Opinion | By Khushi Malhotra
The Competition Commission of India (CCI) dominated the discussions at the 8th BRICS International Competition Conference this month. Within India, the watchdog’s policies are falling short of anti-competitive actions.
CCI’s new amendment is looking for a cure for cartels – a civil offense that attracts the highest penalty from the commission – when in fact, it could crack the whip on the most prominent threat to competition in India: oligopolies.
Look at the telecom industry. In 2021, Reliance Jio, Bharti Airtel, and Vodafone-Idea raised their prices by 20-25% to improve their average revenue per users (ARPU). In one go, India’s largest telecom companies forced consumers to pay higher prices, especially when income levels had plunged during the pandemic. How were they able to push their prices up in such dire circumstances? – Market share.
On December 31, 2021, these telecom companies together held 89% of the market. This shows that when an overbearing majority of the market wants a hike in prices, the market gets a hike.
Other sectors like oil, aviation, payments industries, etc., are all witnessing market domination by a select few. While cartels hurt consumers by controlling prices and supply, oligopolies are no different.
Why CCI Falls Short
CCI incentivizes companies to reveal cartelization, but in the process, gives them a leeway to evade penalties.
The foreign laws that CCI follows have a well-established competition authority. In India, however, CCI’s vigilance is limited. Indian competition law violators can be granted full immunity from penalties if they apply for CCI’s leniency policy.
In 2018, the Panasonic, Eveready and Nippo dry-cell cartel also got on CCI’s lenient side. The companies colluded to fix prices and control supply of zinc batteries for eight years, after which they decided to come clean. Panasonic still got a 100% leeway for being the first one to confess the scheme. That was less “CCI in action” and more “CCI inaction”.
There are nearly 200 cement companies in India, but in 2022, the top 17 companies of the industry including Adani’s ACC, Ambuja Cements, Ultratech, and Dalmia, which hold the majority market share, were probed by CCI, and found liable for antitrust violations.
Tata’s acquisition of Vistara and AirAsia India is another example of CCI turning a blind eye to oligopolies, as the merger between Air India and Vistara is likely to intensify the oligopolistic character of the Indian aviation industry.
The Competition Commission was set up to counter anti-competitive practices, abuse of dominant position and regulate the mergers and acquisitions in the country. With the number of oligopolies rising, it is highly unlikely that CCI’s new endeavors to prevent anti-trade practices or cartel-snitching policies will be a boon for consumers.