Competition law for professional services

THE RECOMMENDATIONS of the Raghavan Committee on `Competition Policy and Law' relating to professional services have met with stiff resistance from certain sections of professionals.

These professionals apprehend that their counterparts from developed countries may start practice in India and eliminate domestic professionals, especially `small' practitioners. The common fear is that there will be no level-playing field if foreign professional firms or persons are allowed. This apprehension is found more among individual practitioners than among big local professional firms.

Any profession requires specialised knowledge and an individual practising a profession is deemed to be `self employed'. The concern of the individual is seen in the context of competition with foreign individuals or firms, as it threatens his employment and income. The individual professional, therefore, seeks support force, not protection, from the government.

In any competitive environment, it is a question of survival of the fittest. One argument in this regard is that if a foreign professional comes to India to compete with local professionals, the latter should also be permitted to move to other countries to practise and compete. This is a legitimate demand which the World Trade Organisation (WTO) will have to address on a focussed basis before requiring its signatories to conform to the General Agreement on Trade in Services (GATS).

A professional practises according to the law of the land in which he comes into contact with his client and therefore he or she must know the law of the land concerned. In order that the professional conforms to rules of the game including the prescribed code of conduct or ethics, the institute or institution of which he is a member gives him a licence to practise which binds him to the prescribed behaviour. Today, no institute allows professionals to advertise and if they advertise the scope of their or services, they are liable to disciplinary action.

In the absence of advertisements the competition against foreign skilled professionals in India will be severely felt - for the individual professional at least. All professional institutes or bodies may therefore consider permitting members to advertise so that the market is aware of the skills, talents, experience and knowledge as well as the scope of services expected from, or offered by, an individual professional. The market can then choose whom to approach for professional services rather than be guided by brand names.

Professional practice requires specialised knowledge and a professional having such knowledge in more than one sphere or branch may choose only one of them in which he thinks he is more comfortable than others. This again needs to be publicised for the market to benefit therefrom. At present, to a limited extent, the U.S. permits its professionals to advertise or publicise their services. Why not India start in this direction first by amending the rules or code of conduct or `the law as the case may be.'

In any competition, level playing field must be available to the contestants. Reciprocal arrangements are therefore vital. If a U.S. lawyer says he knows the Indian law and wishes to practise in India, a similar facility has to be afforded to an Indian lawyer to practise in the U.S. if he knows the U.S. law. The professional, though skilled, may be driven out of the market if it does not accept him as capable or competent enough.

In fact, a professional whose job is to render quality and honest service to a client at reasonable cost, cannot turn his profession into a business that has a different set of rules including its own ethics and standards. If profession and business are thus distinguished on the basis of `ethics, values and standards' the professional will stand out and based on his talents and experience, the market will recognise him and give him a share. It is for him to improve on his share by delivering the required services in time without compromising on standards, quality and ethics.

There are many who render `professional services' without being a member of any professional institute or body. Similarly, a member of a particular institute or body renders `professional services' in another field in which he may or may not be qualified suitably. Single window services and combination of multi- disciplinary professional services under one roof are also desirable but that would prove unfair to those who stick to one field or line of practice. The individual has to cope with market trends and adapt himself to changing requirements. It will be ironical if professional institutes or bodies are against the competitive spirit governing business and economics. In fact, they should encourage healthy competition, including among their own members.

One can now consider the real cause of fear or apprehension among Indian professionals. There are persons in any profession who are not competent to practise though they are eligible or qualified to do so. Updating one's knowledge is the only solution to improve competence.

If professional services are to be kept at a competitive level in the emerging context of a global market for goods and services, movement of persons qualified to practise in the country of their origin should not be restricted to practise in the country of their choice if they are competent enough.

The U.S. and other countries have already accepted movement of natural persons such as computer or electronics experts from India and other countries. There is no reason why such a facility cannot be extended to accountants, lawyers and other professionals fit enough to move from one country to another to render professional services if they prove themselves competent. Any regulation on entry of such persons considered necessary will not be opposed so long as it is reasonable and based on reciprocal understanding.

The Raghavan Committee emphasises that India's competitiveness lies in services rather than in the manufacturing sector. The quality of services rendered by Indians in various professional fields has come to be accepted and appreciated. Hence, there is no cause for unnecessary restrictions on movement of Indian professional personnel to any developed country. The governments concerned should not discriminate in the matter of taxation between native professionals and foreign professionals as long as the tax levied is paid.

In the current millennium, citizenship or nationality should recede to the background and be confined to exercising political and certain other constitutional rights such as voting and standing for election to legislative bodies. They should not come in the way of efficient professionals working anywhere in the world.

The summary at the end of the Chapter on Services in the committee report states:

1. The statutes governing professions need to be amended to be GATS compatible.

2. A positive approach is necessary on the part of the Government and the professional institutes/bodies to ensure that Indian professionals and professional firms grow to become globally competitive.

3. A profession enjoys monopoly rights of practice in its designated field and the body administering the profession enjoys considerable autonomy in its administration. These monopoly rights and autonomy should be used for regulating the quality of the profession, the standards of entry and discipline and accepted norms of performance. They should not be used to limit competition.

4. Professions should not be denied normal opportunities of association and promotion and opportunities for growth and development. There shuld be no attempt to prevent the use of firm names on narrow technical considerations and to act in a manner which insulates them not only from global competition but also from the opportunity for global contact and interaction. Having accepted globalisation, the advantages and disadvantages consequent thereon must be accepted in the stride.

5. Professional bodies should not utilise their rights of autonomy to counter the normal challenges of global integration. It is illogical to have a totally protected profession in an environment of global industrial integration.

T. V. Padmanabhan

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