Towards a Functional National Competition Policy for India
The FunComp Project
-A CUTS research proposal

TOWARDS A FUNCTIONAL COMPETITION POLICY FOR INDIA (FUNCOMP)

1. Background

Competition policy is an integral part of economic policy. The main objective of competition policy and law is to preserve and promote competition as a means to ensure efficient allocation of resources in an economy, resulting in the best possible choice of quality, the lowest prices and adequate supplies to consumers. To put it differently, ensuring competition is just a means to achieve the above-stated objectives.

There are complex inter-relationships between competition and other public policies. This factor has a direct bearing on the extent to which competition policy objectives can be pursued without being constrained by or conflicting with other public policy objectives. Thus, even in the absence of a competition law or a stated competition policy, many of the related concerns can be addressed, at least partially, if there are other policies, which are favourable to competition.  

Different government policies such as trade policy, industrial policy, regulatory reforms, etc. may encourage or adversely affect competition and hence consumer welfare, particularly, in the context of the present globalising environment. In addition sector-specific policies on health, electricity, telecommunications, financial services etc., also affect competition in the economy. Thus, although a competition law may be quite narrow in its scope, competition policy is much more broad and comprehensive in its scope and tries to bring harmony in all the Government policies that may encourage or adversely affect competition and consumer welfare.

India does not have a competition policy but only a competition law, first in the form of the Monopolies and Restrictive Trade Practices (MRTP) Act, 1969 and now the recently enacted Competition Act, 2002. Concerns have been expressed that a lack of awareness about competition policy, and the nature and extent of prevalence of different types of anti-competitive practices in India will pose a major challenge.

Unfortunately, there has not been much research on competition issues in India. In the past, efforts have been made by the Indian Institute of Management, Ahmedabad and CUTS, Jaipur.  While the IIMA study did not go beyond policy level, a study by CUTS done under the 7-Up Project [1] revealed a crying need to do deeper research in some sectors, which display typically anti-competitive behaviour: cement; trucking; services such as cable TV etc.

2. What will the project do?

Against this backdrop, CUTS has undertaken a project to develop a Functional Competition Policy (the FunComp Project) as an attempt to fill the gap and help the Government of India to come up with a Competition Policy that would be ‘implementable’ as against one that is ‘ideal’. The report will be in the form of a discussion paper, which would highlight the issues that will lay out a road map for further research.

3. How is the project being implemented?

In order to implement the project, CUTS has engaged various experts. The project is been guided by a Steering Committee which comprises of eminent persons such as S. Sundar of TERI (Chairman of the steering committee), Shankar Acharya of ICRIER, Suman Bery of NCAER, and Shrawan Nigam and Pronab Sen of the Planning Commission. The Steering Committee meets at frequent intervals to review the progress and decide future action.

4. What are the contents of the report?

The report would cover the competition policy scenario in India at a macro level as well as at sectoral level. The report would be structured in the following manner.

Part I	Part II
1. Evolution of Competition Policy & Law in India	1. Cement Industry
2. The State of Competition in the Indian Manufacturing Industry	2. Steel Industry
3. Mergers & Acquisitions in India: Implications for Competition	3. Telecom Sector
4. Competition Regulation Interface in India	4. Energy: Electricity, Petroleum, Gas and Coal
5. Competition Abuses at the Consumer Level: Study of Selected Sectors	5. Banking, Insurance and Other Financial Services
6. Cross-border Issues and Competition Act, 2002	6.Transportation
7. Central Government Policies: Interface with Competition Policy Objectives	7. Information Technology
8. State Government Policies and Competition	8. Biotechnology
9. Competition Act, 2002: The Approach	9. Pharmaceuticals
10. Competition Policy and Consumer Welfare	10. Professional Services
	11. Agriculture Markets

5. How will the results be disseminated?

The project report will be published as an edited volume and is expected to be released in January 2005 at New Delhi at a national level conference. The findings from the project will be used to generate awareness on competition issues in the country. Road shows (a series of meetings) are planned in select cities in January/February 2005 for wider dissemination and outreach.