Too much and also too little

Too much and also too little

Let Competition Amendment Bill not be arbitrary.

The government has introduced a Competition (Amendment) Bill. This is the right time to introduce some changes to the functioning of the Competition Commission, apart from some desirable changes recommended by the Competition Law Review Committee, such as a separate appellate body for the Competition Commission and an investigative arm controlled by the commission itself, rather than by the government. What the competition body lacks as it stands is a provision for ongoing economic analysis of developments that might restrict competition and initiation of an inquiry based on the findings of such analysis.

A key amendment to the Act that has been proposed in the Bill is the power of the government to add any criterion to the criteria listed in the Competition Act to initiate intervention by the Authority. This is too vague and, moreover, arbitrary. Even if this is circumscribed by the condition that such a criterion would be added in consultation with the Competition Commission, given the tendency for institutions in India to be ever so mindful of the government’s whims, it is better to guard against arbitrariness by making regulatory interventions by the Competition Commission conditional on a finding of likely restriction of competition in the analysis of a proposed major development in commerce and industry. Such a condition would address another criticism of the Bill, namely, that it does not address ‘intent to monopolise’. This is slippery ground. It is the legitimate goal of any player in a field to defeat the competition. It could well be interpreted as an undesirable intent. Instead of making ‘intent to monopolise’ an explicit target of commission inquiry, it would be better to provide economic analyses to seemingly restrictive practices, conclude potential harm to competition and then launch an investigation.

The notion that mergers arising from insolvency resolution need not be scrutinised for anti-competitive potential does not hold water. Once again, the answer is to formulate a Competition Policy and analyse all actions that violate its spirit.