March 04, 2005, Chennai, Press Release

Indian economy is experiencing several competition promoting reform measures over the past one and a half decade, however, consumers are still to realise the benefits of increased competition to the extent desirable. For instance, in telecommunications, though the sector has witnessed increased competition over the years, the benefits of competition, in the form of improved quality of service is yet to be realised. Moreover, there are several competition abuses that exist at consumers’ end. This message emerged at the outreach seminar, organised jointly by CUTS International and Citizen consumer and civic Action Group (CAG), at Chennai on 4th March.

The seminar was fifth in the series of seminars, organised by CUTS International, as part of its outreach activity to disseminate the findings of its project report on “Towards A Functional Competition Policy for India.” Manish Agarwal, Policy Analyst, CUTS International, presented key findings of the report, and highlighted that contrary to popular understanding, in India, the biggest hurdle to an effective competition regime, comes from the government, both central as well as state.

Referring to the establishment of sectoral regulatory agencies in the past few years, TCA Srinivas Raghavan, Consulting Editor, cautioned that we have not given adequate attention to the interface between competition authority and sectoral regulators, which may result in a turf war between these agencies in future. He was of the opinion that besides talking about price-competition, we also need to emphasise on competition for quality. This is important, given that the Indian economy is increasingly becoming self-oriented.

Dr S. Chakravarthy, former Member, MRTP Commission and Fellow CUTS, outlined the key provisions of the Competition Act, 2002. He mentioned that even though we have embarked on competition promoting measures, we still require a competition law, to check the various anti-competitive practices.

Responding to a question on how Intellectual Property Rights (IPR) are related to competition law, it was mentioned that though, IPR confers a monopoly right on the holder, any unreasonable condition in the exercise of IPR, would come under the purview of the Competition Act, 2002.

Bharath Jairaj, Legal Coordinator, CAG, provided examples from Tamil Nadu highlighting cases of regulatory failure at state level. One such case was the flyover scam in Chennai, where the contractor who won the bid, had sub-contracted the same to other contractors. He also informed about cases of competition abuses at consumer level, such as tied-selling in school education, where schools force their students to purchase books, uniform, and stationery from pre-specified shops. In health services, there is a nexus between doctors and laboratories.

While discussing the role of media in promoting a competition culture, Mr S Vishwanathan, Editor, Industrial Economist, mentioned that over the years, newspapers are increasingly dependent on advertisements, as more than 90% of the revenues come from advertisement. Under such circumstance, for instance, where Hindustan Lever has an advertisement budget of Rs.700 crores, it is difficult to imagine newspapers writing against Hindustan Lever.

N L Rajah from CAG highlighted the need for creating awareness among consumers on redressal mechanisms. He informed that, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), for instance, takes up class action cases in telecom and cable TV sectors. TDSAT has, in fact, been innovative enough to specify that even if two consumers come with the same complaint, it will be considered as a class suit. However, till date, not a single class action case has been filed by any consumer organisation. He also highlighted that given the existence of a large number of competition abuses at local level, there is a need for local level agencies. In this context, one has to see to what extent the Competition Commission, will be effective in dealing with local-level issues.

The seminar was attended by representatives from various consumer organisations, state electricity regulatory authority, media, professional bodies, academia, etc.