The Parliamentary Standing Committee on Finance headed by Jayant Sinha has recommended many changes to the Competition Law, some of which, if accepted by the government, would significantly weaken the law by diluting its deterrence besides putting an onerous burden upon the regulator to establish ‘effects’ of anti-competitive conduct of dominant undertakings.
Effects based approach
In a key recommendation, the panel noted that the law does not mandate CCI to undertake an effects-based analysis while determining abuse of dominance and accordingly, it recommended changes in the law to provide for such analysis by proposing suitable amendments.
Incidentally, Google has been consistently pleading CCI to adopt effects based approach in various cases where it was facing heat for abuse of its dominant position.
CCI, however, summarily rejected the plea of Google in its various orders by noting “In relation to the arguments of Google that actual anti-competitive effects must be demonstrated to establish an abuse under Section 4 of the Act, the Commission notes that under the scheme of the Act, the Commission is, amongst others, obligated ‘to prevent’ practices having adverse effect on competition” and also highlighted that the focus of the Preamble of the Competition Act was on ‘preventing’ practices having adverse effect on competition.
Once a dominant undertaking is found to have indulged in any of the acts prohibited by the law, “the contravention of the Act stands established”, added CCI in its orders.
Competition law experts view the recommendation of adopting effects-based approach by CCI as inconsistent with the global practices.
Also, they pointed out that requiring establishing effects is not only unnecessary but would virtually render CCI toothless as it would be well-nigh impossible for it to demonstrate actual effects and if at all, such effects are established, it would be too late in the day and market would be distorted by then due to such effects.
Interestingly, the representatives of Google, who appeared before CCI in the two inquiries where CCI rejected effects-based approach plea, also deposed before the parliamentary panel and are believed to have made a similar pitch to the parliamentary panel for recommending such test.
Cartels under settlement
In another key recommendation,cartels, which are considered to be the most egregious infractions of anti-trust law, have been recommended to be included under the proposed settlement regime. The Amendment Bill confined the scope of settlement mechanism only to unilateral market power abuses, and did not cover cartels. In fact, the Bill, which was put up for public consultation by the government also did not propose so. However, in a surprise move, the parliamentary panel recommended inclusion of cartels within settlement mechanism.
This has raised many eyebrows and experts tracking the development pointed out that already leniency regime was available to cartel participants to seek lesser penalty on self-disclosure, however, the panel has gone a step ahead and now even if a cartel participant, who did not self-disclose, is caught can apply for settlement.