Economy

What CCI has to do with economic opportunity

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The Competition Commission of India (CCI), by ordering a probe into big tech giants such as Google, Amazon, WhatsApp’s new privacy policy, and also sectors such as automobiles, aims to control monopolistic, restrictive, exploitative and exclusionary trade practices.

What is India’s anti-trust regulator?

CCI, India’s anti-trust regulator, was set up in 2003. It is guided by the Competition Act, 2002, which seeks to build a robust competitive environment. The competition law protects trade from the vagaries of unfair business practices such as price fixing and ensures the prevalence of fair competition. This Act, which focuses on encouraging competition and business freedom replaced the Monopolies and Restrictive Trade Practices (MRTP) Act of 1969 that was aimed at curbing monopolies and preventing expansion of firms whose assets were more than 100 crore. It is on the lines of anti-trust laws in countries such as the US.

What are India’s competition rules?

The Competition Act seeks to bar anti-competitive agreements and abuse of dominant position by big enterprises. It regulates mergers and acquisitions that can have adverse impact on competition. It disallows setting up of horizontal and vertical restraints such as price fixing, market allocation, predatory pricing, and tied selling. In 2019, a committee constituted by the government suggested that the scope of anti-competitive agreements should not be limited to horizontal and vertical restraints. It also said high-value transactions of technology firms might escape scrutiny and thus there is need for a re-look.

What move has CCI made in case of big tech firms?

Abuse of dominant position in the smart TV market and circumventing foreign investment e-commerce rules are some of the allegations against companies such as Google, Amazon and Flipkart. In 2018-19 and 2019-20, 11 and five companies, respectively, in the information technology sector were issued notices for violating regulations.

What led to big-ticket reforms?

The Act was established keeping in mind the country’s economic development by promoting market competition, protecting the interest of consumers and ensuring freedom of trade. Under the MRTP Act, 1969, the previous method of regulating businesses having assets worth more than 25 crore (relaxed to  100 crore in 1985) was unscientific. By encouraging competition and promoting free trade, the economy is able to minimize its deadweight loss, a cost created by the existence of market inefficiency.

How does CCI protect consumers’ interests?

It tries to protect consumers’ interests in terms of price, quality, and availability of variety of products by minimizing the scope for their exploitation through monopoly advantage. This would also help build an environment of a competitive and efficient market structure in India and add to its story of being an attractive destination for foreign and domestic investors. CCI is known to have intervened in cases of cart-elization of cement and steel firms.

Jagadish Shettigar and Pooja Misra are faculty members at BIMTECH.

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