The Selection Committee for the appointment of the chairman and the members of the Competition Commission of India was established early last year and the advertisement for the vacancies came out in May of 2008. The advertisement said:

“Applications in the prescribed format, duly completed. should reach Shri. U.K.Jindal, Deputy Secretary, Ministry of Corporate Affairs, ‘A’ Wing, 5th Floor,Shastri Bhawan, New Delhi – 110 001 latest by 16th June, 2008”.

However, almost seven months have passed and the organogram of the commission still reads Chairperson and Members (vacant). This just points out to the fact that the political masters are not yet willing to establish a truly functional Competition Commission, a very important institution for the effective functioning of a market based economy. This is has to be seen in the light of the fact that the issues the Commission will be handling pertain to an economy of size more than $1 trillion, with the largest number of listed companies, and the third largest investor base in the world.

The Commission once fully operative has the powers to inquire into instances of abuse of dominance by vested corporate interests wielding enormous clout over all levels of government. The Commission is well within its powers to:

direct any enterprise or person or their associations to discontinue with anti-competitive practice, by issuing a ‘cease and desist’ order;

impose penalty up to 10 per cent of the turnover, which can go up to the higher of three times of the profit or 10 per cent of the turnover for each year of cartelisation;

modify any agreement or direct an enterprise to abide by its orders;

order division of an enterprise which enjoys dominant position in order to prevent abuse of such position.

Given this crucial role the Chairperson and Members of the Commission deserve a sufficiently high status in the bureaucratic hierarchy, say, of Supreme Court Justices or of the Chief Election Commissioner so as to be able to discipline these mighty corporate giants. However, the Act equates them with Group A category officials of the Government of India, and forces them to wait on the minions of the Ministry of Corporate Affairs for sanction and creation of posts, appointment of their own staff and other matters of day-to-day administration.

It is an open secret corporate entities are credited with even having Members of Parliament and the top crust of the political and governing classes in their pockets. No functionary in the Central and State Governments can match a business tycoon in the resources he commands.

Clearly, if the abovementioned powers are exercised by a well functioning Commission, it will be quite unpleasant for some of the businesses. The biggest losers if this institution is established will be the businesses who for years have foreclosed competition and indulged in rent seeking detrimental to the consumer. Given this business- politician nexus no wonder the Government is dragging its feet in the establishment of the Commission; after all being an election year the government cannot upset their funding source i.e. the large business houses by setting up something as trivial as an antitrust body!

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Tags: Competition Commission, Institutions

This entry was posted on Monday, January 5th, 2009 at 11:22 am and is filed under Indian Economy, Policy, Regulation and Competition. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.