That there is already a controversy surrounding the Competition Commission, as reported by FE yesterday, isn't necessarily a bad thing—at least, after many years in the making, the Competition Commission is at last being noticed. A key feature of advanced capitalist economies is an independent and competent competition regulatory body. And India can be no different. Unsurprisingly, though, the immediate controversy surrounds turf. Apparently, sectoral regulators like RBI (for banks) and Trai (for telecom) are resisting the Competition Commission of India's (CCI's) jurisdiction in their spheres of influence. So, RBI is arguing that the Competition Commission has no right to comment on whether public sector banks have an unfair advantage over private sector banks. Trai in a similar argument says that the CCI cannot recommend how many operators per circle the regulator should grant licences to. Both sides have a point. The CCI cannot and should not pronounce on what are essentially policy decisions for a sector as a whole. That should be left to the government or to the sectoral regulator. However, that is not the same as arguing that the CCI should not have any jurisdiction at all in consolidation/M&A activity in sectors where there are independent regulators in any case.
Following global best practices, CCI should consider individual cases (of consolidation, merger or acquisition, or even collusion) from every industry and judge them in the context of maintaining a competitive market. Competition is a complex issue and it isn't always the case that having more players in a particular market is a guarantee for fair competition. The airline industry, in different parts of the world, has often been guilty of cartelisation despite numbers. On the other hand, some heavily concentrated industries can be brutally competitive—look at the fierce competition between the duopoly of Coca-Cola and Pepsi, or the near duopoly of Boeing and Airbus. So, if Coca-Cola acquires a smaller soft drink company other than Pepsi, it need not be an anti-competitive move. Even when Boeing bought out McDonnell Douglas, a competitor, it was allowed to do so as competition was ensured by Airbus. In fact, the aircraft manufacturing industry needed consolidation for economies of scale. Many other industries need that too and consolidation per se isn't necessarily against competition. The CCI would, therefore, have its hands full just examining various individual cases thoroughly. It doesn't need to get entangled in broader policy issues. Actually, the controversy over turf is needless because just like everywhere else, competition authorities and sectoral regulators co-exist peacefully and effectively. It's simply a matter of each sticking to its own area of expertise.
