Key Challenges

Hon’ble Minister, Shri Veerappa Moily, Ambassador Varghese, Shri Naved Masood, Secretary, Corporate Affairs, Prof William Kovacic, Mr Mehta, Mr Chatterjee, ladies and gentlemen,

I am honoured to be present here in this august gathering on the occasion of the launch of the platform ‘Friends of Competition’. I would like to congratulate the organizers for selecting a theme whose time, to use a cliché, has come in the rapidly globalizing India of today.

2. The organizers have asked me to speak on ‘Key Challenges in Enforcement of Competition Law in India’. A little over two years ago, the provisions relating to anti-competitive behaviour and abuse of dominance came into effect. Mergers and acquisitions have been operational for six months now. Though relatively short in terms of life span, the legislation is hugely significant as a building block for economic development and rising levels of economic welfare. It is, therefore, a good opportunity to assess what has been achieved and more importantly identify the challenges that lie ahead.

3. The key challenges in enforcement of law will necessarily vary from time to time. At this juncture, I would identify five (5) key challenges. These are :

i) Business awareness and public perception;
ii) Strategic Focus;
iii) Interface with sectoral regulators;
iv) Robust data for economic analysis; and
v) Capacity building and institutional strengthening of the Competition Commission.

4. The Competition Act is gradually beginning to bite. But the level of awareness even among economic stakeholders is limited. It is also perceived by some to be an albatross around the neck of industry. Very few perceive the Act as “business friendly” which, in the ultimate analysis, will lead to higher efficiency, lower cost and improvement of quality – goals which would gladden the hearts of not just business but equally of consumers. In the perception of the public at large, the Act is mistakenly seen as a vehicle for the limited objective of consumer welfare only. Quite clearly, there is need to intensify the efforts at Advocacy not only in the Commission but across the spectrum of stakeholders.

5. The Indian Competition Law provides for informants to notify the authorities about unfair competitive practices. It also gives the Commission ‘suo moto’ powers. Evidently, the intention of the legislature was to ensure that the Commission keeps in mind its strategic focus so that it produces maximum benefits from the Act. In the initial period, we have seen a large influx of cases pertaining to the real estate, entertainment, and pharmaceutical retail sectors. While not minimizing their importance for the general public, it would seem there is scope for focusing on more heavy weight sectors which can yield handsome dividends in terms of enhanced competitiveness and hence lower prices. The strategy focus – which will necessarily keep evolving – is something which the more robust competition jurisdictions around the world have followed with advantage.

6. The process of de-regulation of the economy resulted in most sectoral regulators preceding the Competition Act and the Commission. An institutional interface for better co-ordination between sectoral regulators and the CCI is universally recognized as an imperative. The challenge is to make it work. A case in point is the proposed architecture on mergers and acquisitions in the Telecom Sector which are presently under formulation. We in the CCI hope to be able to contribute to that exercise. Eventually, however, a more formal architecture – of the kind in some other countries with all economic regulators would be required.

7. Economic analysis of the market and its structure is the foundation for an appropriate legal appreciation of competition issues. And that requires availability of reliable and recent data. This is a key challenge. The gap will need to be addressed by encouraging credible databases to come up which can service the needs of not only the regulatory authorities but also business, financial institutions etc.

8. Last, but by no means least, is the challenge of capacity and institution building. Capacity is limited not merely in terms of number of talented people but also in terms of range and depth of experience. The credibility and performance of the Competition Commission is no doubt going to be assessed on the basis of effective intervention and the soundness of its pronouncements. Jurisprudence in Competition Law is at a nascent stage and as a Nation, we have to ensure that its foundations are strong.

9. Ladies and gentlemen, these are some of my early thoughts on the key challenges before us. A true assessment of how we – not just the authorities but all stakeholders – handle this will take some time. That report card will have to be made by the public at large.