Following the scrutiny of the stock market regulator, the Competition Commission of India (CCI), India’s competition watchdog, is now facing the scrutiny of the powerful Public Accounts Committee (PAC) of the Parliament. This marks the first step towards a performance audit of the CCI. The PAC, headed by Congress leader K.C. Venugopal, has members from various political parties.
The PAC requested a detailed report from the corporate affairs ministry about the CCI’s functioning, which was submitted by September 27th. The review is expected to examine the effectiveness of competition regulation in India, particularly in ensuring consumer choices and market outcomes without hindering innovation. The CCI’s manpower and track record in enforcement will be under the spotlight.
Data reveals that of the 1,224 anti-trust cases registered by March 2023, the CCI investigated 403, resulting in 185 cases with detected violations and adjudicatory orders. Over 100 cases were pending as of March 2023. The CCI has also overseen over a thousand merger filings.
One area of interest for the PAC is how businesses challenge CCI’s penalty orders, which often impede the recovery of these amounts. In fiscal years 2022 and 2023, the CCI levied penalties of 1,336 crore and 2,672 crore, respectively, but managed to recover only about 13% and less than 1% of these amounts, according to the CCI’s annual report.
The PAC will also investigate how equipped the CCI is to handle its growing mandate. Since the National Anti-Profiteering Authority (NAA) expired in 2022, the CCI has taken on the additional responsibility of handling profiteering cases related to the Goods and Services Tax (GST). Furthermore, the expansion of the digital economy and the proposed digital competition law are expected to significantly increase the CCI’s regulatory responsibilities. However, the CCI currently has only about 30 professionals, including financial analysts, economists, and lawyers.
Experts believe that India’s competition regulations have evolved over the past decade and have been effective. They acknowledge the CCI’s progressive approach in keeping pace with changing times and global best practices. However, with the increasing focus on the digital sector, the CCI faces the challenge of regulating tech giants while allowing for growth and innovation in the digital space, all while safeguarding consumer interests.
India’s competition regulation has made significant strides in promoting fair market practices and curbing anti-competitive behavior. However, there are areas where improvement is needed, such as strengthening the CCI’s ability to address complex digital market issues.
Experts suggest that effective coordination between the CCI and sectoral regulators is crucial to avoid regulatory overlaps and ensure smooth enforcement. They also highlight the need for the CCI to balance public interest with competition concerns when dealing with public sector units, which are exempt from certain provisions of the Competition Act.
The parliamentary panel’s review has the potential to become politically sensitive. Opposition leader Jairam Ramesh raised concerns about a five-fold increase in user development fees (UDF) at Lucknow and Mangalore airports, both managed by the Adani group, despite the CCI’s penalties on both domestic and international firms for alleged abuse of dominance.
The outcome of this performance audit of the CCI will be closely watched by businesses, stakeholders, and the public alike. The review could lead to significant changes in the regulation of competition in India, ensuring a level playing field for businesses and protecting consumer interests.
