The Hindu Business Line : Meet on Competition Act highlights industry concerns

Mumbai, Feb. 6 Cartels and monopolies do exist in the Indian economy in various sectors, Mr Prem Chand Gupta, Union Minister of Corporate Affairs, said while addressing a conference on the Competition Act organised by the Bombay Chamber of Commerce & Industry on Wednesday.

The sectors the Minister mentioned in this context were cement, tyre, transportation and civil aviation.

Representatives of the legal and corporate sectors said that the 2007 amendments to the `Competition Act 2002’ would be a stumbling block in the way of Indian companies when it came to global mergers and acquisitions.

The amendments that invited criticism were those related to mandatory prior notification of an M&A or restructuring deal (instead of voluntary notification asked for earlier); and the time period for approval of deals from 90 days to 120 days.

“This period of 210 days is unrealistic,” said Mr Bharat Vasani, Chairman of BCCI’s legal affairs committee. “It would prove to be a stumbling block especially in global competitive bids.”

To this the Minister replied: “The period of 210 calendar days is the maximum time that can be taken, and only in rare cases; it may not be correct to presume that every case would require 210 days to be decided upon. However, I appreciate the concerns of the trade and industry and we are addressing these process related issues through regulations. We are ensuring that the regulations are finalised only after thorough and open consultations with all the stakeholders.”

The issue of deciding on the group asset base of a company to decide “dominance” in a sector was also criticised. “Mere asset size is not a sufficient criterion to restrict enterprises from expanding their market base, as capital intensive sectors such as infrastructure and petroleum need substantial asset creation and may unnecessarily be subjected to the rigours of the Act,” said Mr M.R. Prasanna, Special Advisor on Corporate Law Policies for BCCI.

“Last year 1070 deals took place where the aggregate value of the deals was $ 72.2 billion; M&A transactions in India are growing at the rate of 156 per cent per annum,” said Mr Vasani. “We have serious concerns on whether the Competition Commission has the ability to scrutinise the complex volume of the transactions given the gross inadequacy of the infrastructure and manpower.”

The Minister said the Commission definitely has the capacity to handle complicated matters such as M&As. Mr Gupta said the Commission will come into operation in another five to six months.

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