A Competition Policy

What about the other problems that plague the Commission? For example, the government has been tardy about filling vacancies, the MRTP Commission has no benches outside Delhi, and the lack of computerisation and shortage of personnel create their own problems. But the real problem is one of mindset. Competition policies can conceptually cover structure (market concentration), conduct (unfair trade practices and restrictive trade practices ) and performance (profitability). The MRTP Commissions mindset has been to focus on structure, and so it has been inordinately pre-occupied with monopolies and market shares. In more recent times it has also focused on conduct, but usually concerned itself with peripheral issues. The government also proposes to bring back mergers into the revamped MRTP Act. While this is welcome, global experience shows that competition policies which focus on conduct are more efficient and sensible than those that focus on structure alone.

 

In either case, the test has to be what happens to consumer welfare. Hypothetically, it is possible for mergers to exploit economies of scale and drive down costs for the consumer. Such mergers ought to be encouraged, not discouraged. But does the MRTP Commission have the technical expertise to examine such issues? In other words, there may be a case for scrapping the existing MRTP Commission and setting up a completely new FTP Commission. Why tinker with the old MRTP Act? The MRTP Commission, by any other name, will smell just as before and will spend its time trying to curb monopolies. It is time that a competition policy served the interests of the consumer instead.