CCI cometh, CCI Faceth Problems

 

According to a news report in Business Standard on 21^st May, (http://www.business-standard.com/india/news/cci-to-notify-regulations-soon/358754/ ) Competition Commission of India (CCI), will notify the regulations to govern its functions in a day or two. Following is the list of regulations which have already been drafted and which may be notified in the coming days:

• draft Competition Commission of India (calling upon Experts to assist in conduct of                   Inquiry) Regulations;
• draft Competition Commission of India (Engagement of Experts and Professionals)                  Regulations;
• draft Competition Commission of India (General) Regulation;
• draft Competition Commission of India (Meetings for Transaction of Business) Regulation;
• draft Competition Commission of India (Determination of Cost of Production) Regulations;
• draft Competition Commission of India (Lesser Penalty) Regulations;
• draft Competition Commission of India (Combinations) Regulations.

Though these draft regulations cover most of the basic regulatory issues, I doubt if they are sufficient to ensure a smooth functioning of CCI. Some of the issues which might face CCI in near future:

• Conflict with Intellectual Property Rights – Competition law frowns at monopolies. On the other hand IPR laws gives the Intellectual Property Owners a monopoly over his right. Section 3(5) of Competition Act does recognised the rights of the Intellectual Property Owner under IPR laws but it only allows the owner “to impose reasonable conditions, as may be necessary for protecting any of his rights”.  There is no clarity on what can or cannot constitute ‘reasonable conditions’? The advocacy booklet of CCI on the subject also fails to give a clear idea on the issue. CCI would be required to come up with specific regulations or guidelines in this regard to make matters more clear.

 

• Conflict with the Anti-dumping laws – Even though both Competition law and Anti-dumping laws seek to ensure competition in the market and have common origin in US, they have evolved into two extremely divergent concepts. Governments use anti-dumping to protect the domestic producers against cheaper imports. On the other hand, through competition law, Governments seek to protect the interest of the consumers by encouraging competition in the domestic market. And it may be relevant to note here that encouraging more efficiently produced and hence cheaper imports plays an important role in this. Competitive pricing under Competition law can, in certain circumstances, be considered dumping under Anti-dumping laws.  

 

• Conflict with other regulators – Under Section 21 and 21A of the Competition Act, 2002, CCI and other Statutory Authorities can reference to each other for matters related to Competition. However, would CCI have a complete freedom to take action against enterprises operating within the jurisdiction of the some other regulator? Or would it be required to coordinate its actions with other regulators? Competition Authorities in other countries have also faced similar problems. For instance in some countries, like in Australia, they have created a single entity to deal with matter related to Competition and Consumer issues.  

 

• Extra-territorial jurisdiction under Section 32 - Section 32 of the Competition Act, 2002 gives CCI, the power to enforce Indian Competition law against foreign entities whose actions have ‘appreciable adverse effect’ on competition in the relevant Indian market. The question is, will CCI be able to use its powers to control International mergers or export cartels, which are being promoted and protected by their own governments, if such International mergers or export cartels are having an adverse effect on competition in Indian market? It reminds us of the merger of Boeing and McDonnell Douglas which received the approval of European Commission only because of intense political pressure and threats of a trade war, emanating from Washington.

 

• Regulations regarding Joint Ventures – How would CCI treat a joint venture if it has an appreciable adverse effect on the market? Would it be considered an anti-competitive agreement and treated as such or would it be treated as a merger proposal which will have to take the approval of CCI before going ahead with the venture.

  

As of now, I can think of only aforementioned issues. But am sure, there will be many more such issues which would rise in due course and CCI would have to address them, either with regulations or guidelines or both.

 Another interesting thing that I noticed was that there is nothing on the website to indicate that CCI has become operational. Even the notification of 20^th may, notifying Section 3 and 4 and appointment of Dr. Justice Arijit Pasayat, as the head of Competition Appellate Tribunal, has not been updated on the website. I wonder if this sluggishness would continue when CCI actually starts handling cases. As a lawyer I know that law expects me to read the official gazette of India regularly (Ignorantia legis neminem excusat). But please would somebody tell where on net can I find it or which newspaper wallah in Malvianagar keeps a copy of this Gazette???!!! I would really appreciate that.