If it's competition you want, it is competition you will get -- except that in the case of the members of the Competition Policy Committee it seems to have been mutual. Four members of the committee have put in separate notes (two of them have signed a second note other than their own), only one of which is officially called a `dissent' note and the other three are just notes. What this is going to do to the credibility of the report is anyone's guess. No one should be surprised if the government sets up another committee to examine the suggestions of this one.
The basic elements of a competition policy are well known. Dismantling entry barriers, preventing collusive pricing, abuse of market power, etc. are, in a sense, old hat as principles though they do need to be defined. The problem has always been in implementing competition rules. Whether it should be done via a permanent Competition Commission or through the judicial system has always been open to question. The committee favours the former. But, given that enforcing competition is a very complex affair, this has prompted two of its more liberal members to point out the dangers. The biggest danger is that it could simply end up increasing the discretionary power of the bureaucracy.
So one of them, Rakesh Mohan, has sensibly said that there should be an initial period during which the proposed
Competition Commission plays only an advocacy role so that those whose job it is to enforce competition can be suitably trained, for otherwise the competition bureaucracy could wreak havoc. The government needs to pay serious heed to this suggestion. Another member, Sudhir Mulji, is opposed to promoting competition through a law which could bring back the licence-permit raj. Implicit in all this is the criticism that the true nature of a market economy is yet to be understood by Indian bureaucrats. The government has to take note of these issues.
The third note relates to mergers and its author, P Narielwala, makes the valid point that the Sebi Takeover Code and the Companies Act are sufficient at present and that there is no need for the competition policy to add a dimension, especially when the bureaucracy is yet to be educated and reformed. This note makes another point, namely, that by international standards Indian firms are too small for the country to worry about mergers spoiling competition and that if they are to stand up to foreign competition they should be allowed to become bigger, if necessary through mergers. This is entirely rational, except that Indian consumers (who get no protection from Sebi or the Companies Act) do need some guarantees against the abuse of market power which could accrue through uninhibited mergers.
Given the divergent views on how to implement a competition policy, a review seems not just proper but also necessary. A more sensible course would have been to further extended the committee's term, if only by another month. During this time the members could have been asked to reconcile their views. By insisting on immediate submission, the government has not been very clever.
