Fearing a sectoral backlash against the competition law, the ministry of corporate affairs (MCA) has formed a core committee to look at the issue of regulatory overlap in relation to the Competition Act.
The four-member committee headed by former Competition Commission of India (CCI) chairman Dhanendra Kumar, which is working on drafting the National Competition Policy, would also look at the issue of regulatory overlap.
Among the key mandates that the committee is empowered with is to identify specific examples of other extant laws that allow sectoral regulators to deal with competition issues. Issues concerning (absence of) competition are largely seen as the prime responsibility of CCI, and the Competition Act gives the commission comprehensive powers in this regard.
The ministry’s move follows hectic lobbying by other prominent regulators ? the Reserve Bank of India, Insurance Regulatory and Development Authority and Telecom Regulatory Authority of India ? for virtually keeping CCI out of the ambit of competition regulations in their respective areas.
According to MCA sources, the ministry wants the CCI to have a clear mandate to tackle every kind of competition issue that arises principally from three situations ? cartels, abuse of dominance and combinations. For instance, in the preambles to the Trai Act and Electricity Act, the respective regulators are empowered to ensure that competition is maintained by the players. Apart from that, even the Petroleum and Natural Gas Regulatory Board (PNGRB) has the mandate to foster ?free trade and competition? among the entities it regulates. ?Regulatory overlap is an area that we are closely studying. There are grey areas that need to be tackled,? an MCA official told FE.
The matter first came to light last year when the CCI initiated an investigation against oil marketing companies like Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation for allegedly forming a cartel to supply aviation turbine fuel to national carrier Air India. The OMCs had moved the Delhi High Court alleging that the CCI had no mandate to look into the matter as the PNGRB was already looking into it. The high court issued a stay order on the commission’s probe. ?Issues such as this create unnecessary confusion. Why have the Competition Act when there are sectoral regulations tackling competition,? a CCI official said.
When contacted, Dhanendra Kumar said, ?It is too early to comment on what are the areas we would be looking into. We are going to have a meeting soon to discuss the broad contours of the policy.? According to competition law expert M M Sharma, the CCI is best suited to tackle every case of competition. ?There are many sectoral regulators like Trai, Central Electricity Regulatory Commission, Irda, Sebi and PNGRB which have been vested with powers to promote competition in their respective sectors. But since the CCI has got the special mandate, they are best suited to look into these issues,? Sharma said. He added that matters pertaining to cartelisation, abuse of dominance and combinations must come to the commission.
Pradeep Mehta, secretary general of CUTS International and a member of the high-powered committee, said the solution to the vexed issue lay in mandatory consultation between the two sides periodically. ?Structural issues should be dealt with the sectoral regulators and behavioural issues should lie with the CCI. In the case of Europe, the balance is maintained because there is constant consultation between the sectoral regulators and the competition agencies,? Mehta said.
Apart from the Kumar committee, even the Indian Institute of Corporate Affairs would send its recommendations to the MCA on the issue of regulatory overlap.