CIRC PRESS RELEASE - July 2008

Competition Law should tackle both Business and Government Practices Impeding Competition

New Delhi, July 11, 2008

A competition law should be such that attacks the behaviour of business as well as the rules, laws, practices and regulation of government that impede competition”, said Allan Fels, Dean of the Australia and New Zealand School of Government (ANZSOG) and former Chairman of the Australian Competition and Consumer Commission (ACCC). He was delivering a seminar on “How India should deal with Abuse of Dominance and Cartel Busting – Experiences from Across the Globe”, jointly organised by CUTS Institute for Regulation and Competition (CIRC) and Society of Indian Law Firms at New Delhi early this week.

“There are two aspects to the promotion of competition in an economy. One is to have a competition law which attacks behavior of business, while the other is to have a broader law/policy that attacks other sources of anti-competitive behavior, such as government policies and practices that restrict competition”, said Mr. Fels.

“Competition law involves an interesting paradox, pointed out Mr. Fels adding that “while competition law aims to get a competitive economy, but to do so we need government interventions.” He advocated the need to review policies and practices in an independent and transparent manner to see if they are anti-competitive in nature.

Speaking about cartels, Mr. Fels said that it is not just limited to price fixing but covers a wide range of other forms of anti-competitive behaviour such as bid rigging, market sharing etc.

He further observed that despite criminal sanctions on cartels in many countries across the globe, there has been an increase in the instances of cartels. “The main reason behind is that the incentive to create cartel is higher than the punishment imposed”, he said. “Fines and penalties imposed on firms forming cartels are often considered to be cost of doing business and do not act as a strong deterrent”, observed Mr. Fels.

Mr. Fels remarked that incentives in India for cartel behavior are neither too less nor greater than anywhere else in the world and it presents a major challenge to the newly formed competition authority. Talking about merger regulations, Mr. Fels observed that it is an important part of any competition law and without it the competition law is not likely to be very successful.

CIRC Director General, Pradeep S Mehta, moderated the session, while Amit Kapur, Partner of J. Sagar and Associates welcomed everyone.

More than 50 participants representing various law firms, academic and research organizations, government officials assembled to widen their perspectives on how India should deal with the challenges of abuse of dominance while balancing the need of business and consumer interests.

For further details, please contact:
Pradeep S. Mehta, psm@cuts.org, +9198290 13131
Smita John Marcus, sj5@cuts.org, +9198117 51126