DEVELOPMENT OF NATIONAL COMPETITION POLICY

DEVELOPMENT OF NATIONAL COMPETITION POLICY

National Competition Policy proposes to build and integrate a seamless national market which can add to 2% to the countries growth. This would significantly affect the trade and investment scenario of the country and also give effect to the provisions of Article 307 of the constitution pertaining to the setting up of inter state trade and commerce.

1. Sectoral Conflicts:

In India, there exists a situation of jurisdictional arbitrage and overlap resulting into regulatory conflicts.

The genesis of this problem is rooted in the competition act itself. Section 60 of the competition act provides primacy to the CCI on all matters pertaining to competition. However, Section 62 provides that provisions of competition act have to be read in conjunction with all other relevant laws. These two provisions may give rise to situations that are mutually contradicting.

Moreover, Section 21 of the Act provides for reference by the statutory authority to the CCI on Competition related matters. This opinion of CCI on reference, however, is not binding. Following are the instances where there has been conflict between CCI and other regulatory boards.

1. Petroleum and Natural Gas Regulatory Authority Board/CCI

In the case of Gujarat Textile processors Association v Gujarat Gas Company, reference was made by the government of Gujarat regarding abuse of dominant position in gas and supply agreement under section 19(1)(b) of the competition act. Comments were sought from the PNGRB and PNRGB provided that since the entity was regulated by it, CCI should decide the matter.

The competition legislation provides for the private right of action and provision for claiming damages. The PNGRB does not provide for the same.

 PNGRB does not give the definition of the word person so consumer protection related matters cannot be adequately taken up.

1. Electricity Commission/CCI: Section 60 of the EC Act is in conflict with Section 4, 5, 6 of the Competition Act relating to abuse of dominant position.

Section 60 of the EC act provides the Commission has powers to issue directions to a licensee if they enter into the anti-competitive agreement or engage in abuse of dominant position.

In the case of Shri Neeraj Malhotra, Advocate vs. North Delhi Power Ltd. & Ors. Discoms alleged before the CCI that only the Delhi Electricity Regulatory Commission under the EC Act had jurisdiction to deal with the issues relating to the anti-competitive behavior of electricity distribution companies. The commission held that CCI was the final authority in dealing with matters.

1. Telecom Regulatory Authority of India/CCI: Section 11 of the TRAI mandates TRAI to facilitate competition on the other hand Section 14 excludes its jurisdiction in matters relating to competition.

In the case of Consumer Online Foundation v. Tata Sky Ltd. & Other Parties, Dish TV submitted that the CCI could not claim jurisdiction over this matter as TRAI and TDSAT were already vested with the jurisdiction and responsibility to govern and regulate the telecommunication industry covering telecom, broadcasting and cable TV services.CCI held that any matter that raises competition concerns would fall within the purview of the Comp. Act enabling CCI to exercise its jurisdiction.

1. SEBI/CCI: Under the SEBI Takeover Code if the acquirer fails to pay the consideration within 15 days of the closure of open offer due to non-receipt of statutory approvals-may be liable to pay penalty in terms of interest to shareholders for each day of delay however under CCI allows acquirer 30 days to notify and can take up to 210 days to arrive at a decision. This may lead to a situation of a possible conflict
2. BANKING SECTOR/CCI: CCI has jurisdiction over combinations under section 5 and 6 of the Competition Act. RBI, on the other hand, has competing claims over Merger & Acquisition of Bank. The government seems to be persuaded with latter which is evidenced in Banking Regulation Amendment Bill. It is pertinent to note that Regulatory loopholes of RBI as observed in Bank Case “pre payment penalty” case shows the importance of CCI in this sector.
3. INSURANCE REGULATION AND DEVELOPMENT AUTHORITY ACT, 1999: Section 14(2) of the IRDA Act subjects the authority to the provision of any law for the time being in force. Thus there is not much conflict with CCI. But IRDA (Scheme of Amalgamation and Transfer of General Insurance Business) Regulations, 2011, gives authority to IRDA to regulate combinations in the insurance sector. This may be a potential source of conflict with CCI.

Suggestions to avoid sectoral conflict:

1. The different frameworks which have evolved to address such situations of conflict are

• Shared jurisdictions over competition matter as practiced in U.K
• The Australian model where the Competition Commission primarily enforces competition related matters and the sectoral regulators enforce the technical requirements.
• Adoption of reference mechanism between the Competition Commission and other Sectoral regulators or by signing MOU’s. There is a mechanism in the Indian Competition Act for references to be made under Section 21 of the Competition Act.

1. The 2013 report of Financial Sector Legislative Reform Commissions headed by B. N Sri Krishna has recommended that CCI should review the draft regulations framed by the financial regulators by either adopting the process of reference by either the financial regulators or the competition commission or by signing of MOU’s.

1. To combat economic irregularities:. The issue of appropriate policies and procedures for allocation of natural resources such as spectrum and coal has become the subject of vigorous national debate. Sectors such as airlines and telecommunications which were apparently buoyed by healthy competition so far are now in difficulties. It would be rather obvious that the negative cascading effect of the 2G imbroglio on the telecommunications sector and the economy as a whole could have easily been avoided had it been mandatory to test the proposed decisions of the department against various provisions of National Competition Policy.

            Indian competition law does not provide for recognition of international competition policy which was one of the Singapore issues. Thereby India did not include competition policy as a part of its WTO agreements. Countries like Brazil and Canada have separate Dedicated Competition Cooperation Agreements as a part of their Bilateral Agreements. India, on the other hand, includes competition policy issues in the FTA’s itself. Earlier the trend as witnessed in an FTA with Japan observed that competition policy was included in the FTA but not enforced. However now in the Bilateral Trade and Investment Agreement with EU, EU wants a stronger competition policy. The agreement also suffers from the lack of transparency and public consultation where all the stakeholders were not consulted including the state governments even though it involved matters pertaining to the concurrent lists.

            In the wake of such developments, it is all the more essential that the Indian canvass holds a robust competition policy in place.