Why laws, rules and regulations of India's competition regime need a revamp

The review panel must push for greater clarity on regulatory front, more CCI benches and expeditious disposal of cases, say experts

On September 30, the central government set up a nine-member Review Committee to revisit the law, rules, and regulations of the country’s competition regime. The Committee has three months to submit its recommendations, a short span for a review of such a magnitude. 

Given the duration of the enforcement of this law — about 10 years, experts believed it was a good time to review the law. Businesses, meanwhile, pitched for greater certainty in regulations and rewarding a culture for compliance. 

The enforcement of the competition regime began in May 2009, after the Competition Commission of India (CCI) was set up. Avirup Bose, associate professor, Competition Law and Policy at Jindal Global Law School, said: “The time to review the law seems to be appropriate given the dynamic changes happening in India and globally in the area of high-technology.”

The appellate body of the competition regime at present is the National Company Law Appellate Tribunal, that is, it takes up appeals against orders of the Competition Commission of India. However, this was not always the case. The original structure of the appeals against Commission orders went to a dedicated tribunal — the Competition Appellate Tribunal (Compat). This was done away with in the Finance Bill, 2017. 

Experts feel that there has to be a dedicated tribunal to address competition appeals. “An 'Independent Appeal Tribunal' could be considered to be re-introduced in line with the intent of Section 60 of the Competition Act,” said Manas Chaudhuri, competition partner at law firm Khaitan & Co. 

On similar lines, Avaantika Kakkar, partner and head, competition, Cyril Amarchand Mangaldas, noted: “With any new regime, there will be teething troubles and a robust appellate authority is essential to the smooth development of such a specialised regulation.” 

The Competition Act, being a specialised law and based on the understanding of markets and the economy, needs an appellate body dedicated to it, she said. 
 

About the core principles on which the law is based, experts called for clearer definitions and laying down of standards within the framework.  In a recent column in Business Standard, lawyer Somasekhar Sundaresan noted the phrase ‘appreciable adverse effect on competition’ could be widely interpreted. There was a need to codify the requisite criteria to define this phrase in an equitable and proportionate manner, he said. 

Bose said the Act must be amended to provide for an “efficiency-based” enforcement approach while examining allegations of anti-competitive conduct by dominant firms.

Nisha Kaur Uberoi, national competition head, Trilegal, a law firm, said for cases of abuse of dominant position, a test for the appreciable adverse effect on competition should be included. “Similarly, in relation to merger control, the CCI should be empowered to have differential sector-specific thresholds,” Uberoi said. For sectors, such as the digital space, cases involving Facebook/WhatsApp escaped merger control scrutiny on account of low turnover, without regard to factors such as transaction value, number of users, and impact on market,” she added.

Further, allowing appeals against orders of the Commission where they disagree with the reports of the Director General needs to be incorporated within Section 26 of the Act, said Chaudhuri.

The Union Cabinet, on April 4, decided to ‘rightsize’ the Commission to a body of four members — chairperson and three others. Experts said more had to be done for improving the functioning of the Commission, than merely reducing the number of personnel.

“Such downsizing or 'rightsizing' cannot be a prudent move for a young competition regulatory authority and does not, as such, contribute to the ease of doing business,” Uberoi said. On the reforms side, she advocated for benches of the CCI. “A fair trade market regulator needs to be present in more than one location,” she said. 

Experts also brought up the issue of the Commission being staffed with bureaucrats. Currently, the entire leadership of the CCI is bureaucratically staffed and positions are filled up on a ‘deputation basis’ from other government departments, who are appointed only for a period of two-three years. “This harms the ability of the CCI to build robust institutional memories of enforcement,” Bose said. 

He said that India lagged on a global scale in hiring more anti-trust practitioners or scholars at the highest level of the CCI. In contrast, most developed antitrust agencies consist of commissioners/members who have substantial background in the practice or scholarship of antitrust law. 

Experts asked for quicker decisions and greater clarity on the regulatory front. “Companies expect expeditious disposal of case with high qualitative standards.  It would lead to minimising interventions by courts,” Chaudhuri said. 

Uberoi noted the need for certainty in the competition regime. “Industry expectations will be that there is greater certainty to the competition regime in terms of applicable evidentiary standards for cartels, rewarding of a culture of compliance and penalty guidelines that will serve as a roadmap, as well as merger control thresholds which will provide certainty.”

Corporate India’s wish list

| Clearer definitions and certainty to the competition law; set the standards within the framework of the law

| A dedicated tribunal to address competition appeals

| Hire more anti-trust practitioners at the highest level of the Commission

| Speedy disposal of cases

| Rewarding of a culture of compliance