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26 Aug 2016

Guidelines for Assessment of Economic Legislations and Policies from a “Competition” perspective

By: Anshu Pratap Singh
 Corporate & Commercial   Add a comment

The Competition Act, 2002 (the “Act”) provides the Competition Commission of India (the “Commission”) with two mechanisms viz. enforcement and advocacy to promote competitive markets and thereby protect consumers. “Competition advocacy” refers to those activities conducted by the competition agency to promote a competitive environment by means of non-enforcement mechanisms, and mainly through its relationships with other government bodies and by increasing public awareness of the benefits of competition[1].

The Commission, under its mandate of competition advocacy (Section 49) under the Act, has issued The Competition Commission of India (Competition Assessment of Economic Legislations and Policies) Guidelines, 2016 (CAELP Guidelines) which will be effective from January 1, 2017.

The CAELP Guidelines aim to facilitate objective and transparent assessment of select existing as well as upcoming economic legislations and policies (“Policies”) made by a legislature, ministry, government department or a Statutory Authority from a “competition” perspective. The Commission would, if necessary from a competition perspective, suggest appropriate modifications in the Policy along with the underlying reasons for the suggestions to relevant stakeholders.

The Commission may suo moto identify any Policy for assessment or approve the assessment of any such Policy referred by any government agency/statutory authority or identified by the Advocacy Division of the Commission.

To carry out initial competition assessment of the economic legislations or policies referred to them the Commission will maintain an expert panel of 5-7 reputed institutions having expertise in law, economics, finance or management.  The member institutions of the expert panel will be selected by a committee constituted by the Commission on the basis of a sample competition assessment submitted by them in response to public advertisement. Once selected, the institute will remain in panel for a term of three years, unless removed earlier.  The Commission may also impart training on the methodology of competition assessment of Policy to professionals from these institutions who are part of the expert panel.

The Commission will assign the selected Policy to any institution in the expert panel or the in-house team for assessment if any provision of such Policy could:

  1. cause appreciable adverse effect on competition in the relevant market(s) in India;
  2. humble any of the salient features of a competitive market;
  3. restrict the freedom of players in the market and choices of consumers; or
  4. be in disharmony with the objectives of the Act.

The institute/ team shall submit their assessment of the referred Policy in the format prescribed in the CAELP Guidelines within 15 days of the receipt of the assignment. The institute will be paid an honorarium indicated at the time of assignment, if the Commission finds the assessment satisfactory. The Advocacy Division shall examine the submitted assessment and submit the same with its views to the Commission within 15 days of the receipt of the assessment. The Commission will form its views at the earliest on such Policy and suggest modifications, if necessary, to the relevant committee of the legislature, administrative ministry or government department or statutory authority. The Commission may publish the assessment made by the empanelled institution on its website.

Under Section 49(1) of the Act, the Commission can opine on a policy only on the reference of the Government. Such opinion will be non-binding on the Government and it should be delivered within sixty days from the date of such reference. The suo moto identification and examination of the economic legislation/policies by the Commission other than on reference thus appears to be ultra vires. Further, a three tier assessment procedure involving institute/team, advocacy division and the Commission may result in unnecessary complexities and delays.

Even so, the CAELP Guidelines are a welcome step towards ensuring the removal of distortions creeping into the market because of legislations and policies. The Commission, by examining the economic legislation/policies, will offer policy-makers an assessment of the potential costs of restrictions on competition as well as help in raising awareness among policymakers and elevate competition as a consideration alongside other public policy goals.

[1] Advocacy and Competition Policy, International Competition Network Advocacy Report, 2002.  Pg 1. Available at: http://www.internationalcompetitionnetwork.org/uploads/library/doc358.pdf

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