Relevance: GS-2: Statutory Bodies, regulatory and various quasi-judicial bodies.

Key Phrases : Competition Commission of India, Antitrust Watchdog, Competition Act 2002, Competition Amendment Bill, 2022

Context

• The Government of India has intended to introduce the Competition Amendment Bill, 2022 in order to give more teeth to the watchdog. Government aims to correct some of the new age market practices that could stifle competition. Thus, the issues related with competition in India are brought into discussion.

Background

• An antitrust watchdog is necessary to keep markets free and fair and ensure that the competition among players works to the benefit of consumers and innovation.
• The idea behind the new amendments is to make competition regulation more inclusive taking into account the development of the economy and strong growth in internet-led businesses in the last two decades.

Competition Commission of India

• It is a statutory body set up in 2003 by the Government of India. It is responsible for enforcing the Competition Act, 2002 which was passed based on the recommendations of the Raghavan committee. It is a quasi-judicial body and consists of six members besides a chairperson.

Competition Act, 2002 and CCI

• The Act prohibits anti-competitive agreements and abuse of dominant positions by enterprises. It provides for the establishment of the CCI and the Competition Appellate Tribunal.
• CCI protects the interests of consumers and ensures freedom of trade in the markets by eliminating practices having adverse effects on competition.
• It ensures fair and healthy competition in economic activities in the country for faster and inclusive growth and economic development.
• It is tasked with busting cartels, vetting mergers and acquisitions that may unfairly tilt a market in favor of big players, and taking up complaints of bullying.
• It gives opinions on competition issues to statutory authorities, aims to generate public awareness, and impart training on competition issues.
• CCI implements competition policies to effectuate the most efficient utilization of economic resources. It establishes and nurtures a competitive culture in the Indian economy.

Emerging challenges

• Backlog of cases: At present, allegations of anticompetitive behavior by businesses are judged by a three-member panel that handles around 245 cases a year. It is able to settle only a little over 80 per annum.
• Market monopoly: It translates to pricing power e.g. dearer cement on account of collusion among its makers would burden its users and shrink incentives for innovation.
• Digitalisation: In the digital economy, users of social media networks do not always pay for the services. Even if their data enriches platforms, it’s only advertisers that may get financially squeezed.
• Overseas firms: Concentration of power on the internet is trickier to regulate, as many big firms are based overseas.
• Network Effects: Coupled with low user sign-up costs, it can give leaders an unbeatable edge. People’s fast-evolving patterns of app usage could still leave such spaces contestable e.g. Facebook, WhatsApp and Instagram may wield market clout as a trio, but TikTok has taken away screen time in places like the US.
• Technological Advancements: CCI finds it difficult to understand the technological nuances of the new digital era which were not there at the time of enactment of the Act in 2002. Now that the boundaries in the digital space no longer exist, the definition of market needs to be updated.
• Online, new business models are emerging rapidly and market categories are getting blurred. Technology firms and their overlaps with all kinds of traditional businesses are only going to make it harder to assess market dominance and its abuse.
• Other factors: A global shortage of commodities due to the pandemic, the war in Eastern Europe and disruptions in the supply chain, a possibility of threat from cartelization etc. have made it necessary for the government to bring an amendment to the Act.

Changes proposed in the Competition (Amendment) Bill, 2022

• Bill aims to bring more flexibility to the CCI’s working, while also strengthening its enforcement efficiency as well as transparency.
• The aim is to cover new age marketing arrangements which do not completely fit into conventional supply chain arrangements for which explicit regulatory provisions are given in the law.
• Flexible decision-making: The Bill proposes to let individual members of the six-member board to decide on cases rather than a group of three members at present. It is expected to help dispose of them quicker.
• Room for negotiations: The “negotiated settlements and commitments” clause will help avoid long-drawn proceedings, cut down litigation, and provide soft-exit windows for uninformed or ill-informed individuals and businesses.
• Widening definitions: The Bill also proposes an expansion of the prohibited anti-competitive agreements to cover new-age marketing arrangements, specifically the hub-and-spokes model of cartels. At present, prohibited anti-competitive agreements fall in the class of parties in the same line of business or those at different stages of production or supply. It will make the regulator’s checks and balances foolproof.
• The definition of customers would be updated to include government agencies making procurements.

Way Forward

• Across the world, Big Tech companies are facing antitrust scrutiny and judging antitrust cases is getting increasingly difficult. In such a scenario, more expertise is essential and so is diversity in the views.
• Thus, doing away with plural panels would deprive the process of what we need for well-considered rulings as two minds are better than one. The CCI must expand its capacity instead, drawing on a range of legal, business and economic analysis. There is no doubt that solo case examiners may help clear a mounting pile-up, however, a quick resolution may not be a good replacement for quality resolution.

Sources: Live-Mint,  Business-Standard

Mains Question:

Q. The Competition Commission of India is an antitrust watchdog that aims to keep the market free and fair. Critically analyze in the light of the proposed Competition Amendment Bill, 2022. [250 Words].