Threat to competition rises manifold, but CCI has a staff problem

The recent major amendments to the Competition Act have strengthened India’s anti-trust law, attuning it to new-age economic realities, such as the fast-growing digital business. However, the Competition Commission of India (CCI) seems unequal to its task, owing to a slow pace of capacity building, if not also a lack of political will to give it a free hand.

The policy ambivalence came into play, at a time when the CCI was taking its rightful place in the regulatory landscape, after an initial period of relative complacency. The CCI became operational only in 2009, though the Competition Act, 2002, came into force in January 2003. This was because of a legal wrangling that went on for years over its structure between the executive and the judiciary.

The regulator, with its mandate is to take ex ante action against practices that distort markets, has penalised several cartels and passed hundreds of combination orders since. It has come in the spotlight, with the recent penalty orders against global tech giant Google.

Ravneet Kaur was recently appointed the new chairperson after months of delay, which led to a big rise in the backlog of cases. The chairperson’s appointment is not enough to fast-track regulatory functions. There are still a high number of vacancies at the top as well as across the middle and lower levels of the commission.

This is even as the work has increased after the setting up of a unit for digital data and markets and the shifting of anti-profiteering mechanism under the Goods and Services Tax (GST) to the CCI. The commission would also have to adhere to faster timelines, after the notification of the Competition Amendment Act, 2023.

According to a recent report of the Parliamentary Standing Committee on Finance, as many as 67 of the 195 sanctioned posts at the CCI were vacant. Despite the lack of staff strength, the overall pendency of cases with the CCI had come down over the last three years to 122 in FY23 (by February 24, 2023) from 140 in FY21.

“The Committee feels that given the pendency of cases with the CCI along with the constitution of the Committee on Digital Competition Law, the Cadre Review and Restructuring process should be finalized at the earliest…,” said the report on the demand for grants (2023-24) of the ministry of corporate affairs.

According to the CCI’s website, applications have been invited to fill up 15 professional staff posts, including one of Additional DG, as well as two support staff in the DG, CCI’s office.

Augustine Peter, former member, CCI, and founder and head of APRLP Law noted that while the CCI, with two members had started clearing combination cases invoking the doctrine of necessity, there has been an accumulation of anti-trust cases.

“On an average CCI issued over six anti-trust orders per month in 2022, until October. It can be estimated that over 30 orders are overdue now,” he said, adding that DG reports also need the Commission’s perusal and assessment before circulation to the parties. Normally parties take at least three months to give their comments on the DG reports, once circulated. Hearing on these reports has to wait till then.

At present, a number of investigations by the DG office of the CCI are under way in sectors such as steel as well as in the Big Tech space comprising the likes of Amazon, Flipkart, Zomato, Swiggy, Apple, WhatsApp, Facebook (Meta), and Google. A report on Apple has also been pending due to a lack of quorum.

The CCI is now in the process of appointing three new members to replace the two current members – Sangeeta Verma and Bhagwant Singh Bishnoi – who are likely to superannuate this year.

Peter also pointed out that another major issue that requires the attention of the Commission is the official strength. “Cadre review has never happened since the Commission’s inception. It follows government pay scales while other regulators like SEBI, RBI and even the young IBBI provide much more attractive pay and perks packages. Besides, stagnation has set in for some time,” he said.

Vinod Dhall, founding chairman, CCI, said that issue of quorum at the Commission has been troublesome and affected its working as seen in recent months. “There should be at least four members, including the chairperson, to provide some legroom in case one of the members is absent,” he stressed.

While expressing satisfaction over the CCI’s evolution over the years, he said that in terms of mergers, its record has been good and is further improving. Timely clearances are happening and the green channel is a good innovation.

However, it is in enforcement where the CCI’s record is a bit mixed. “More consistency and predictability are needed as penalties in some cases are very nominal while in others, they appear to be very high,” he said.

While the latest amendment once again provides for penalties to be based on global turnover, the CCI should clarify the principles like proportionality to assure parties especially MNCs that the size of penalties in India will not be disproportionate to the business size. “The regime for commitments and settlements needs to be finalised soon, as it may take time to settle down and for everybody to understand how this will work,” Dhall also noted.

MS Sahoo, former chairman of Insolvency and Bankruptcy Board of India (IBBI), and a distinguished professor in National Law University-Delhi, is of the opinion that a regulator should not rely only on its statutory authority to govern the market and business. “It should also be perceived as having a legitimate right to govern by those who it seeks to govern,” he stressed, adding that this requires the regulator to build and demonstrate its social capital by consistent conduct and performance over years.

An effective means of such demonstration is an external evaluation of its conduct and performance. “Every regulatory statute should mandate external evaluation of every regulator. Till that happens, every regulator should voluntarily facilitate external evaluation,” he noted.

The IBBI got it done in 2021 by NCAER. The IFSCA is currently undergoing an internal-cum-external evaluation.

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