A corporate affairs ministry note prepared for a group of ministers has sought to bring all sectors of the economy under the Competition Commission of India's (CCI) purview
Objections to that by the Department of Financial Services (DFS) and the Department of Telecommunications (DoT) have been contested. The DFS and the DoT had asked for the banking and telecom sectors to be exempted.
To ensure no conflict between the CCI and sector regulators, the note has sought amendments in the Competition Act so that coordination between them becomes “mandatory” through suitable provisions added to the Act and the relevant sector-wise laws.
| PROPOSED CHANGES IN COMPETITION ACT |
| * Revised definition of ‘control’ by a group in a merger or acquisition to mean it is directly or indirectly in a position to exercise 50% or more voting rights in the other enterprise (from 26% currently) |
| * Power for the commission to prescribe, in consultation with the central govt, sector-wise thresholds on values of assets and turnover for acquisition purposes; currently, it is fixed across sectors |
| * Lower time limit for deciding an M&A case at 180 days instead of the existing 210 |
| * Power to the CCI chairperson to approve search and seizure; there is no such power now |
It has suggested the Cabinet committee on competition to be set up under a proposed National Competition Policy be the forum of last resort and be empowered to give directions in the event of any difference of opinion between the CCI and a sector regulator on competition-related issues.
The DFS and the DoT had sought exemption, saying the sector regulators (the Reserve Bank of India and the Telecom Regulatory Authority of India) had sufficient expertise to deal with cartelisation, monopolistic behaviour or unfair competition. The DFS had argued under the Banking Laws (Amendment) Bill, 2011, Parliament’s standing committee on finance had approved the exemption of bank mergers from the purview of the Competition Act.
Similarly, the DoT has argued the TRAI Act, 1997 “provides for measures to facilitate competition and promote efficiency in the operation of telecom services”.
After differences surfaced among various government departments, the Cabinet last month decided to set up a group of ministers (GoM) to examine the issue. The group includes Finance Minister Pranab Mukherjee, Home Minister P Chidambaram, Corporate Affairs Minister Kapil Sibal and Law Minister Salman Khurshid.
Justifying its stance, the note for the GoM says the regulators have been created by Acts of Parliament to undertake specific tasks that include market development, entry regulation, tariff determination, consumer interest and sector-specific technical matters. It would, therefore, be reasonable to say the jurisdiction of the sector regulator arises ex-ante (before the event). On the other hand, CCI jurisdiction arises ex post facto or after the commission of an act with implications for competition, though there is preventive jurisdiction in a few cases.
The note has argued various countries such as in the European Union, Japan, Australia, Pakistan, South Africa and
Indonesia are moving in the direction of allowing the competition authority to monitor and regulate competition matters across all sectors. That, it says, indicates a policy position that completion regulation requires technical and sophisticated analysis by a specialised regulator.
Rejecting the DoT’s argument, the note says Trai’s mandate is facilitation and not regulation of competition. Trai’s functions amount to enabling competition, not exercising a quasi-judicial power of regulation of competition, it says. It says a similar situation (of there being no power of appeal) prevails in the Reserve Bank’s case.
