India Inc's ignorance about Competition Law may cost them a fortune: EY report

More than 80% of Indian enterprises are unaware about Competition Law and the likely consequences of contravening it, said the findings of a survey conducted by the EY's Fraud Investigation & Dispute Services practice.

The report titled 'Calibrating the pulse of Competition Law in India' further stated that more than 75% of the respondents believe that there is no clear data available for conducting clear and viable economic analyses in anti-trust situations.

About 25% of the respondents indicated that the problem is not due to lack of data (quantitative data), but to the dearth of qualitative data available for reasoned economic analysis.

"Competition law related regulatory decisions have been making waves across corporate India, given the huge penalties levied on organisations who were found flouting regulations. A serious overhaul of the Corporate India's mind-set is necessary at this point. Apart from the industry incognisance, there are a series of external factors which stand to impact the smooth transition to a better regulatory framework on this front," said Arpinder Singh, Partner and National Leader, Fraud Investigation & Dispute Services. Penalties levied could cost the company a 10% fine on the company's average turnover.

Among the external factors Singh points out that these range from data which lacks quality and is largely unstructured and widespread, to trade associations who may facilitate anti-competitive conduct. "Given the magnitude of what's at stake, it's necessary to promptly mitigate these setbacks and organizations need to take the onus of ensuring they're aware," he added.

On the other hand, most multi-national corporations (MNCs) in India have a high degree of awareness and have adopted mechanisms to comply with it. Incidentally, 70% of the respondents are convinced that Indian enterprises do not have control mechanisms in place, and their documents (vendor contracts, supply and distribution agreements, etc.) are not verified at the grass-root level for compliance with Competition Law. The findings therefore induce the need for organisational awareness and highlight the importance of complying with the mandates of the Law.