The government would examine the possibility of keeping banking and shipping sectors out of the purview of the Competition Commission of India, Corporate Affairs Minister Salman Khurshid said.
“There are other people, too, who cite historical and global evidence to say that there are areas where there can be exceptions for them. We receive such petitions. We will examine them, we have no problem,” he said, when asked whether the ministry would keep the banking sector out of the purview of the Competition Act.
“We have been told, for instance, that in the shipping area there are exceptions in some countries... We will examine them, we have no problem,” Khurshid further said.
The Reserve Bank of India has reportedly written to the finance ministry, asking the banking sector, including that mergers and acquisitions of banks, should be kept out of the purview of the Competition Act, 2002.
The ship liners’ association has also approached the Ministry of Corporate Affairs seeking anti-trust immunity from the competition watchdog. The ship liners come together to operate cargos on designated routes and agree on prices.
Section 54 and 55 of the Competition Act, 2002, grants power to the central government to exempt certain sectors or enterprises from the competition watchdog’s lens.
The government, however, is yet to notify Sections 5 and 6 of the CCI Act, which will empower the Commission to vet mergers and acquisitions that can have a bearing on the competition in a particular sector.
After notification of Sections 5 and 6, all mergers which would increase the combined assets of the two entities to more than Rs 1,000 crore or raise the turnover to Rs 3,000 crore would require CCI’s approval.
“Anything that is available in terms of best practice, we will examine them. It may suit us, it may not suit us, but that has to be an objective decision. Similarly, what you are saying about banks, if there is any such view... we will obviously examine it in that context,” Khurshid said.
The banking sector also enjoyed exemption from the regime of erstwhile Monopolies and Restrictive Trade Practices Act.
“The bottom line, don’t forget, is the misuse of dominant position, so ultimately it is not so much about combinations, it is about combination and misuse of dominant position. So, where there isn’t misuse of dominant position, there is still a public interest that allows for combination, which otherwise might be questionable,” Khurshid explained.
The Competition Act, 2002, was enacted to prevent practices that have adverse effect on competition; to promote and sustain competition in markets, to protect the interest of consumers and to ensure freedom of trade carried on by other market participants.
