February 15, 2005, Kolkata, Press Release

“Competition policy and law is an important tool to regulate markets to ensure consumer welfare and equity”, said Professor T. C. A. Anant, Delhi School of Economics, while speaking at an outreach seminar organised by the Jaipur-based CUTS Centre for Competition Investment and Economic Regulation in association with National University of Juridical Sciences (NUJS) and the Indian Chamber of Commerce (ICC) here yesterday

The seminar was held as a part of an outreach programme by CUTS to release a research report: “Towards a Functional Competition Policy for India”. The report, edited by CUTS Secretary General, Pradeep S Mehta, contains 22 chapters, covering both systemic and sectoral issues. It has been done by various experts under the supervision of a steering committee, chaired by S. Sundar of TERI, which includes eminent economists such as Shankar Acharya, Subir Gokarn, Shrawan Nigam, T. C. A. Anant and Pronab Sen. The project has been supported by DFID, UK, while the report has been published by the Academic Foundation, New Delhi.

Kicking off the ball, NUJS Vice Chancellor, Prof B S Chimni, stressed on the dynamic concept of competition emphasised sby Prof Ajit Singh of the University of Cambridge. He highlighted the cases of Korea and Japan which promoted giant businesses to accelerate economic growth. This point was rebutted by both Prof Anant and Mr Mehta, who said that the conditions following World War II are quite different than what India is today in.

“In fact, both the Japan and Korea are suffering from high concentration in their economy due to handful of players, and are strengthening their competition laws, to reign in crony capitalism”, said Mehta.

In his introductory remarks, Mehta stressed on the distinction between competition and competitiveness and the conflicts between industrial policy and competition policy. For example, the present pursuit of mergers among large nationalised banks needs to be analysed on the touchstone of competition. Such mergers will mean that there will be lesser number of banks, and this situation has its own problems. Such as if a large bank fails, then the consequences can be pretty adverse for depositors, consumers, and the economy.

“Our research shows that a large number of anti-competitive practices in our country happen due to government policies, both at the central and state level. For example the excise policy followed by states, promotes liquor cartels, which have a double whammy impact. Not only revenues come down, but consumers pay a higher price”, said Mehta.

“We are at the cross roads of implementing a modern and new Competition Act, 2002. It has been enacted to replace the MRTP Act, which was more of a licencing law. The new law has not yet been implemented, due to a turf battle between the judiciary and the bureaucracy. However, not much attention has been paid to issues which relate to the broader remit of a competition policy, which is all encompassing. The current project aims to sensitise policy makers and law makers to pay attention to fundamental issues, which are affecting our economic development due to rampant anti-competitive practices in the country. We need a stated National Competition Policy, which has also been echoed by the Planning Commission”, said Mehta.

Justice Aniruddha Bose of the Calcutta High Court, as the keynote speaker, spoke about the paradoxes of necessity of competition policy in the free economy. The importance is increasing because the establishment of WTO has demolished international trade barriers. Natural monopolies existing in the economy like in utilities, that were under state control, are now opening up for private participation. More and more domestic and international mergers are coming up which requires scrutiny even to regulate domestic market. He highlighted the role of judiciary in various countries to depict how competition policy can contribute to growth and equity in the economy.

Prof Anant, one of the authors of the report, spoke about the absolute need to developing a pro-competitive policy in India. He noted that the new government is very serious about promoting competition in the market place and also adopt best regulatory practices. NUJS’s Shiju M. V. spoke about the Competition Act, 2002 and its various drawbacks.