Cabinet decisions: Burn Standard being shut, CCI to be ‘right-sized’

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Published: April 5, 2018 4:19 AM

The Cabinet decided to “right-size” the Competition Commission of India saying that its workload has reduced as merger proposals below a threshold don’t need its concurrence after a 2017 amendment to the relevant rules.

Cabinet, Cabinet decisions, Burn Standard, CCIThe Cabinet decided to “right-size” the Competition Commission of India saying that its workload has reduced as merger proposals below a threshold don’t need its concurrence after a 2017 amendment to the relevant rules.

The Cabinet on Wednesday decided to “right-size” the Competition Commission of India, the country’s one-and-half-decade-old antitrust regulator, saying that its workload has reduced as merger proposals below a threshold don’t need its concurrence after a 2017 amendment to the relevant rules. The commission will henceforth have a maximum strength of one chairperson and three members, while so far it could have had a seven-member board, including the chairperson. The change is being effected “by not filling the existing vacancies of two members and one more additional vacancy, which is expected in September, 2018 when one of the present incumbents will complete his term”, the government said. In pursuance of a policy of shutting down non-viable loss-making PSUs, the Cabinet also approved closure of Burn Standard (BSCL), which has been in poor financial health for over 10 years. The CCI is mandated to “eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade in the markets of India”. It was set up under the Competition Act, 2002, which saw major amendments in 2007.

The right-sizing, according to an official release, is expected to allow faster turnaround in hearings, speedier approvals, thereby stimulating the business processes of corporates and resulting in greater employment opportunities in the country. It is also in sync with the government’s stated objective of “Minimum government, maximum governance”. Currently, the Competition Appellate Tribunal, which hears appeals on CCI’s decisions, comprises one chairperson and two members. According to a ministry of corporate affairs notification issued in 2017, in case of mergers, acquisitions and amalgamations, the assets and turnovers will be computed on the basis of portion of the enterprise, division or business being merged, acquired or amalgamated rather than the entire business. Also, not only acquisitions but mergers and acquisitions also were brought under “target exemption”, along with a lowering of the relevant thresholds, virtually freeing most proposals from the requirement of CCI’s prior approval. On BSCL closure, the government said, “This measure will save public funds, which are currently being used for loss making BSCL, and can be used for other developmental work. The Centre will provide one-time grant of Rs 417.1 crore towards severance package and for clearing the current liabilities (of the railway PSU).” In the decade to FY16, 21 central public sector enterprises (CPSEs) have incurred losses continuously amounting to nearly `70,000 crore for reasons varying from stiff competition from private sector to old machinery and mismanagement. Nearly 70% of these losses were accounted for by Air India alone. Following a recommendation from NITI Aayog last year, the government is currently in the process of shutting down nearly 20 of the 43 loss-making units while many others including Air India and its subsidiaries are in the process of strategic disinvestment. In another decision, the Cabinet approved the demerger and transfer of 773s of acre surplus land from Tata Communications (erstwhile state-owned Videsh Sanchar Nigam) to Hemisphere Properties India, a PSU. It also gave the administrative control of HPIL to ministry of housing and urban development, a move likely aimed at boosting the Centre’s housing for all scheme by 2022.

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