Explained | What is the role of Competition Commission of India

Representative image (Reuters)

The Competition Commission of India (CCI), a statutory body set up under the Competition Act, 2002 with the primary purpose of regulating competition in the market, plays a significant role in protecting the interests of consumers.

What the CCI does has assumed great significance amid the rapid growth of technology and e-commerce domains as well as increasing mergers and acquisitions (M&As) across industries. Moneycontrol takes a detailed look at CCI’s functions.

Anti-trust watchdog

CCI became functional in 2009, seven years after the Competition Act was passed in 2002 with the aim of promoting healthy competition. The body, which is often called the anti-trust watchdog, is required to protect the Indian markets against activities among players which may have appreciable adverse effects on competition.

This essentially means that any agreement among similarly-placed market actors or an agreement among various hierarchical stages of supply chain that may result in an undue adverse impact on the market ought to be prevented, deterred and punished by the body.

The CCI is also empowered to act against any entity that abuses its dominant market position to its undue advantage.

Cartelisation or instances of exclusive distribution arrangements can be said to be examples of agreements that are in violation of the competition law. In essence, any activity among various kinds of market players which may result in price fixing, limiting production or supply, or collusive bidding et al would be said to have an appreciable adverse effect on the market and will form for an actionable ground for CCI’s intervention.

To be clear, the ultimate impact of any anti-competitive activity in the market is borne by the end consumer whose interests are sought to be protected by CCI.

The Competition Commission may act on a complaint filed by an informant pertaining to an anti-trust activity or may take action suo moto. CCI may ask its Director General to conduct an investigation to probe the alleged activity and hold a hearing on the findings of the probe report thereafter.

Being a quasi-judicial statutory body, orders passed by CCI can be challenged before the appellate forum.

Regulatory body

The competition law also requires for M&As between entities to obtain regulatory approval from CCI, provided such combinations satisfy the monetary threshold mentioned in the law.

The combinations that may lead to merging of entities, or acquisition of control, voting rights, or assets of one entity by another need the consent of CCI. This is required to ensure that such a combination does not result in adversely affecting competition in the market. As such, a deal of this nature would have to be notified before CCI in accordance with the requirements and thresholds laid down in the law.

The commission has the right to modify the scheme of the combination or in some cases even prohibit a combination if it is likely to harm competition and give the merged entity monopolistic holding in the market.

In a Bill proposed for amending the competition law, which is under review at present, the deal value threshold for notifying CCI about a combination is proposed to be set at Rs 2,000 crore. Additionally, the timeline for CCI’s decision on the combination is sought to be brought down to 150 days from the existing 210 days to make M&As a swifter process keeping in line with the ease of doing business approach.

The Bill also proposes amendments that seek to ease the administrative functioning of the commission and a settlement mechanism for certain violations. Keeping in view the changing face of market and competition, the amendment also proposes to, in some ways, expand the scope of agreements that may be considered anti-competitive.

The Bill is likely to be considered by Parliament in the winter session next.