Imagine a high-level party six months ago. People getting high on orange juice. The Honourable Minister of Law wonders whether the MRTP Commission is serving any purpose. A clever dog quips, "What we need is not a commission to curb monopoly, but a policy to stimulate competition." A worthy thought, and a committee is born "to examine the provisions of the Monopolies and Restrictive Trade Practices Act, 1969 and to propose a modern Competition Law." This government wants quick results: ask them to report in three months.
The chairman, seized by a sense of urgency, calls a meeting on November 4. Lady and gentlemen, our task is to usher in competition. There is no time to waste. But soon scuffles break out. A points out, look, we are supposed to be ready with a competition law in three months; shouldn't we start drafting it straightaway? B points out that the requisite expertise already resides in S Chakravarthy, who is master of the competition laws of 80 countries;
why not ask him to draft the golden
mean of those 80 acts? Immediately the libertarian C suspects a conspiracy: these guys want to bring back the MRTP Commission in greater glory. The
supremely temporizing D says, all right; we have an even greater expert in Pallavi Shroff; let us ask her to draft it. E, F and G go into a huddle: we are being hustled, we've got to stop this juggernaut. F is disgusted; all these guys want is another bureaucracy to wield the whip and make a buck. He resigns. No matter; he is replaced by Mala Banerjee.
The chairman is at his wits' end. He thought all the members were rational, grown-up men and women; he never imagined they would squabble like fishwives. He has promised a report within three months. The member-secretary is pretty useless when it comes to conceptualising the report. The British High Commission offers the committee a free trip to London to study the Competition Act of 1988. The members are thrilled; five of them go off to London. When they are around, they enjoy the spurious wisdom of Shyam Khemani. When is the report going to be written?
The chairman turns to E: E, you are sitting on a vast economic empire, can you spare a body? So E gives him Vivek Shrivastava. In the meanwhile, H is always at the chairman's side, offering helpful comments, giving suggestive excerpts
from foreign legislations. For lack of
someone better, the chairman asks him to help in the drafting.
So while battles go on in the committee, the report quietly takes shape under the hand of Chakravarthy, Shroff and Shrivastava. The chairman has done it: it is ready by the middle of March. But when it is put before the committee, the heat becomes unbearable. G says he never agreed to suggest a competition law. But, B points out to him, you should read the terms of reference, my friend; they call precisely for that. Oh! I hadn't read them, says G. Naturally, you have bigger fish to fry, someone quips. The temperature goes up.
The chairman seeks a meeting with the minister. I've got the draft, but I cannot get it past the committee yet. But give me some more time, and rename it a High Level Commission, and maybe I can swing it. So he gets an extension.
When, finally, it becomes clear that the committee has reached an impasse, the chairman reads out to it from the terms of reference: The Committee would function under the Chairman and would devise its own procedure of working under guidance of the Chairman. He guides it to pass
the report by majority. Surprisingly, there was only one note of dissent; Sudhir Mulji could not persuade anyone else to join him, although he signed Narielwala's "comment" of dissent disagreeing with the recommendation that a notice of mergers above a certain size should be given to the government.
Rakesh Mohan was in a dilemma. He agreed with Sudhir Mulji. On the other hand, the committee had accepted many of his favourite recipes, including small-scale dereservation, and he could not be brazenly ungrateful. So he wrote a note of dissent, but called it a "Supplementary Note". He ended it with two recommendations. First, the report should be put "in the public domain". Did he seriously fear that the government would put the report -- this report -- under lock and key? And that the proposed Competition Commission of India should "be charged with an advocacy role for 3-5 years". This recommendation, coming from a man of Rakesh Mohan's intelligence, is scandalous. Advocacy of what? Competition? Is this commission to sit around for five years preaching the virtues of competition? Do they need to be preached? Just who is against it in our blessed country? Industrialists, small and large. Will they change their stripes because of a commission's "advocacy"?
Thus was the opposition to the report divided and destroyed. Why? For two reasons. Or three; make it two-and-a-half. First, apart from the proposal for this Competition Commission of India, there is little to disagree with in the report. Many of its recommendations are perfectly laudable: for instance, that the Industrial (Development and Regulation) Act, the Sick Industries Act, and the MRTP Act should be repealed, that the BIFR should be disbanded, that trade policies should be open, rule-bound and non-discriminatory, that small-scale reservations should be dismantled as the products are put on open general licence, that the Industrial Disputes Act should be amended to make retrenchment possible, etc etc. No liberal can oppose the report in toto. Second, no one can disagree that the practices against which the Competition Commission is intended to act are undesirable.
And the half-reason: Sudhir Mulji's objections are not convincing. He says that other countries have anti-monopoly laws because they already have competition. They do not. It is possible to point to any number of monopolies and near-monopolies in western countries, not to mention Japan the market for pizza bases in the US, or the market for ice cream in Britain for instance. Western countries do not bother about all such monopolies or near-monopolies; but they do get active when the markets are important and a firm is obstructing competition. They regard anti-monopoly policies as pro-competition policies no one who has followed the Microsoft case can miss this. Sudhir Mulji's distinction between the two does not stand up, I am afraid.
The strange thing is that he quotes Flynn and Stafford, but does not pick up the point they make. It is that the economic concept of competition is about the structure of the market; nowadays, people bother much less about it because competition is often contestable, and trade provides competition. Unacceptable anti-competitive conduct is what competition laws concentrate on; and surely with reason. Unfair trade practices are a perfectly definable concept in law and equity. And because they are, Sudhir Mulji lost the argument in the committee.
But this column was supposed to be about the High Level Commission on Competition, not about Sudhir Mulji. Never mind; there is the next column.
