The Hindu Business Line : `Competition Law likely by mid-2008'

Giving an overview of Competition Law and Policy at an interactive session organised by the Merchants Chamber of Commerce here today, Mr Vinod Dhall, Member and Acting Chairman of the Competition Commission of India, said that the law was likely to come into force only by mid-2008.

Conceding slow progress, he said the Commission was ready, except for appointment of full staff (set to begin soon), and other Members. At present, there was just one Member and a small staff complement.

Pointing out that substantive enforcement provisions were yet to be notified, he said the new Competition Law was ready for enforcement with passing of the Competition (Amendment) Act 2007 in September 2007. He suggested that the Ministry of Company Affairs should make the Act fully functional, as the necessary amendments had been carried out.

Stating that the proposed Law had two key elements - Competition Policy and Competition Law - Mr Dhall said such a Law was a necessity in a free market economy to safeguard consumers' interests and ensure freedom of trade. The Act provides for "allocative efficiency" (making producers produce what the consumers want), and eliminates anti-competitive practices.

Like a referee

Asked whether Competition Law would clash with the functioning of other regulatory institutions, such as SEBI or TRAI, Mr Dhall replied in the negative, stating that the Commission was not an "in-market regulator" like the others, and that it could be likened to a referee - a non-intrusive authority.

"The Competition Commission's role is normally ex-post, not ex-ante, except in mergers," he said.

Stressing the regulatory aspect of `combinations', he said this includes mergers, amalgamations, acquisition of shares and acquiring of control, which could be horizontal or vertical. He added that, worldwide, competition regulators did not interfere with the vast majority of mergers.

The interventions

On the remedies available, he said the Commission could issue a cease-and-desist order, enforce penalty up to 10 per cent of turnover, and, in the case of cartels, 10 per cent, or three times of cartelised profit, whichever is higher. In the case of dominant enterprises indulging in unfair practices, an order recommending division (as in the case of Microsoft) could be issued.

Mr Dhall, however, clarified that it was not dominance, as such, but its abuse that was sought to be prohibited. Dominance, he said, is to be determined by factors such as market share, share of competitors, entry barriers, size and resources of the enterprise/competitors, etc. By way of example, he cited predatory pricing, denying market access, use of dominance in one market to enter other relevant markets, and so on.

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