At a time when the Centre is desperately exploring legal provisions to crack down on hoarding and cartelisation?an effort to curb inflation – the Competition Commission of India (CCI), the regulator to punish those indulge in anti-competitive activities, has said if it had been fully functional it could have helped in preventing instances of unreasonable rise in prices of commodities.
However, the Competition Act and CCI are yet to be fully functional. Recently, industry bodies such as Ficci and CII had opposed some provisions in the Act, including on mergers and acquisitions. Besides, it is still uncertain whether the CCI will be operationalised by year-end as recruitment of members is yet to be completed. Though the Act was enacted in 2002, Parliament had approved the Competition (Amendment) Bill, 2007 only in September 2007. Also, the CCI was set up in 2003, but in 2005, the Supreme Court had asked the government to look into the issues regarding the appointment of its chairman and members.
CCI member Vinod Dhall said, ?The CCI could have definitely prevented price rise due to manipulation of markets by cartels and abuse of dominance by a major player. It could have helped in controlling inflation through speedy decisions in such cases, where there is evidence that the consumer is hurt by such illegal practices like collusion of manufacturers or distributors to form cartels and increase prices.?
The law could have created adequate conditions for a level playing field by doing away with entry barriers and allowing new players to step in. This would have, in turn, ensured that market prices of all essential commodities are invariably competitive and affordable.
China, also troubled by rising inflation, has passed competition laws and would enforce it by August 2008, Dhall said, adding that a Competition Commission is already functioning in Pakistan, where work on drafting competition laws started after India.
Developed countries, including the US, UK, Canada, Australia, Japan, France, Germany and Singapore have effective competition laws to crack down on companies or entities causing abnormal and unreasonable increase in prices through manipulation. Even a comparable economy like South Africa also has a functioning competition law.
Pradeep Mehta, secretary general, Consumer Unity and Trust Society International, said, ?In the rich countries, hoarding hardly takes place as competition laws have ensured that businesses are more transparent, thereby making it easier to identify such illegal practices. Nearer home, Bangladesh is also expediting the enforcement of competition laws to combat inflation.?
Rahul Singh, assistant professor, National Law School of India University, said, ?In India, the Competition Act specifically states that companies must not enter into anti-competitive agreements. It also states that entities with ability to influence markets and price decisions, cannot abuse their market power by hiking prices or reducing output to in turn increase demand.