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Competition Commission of India (CCI)

GS Paper: 2

Topics Covered: Statutory, regulatory and various quasi-judicial bodies.

 

What to study?

For prelims: objectives, composition and functions of CCI.

For mains: issues associated with its functioning and the need for reforms.

 

Context:  The Competition (Amendment) Bill, 2022 has been introduced that aims to improve regulatory set-up by increasing the CCI’s accountability, giving it flexibility and enforcement efficiency.

 

Key Changes mentioned in the bill:

Increasing transparency and strengthening the accountability:

  • A board with part-time members to supervise CCI activities.
    • This would bring its regulatory architecture at par with that of financial regulators.
  • CCI to mandatorily issue penalty guidelines and give reasons in case of any divergence.
    • It will give much-needed certainty in regulatory environment.

 

Enforcement efficiency: 

  • CCI could engage in structured negotiations with parties and arrive at mutually-workable solutions without having to go through lengthy formal proceedings.
    • This will bring powers of CCI on par with Sebi, which has been passing settlement orders for over a decade.
  • Previously CCI was only empowered to take action for abuse of dominance or anti-competitive agreements in the form of final orders in proceedings before it.
  • CCI can make appeals to the National Company Law Appellate Tribunal conditional on a pre-deposit of up to 25% of the penalty imposed by the CCI.
    • This change is likely to deter frivolous appeals.
  • Shortening of the merger review period from 210 to 150 days
  • Introduction of a green channel for merger applications: Certain categories of mergers that had to wait for CCI approval would be allowed to attain full consummation without any standstill obligation under the new green-channel process.

 

Flexibility: Previously, only those agreements are allowed if agreements made between businesses at the same level of production (such as competitors that form a cartel) or businesses that are in a directly upstream or downstream market (such as agreements between a manufacturer and distributor). If the parties do not fall in either of these brackets, anti-competitive agreements between them can go unchecked.

  • But the bill also recognizes other forms of cartels such as hub-and-spoke cartels, it also has a catch-all provision to enable the CCI to deal with anti-competitive pacts irrespective of the structural relationships between parties.

Limitations:

  • The bill does little to address competition concerns in digital markets. e.g., mergers concern in digital markets between entities that do not have significant assets or turnover, but are still very significant (such as Facebook-WhatsApp). The flexibility to introduce new thresholds will let the CCI review such mergers.
  • No effective clause for regulating anti-competitive conduct by digital platforms.
  • Delayed: It was released for public comments in 2020, and given the rapid developments in digital markets and global regulatory responses, it seems to have got dated already.

 

 Competition Commission of India:

It is a statutory body of the Government of India, responsible for enforcing the Competition Act, 2002 throughout India and to prevent activities that have an adverse effect on competition.

 

Current Affairs

 

Objectives of the Commission:

  • To prevent practices having adverse effect on competition.
  • To promote and sustain competition in markets.
  • To protect the interests of consumers.
  • To ensure freedom of trade.

 

Functions of the commission:

  • It is the duty of the Commission to eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade in the markets of India.
  • The Commission is also required to give opinion on competition issues on a reference received from a statutory authority established under any law and to undertake competition advocacy, create public awareness and impart training on competition issues.

 

Insta Curious:

Comparison of the current bill with 2002 version?

How might cartels be worse than monopolies? Read this.

 

InstaLinks:

Prelims Link:

  1. About CCI.
  2. Highlights of the Competition Act and amendments to it.
  3. About NCLT and its jurisdiction.
  4. What is Cartelisation?

Mains Link:

Discuss the roles and functions of CCI.

Sources: Live Mint