CCI favours better compliance, not penalties: Chairman

Seeking to allay concerns of the industry over high penalties, Competition Commission Chairman D K Sikri today said the fair trade regulator does not favour imposing fines and would rather want better compliance to the competition laws.
The comments assume significance in the wake of several voices from the industry terming the hefty penalties imposed by CCI as detrimental to the efforts towards improving ease of doing business. As such, CCI has also not been successful in recovering a large portion of the penalties imposed by it, as most of them are locked in appeals at various levels.
Sikri also said that the regulator has strengthened its initial enquiry procedures for alleged anti-trust cases, due to which only 20 per cent matters are now going to the investigation stage, as against 50 per cent earlier.

"Unlike in the past when we undertook the investigation, in more than 50 per cent of the cases or informations filed with us we are now applying rigours of enquiry very-very strongly," Sikri said.
"Of the information filed, now 80 per cent is not subject to any investigation as only 20 per cent cases go through the investigation stage," he added.
The fair trade regulator has disposed of more than 600 of 750 anti-trust cases handled by the Commission by now, which comes about 80 per cent of the total cases.

Sikri said that the commission is not in favour of imposing penalties and these should be very rational and proportional.

"We do not favour it and we do not want this to be imposed, we will advocate and favour more and more compliance which is in the best interest of Indian economy."
In his address, Assocham President Sunil Kanoria said: "The monetary fines imposed by CCI on various sectors are a major concern. In most cases these fines are hefty and invariably corporates usually opt to challenge such claims, which results in lengthy litigations. In almost 97 per cent cases, either the penalty gets stayed or is sent back for fresh investigation."
"Therefore, the track record of these fines is very dismal. Proper scientific methods for calculation should be developed and penalty should be kept at an optimum level, so that companies are in a position to pay off and at the same time their future is not jeopardised," he added.

Advocating for competition compliance, Sikri said it must go beyond being made a formality, it should be formalised and imbibed as an article of faith by all businesses in the country.
"We have recently embarked upon and are preparing a competition compliance manual which is comparable to international standards and are taking the help of legal fraternity in preparing this," he said.
CCI, which has the mandate to prevent practices having
adverse effect on competition, is trying to make people aware about the law through several initiatives.
In about past six months, CCI organised 40 events for promoting awareness in one way or the other amongst the people about the Competition Law, for all stakeholders and people to understand the scope of the law and the remedies it offers.

Meanwhile, Competition Appellate Tribunal Member Rajeev Kher said to establish dominance continues to be a challenge for the authorities with the evolution of technology.
"With the evolution of technology disruptive in nature and Internet becoming a critical platform for providing services, deciding dominance has become even more challenging," he said.
(REOPEN DCM58)
Meanwhile, Union Law Secretary Suresh Chandra said that government has not been able to make the CCI very effective.
"The original idea of having a CCI as a multi-member and an effective body to regulate and deal with all unfair trade practices and the cartels, mergers and acquisitions, to some extent perhaps we have not been able to make the CCI very effective," Chandra said.

"I do not know because the quasi-judicial functions though have been but again we have the appellate tribunal which is perhaps going against the principle of minimum government and maximum governance," he said.
He said there is a need to see and understand "what was the initial objective of bringing this law and as to whether we have been successful".
"Initially, it was thought that the Competition Commission which is a mechanism to regulate the free level playing field, being a multi-member body will have a specialised person from the legal field, international trade, economics and those who understand how business functions," Chandra.

"This multi-member body was supposed to provide a level playing field and bring out fair play at the same time prohibiting or taking actions against anti-competitive agreements and also prohibiting/preventing any dominant player to prevent any new entrepreneur to enter into, and also the combinations, regulations i.E. Mergers and acquisitions," he added.
Apart from that it was also envisaged that the CCI will also carry out the function of competition advocacy and at the same time will also give recommendations to Central government either on their request or suo moto to bring whatever necessary improvements in the field of competition law.

"It was also not thought of that it will also have an appellate tribunal over and above this, while we had thought at that time if there is anything that will go to the court of law," the Union Law Secretary said.