Competition Law: Competition Authority And Sector-Specific Regulator-Jus Dicere

Introduction To Competition Law

After the liberalization movement in 1991, there were many scams in India. The Government was relying on the market rivalry to run the economy of the country. Later on, the Government understood the importance of governance. As a result, sector-specific regulators were established. One of the first regulatory authorities in India, consequent upon securities scandal was the Securities and Exchange Board of India (“SEBI”) through the Securities and Exchange Board of India Act, 1992 (“SEBI Act”). The basic premise of the existing sector-specific regulator is that they have the domain expertise in it.  This led to the conflict of authority among all those authorities.

Development of Competition law

The competition policy had not yet developed. When the Competition Act was passed, an authority called as “Competition Commission of India” was established. The Act has been made by taking guidance from the US antitrust model and the EU competition law model. The scope of the Act is very wide which aims at regulation of Competition with certain specific parameters. The roles of Competition authority and sector-specific regulators can be complimentary. But it may create tensions as well. For example- sector-specific regulators identify any problem ex-ante whereas the Competition authorities do the same ex-post. Section 60 of the Competition Act, 2002 states about the supremacy of the Act over all the other statutes whereas Section 62 states that the Competition Act, 2002 has to act in complementary to other statutes.  Section 18 of the Act entrust the Competition Commission with an overarching duty of sustaining competition in the market. This power is not unavailable to other sector-specific regulators.

Regulation

Regulation, implemented through the sector-specific authorities, differs from the same through the Competition Commission of India. Competition law seeks to promote efficient allocation and utilization of resources, which are usually scarce in developing countries. The objective of a sectoral regulator is to provide good quality service at affordable rates, but the promotion of competition and prevention of anticompetitive behavior may not be high on its agenda or the laws governing the regulator may be silent on this aspect. It has the tendency to concentrate on the needs of the firms present in that sector. It would determine yardsticks which might not be acceptable to other sector-specific regulators. The Competition authority focuses on the whole economy. The conflict between the two could be the result of legislative ambiguity or jurisdictional overlap or legislative omission. The interpretation of the bureaucracy is another factor. These had harmed the consumers and increase the risk of investments. It is quite evident from the acts of the legislature not only from the past statutes but also from the current ones.

Measures

The possibility of the conflicts can be resolved in a number of ways. Firstly, the sector-specific regulators must be given the authority to decide matters ex-ante like structural issues and the competition authority would decide matters ex-post like behavioral issues. For example, under the Electricity Act, 2002, the regulator must be given the authority to decide the tariffs and the Competition authority would intervene if the tariffs are claimed to be excessive. The Competition authority must be bestowed with the powers for competition enforcement, access regulation, regulation of prices of public utilities and a variety of other regulatory tasks while sectoral regulators must carry out the technical regulatory responsibilities in their specific industries. The Sector regulators must have the liberty to apply Competition laws while deciding cases whereas the Competition authority would decide on the penalty matters. There is no single model to resolve the conflicts. In some of the sectors, both the authorities can have concurrent powers, whereas, in other sectors, the Competition authority can control a few aspects of that sector.

Shri Neeraj Malhotra, Advocate vs. North Delhi Power Ltd. & Ors. [Case No.6/2009]-concerning the issue of the alleged anti-competitive behavior of the electricity distribution companies.-The DERC categorically stated in its communication to the CCI that although all matters pertaining to electricity tariff have to be decided as per the provisions of the EC Act and the DERC Regulations, allegations of anti-competitive behaviour, including abuse of dominant position by the discoms fall within the jurisdiction of the CCI.

Section 21 of the Competition Act, 2002 can be utilized effectively in the manner that the Government of India must make the period given in the provision as mandatory. It states about the days within which the sector-specific and Competition authority has to give their opinions to each other on any question raised. Another measure can be a Memorandum of Understandings between the two with respect to the different subject matters. Whenever Competition law precedes in any matter, the Sector-regulators can assist the Competition authority by analyzing the Sector-specific aspects. The imposition of the requirement for consultation on competition issues between sector regulators and competition agencies can only help to improve the efficiency and effectiveness of the regulatory process. Another point to be kept in mind that the Government is allowing the Competition authority to regulate most of the public utility matters which might render the sector-specific regulators redundant in the near future.

Conclusion

The statutes are implemented with some objectives. The Competition Act has been implemented keeping in mind the anti-trust or competition issues. But this cannot make the sector-specific ones as redundant as their objectives are quite different from the other. It is the duty of the legislature to clearly demarcate powers of both the authorities so that it cannot be misused by the enforcers.

By Jus Dicere Team