Tag Archive: Competition Commission of India

I recently met a couple of interns researching and writing on various topics at the Commission as a part of the internship programme. I was surprised to see that most often than not, they waste have to spend considerable amount of time in writing introductory paragraphs on the evolution on Indian Competition Law. The time allotted to them is 30 days for submitting a report on a chosen topic approved by the mentor, but the actual working time in the Commission comes out to be 20 days, excluding Saturdays and Sundays, out of which 4 days have been made compulsory for the Interns to visit and observe the working of various branches of the Commission, leaving them with about 16 working days at the Commission. This is a significant difference from the time I was an intern there, since the internship period was 3 months then.

I was fortunate enough along with another intern Pradeep Tiwari to see the Commission coming into existence. We were delighted to be a part of the time that no other person apart from the few officials present would ever see. A lot of time has passed after that but the day is very clearly etched in our minds.

As a Valentine’s Day present to the interns there now and more in the future, I am very glad to share the various reports and discussions that form a part of the formulation of Indian Competition Law, all under one roof.

Please feel free to email me at pranavmehra@live.com if I have left anything or for any other update.

Policy National Competition Policy 2011 (Draft pending for approval in parliament)
Act Indian Competition Act 2002 (as amended)
Amendment Bill Indian Competition (Amendment) Bill 2012 (As introduced in Lok Sabha, pending with Parliamentary Standing Committee of Lok Sabha)
Previous Act Indian Monopolies and Restrictive Trade Practices Act 1969 (Repealed)
General Regulations General Regulations 2009 (Incorporating 1st amendment)
General Amendment Regulations 2011 (Amendment of 2011, unincorporated above)
Combination Regulations Combination Regulations 2011 (as amended upto 23-02-2012)
Whistleblowing Regulations Lesser Penalty Regulations 2009
Cost of Production Regulations Determination of Cost of Production Regulations 2009
Historical documents on the formulation of Indian Competition Law & Policy
Singapore Ministerial Declaration Singapore Ministerial Declaration of 1996
Working Group on the Interaction between Trade and Competition Policy WT/WGTCP/W/24 10 July 1997
WT/WGTCP/W/79 24 July 1998
WT/WGTCP/W/110 16 November 1998
WT/WGTCP/W/149 18 September 2000
WT/GC/W/459 6 November 2001
WT/WGTCP/W/215 26 September 2002
WT/WGTCP/W/216 26 September 2002
WT/GC/W/513 23 August 2003
WT/GC/W/522 12 December 2003
Report of High Level Committee on Competition Policy & Law Report of High Level Committee on Competition Policy & Law – SVS Raghavan Committee 2000
Competition Bill 2001 Competition Bill 2001
93rd Report on Competition Bill 2001 Department Related Parliamentary Standing Committee on Home Affairs – 93rd Report on Competition Bill 2001
Writ Petition (Civil) 490 of 2003 Brahm Dutt vs Union of India | 20 Jan 2005
Competition Amendment Bill 2006 Competition Amendment Bill 2006 (As introduced, later withdrawn)
44th Report by Standing Committee on Finance Forty-fourth Report on the Competition (Amendment) Bill 2006
2nd Administrative Reforms Commission Recommendations 4th Report of the Second Administrative Reforms Commission – Recommendations on Promoting Competition (2007)
Working Group on Competition Policy Report of the Working Group on Competition Policy (2007)
Competition Amendment Bill 2007 Competition Amendment Bill 2007 (As Introduced)
Competition Amendment Bill 2007 (As passed by Lok Sabha)
11th Five Year Plan (2007-2012) Chapter 11 on Consumer Protection and Competition Policy (2008)
Competition (Amendment) Ordinance 2009 Competition (Amendment) Ordinance 2009 (Repeals MRTP Act)
Competition Amendment Bill 2009 Competition Amendment Bill 2009 (As Introduced)
Competition Amendment Bill 2009 (As passed by Lok Sabha)
Competition Amendment Bill 2009 (As passed by both houses)
11th Five Year Plan (2007-2012) – Mid Term Appraisal 11th Five Year Plan – Mid Term Appraisal (2011)
Competition (Amendment) Bill 2012 Indian Competition (Amendment) Bill 2012 (Pending with Department Related Parliamentary Standing Committee of Lok Sabha)

Taj Mahal

The Indian Competition Law Group (ICLG) is glad to launch a newsletter on the state of Competition Law in India. This first issue of Conspicuous Competition provides you with the latest update on the Indian competition regulator, status of the investigations before it, and the recent orders passed in the last two weeks.

2012 has been extremely rewarding for us. Our online group registered a massive growth with 850 plus members on board. We went from a closed group to an open but moderated group in May 2012, which meant that our future discussions were now fully visible, searchable, and shareable on the Web. 2012 also happened to be special in a lot of distinct ways than I can remember. First we used our full resources and time to get this group started. After a month of its active state we send invites to a few people we knew to get a honest opinion on the way we were going. Not only we received a fantastic feedback, we also established good relations within the industry. Gradually we saw that the people who wanted to be the members were coming from contacts who were praising us in our contributions to the void that had been there from a long time. But we have been very careful in our process of selecting people to become members of the Group. We are proud to have you and believe that as you grow professionally, we hope to get benefit from your experience and vice versa. Nobody is as strong as all of us put together!

I hope that you would like the newsletter, and appreciate the hard work that has gone into making it. We encourage you to come back to us with your feedback by way of comments, suggestions and views to enable us to improve the quality of coverage.

Before I conclude this, I just want to say…. Wish you a very Happy 2013 !!!

Imagine that there is only one carmaker in the country. The company would be free to increase the price of its cars at will, as there is no worry of the 
competition taking away its business. And the consumers will be at the receiving end.

Imagine another scenario in which there are many carmakers but all of them discuss and fix prices. Here again, companies gain at the cost of consumers.

The key point in both these situations is lack of competition. While it is not something every consumer thinks about every day—often because of the plenty of options available—competition directly influences the price of all products. And if you thought there was fair competition in every sector, the orders passed by the Competition Commission of India (CCI) would make you think otherwise.

The CCI ensures companies do not take advantage of lack of competition in the market. The body has two wings—the chairman’s office and the director-general of investigations. The chairman’s office receives complaints, which are considered by the seven-member commission. If the matter is worth investigating, the case is 
forwarded to the DG of investigations. Otherwise it is closed at the first stage itself. After investigation, the report 
is discussed by the members and an order is issued on the basis of a majority decision.

As of June 30, 2012, the CCI has delivered final orders in 90 cases. Currently, there are 47 cases with the commission and another 23 with the investigation wing.

Despite the ripples they have been making, the CCI’s orders are not conclusive, and most of them land up at the Competition Appellate Tribunal (COMPAT). Though many experts approve of the steps taken by the CCI, they say its weaknesses outnumber its strengths.  “It has been a positive journey for the CCI in the last three years. But they have their set of problems, too. I would probably give them a three out of ten and that would be purely because of the activity shown by them,” said Pradeep S. Mehta, secretary-general, CUTS International, a non-profit organisation for consumer rights, social justice and economic equality.

The CCI is severely understaffed. While two or three people work on a competition case in India, it is eight in the US and Europe. “The investigation wing has a severe quality manpower issue. They are operating at 50-60 per cent less than the sanctioned strength,” said Ashok Chawla, CCI chairperson.

Also, most officials in its investigation wing are on deputation. By the time they are trained, they get transferred. “Ministry of corporate affairs has taken up the view that people should only be on deputation there. We are trying to get it modified to the extent that there is a scope for people to be taken directly,” said Chawla.

There are allegations that the CCI is a dumping ground of former bureaucrats. But for Geeta Gauri, all members of the commission are former bureaucrats or retired judges. “The CCI needs people who are specialists in economics and legal issues, people who understand how markets and competition law work,” said Sajid Mohamed, partner at PDS Law & Associates, a law firm.

Many competition lawyers have taken a strong view against many CCI orders. “Due to lack of proper growth of domain knowledge at all levels some of the complex disputes, and decisions thereof, under the [Competition] Act have generated controversies,” said Manas Chaudhuri, partner at law firm Khaitan & Company.

For instance, the NSE vs MCX case. In 2009, MCX-Stock Exchange complained against the National Stock Exchange of using its dominant position in the market to prevent competition in the currency derivatives segment. The CCI declared that the NSE used predatory pricing to thwart competition, and asked it to modify its zero pricing policy and pay a fine of 055.5 crore.

The CCI cited NSE’s predominance in the market to back its decision. Competition lawyers, however, say it was not correct as MCX was the largest player in the currency futures segment even at that time. The two dissenters in the commission, Geeta Gouri and Anurag Goel, did not find any abuse of monopoly by the NSE and, in fact, said that any meddling by the CCI would not help the consumer. The case is now with COMPAT.

Some experts, however, say the ruling was fair. “NSE being dominant in the equity segment, leveraged its position to dominate the neighbouring market of currency derivatives (CD). Charging nothing in the CD market was predatory behaviour, since zero price is below any measure of cost,” said Amitabh Kumar, partner at law firm Jyoti Sagar Associates and former director-general of CCI.

In another controversial verdict, the CCI slapped a penalty of Rs630 crore on DLF, saying the realtor abused its dominance by asking apartment owners to sign one-sided clauses. Many law experts are of the opinion that the CCI’s notions in the case were misguided.

Since it was a dispute between flat buyers and the builder, they say, it was a consumer case and hence the CCI should not have accepted it in the first place. “The accusation that DLF breached terms of contract between two parties is actually a contract law issue and not competition case,” said Naval Satarawala Chopra, partner at law firm Amarchand & Mangaldas & Suresh A. Shroff & Company.

The CCI also faulted on the methodology it used to figure out DLF’s dominance in the relevant market. The DG calculated the market share on the basis of all-India revenues of realtors operating in Gurgaon. “A company might be a market leader in Mumbai, with one project in Gurgaon, but the DG estimated its market share in Gurgaon by using its all-India sales figure,” said Mohamed.

The CCI’s most defining moment came in June, when it fined 11 cement companies with Rs. 6,300 crore for fixing prices. “Cement companies reduced production, in fact, they produced much less than installed capacity thereby creating artificial scarcity. And although the sector was divided into five different zones, prices of all companies moved in the same manner. The price of cement rose faster than input prices. Cement companies had enough margin to reduce the prices 
but they did not do so, they kept increasing prices and earned handsome profits,” said the commission’s 258-page-long order.

Competition lawyers, however, say price parallelism is not illegal and suggestive of cartel behaviour in itself unless there are strong evidences. “They have relied mainly on circumstantial evidence to build up the case, which will be difficult to prove in courts. Even in the case of circumstantial evidence, they have not done proper economic investigation,” said a lawyer. This case also is with COMPAT.
Experts say most of these cases are going to land in the Supreme Court and the CCI is on a weak footing. “It is fine if these orders are reversed. Jurisprudence evolves only over time,” said Dhanendra Kumar, former chairman of CCI.

Some allege the CCI has been a laggard in taking up cases on its own. “They are not very proactive. There are violations happening in a lot of sectors which they have ignored,” said Mehta. It has taken up only five cases suo motu, which is only 2 per cent of the total cases.

The good thing is, corporates have started taking the CCI seriously. “We have been in discussion with them over several matters,” said the chief financial officer of a telecom company. “We want to comply. The feeling is that there is a body watching you, even if you escape the eyes of the sector regulator, and that is good.”

Fair play

The Competition Commission of India (CCI) was established to provide a 
“level-playing field” to producers to ensure the welfare of consumers through fair competition in the economy.

  • Seven members, including the chairperson, comprise the CCI’s chairman’s office division while the director-general of investigations division deals with the cases forwarded by the former.
  • There are various sections like investigation, economic, combination, anti-trust and legal headed by some of the members.
  • The commission studies competition law violations based on specific complaints and can take up cases suo motu, too.
  • The complete report is discussed again by members and the final order is issued by majority approval.
  • Companies can appeal to Competition Appellate Tribunal (COMPAT) against an order.
  • CCI has delivered final orders on 90 cases as on June 30, 2012, 47 cases are still with the commission and 23 with the investigation wing.

Case study

  • 11 cement companies were fined a whopping Rs. 6,300 crore by CCI for “cartelisation”, but the companies got a stay order from COMPAT.
  • MCX alleged that NSE’s zero-pricing policy in currency 
derivatives segment stifled competition, for which CCI fined the latter Rs. 55.5 crore. The case is now in COMPAT.
  • DLF was accused of making apartment owners sign one-sided clauses, for which CCI fined the realty major Rs630 crore. CCI drew flak for this decision as experts felt that it was a consumer case and not a competition one.

Credit: The Week

The Competition Appellate Tribunal (Compat) dismissed the plea of Financial Technologies India Ltd (FTIL) to be a party in the case related to NSE’s appeal against the Rs 55.5 crore penalty imposed on the stock exchange by fair trade regulator CCI.

The CCI order came on a complaint filed by MCX Stock Exchange (MCX-SX), which competes with NSE in the currency derivatives market. For dissenting opinion, see below.

MCX-SX was set up by FTIL and MCX, the country’s biggest commodity bourse.

A three-member Compat bench, headed by its Chairman Justice VS Sirpurkar, dismissed FTIL’s plea after observing that it does not “find any merit” in it.

FTIL’s plea was opposed by the NSE, which said that it was not a party before the CCI (Competition Commission of India) and hence there is no need for the same in Compat case.

The NSE had challenged the CCI order, passed last year, wherein it had imposed the penalty on the bourse for allegedly abusing its dominance in the equity market, thus affecting the competition in currency derivative segment.

FTIL is a specialist in providing IT solutions for the equity, treasury, forex, commodity, derivatives and depository segments.

Order u/s 38 by CCI and dissenting order by Dr. Geeta Gouri and Shri Anurag Goel here

Order of the COMPAT here

Credit: Indian Express

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