Competition Commission of India: The stage is set

After several years of consultation, a constitutional challenge and advocacy seminars across the country, with the appointment of the last member on the Competition Commission of India (the Commission), the stage has been set for the enforcement of competition law in the country.

Given the time it has taken for the Competition Act, 2002 (the Act) to come into force, the law is fairly modern and seeks to build on international best practices. As a result, unlike the case with the SEBI Act in its initial years, the Act, has given the Commission teeth and how – the Commission can, for example, in the case of a cartel, penalize each member of the cartel up to 10% of its turnover or up to 3 times its profits, whichever is higher, for each year of participation in the cartel.

Now that the Commission is operational, the future of how business is and will be done in the country rests on the shoulders of the Commission Members and the manner in which they enforce the law.

Admittedly the Commission has a difficult task and the challenges it face are not few.

First, as with any new regulator the Commission will need to carve its own space. Under the Act, the Commission has the power to investigate the functioning of Government departments. As a result, the Commission may need to take tough decisions which involve the Government. As the Supreme Court of India has successfully managed, the Commission should seek to function, and the Government should ensure that it helps the Commission function, independently and without political interference.

Second, decisions of the Commission should be well reasoned and supported by strong economic and legal analysis. Robust economic data should be the most important factor in influencing its decisions. Thanks to us lawyers, it is inevitable that decisions of the Commission will be appealed right up to the Supreme Court. However, to inspire faith in the Commission, they should ensure that their decisions are sound, reasoned and able to sustain any onslaught.

Third, at times, the Commission will be confronted with difficult choices, such as, whether to clear a merger which doesn’t harm competition and which increases efficiencies but also results in job losses – the Commission is a competition regulator and stakeholders should not expect it to play the role of an arbitrator for labour unions and management or a forum for enforcing ideas of social justice.

Fourth, confidentiality, confidentiality, confidentiality! In order for the Commission to be a successful regulator, the Commission and companies/individuals filings complaints must ensure that confidentiality is maintained at all stages and levels. A breach of confidentiality would harm not only existing but future investigations and the confidence of persons to come forward and provide the Commission with helpful information.

Fifth, in order to provide business certainty and avoid wastage of time and money, the Commission should issue regulations to provide for informal guidance. This is especially important in the case of merger filings, where an effective informal guidance scheme could assist parties in determining whether a merger filing obligation exists.

One of the many failings of the erstwhile MRTP Act was that the only power the MRTP Commission had against a defaulter was to pass a “cease and desist” order. In order to ensure that competition law enforcement is not taken lightly, the Commission should avoid this “slap the wrist” type approach and should actually impose the fines it has the power to.

The stage is set, the expectations are high and the world is watching. To paraphrase from Nehru’s speech, Tryst with Destiny, “Long years ago we made a tryst with destiny, and now the time comes when we redeem our pledge… we step out from the old and into the new… are we brave enough and wise enough to grasp this opportunity and accept the challenge of the future?... The responsibility rests upon” the Commission.

Naval Satarawala Chopra is Principal Associate Designate and Harman Singh Sandhu is Associate, Amarchand Mangaldas