Competition Commission of India (CCI) is in the throes of carving a space for itself and acquiring the legal and technical capacities to fulfil its mandate. Its chairman Dhanendra Kumar took time off his busy schedule to speak to FE?s KG Narendranath on subjects ranging from capacity-building at the commission to the alleged conflict between the commission and some sectoral regulators. Excerpts:

How hectic is the life of the Competition Commission of India?

It?s been over eight months since I took over as chairman of the CCI. During this period, we have primarily focused on building up capacities, even as we have also been able to refer a dozen cases to the acting director-general for investigation. Human resource is our main raw material. The commission is now equipped with a full contingent of seven members including the chairman. The Competition Appellate Tribunal is also in place.

CCI , however, needs the manpower of 187. We have recently appointed two dozen professionals belonging to diverse disciplines such as finance, law and accounting. These persons joined us on deputation from other wings of the government?the ministry of finance, Sebi, ministry of corporate affairs etc. We?re in the process of recruiting more professionals besides a small, compact team of supporting staff. We?ve recently advertised for 31 professionals and 17 supporting staff who would join us on deputation from other wings of the government. For the commission to be fully equipped, we would need another 49 professionals and 19 supporting staff for which also, the recruitment process has been initiated with an open advertisement.

Simultaneously, we have taken up rigorous training of our officials. We have an arrangement with the European Union?s directorate general of competition for reinforcing our manpower with specific training modules. Hopefully, in the next two months, the full contingent of financial analysts, economists and technical experts will be on the job. We are also moving to a more spacious facility at the centre of Delhi in December.

Sections 3 and 4 of the Competition Act relating to ?anti-competitive agreements? and ?abuse of dominant position? respectively have already been notified, whereas Section 5 and 6 for ?regulation of combinations? are yet to be activated.

We have conducted many national and international conferences on various aspects of competition regulation in the last few months, as part of the fulfilment of our competition advocacy function. The latest in the series was attended by the outgoing European commissioner for competition, Neelie Kroes and the commissioner-FTC (US), William E Kovacic, in addition to our finance minister and the corporate affairs minister.

We have got the enforcement powers by the end of May only. Investigations usually take a few months to be completed; hopefully we will be deciding on a few cases very soon. Banking, civil aviation etc. are among sectors currently under scrutiny.

As competition regulator for India, how does CCI?s mandate tally with or differ from that of your global counterparts many of whom have years of experience behind them?

We have interacted closely enough with our counterparts in the US (Federal Trade Commission and department of justice), Australia and Europe. One common view that emerged from the exchange of ideas is that the competition regulator would need to focus, after all, on the common man. Competition at the right dose can spur economic growth by way of efficient allocation of resources and increased productivity. It?s of paramount importance that the benefits of competition are passed on to the consumer who is mostly the common man, in the form of better quality of goods and services at lower prices and greater product differentiation. Our competition framework, however, can?t be a replica of the regimes in advanced economies. We can?t ignore the social goals. Price support for agriculture, right to food and education and support to small industries would remain as specific policy goals of India?s competition commission, even as we generally tend to have a non-discriminatory approach, irrespective of the size or sectoral traits of the market players. We will prioritize and regulate our action sequence on the basis of the expected gains to the consumer, rather than often stick our neck out.

Isn?t public procurement one area that needs your urgent attention?

There is a need for ensuring free competition in public procurement systems that account for 30% of the country?s gross domestic product (GDP). The principal objective of public procurement is to derive best value for the money spent. Ensuring fair play through adequate competition and transparency is central to achieving that objective. An effective public procurement policy would be marked by coordination among various departments. There needs to be determined effort on the part of the government to reform the policy.

Deigning of the tenders should be such that collusive bidding and bid rigging can be eliminated. With its expertise, the commission would be in a position to help procurement agencies to cut costs. A transparent policy would also help SMEs, which are now largely left out, to be active in the area. A uniform e-procurement policy would be of immense help.

Where exactly do you want businesses to draw the line between profit motive and responsiveness to consumers?

The task is to find out how much competition is good and how much is not. As competition regulator, our job is not to obstruct economic growth but to spur it. So, we will know where to draw that line. We have the scientific and legal tools to nullify anti-competitive agreements and abuse of dominant position. We are not against monopoly per se unless it throttles competition. Competition will engender efficiency and thereby accelerate economic growth. No one expect the slothful would be a loser. We have the experience of sectors like telecom that have benefited enormously from competition in the last one decade. Likewise, the public private partnership (PPP) model based on the competitive bidding pattern has proven to be successful in many infrastructure areas like roads, ports and airports.

There is the issue of regulatory overlap as many important sectors of the economy are overseen by influential regulators. Your comment please.

Internationally, competition authorities and sectoral regulators share a common objective to prevent abusive market power and thereby improve economic performance. It is true that the roles of the two classes of regulators appear to sometimes overlap. Also, it is not impossible that such overlap could lead to inconsistent regulatory actions, allowing the regulated entities to go for forum shopping. Since in most developed countries the competition authorities were born prior to the sectoral regulators that preside over once-controlled industries, the issue is somewhat settled. (Competition authority in the US is more than a century old). In India, there has been an inverted sequencing with many sectoral regulators being much older than us. That is perhaps the reason why some of them are trying to hold on to a different view on the matter.

Globally, the competition regulators? job is to ensure that markets, irrespective of their sectoral or other hues, function as per the principles of competition laws which are almost globally synchronised. On matters of competition, we would need to have the final say to perform our function effectively. This is not to say that we intend to be a super regulator. Sectoral regulators, on the other hand, can provide specialised regulation for sectors that require in-depth domain knowledge for their regulation.

In fact, the newly set up Indian Institute of Corporate Affairs has done a balanced study on this issue. The study points out that despite sharing a common goal, competition and sectoral regulators have different legislative mandates which could lead to differences in their perspectives about competition matters. The two approach the issue from different angles. Competition law seeks to protect the process of competition, not the participants in the market.

In other words, technical (sectoral) regulation is regarded as an ex ante exercise while competition enforcement is generally an ex post action (except in merger analysis, which is mostly forward?looking). Moreover, technical regulators deal with structural issues of the sector concerned while we have to grapple with behavioural issues. Sectoral regulators need to be cognizant of the technological evolution of the industry concerned. We are an expert body in the field of markets. Put succinctly, the difference between competition agency and sectoral regulator is that while the former says what not to do the latter says what to do. Clearly, regulatory policies and legal frameworks should not become barriers to competition.

We appreciate that various sectors of the economy have evolved differently with varying history of market evolution. Some are still evolving. Many infrastructure industries have the presence of natural monopolies and it was right to have specialized regulators with statutory powers in those areas with the objectives of capping profits and enabling responsiveness to consumers. But competition law generally applies to all sectors of the economy and its implemen- tation, therefore, should be consistent across sectors. A more general approach than a sectoral one is desirable.

Isn?t there a need for greater coordination between you and other regulators?

There is clearly a need for closer interaction between us and other regulators to decide on issues formally and informally. In fact, Sections 21 and 21A of the Competition Act provide for a formal statutory framework for inter-regulatory references i.e. reference by sectoral regulator to us and vice versa. Section 21 read with sections 19 and 20 provide that statutory regulator may make a reference to the commission; may seek opinion of the commission. The central government can also refer cases to us. A culture of regulatory consultation rather than conflict ought to be fostered.

Internationally, specific carve-outs from competition regulation are not accepted. The EU member states through their laws mandate the need for the competition authority and other regulators to confer with each other

What can the commission do in the field of agriculture where market distortion is the norm?

Discriminatory policies of the government for irrigated and rain-fed lands should go. Maximum subsidies on inputs are provided to irrigated lands, keeping rainfed areas in the lucrch. There is a lack of good crop insurance product due to absence of competition. The commission has to address central and state government policies and laws for providing better competition in the agricultural market. Laws like APMC Act and pricing policy should be reviewed from competition perspective. De-linking of minimum support price policies and public distribution systems is also important.