Competition panel feels toothless

GOVERNMENT IN OVERDRIVE TO COOL CEMENT, STEEL PRICES

Even as the government has railed against steel and cement manufacturers for behaving like a cartel, the Competition Commission of India (CCI), the body that is supposed to take action against any abuse of market dominance, says it is in no position to do so.

The issue of cartels and the government's seeming inability to deal with them has once again come to the forefront after Finance Minister P Chidambaram yesterday accused the domestic cement and steel industry of forming cartels to exploit consumers.

He also warned the industry that if they did not mend their ways, the government would not hesitate to take tough measures and break the logjam. While cartelisation in the cement industry has been talked about since last year, it is only now that the spotlight has shifted to the steel industry.

Established in October 2003, the CCI was supposed to prohibit anti-competitive agreements, abuse of dominant market positions as well as to regulate mergers and acquisitions. It was formed after the government reviewed the Monopolies and Restrictive Trade Practices (MRTP) Act, 1969, and enacted the Competition Act, 2002.

The Act seeks to repeal the MRTP Act and dissolve the MRTP Commission from the date it is notified by the central government. Such a notification is yet to be issued by the central government which is the crux of the problem that it has on its hands.

On the one hand, the concept of dominance has been taken away from the MRTP Act. On the other, the CCI, which has the power to deal with it, is not operational as yet, despite the amendment to the Act that governs it, in September 2007.

"What can we do if the enforcement provisions have not been notified despite Parliament gave its approval last year?" a CCI official said today.

The notification may happen by the middle of the year but even then the CCI will not be able to begin operations immediately. This is because the selection of the three members, who are to constitute the full commission, has not happened. Similarly, the support staff (currently the body runs on a skeletal staff), is yet to be recruited.

"Even after the notification, it will take four to five months to get the commission up and running," a source said, adding it was imperative the government moved speedily on this front.

Officials said the matter, which is with the Ministry of Corporate Affairs, has been monitored regularly by the Prime Minister's Office. "If there is cartelisation, the solution is to make the CCI operational soon," said an official.

Eminent lawyer Kumkum Sen, partner, Rajinder Narain & Co, said the CCI would not become operational unless the MRTPC was wound up. "The entire thing remains a power struggle. We are at pains to explain to our overseas clients that we do not have a cartel law in place," she said.

The MRTPC, which has acted against the cement industry in the past, had warned it in December 2007 not to repeat the practice. The industry denies these allegations and earlier this year, the 44 companies that the commission had found guilty of cartelisation for the period between February and April 1990, appealed at the Supreme Court.

The commission had begun inquiries in October 1990 after its investigative wing, the Director General of Investigation and Registration (DGIR), alleged that the cement companies were involved in cartelisation.