Regulating competition in times of Covid-19

October 15, 2020 6:40 AM

Competition Commission of India recognised quite early how the pandemic was going to queer the competition pitch, and spelt out clearly that efficiency gains and benefits to consumers, among other considerations, were to be treated as the touchstone for allowing collaboration between businesses

Apart from these measures, CCI has been exchanging ideas with other competition agencies of developed markets to see what can be applied to Indian markets.Apart from these measures, CCI has been exchanging ideas with other competition agencies of developed markets to see what can be applied to Indian markets.

By Ashok Kumar Gupta

Covid-19 has emerged as the foremost challenge for countries around the world in 2020. While the pandemic has obvious health implications, it has given rise to serious economic consequences to deal with. Lockdowns of various degrees were imposed in order to flatten the curve of rising Covid-19 infections. This brought unprecedented and abrupt disruptions in the normal course of economic activities. Covid-19 also caused a sudden surge in demand for certain products while triggering shortages for others. Response to the pandemic and economic situation arising out of it warranted extraordinary measures.

Enterprises have been devising new strategies to overcome the volatility in demand & supply and the resultant price fluctuations of goods and services.

Cognizant of the steps that may be adopted by certain enterprises as a response to the pandemic to meet consumer demand for certain essential items, various competition authorities across the world have issued advisories to safeguard fair market conduct by enterprises to help them formulate appropriate business strategies.

In India, Competition Commission of India (CCI) has been closely observing the fast-evolving, dynamic situation arising because of Covid-19, and has taken proactive steps to engage with the stakeholders and provide guidance in these tough times about its perspective. Considering restrictions placed on physical movement, CCI immediately allowed flexibility within its procedures—including electronic filing of antitrust cases as well as combination notices including Green Channel notifications and deferment of non-urgent cases. CCI also made the Pre-Filing Consultation (PFC) facility for combinations available through video conference. A dedicated helpline was set up to attend to the queries of stakeholders during the pandemic. Relevant public notices were regularly put on the website of CCI for information of the relevant stakeholders. CCI has also put in place a mechanism to conduct proceedings through video conferencing to avoid physical contact and presence. For physical proceedings also, CCI has made all necessary arrangements to ensure that these are conducted in a sanitised
environment. These initiatives have facilitated the functioning and interface of stakeholders with CCI during the last six months.

To inspire confidence in stakeholders that we have the requisite capacity and ability to deal with the challenges arising out of these difficult times and also to impart clarity, CCI, like other advanced jurisdictions, issued an advisory in April to guide the businesses during this pandemic. CCI recognised that businesses may need to coordinate certain activities by way of sharing data on stock levels, timings of operation, sharing of distribution network, and infrastructure, transport logistics, R&D, production, etc., to ensure continued supply and distribution of products including healthcare and medical products and other related services. In this context, it is important to note that the Competition Act, 2002 prohibits conduct that causes or is likely to cause an appreciable adverse effect on competition, and further Section 3(3) of the Act presumes certain concerted actions between competitors to cause an appreciable adverse effect on competition. This presumption is, however, not applicable to joint ventures, if such agreements increase efficiency in production, supply, distribution, storage, acquisition or control of goods or provision of services. Also, while conducting competition assessment, the law enables CCI to have due regard, amongst others, to the accrual of benefits to consumers, improvement in production or distribution of goods or provision of services, and promotion of technical, scientific and economic development by means of production or distribution of goods or provision of services.

These in-built safeguards of the Act to protect businesses from sanctions for certain coordinated conduct were highlighted in the advisory, provided such arrangements, as mentioned above, result in increasing efficiencies. At the same time, we are aware that sudden demand surges, as well as disruptions in supply chains, are prone to exploitation by businesses through excessive pricing and collusion. Businesses were, thus, cautioned not to take advantage of Covid-19 to contravene any of the provisions of the Act. Any behaviour in the form of information sharing on prices, output volumes, customers or delineation of markets or price fixation would be under strict vigilance. Through its advisory, CCI has spelt out the framework that will inform its decisions in the present circumstances. This would have facilitated decision-making by businesses to meet the emergent demands arising out of the crisis without unduly worrying about regulatory trysts.

CCI in its recent rulings has also been cognizant of liquidity stress of micro, medium and small enterprises arising out of raging global pandemic and has been crafting remedies which are proportionate to achieve the larger goals of the market correction.

Apart from these measures, CCI has been exchanging ideas with other competition agencies of developed markets to see what can be applied to Indian markets. CCI has also signed ‘Statement of the BRICS Competition Authorities on Covid-19’ expressing intention to join efforts in combating the negative economic consequences caused by Covid-19, sharing experiences, information and practices on developing competition during and after the pandemic for the benefit of the society and economies. CCI has also been engaging with stakeholders to take any other measures which may be necessary in the present context.

Though the times have been tough and there are challenges ahead, the present situation has enabled us to revisit our systems and has provided many learnings which have equipped us to act tout de suite in any difficult circumstances. We have adapted well to the new normal and are open to bringing in any necessary measures to meet the advance effects of the pandemic.

The author is Chairperson, Competition Commission of India

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