Quasi-Judicial Status Likely For Competition Authority

The competition authority, to be created through the proposed competition policy and statute, will be cast as a powerful quasi-judicial body with suo motu powers to investigate abuse of dominance and other anti-competitive practices.

The authority will examine or investigate such cases on the basis of complaints filed by aggrieved parties. However, its suo motu powers will also enable it to directly take up such issues, even if no complaint has been filed. The authority is also likely to get the power to enforce awards.

All such cases will have to come within the broad definition of anti-competitive practices.

Some practices that can be declared as de-facto anti-competitive include cartelisation, transfer pricing and, in some cases, territorial restrictions.

 

Practices involving abuse of dominance can also come within the purview of the authority. In these cases, however, the proposed Competition Law is expected to define dominance.

Under the current Monopolies and Restrictive Trade Practices Act, control of 25 per cent or more of marketshare construes dominance. Marketshare in this case is the aggregate share held by interconnecting firms and entities.

Mergers and amalgamations are also slated to come under the authority, though it is being debated by the S V S Raghavan Committee on competition policy whether the authority's prior approval should be obtained before legalising the arrangement.

The argument in favour of such a scheme is that an investigation after the event has taken place may defeat the purpose. Besides, unraveling the structure a year or so after the event will not be easy. The argument against such prior approval is that it will impose artificial restraints for market forces.

In case the committee opts for prior approval, a threshold limit may be set, beyond which mergers and amalgamations will come under the authority's purview.

The limit will be a monetary one, which will narrow the number of cases that need a green signal from the competition authority.