CCI needs an update to ensure fair play in digital economy, say experts

New Bill, better training will help anti-trust regulator perform better, they add

The Competition Commission of India (CCI) – which has received both praise and criticism for taking on tech giants Amazon, Google, and Meta over alleged anti-competitive behaviour – will have to walk a tightrope in trying to ensure a balance between innovation and fair play, experts say.

To achieve this balance in an ever-changing scenario, the CCI need look no further than the Competition Act, said Vinod Dhall, a former CCI chairman. “The Act is well constructed and is globally comparable. Its main aim is to foster and maintain competition while keeping in mind the economic development of the country and ensuring that it does not dampen growth.”

Critics argue though that the CCI’s moves could discourage innovation and deter foreign companies from setting up offices in India. “In many cases, the business models of global companies are different in India and action taken in the US or EU is not applicable here. There is a short-sightedness in these decisions,” a senior competition law expert said.

The CCI, it appears, is aware of some of these shortcomings. It is building a digital market unit to understand the models of e-commerce platforms and digital-first companies to ensure that anti-competitive conduct does not go undetected.

One problem the CCI might encounter, experts feel, could be on the manpower front. “CCI members have a five-year term with suitable background and learn further on the job. But much of the staff, including in the DG office, are on deputation sometimes with uncertain tenures. This hampers the development of the CCI’s institutional knowledge,” Dhall said.

Industry analysts said the CCI needs to augment its understanding of high-tech markets by not only employing in-house, but also engaging outside experts. One of the suggestions is for the CCI to conduct economic analysis of its cases with the help of experts. “It will make the CCI’s decisions more sound and professional and also gain international recognition,” Dhall said.

International cooperation through deputation of staff, training programmes, and technology collaborations will also help members learn global best practices, experts said.  Even the post of chairman now requires technical know-how.

Union Finance Minister Nirmala Sitharaman had also said recently that the CCI must fairly and squarely address issues arising out of corporate mergers involving cross-border elements. “As we evolve to be a digital economy, the challenges that digitisation brings are also very important for us to address, we can’t ignore them,” Sitharaman said.

It’s not just training, vacancies, too, have affected the CCI’s functioning. According to a report by the Standing Committee on Finance, 47 of the 154 sanctioned positions were vacant. Even at the director-general’s office, only 19 of the 41 sanctioned positions were filled.

Since the enactment of the Competition Act in 2002, 88 per cent of anti-trust and 93 per cent of combination (mergers and acquisitions) cases have been disposed of.

Between April 2017 and June 2022, the CCI imposed penalties totalling Rs 4,369 crore on 241 companies. However, just Rs 198 crore has been paid by the companies. 

Gupta had told Business Standard that the low rate of recovery was because most cases were either stayed by courts or set aside. “We are more focused on the market correction part and not the penalty.”

Legal experts say the lack of a separate Bench to deal with competition matters has also hampered enforcement, as it has increased the burden on courts. “The NCLAT is now dealing with Competition Act matters. It is overburdened with insolvency and bankruptcy code cases. The government should consider having a dedicated bench with subject expertise for Competition cases,” a senior competition lawyer said.

Amendment Bill

While India’s competition regulator is younger than its European or American counterparts, the Competition Amendment Bill could help bring it up to speed with current global practices.

Dhanendra Kumar, former CCI chairman and the first person to occupy that post, said: “The objective of the CCI is to make markets stronger for consumers and to promote and sustain competition. The new Bill has many provisions that are very relevant for the new-age economy, such as the deal value threshold, settlement and commitment.”