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Journalism of Courage
Take a look at the essential concepts, terms, and phenomena from the static and current parts of the UPSC-CSE. The Post Read Q&A will help you to self-evaluate your retention memory after reading the article.
Word: CCI
Subject/Topic: Polity and Governance
Relevance: CCI has been in the news a lot due to the imposition of penalties on Google and others. Although it may seem to be more a specialist topic than a generalist one, UPSC questions may revolve around basics, terms in news, aims and objectives or challenges with respect to this word. We go Beyond the word to discuss a few of these briefly.
Why in news?
—In what is turning out to be a bad month for Google, the Competition Commission of India (CCI) Tuesday imposed a Rs 936.44-crore penalty on the company for “abusing its dominant market position with respect to its Play Store policies”.
—This comes just days after the antitrust regulator imposed a penalty of Rs 1,338 crore on it for “abusing its dominant position in multiple categories related to Android mobile device ecosystem” in India.
What is CCI or the Competition Commission of India and what is its role?
—The Competition Commission of India (within the Ministry of Corporate Affairs) has been established to enforce the competition law under the Competition Act, 2002.
—It should be noted that on the recommendations of Raghavan committee, the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act) was repealed and replaced by the Competition Act, 2002.
—The Commission consists of a Chairperson and not more than 6 Members appointed by the Central Government.
—It is the statutory duty of the Commission to eliminate practices having an adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade carried on by other participants, in markets in India as provided in the Preamble as well as Section 18 of the Act.
—The Commission is also mandated to give its opinion on competition issues to government or statutory authority and to undertake competition advocacy for creating awareness of competition law. Advocacy is at the core of effective competition regulation. Competition Commission of India (CCI), which has been entrusted with implementation of law, has always believed in complementing robust enforcement with facilitative advocacy. It is a quasi-judicial body.
According to PM Narendra Modi,
India is continuously marching ahead with holistic efforts focussed at all-round and all-inclusive development. We have strived constantly for a governance that is professional and process-driven. Our approach has been to ‘Reform with intent, Perform with integrity, Transform with intensity. In such a scenario, the role of CCI assumes greater significance in furthering healthy competitiveness aimed at inspiring stakeholders to innovate and augment effectiveness. Ensuring a level-playing field and stimulating the business processes is critical for the larger benefit.
What is the Competition Act?
—The Competition Act, 2002, as amended by the Competition (Amendment) Act, 2007, follows the philosophy of modern competition laws. The Act prohibits anti-competitive agreements, and abuse of dominant position by enterprises and regulates combinations (acquisition, acquiring of control and M&A), which causes or likely to cause an appreciable adverse effect on competition within India.
—In accordance with the provisions of the Amendment Act, the Competition Commission of India and the Competition Appellate Tribunal have been established.
— The government of India replaced Competition Appellate Tribunal (COMPAT) with the National Company Law Appellate Tribunal (NCLAT) in 2017.
—The provisions of the Competition Act relating to anti-competitive agreements and abuse of dominant position were notified on May 20, 2009.
What is the vision and mission of CCI?
VISION —To promote and sustain an enabling competition culture through engagement and enforcement that would inspire businesses to be fair, competitive and innovative; enhance consumer welfare; and support economic growth.
MISSION— Competition Commission of India aims to establish a robust competitive environment through:
Beyond the word
Antitrust
—The Competition Act, 2002 (as amended) follows the philosophy of modern competition laws and aims at fostering competition and at protecting Indian markets against anti-competitive practices by enterprises. The Act prohibits anti-competitive agreements, and abuse of dominant position by enterprises, and regulates combinations (mergers, amalgamations and acquisitions) with a view to ensure that there is no adverse effect on competition in India. The Act prohibits any agreement which causes, or is likely to cause, an appreciable adverse effect on competition in markets in India. Any such agreement is void.
—An agreement may be horizontal i.e. between enterprises, persons, associations, etc. engaged in identical or similar trade of goods or provision of services, or it may be vertical i.e. amongst enterprises or persons at different stages or levels of the production chain in different markets.
—Cartelisation is one of the horizontal agreements that shall be presumed to have appreciable adverse effect on competition under Section 3 of the Act.
—Cartels can be difficult to define. According to CCI, a “Cartel includes an association of producers, sellers, distributors, traders or service providers who, by agreement amongst themselves, limit, control or attempt to control the production, distribution, sale or price of, or, trade in goods or provision of services”.
—The International Competition Network, which is a global body dedicated to enforcing competition law, has a simpler definition. The three common components of a cartel are:
“The agreement that forms a cartel need not be formal or written. Cartels almost invariably involve secret conspiracies. The term competitors most often refers to companies at the same level of the economy (manufacturers, distributors, or retailers) in direct competition with each other to sell goods or provide services. The aspect of a restriction on competition distinguishes conduct that targets open competition from benign, ordinary course of business agreements between firms,” it states.
Why ‘competition’ is needed?
According to cci.gov.in,
Competition is the best means of ensuring that the ‘Common Man’ or ‘Aam Aadmi’ has access to the broadest range of goods and services at the most competitive prices. With increased competition, producers will have maximum incentive to innovate and specialize. This would result in reduced costs and wider choice to consumers. A fair competition in market is essential to achieve this objective. Our goal is to create and sustain fair competition in the economy that will provide a ‘level playing field’ to the producers and make the markets work for the welfare of the consumers.
What is the major challenge ahead for the Competition Commission of India in the digital era?
CCI needs to revisit its definition of ‘relevant market’. In the age of digital world, defining relevant market has been a tough task for regulators world-wide. Technological developments like Web 3.0, AI, IoT, Blockchain and issues like data protection and privacy, search bias, platform neutrality, confidentiality, etc, have created a need for a robust competition law. Such a law should meet the demands of the technological era we live in.
(sources: cci.gov.in)
Point to ponder: Why has CCI fined Google again, this time for its Play Store policies?
MCQ:
Which of the following statements with respect to CCI is/are true?
1. Competition Commission of India (CCI) is a statutory body of the Government of India responsible for enforcing the Competition Act, 2002.
2. Government of India replaced Competition Appellate Tribunal (COMPAT) with the National Company Law Appellate Tribunal (NCLAT) in 2017.
3. On the recommendations of Rangarajan committee, the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act) was repealed and replaced by the Competition Act, 2002.
a) 1 , 2 and 3 b) 2 and 3
c) 1 and 3 d) 1 and 2
Post Read Q&A
Can you recall what you read?
2. What is Cartelisation?
3. What is the major challenge for CCI in the digital era?
