CII favours U.K. model for competition law

By Our Special Correspondent

NEW DELHI, SEPT. 19. The Confederation of Indian Industry (CII) has stated that there was a need to follow the U.K. example to effectively implement competition law in the country.

Commenting on the Raghavan Committee report on Competition Policy and Law, the CII, in a press release issued here, suggested that like in the U.K. the law could be enacted first and allowed to come into force in the next 12 to 18 months. This should be adequate time for building up institutional capability to implement the law. The interim period should be used to design appropriate institutional structures and get the right type of people to man these institutions. The CII has submitted a detailed set of recommendations to the Government recently in this regard.

The CII says the law to be flexible enough to incorporate any changes that would be needed in the ever-changing scenario. The law should be dynamic and responsive to the needs of the market in a competitive environment. The law, it feels should be prepared with detailed merger guidelines. Key elements such as merger and other anti-competition activities should be clearly defined. The CII has also called for a review of the provisions relating to mergers and acquisitions. The Raghavan Committee report had suggested that mergers resulting in entities with assets of Rs. 500 crores and groups with assets of Rs. 2,000 crores must go through a pre-notification process. If no order is passed by the Competition Commission of India (CII) within 90 days, the merger is deemed to be approved.

According to CII, the committee's recommendation with regard to mergers seems to stem from a fear that these would lead to monopolies.

It has pointed out that apart from the fact that this is somewhat opposed to their terms of reference, there seems to be no reason why these cannot be considered by the High Court which necessarily have to approve mergers under the Companies Act.

The chamber has therefore suggested that instead of an additional set of procedures before the Competition Commission that may lead to a delay, these issues can be addressed in a holistic and cohesive manner by the High Court, where the commission can play an advocacy role.

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