Amending India's Competition Act

Posted by D. Daniel Sokol

With all the focus in recent years on China within the antitrust community, we often have overlooked India and its antitrust system. Given the history of India 's economic development and its increasing importance as a destination for FDI, it is critically important to start thinking about antitrust issues in India. A new paper by Aditya Bhattacharjea of the University of Delhi - Delhi School of Economics provies an excellent overview of the current state of Indian antitrust law.  His article is entitled "Amending India's Competition Act."

ABSTRACT: For nearly four years, the Indian government has been unable to bring into force the substantive provisions of the Competition Act passed by Parliament in December 2002. The implementation of the Act, and the appointment of the chairman and all but one of the ten members of the proposed Competition Commission of India (CCI), was stalled by a writ petition in the Indian Supreme Court which contended that the constitutional doctrine of separation of powers required that the CCI be headed by a judge chosen by the judiciary and not a bureaucrat chosen by the executive.

The Competition (Amendment) Bill, 2006, contains provisions designed to address the Supreme Court's concerns. It also proposes to make several other changes in sections of the Act dealing with anti-competitive practices. This paper offers a critical assessment of the Bill. Some proposed amendments are quite sensible, while others (notably a modified leniency programme for firms that provide information about their participation in a cartel) have been inadequately thought out. The amendments designed to placate the Supreme Court will also have some negative consequences. Several weaknesses in the original Act, pointed out by this author in an earlier paper, remain unaddressed. Finally, the scarcity of the kind of economic expertise required to interpret the Act's multifarious technical clauses also remains a matter of concern. Intensive capacity building and a reassessment of the Act itself are urgently required.