposed approach can be opposed on the ground that a political party is not an enterprise as defined in Section 2(h). The Competition Commission has in the past rejected cases involving a defendant that is not an enterprise. For instance, the prima facie order in case of Rajat Verma Vs PWD Haryana & Others ruled that the latter was not an enterprise, which was overturned on appeal. It is time the Commission reviewed the definition of an enterprise to address the anti-competitive market behaviour of entities that are not enterprises in the conventional sense, yet their activities not only affect other players in the market but also generate negative externalities for third parties outside this market.

The proposed approach does not treat the greater ability of a political party to raise resources as problematic in itself. Parties differ in their ability to raise and use funds. The government should not curb the freedom of individuals and corporate groups to contribute to a party of their choice. However, there is a need to check the misuse of a dominance that denies other parties access to critical non-substitutable campaign inputs and eventually restricts voters’ access to information on alternatives, which subverts the purpose of elections. Skewed distribution of resources within parties is also harmful, but that requires a separate discussion.

Vikas Kumar & Poonam Singh teach economics at Azim Premji University, Bengaluru, and National Institute of Industrial Engineering, Mumbai, respectively

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