CCI seeks powers to penalise trade bodies

Written by Ronojoy Banerjee | Ronojoy Banerjee | New Delhi | Updated: Sep 13 2011, 07:40am hrs
Anti-trust regulatory body, Competition Commission of India (CCI), is set to propose key amendments to the Competition Act, 2002, in an effort to expand its powers for better scrutiny of trade associations.

The commission would seek more powers to conduct search and seizures, much like the income-tax department.

The commission had formed a core committee, headed by its director-general (investigation) AK Chauhan, to formally prepare a list of key amendments to the Act for smoother and more efficient functioning of the CCI.

The committee submitted a detailed report to the commission last month for the opinion of its six-member body. This is the first time since the commission got fully operational in 2009 that it has sought additional powers. A final list of the main proposals would be sent to the corporate affairs ministry for its observations. When contacted, Chauhan declined to comment on the development.

Top CCI sources told FE that while Section 19 (1) of the Competition Act brings trade associations under its ambit, the commission has faced severe practical difficulties in enforcing penalties. For instance, even if the commission finds trade associations engaging in practices of cartelisation, it cannot enforce a fine on them since it comprises individual office-bearers and not companies.

There have been cases that have been filed against trade associations. How can we impose monetary penalty on individual members of the trade body a top CCI source argued.

As per Section 27 (b) of the Competition Act, the commission can impose a fine of up to 10% of the average turnover for the last three preceding financial years upon each of such person or enterprises which are parties to such agreements or abuse.

According to the source, the quantum of penalty for trade associations should be clearly defined as well. Every big sector is represented by a powerful lobby group or an association. There must be a clear deterrent in the Act to pull up such parties, the source said.

Another proposal that would be vetted by the members relates to empowering the director-general wing of the commission to conduct searches and seizures.

At present, while investigation officers can conduct searches, they need a warrant from the chief metropolitan magistrate. The source said that if the power was vested with the investigators, then unnecessary delays could be avoided.

According to competition law expert KK Sharma, who was earlier adviser of law to CCI, the proposal for expanding powers is justified.

Since in trade associations, all members are office-bearers, there is a requirement for a clearer definition of the penalty as a good number of cases with the commission relate to such trade outfits, he said.