The recently introduced Competition (Amendment) Bill 2022 seeks to broaden and widen the scope of consultations between CCI and sectoral regulators, said Ashok Kumar Gupta, Chairman, Competition Commission of India (CCI).
Although the existing statutory framework already provides an inter-regulatory coordination mechanism whereby CCI and sectoral regulators can interact and seek each other’s opinion on non-binding basis, the problem, however, with this mechanism is that the threshold for triggering such mechanism for consultation is high, Gupta told BusinessLine.
Gupta further added that the Bill proposes to lower this threshold by providing that CCI or sectoral regulators, as the case may be, may make reference to each other on any issue that involves provisions of their respective statutes.
Put simply , CCI can make a reference on any issue to a sectoral regulator in respect of the Act administered by that sectoral regulator and vice versa. So, the proposal will engender a comity amongst regulators and would obviate unnecessary gaps and overlaps between regulators; reduce regulatory arbitrage and would result in cohesive and holistic enforcement, providing much needed certainty and predictability to the businesses, according to Gupta.
In fact, the Bill also enables CCI to enter into MoUs with sectoral regulators. This would institutionalize the inter-regulatory consultations between CCI and sectoral regulators, he added.
Gupta highlighted that Inter-regulatory references gain significance owing to the fact that CCI as an overarching market regulator has interface with various sectoral regulators, especially when their functions can impact the broader scope and objectives of competition policy.
Legal experts are, however, divided on the issue of the Bill solving for all issues around inter-regulatory coordination. Though they agreed that the proposed amendments are steps in the right direction, they pointed out that the same are not sufficient to solve the actual conflicts.
In a given case of divergence of opinion between CCI and sectoral regulator, there is no body like a Financial Stability and Development Council (FSDC) which can deliberate and decide such conflicts.
So the proposed Bill only enhances cooperation and exchange of thought between CCI and sectoral regulators and, in the absence of a body like FSDC to resolve actual conflicts, the amendments may not be sufficient, legal experts said.
Regulatory turf wars
Regulatory turf wars are a common occurrence in India.
For instance, a fierce turf war is raging between CCI and SEBI and matter is pending before the Bombay High Court. Earlier this year, CCI ordered a probe against debenture trustees and their associations for suspected cartelisation on fees. The regulations framed by SEBI mandate that companies raising debt appoint ‘debenture trustee’ to protect the interests of investors. The trustees charge a fee from the companies issuing the debt and make due-diligence checks on them. A leading southern non-banking finance company had complained to both SEBI and CCI, alleging that leading debenture trustees were cartelising the debenture issuance market and charging exorbitant fees.
The debenture trustees challenged CCI’s order initiating investigation by moving the Bombay High Court and sought a stay on the CCI proceedings on the ground that SEBI was the sectoral regulator and hence it alone had jurisdiction to act against them.
The Bombay High Court asked CCI not to take any coercive action against debenture trustees and their association till SEBI concludes its enquiry.
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