The Committee on Competition Policy (CPC) has recommended setting up of a Competition Commission of India (CCI) that will define the parameters of competition, have the right to hold summary trials and review orders of other regulating authorities, including state regulators or monopolies.
The committee also recommends a threshold limit on pre-notification of mergers, saying all state monopolies should be brought under the purview of the proposed competition law except those dealing in defence, law and order and currency.
It also recommends the repeal or scrapping of the existing legislations_Monopolies and Restrictive Trade Practices Commission, the Board for Industrial and Financial Reconstruction, Sick Industrial Companies Act_and de-reservation of the SSI sector.
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Also, it moots a proper exit policy to ensure the closure of inefficiently-run units.
The CPC submitted its report to the Prime Minister yesterday. Of the nine-member panel, three_ Sudhir Mulji, Rakesh Mohan and P Narielvala_have appended dissent notes, while another member S Chakraverti has submitted a supplementary note.
In its report, CPC says there are three situations where competition has to be defined and its abuse prevented.
i) Agreement among enterprises
ii) Abuse of domination
iii) Mergers or combinations
According to the CPC, competition is eroded by firms concluding horizontal (agreements among competitors) and vertical (actual or potential relationship of buying and selling to each other) agreements. Both these should be covered by the competition law.
It strikes down collusive tendering and market sharing as anti-competition. The CPC said vertical agreements like tie-ups, exclusive supply and refusal to deal are also anti-competition.
While recommending that anti-competition policies be declared illegal, it says agreements that contribute to the improvement of products and distribution be dealt with leniently. It says, "blatant price, quantity, bid and territory sharing and cartels should be illegal". The CPC says abuse of domination is an important barrrier to competition. It defines competition as the "Position of strength enjoyed by an undertaking which enables it to operate independent of competitive pressurein the relevant market and and also affects the relevant market, company and consumer by its action."