Competition watchdog headless amid mountain of cases

Written by Ronojoy Banerjee | Ronojoy Banerjee | New Delhi | Updated: Sep 24 2011, 07:49am hrs
Indias anti-trust watchdog, saddled with dozens of high-profile cases of great import to the economy, is virtually rudderless since early June, with the Appointments Committee of the Cabinet yet to take a call on who should chair the body next. This is despite the fact that a high-level committee led by Supreme Court judge SS Nijjar has proposed former finance secretary Ashok Chawlas name as chairman of the Competition Commission of India (CCI) more than five months ago.

Till date, there is little clarity as to when the commission, now being run by an acting chairman, will get its full-time chief. The post is vacant since June 5, when Dhanedra Kumar, the CCIs first chairman, demitted office as he turned 65.

Under the Competition Act, the CCI has the mandate to ensure fair play of market forces a regulatory function crucial to and with examples in all liberalised market-based economies.

The CCI, which became a full-fledged institution following the enactment of the amended Competition Act, got the powers to deal with anti-competitive agreements and abuse of dominant position in May 2009. Since June this year, the CCI assumed powers on mergers and acquisitions (M&As); with this, M&A deals above specified threshold values require to be approved by it.

Currently, the CCI is headed by its senior most member HC Gupta, in his capacity as acting chairman.

Chawlas name was proposed in May this year by a committee that, apart from Nijjar, included the then corporate affairs secretary (now secretary, financial services) DK Mittal and law secretary DR Meena. Other candidates in the shortlist were former environment secretary Vijay Sharma and current CCI member Anurag Goel.

Chawlas name was, however, on top of the list and it was proposed at a time when the ministry was headed by Murli Deora. Sources said current corporate affairs minister Veerappa Moily has also backed Chawlas candidature. Procedurally, when a minister takes charge, the file of a key appointment that was approved by his predecessor is sent back to the new minister for final approval.

When contacted, Moily told FE: There is a certain process involved (for appointment of the CCI chairman) and we are giving it due consideration. There is no question of my agreement or disagreement (with Chawla being the CCI chief). The due process is being followed. Chawla refused to comment.

A top MCA source confirmed to FE that the ministry was backing Chawla but rued the indefinite delay in his appointment as CCI chairman. The matter is not in our hands. There is very little we can do. But there is no doubt that such delay is a cause for big concern, a top MCA source said. Though acting chairman Gupta has been bestowed with the same kind of powers that a full-time chairman enjoys under the Competition Act, experts said that in practical terms, this would make a difference.

The CCI is supposed to consist of a chairperson and six members at any point of time. It now has only six members including the acting chairman.

Competition law expert and secretary general of CUTS International Pradeep S Mehta said: When the commission is operating without a full-time chairman, its advocacy functions could be impacted. This is an important time for the CCI when so many cases are pending. It needs a full-time chairman, he said. Mehta added that just the way in case of a cabinet secretary or foreign secretary the successor is selected a month in advance so that they get into the groove by the time the incumbent secretary resigns, CCI chairman could also be appointed without an interregnum.

A CCI official said that though the absence of a chairman is not felt in everyday matters, the arrangement cannot go on for ever. Functioning without a chairman is fine for a few months. But it cannot go on forever, he said.

Since Kumar demitted office, the commission has issued its two most significant verdicts one that found the countrys largest bourse National Stock Exchange guilty of abuse of dominant position and another one where real estate major DLF was found abusing its dominant position. The two companies were fined Rs 55.5 crore and Rs 630 crore respectively.

Chawlas name as the CCI chairman has been contested by Goel and Gupta, two of the commissions members who were senior to him in the Indian Administrative Service. At present, the commission is looking into scores of complaints including one by Jindal Steel & Power which alleged that Steel Authority of India (SAIL) and the Indian Railways have an exclusive arrangement for supplying steel. Apart from that, the CCI is also expected to pass its verdict on the alleged rigging of bids by gas cylinder suppliers to state-run Indian Oil Corporation.