Seminar on “Functional Competition Policy for India”
Hyderabad, Tuesday, 5th October 2004

Brief Report of the Proceedings

Introduction

The seminar was organised by CUTS C-CIER a day before the WTO-ESCAP Asia Pacific Seminar at Hyderabad. It sought to bring national & international experts on competition to facilitate exchange of international, national and sub-national experiences to identify elements for developing a functional competition policy for India.

Proceedings of the Seminar

The Seminar was divided into two parts. The first part was on international experiences in competition policy and lessons for India. This focussed on current issues of competition policy, cartels of international dimension and consumer protection in the context of developing countries. The second part was on national and sub-national experiences from India. In this part, main findings from the ongoing project undertaken by CUTS C-CIER on Functional Competition Policy for India was presented besides focusing on evolution of competition policy & law in India and competition regulation interface.

The meeting began with a keynote address by Shrawan Nigam (SN), Adviser, Planning Commission, Government of India. SN gave his personal opinion on regulatory framework in the country highlighting challenges related to regulatory capture by large incumbents and the need for greater transparency and non-discrimination in the work of regulatory agencies. He advocated for establishing a set of minimum guidelines for all regulatory agencies.

Mark Proksch, Trade and Investment Division, UNESCAP highlighted the interface between competition policy and investment policy and gave an account of the experiences of Asia Pacific countries in this regard. He highlighted the need for a strong supporting investment and competition regimes to achieve development in the current era of globalisation and liberalisation.

Citing the case of a cartel of international dimension (the lysine cartel), Pierre Arhel, Counsellor, Intellectual Property Division in the WTO, emphasised the need for cooperation amongst competition authorities to check anti-competitive practices, which impacts several countries. He highlighted the importance of leniency provisions in getting evidence on cartels. There was also a discussion on criminal law approach in competition law and Mr. Arhel felt that somebody with policing power is required at competition authority.

Philippe Brusick, Chief, Competition and Consumer Branch, UNCTAD made a presentation on competition policy and consumer protection in the Indian context. He highlighted the role played by UNCTAD in competition policy and consumer protection, and provided information on UNCTAD’s mandates on the UN Set on Restrictive Business Practices and the UN Consumer Guidelines. Highlighting the importance of dispute settlement mechanism at international forum, he pointed that the UN Set has failed to take-off as it is non-binding.

Manish Agarwal (MA), CUTS presented the main findings from an ongoing project undertaken by CUTS C-CIER on Functional Competition Policy for India. MA highlighted that CUTS had taken up the project against the background that there is not much awareness about competition issues in the country. The project report covers competition policy scenario in India at a macro level as well as at sectoral level. MA highlighted the interface between competition policy and government policy (both central government and state governments) and gave instances of how government policies promote/impede competition. He also cited cases of regulatory failures at local level and highlighted anti-competitive practices that exist in agriculture markets. The participants felt that there is need for local level enforcement mechanism to check competition concerns and regulatory failures at local level.

Dr. S. Chakravarthy, consultant on competition policy and law, and one of the main architects of Competition Act, 2002 gave an account of the evolution of competition law and policy in India.

Prof TCA Anant from Delhi School of Economics highlighted the need for cooperation amongst multiple authorities in his presentation on competition regulation interface.

M. Gopalakrishna, Chairman, AP State Financial Corporation, K. Swaminathan (former Chief Secretary of Andhra Pradesh), Chairman, AP Electricity Regulatory Commission, Bhanwarlal, Secretary (FCS & CA), S.Bhattacharya, Commissioner, Industries and Commerce, cited certain competition and regulatory issues from Andhra Pradesh. One such example was the excise policy of Government of Andhra Pradesh, which has resulted in greater competition, better quality to customers, and also the state government’s revenue has increased. As per the state excise policy, arrack (country liquor) is banned. Instead tenders are floated to invite bids from manufacturers of IMFL and marketing is done through shops allotted on fixed charges by draw of lots. Sale of toddy is permitted only through toddy co-operatives.

The participants welcomed the stand of the central government on competition issues. It was also realised that for bringing about effective competition, state governments need to take some action.

Outcome

Following issues were identified that need to be addressed for developing a functional competition policy:

  • Enforcement institutions to be strengthened
  • Develop cooperation between competition authority and investigating agencies
  • Develop cooperation amongst competition authorities to check anti-competitive practices of international dimension
  • Competition policy and other government policies to be consistent and coherent
  • Establish local level competition enforcement authority
  • Advocate with government functionaries (central as well as state)
  • Clarify the role of regulators in dealing with competition issues
  • Create awareness among stakeholders
  • Highlight grass-root level issues
  • Clarify the meanings of various terms such as competition, competitiveness, regulation, competition law, competition policy, etc.
  • Highlight how competition policy can lead to optimal utilisation of resources
  • Focus should be on making competition policy more effective and not just the competition commission
  • Competition is considered antithetical to revenue; but competition can in fact be pro-revenue e.g. excise policy at state level. Such cases need to be pulled out, which show that competition can benefit the government as well
  • Prepare a simple text of the report to reach the grassroots
  • Social justice to be put upfront to get the political buy-in.
  • Prepare an action plan for the competition authority

Highlights

  • The seminar provided a platform to national and international experts on competition to interact amongst each other and also with officials of the state government.
  • Participation of senior officials of Government of Andhra Pradesh and other agencies: Food Civil Supplies & Consumer Affairs (FCS & CA); Industries & Commerce; State Planning Commission; AP Electricity Regulatory Commission (APERC); AP State Financial Corporation (APSFC).
  • State government officials highlighted local level competition/regulatory issues based on their field experience. This related to state excise policy, agriculture marketing, and electricity regulation.
  • Realisation that local level enforcement mechanism is required for a functional competition policy.
  • The seminar helped in creating awareness and generating interest about competition issues among local stakeholders.

CUTS Centre for Competition, Investment & Economic Regulation (C-CIER)

D–218,  Bhaskar Marg,  Bani  Park, 

Jaipur  302 016,  India,

Ph: +91(0)141-2282821

Fax: 91.141.2282485  

Email: 7upmarkii@cuts-international.org  

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Copyright 2005 Consumer Unity & Trust Society (CUTS), All rights reserved.
D-217, Bhaskar Marg, Bani Park, Jaipur 302 016, India
Ph: 91.141.2282821, Fax: 91.141.2282485