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On 19 October, India’s competition regulator imposed a fine of about 223 crore on travel portal MakeMyTrip for entering into preferential pacts with hotel partners. At current exchange rates, that’s roughly about $27 million, or about 9% of the company’s 2021-22 revenues. The MakeMyTrip stock fell only about 0.7% that day, underscoring what the market thought about the material impact of the Competition Commission of India (CCI) order. In its 13-year operational history, the CCI has delivered anti-competition orders of wide import and imposed huge fines, but has collected very little.

In the eight years from 2011-12 to 2018-19, the CCI imposed a cumulative penalty of 13,339 crore across 177 cases, but collected a mere 60.4 crore, or 0.4%, till 31 March 2019, shows latest available data. A high share of CCI orders where the charge is that of cartelization and a significant fine is imposed end up being challenged in higher legal forums, namely the National Company Law Appellate Tribunal (NCLAT), high courts and the Supreme Court.

CCI rulings can be broadly broken into two sets. The first set pivots around anti-competitive issues. An example is recent CCI orders against Google India, fining it a total 2,275 crore. The second set is approvals for mergers and acquisitions that can potentially dilute competition in the particular industry. The first set is where the orders and challenges lie. Of the 867 orders passed by CCI between 2011-12 and 2018-19, 304 orders ended up in appeals, or 35%. In the last two years of this period, appeals exceeded 50%.

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European whip

The marked financial gap between imposition and collection ends up diluting the CCI’s effectiveness as an authority that aims to preserve a free market and competition in Indian industry, both in letter and in spirit. When it comes to performing such a regulatory role, the European competition regulator is cited as an effective global benchmark. Between 1990 and 2022, the European regulator saw through 152 decisions in cartelization cases.

Several of these cartelization cases involved industry leaders across sectors: for example, Daimler in trucks (2016, fined 1 billion euros), Saint Gobain in car glass (2008, 715 million euros), VW Group in car emissions (2021, 502 million euros) and Deutsche Bank in euro interest rate derivatives (2013, 466 million euros). Since 1990, the European competition regulator has imposed fines of about 31.9 billion euros in cartelization cases. Of this, it has realized, after court proceedings, 29.5 billion euros. Or, 92%.

Absence of closure

By comparison, consider the status of one of the high-profile cartelization orders passed by CCI. In 2014, the CCI collectively fined 14 leading automobile companies 2,544 crore on the charge of not making their spare parts available freely in the open market for independent repairers. The auto companies approached the Delhi High Court, which, in April 2019, said the companies could approach NCLAT. Information in the public domain indicates no further updates in this case. Similarly, CCI cases or orders against cement companies for allegedly colluding to fix product prices are winding their way through multiple legal hoops.

The CCI, on its part, has been taking up cases. In the 10-year period between 2009-10 and 2018-19, the latest available, the CCI has noted 1,008 antitrust matters. Ten sectors account for about two-thirds of these cases, led by real estate, automobiles and finance. Closure with big fines, though, is elusive.

In appeal

Some cases arose from complaints. For example, the 2016 case in which the CCI fined 11 cement companies 6,300 crore for cartelization was filed by the Builders’ Association of India, an industry grouping. The CCI takes up cases by itself, like an order it passed in April 2018, where it investigated the presence of a cartel in zinc carbon dry cell batteries.

In terms of fines, this was the big order of 2018-19. The collective penalty imposed on 20 parties was 214.8 crore, which amounted to 60% of the full-year amount. Of these, four parties paid the fine, while the others went to NCLAT. In 2018-19, fines were imposed in 31 cases. In 19 cases, fines were paid or were being paid, but this amounted to just 2.1 crore. The remaining 12 cases, with a collective fine of 355.6 crore, went into appeal. And that, today, typifies the state of CCI rulings.

www.howindialives.com is a database and search engine for public data.

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