A K Bhattacharya: A Commission tied in legal knots

NEW DELHI DIARY

The logic of a competition law in any mature and efficient business environment has never been a matter of debate. Over the years, more countries have recognised its importance and many of them have embraced it.

In 1995, there were only 35 countries in the world which had enacted a competition law. Today, that number has risen to more than 100. In India, too, the logic of a competition law was formally recognised by the Vajpayee government in 2001.

And in October 2003, the government set up the Competition Commission of India, an autonomous body to enforce the competition law and create a level playing field among producers and to protect consumers interests by promoting healthy competition in the market.

What happened after that was, of course, a bad joke. The notification setting up the Commission was issued in October 2003. The Commission was to have a maximum strength of ten members and a chairman.

The government even named Dipak Chatterjee, who was then commerce secretary, as the chairman of the new body, and Vinod Dhall, who was then the company affairs secretary, as a member.

Mr Dhall did not lose much time in joining the Commission, while Mr Chatterjee, who was busy finalising India's stance at the WTO ministerial conference at Cancun, was expected to join as soon as he was free from his responsibilities in Udyog Bhawan.

But by the time Mr Chatterjee was ready to join the Commission, the Supreme Court began hearing a petition questioning the government's process of selecting the head of the Commission.

The petitioner's case was that only a judge should head the Commission. The government's explanation that the world over the competition commissions are mostly headed by experts and economists did not convince the Supreme Court.

The apex court also ordered that till the issues pertaining to the selection procedures were not sorted out, the Commission should not undertake any judicial or quasi-judicial work.

The government's reaction was swift and a little nervous. It revoked the appointment of Mr Chatterjee as chairman of the Commission and assured the Court that it would come back with a proper response.

That was in November 2003. More than a year and two months have elapsed since then. The case has come up for hearing in this period on a few occasions, but has made no substantive progress.

The Vajpayee government was voted out of power in May 2004. For some strange reason, the United Progressive Alliance government did not show much interest in resolving the issues over the procedures for selecting the chairman of the Competition Commission.

Did it mean that the UPA government was not serious about continuing with the new structure that was created by an act of Parliament?

There was no clear signal on this from any department of the government.

The Competition Commission, with only one member in position, however, worked out alternative ways to make itself relevant, in the hope that the court case would soon be settled and advance work done in the meanwhile would stand in good stead once the Court gave its green signal.

So, it did not undertake any judicial work. But it set up an office, developed an appropriate organisational structure, recruited a small team of experts, started training them and began work on raising the awareness level in the corporate sector about the competition law.

Expert committees began work on competition advocacy and framing rules and regulations that should govern the competition policy and predatory pricing.

Research organisations were also asked to undertake studies on competition-related issues in various sectors such as pharmaceuticals, retail food, transport, and telecommunications.

What's more, the Commission is now all set to establish an economic wing that will enable the application of theoretical principles and techniques to the available empirical data of specific markets.

All this does not amount to any judicial work. But it will go a long way in ensuring a smooth functioning of the Commission as and when it gets the go-ahead.

What if the UPA government decides to drop the idea of the Commission? This may sound illogical. But don't forget that the notification to dissolve the Monopolies and Restrictive Trade Practices Commission has not yet been issued.

The government's explanation is that the notification will be issued only when the case before the Supreme Court is settled.

But there are views within the government that seem to suggest that if the Commission has run into legal problems, why not empower the MRTP Commission and let it play the role that is expected of the Competition Commission?

This seems to be an easy way out of a tricky situation. But surely it would be the most regressive step that any government can take in today's environment.

There is no doubt that India needs an efficiently run Competition Commission to look after the interests of both producers and the consumers. Settling for the MRTP Commission, even with an expanded role and powers, would be tantamount to going back in time.

It would be unwise for the government not to dispel the judiciary's legitimate reservations about the process of selecting the head of the Commission.

Why, for instance, should these jobs be virtually reserved for retired bureaucrats and not thrown open for experts, economists or judges? Failure to resolve such issues should not force the government to abandon the concept of having a functioning Competition Commission.

akb@business-standard.com