 "In five years, CCI will be a vibrant regulator: Ashok Chawla")
Ashok Chawla, whose term as chairman of Competition Commission of India (CCI) ends on January 7, 2016, believes the anti-trust body will be fully vibrant in another five years or so. As the process to select a new chief for the youngest regulator enters the final leg, Chawla, a 1973 batch Gujarat-cadre Indian Administrative Service officer and former finance secretary, might go for a stint in the private sector in an advisory role. However, he's not sure what precisely that may entail. Chawla spoke to Deepak Patel and Nivedita Mookerji about his tenure at CCI and more. Edited excerpts:
CCI got much attention, both at home and internationally, during your tenure as chairman. What would you list as your top three achievements?
First, through advocacy and some of our decisions, there is a wider awareness now that there is a competition law and Competition Commission, which is charged with the responsibility for fair play in the market. Second, despite the constraints we had and we continue to have, we tried to build our capacity as rapidly as we could. Third, we took advantage of a fairly favourable international regime. Competition law is national, but the businesses are global. We began at a time when India was one of the two largest economies. So, the global community was quite keen to assist us in developing sound knowledge practices in applying the competition principles on the enforcement, but more importantly on merger and acquisitions side. We took full advantage of that.
I don't think there is that much of a legacy to talk about. I would say the structure of the house is ready. What is now required to be done is to paint, polish and furnish it, so that it becomes a vibrant regulator.
How long will it take for CCI to turn vibrant?
I would say at least another five years. We are six-and-a-half years old. Another five or six years would see the commission maturing. But, if there is not enough competition law jurisprudence during the same time, as far as the user industry or stakeholders are concerned, they will not have sufficient clue about the application and thinking that goes into various things. Till now, not too much jurisprudence has been built on specific applications or cases. We take some decisions, but those cases should be tested on substantive issues.
What has been the biggest challenge?
One challenge has been our own institutional capacity, which we continuously try to upgrade, but it is an ongoing process. The other one is the time taken in the investigation... Quality is important, but speed is important, too. The third is the effort by those who may bear the brunt of what the commission does - to try and block or stonewall our efforts. In the process, a large number of writ petitions have been filed. Then, there are cases which have gone to Competition Appellate Tribunal, where decisions have been taken not on merit but on some technical issues.
Isn't it a setback that your first major decision - where you penalised 11 cement companies for around Rs 6,000 crore due to cartelisation - was struck down by the tribunal recently?
Not at all. They have sent it back saying the commission needs to decide on it within three months. The tribunal has itself applied some principle of natural justice. We take that. We have not been quite enamoured of that. Natural justice is nobody should be punished without being heard. No fresh evidence would be heard. It is not really a major setback.
Do you think judiciary or the tribunal has not understood the regulator's functioning?
I don't think it would be fair to say they do not understand. But, there is a difference in perception and mindset. There is one process that is clearly judicial, which goes into understanding all this technical minutiae. On the other hand, regulatory architecture, not only us but all the regulators, is not that of a judicial body. This fact was told by the government to the Supreme Court, too. We form our own procedures but we don't want to violate the principles of natural justice. We apply these principles to the extent that it conforms to our architecture.
Which are the sectors that keep CCI busy? How's the landscape changing?
We have been getting 10 complaints a month on an average, which is likely to grow. Depending on the decisions we take, other stakeholders feel they, too, can get relief. Initially, complaints were mostly linked to real estate, film sector etc. Now, it is getting more broad-based. It is going into areas like new economy, financial services and insurance. Also, there's been a steep rise in M&A (mergers and acquisitions) cases - almost a proxy for improved business environment. From 10 a month, the number of M&A cases has risen to 21 as of November.
Out of around Rs 14,000 crore worth of penalty, only Rs 82 crore has been realised. How can it be resolved?
I don't think it can really be resolved as everybody has a right to appeal. If the appellate forum feels that paying the fine till the matter is decided is not a good thing, they will obviously stay that and the money will not come. But I think that the fine collection is not our end objective. The end objective is that the people should behave, that there are certain practices which are completely unacceptable.
You have been discussing merger regulations with stakeholders. Do you think there is a need for a comprehensive amendment in the Competition Act itself?
No, I don't think so. Our Act is well conceived. It is in keeping with good international practices and it is robust. There's nothing much on the M&A side where things need to change. But, there is some ambiguity where the DG (director-general) finds a violation and we don't find the violation as such - the Act reads as if the party cannot go to the appellate tribunal. Good or bad, there should be an opportunity for appeal.
Has there been any rejection in M&A cases?
No, there's been no rejection. Out of 365 M&A proposals, 345 have been decided and the rest are in the pipeline. Of the 365, we imposed structural remedies in two cases - Sun Pharma and Holcim. Internationally, too, there are very few rejections in M&A.
How frequently has CCI penalised government entities to be abusing their dominant position?
There have been quite a few cases including Coal India and India Trade Promotion Organisation. Even the international community compliments us for taking on the government.
Why didn't CCI take a stand on net neutrality?
Net neutrality is not our business. Before it is a competition issue, it is largely an infrastructural policy issue. So, let the regulator and the government decide. We'll see if the companies are conforming with the behaviour prescribed or not.
What now? Where are you headed?
I will engage myself in some activities where I can utilise the experience, which I have got in the past many years, particularly on economic matters.
CCI got much attention, both at home and internationally, during your tenure as chairman. What would you list as your top three achievements?
First, through advocacy and some of our decisions, there is a wider awareness now that there is a competition law and Competition Commission, which is charged with the responsibility for fair play in the market. Second, despite the constraints we had and we continue to have, we tried to build our capacity as rapidly as we could. Third, we took advantage of a fairly favourable international regime. Competition law is national, but the businesses are global. We began at a time when India was one of the two largest economies. So, the global community was quite keen to assist us in developing sound knowledge practices in applying the competition principles on the enforcement, but more importantly on merger and acquisitions side. We took full advantage of that.
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So, what is the legacy you are leaving behind?
I don't think there is that much of a legacy to talk about. I would say the structure of the house is ready. What is now required to be done is to paint, polish and furnish it, so that it becomes a vibrant regulator.
How long will it take for CCI to turn vibrant?
I would say at least another five years. We are six-and-a-half years old. Another five or six years would see the commission maturing. But, if there is not enough competition law jurisprudence during the same time, as far as the user industry or stakeholders are concerned, they will not have sufficient clue about the application and thinking that goes into various things. Till now, not too much jurisprudence has been built on specific applications or cases. We take some decisions, but those cases should be tested on substantive issues.
What has been the biggest challenge?
One challenge has been our own institutional capacity, which we continuously try to upgrade, but it is an ongoing process. The other one is the time taken in the investigation... Quality is important, but speed is important, too. The third is the effort by those who may bear the brunt of what the commission does - to try and block or stonewall our efforts. In the process, a large number of writ petitions have been filed. Then, there are cases which have gone to Competition Appellate Tribunal, where decisions have been taken not on merit but on some technical issues.
Isn't it a setback that your first major decision - where you penalised 11 cement companies for around Rs 6,000 crore due to cartelisation - was struck down by the tribunal recently?
Not at all. They have sent it back saying the commission needs to decide on it within three months. The tribunal has itself applied some principle of natural justice. We take that. We have not been quite enamoured of that. Natural justice is nobody should be punished without being heard. No fresh evidence would be heard. It is not really a major setback.
Do you think judiciary or the tribunal has not understood the regulator's functioning?
I don't think it would be fair to say they do not understand. But, there is a difference in perception and mindset. There is one process that is clearly judicial, which goes into understanding all this technical minutiae. On the other hand, regulatory architecture, not only us but all the regulators, is not that of a judicial body. This fact was told by the government to the Supreme Court, too. We form our own procedures but we don't want to violate the principles of natural justice. We apply these principles to the extent that it conforms to our architecture.
Which are the sectors that keep CCI busy? How's the landscape changing?
We have been getting 10 complaints a month on an average, which is likely to grow. Depending on the decisions we take, other stakeholders feel they, too, can get relief. Initially, complaints were mostly linked to real estate, film sector etc. Now, it is getting more broad-based. It is going into areas like new economy, financial services and insurance. Also, there's been a steep rise in M&A (mergers and acquisitions) cases - almost a proxy for improved business environment. From 10 a month, the number of M&A cases has risen to 21 as of November.
Out of around Rs 14,000 crore worth of penalty, only Rs 82 crore has been realised. How can it be resolved?
I don't think it can really be resolved as everybody has a right to appeal. If the appellate forum feels that paying the fine till the matter is decided is not a good thing, they will obviously stay that and the money will not come. But I think that the fine collection is not our end objective. The end objective is that the people should behave, that there are certain practices which are completely unacceptable.
You have been discussing merger regulations with stakeholders. Do you think there is a need for a comprehensive amendment in the Competition Act itself?
No, I don't think so. Our Act is well conceived. It is in keeping with good international practices and it is robust. There's nothing much on the M&A side where things need to change. But, there is some ambiguity where the DG (director-general) finds a violation and we don't find the violation as such - the Act reads as if the party cannot go to the appellate tribunal. Good or bad, there should be an opportunity for appeal.
Has there been any rejection in M&A cases?
No, there's been no rejection. Out of 365 M&A proposals, 345 have been decided and the rest are in the pipeline. Of the 365, we imposed structural remedies in two cases - Sun Pharma and Holcim. Internationally, too, there are very few rejections in M&A.
How frequently has CCI penalised government entities to be abusing their dominant position?
There have been quite a few cases including Coal India and India Trade Promotion Organisation. Even the international community compliments us for taking on the government.
Why didn't CCI take a stand on net neutrality?
Net neutrality is not our business. Before it is a competition issue, it is largely an infrastructural policy issue. So, let the regulator and the government decide. We'll see if the companies are conforming with the behaviour prescribed or not.
What now? Where are you headed?
I will engage myself in some activities where I can utilise the experience, which I have got in the past many years, particularly on economic matters.