cartels: CCI must bust cartels, bane of competition

The Competition Commission of India’s (CCI) approach towards antitrust violations by micro, small and medium enterprises (MSMEs) – letting them off with warnings – is being seen in many quarters as being ‘accommodative’. It goes against the fundamental principles of competition enshrined in law. Now that the economy is in recovery mode, and things are getting better for MSMEs, this approach needs a review. Why should the kid-glove treatment continue for firms that collude to rig prices instead of competing for market share? Cartels are the most pernicious form of anti-competitive activity, and they hurt consumers. An accommodative stance will dilute the deterrent effect of the competition law.

Bid-rigging in government tenders – by which competing firms agree to restrict competition by bidding at the same price, or in a way that predetermined companies win in rotation – if proven, warrants penalties. But there are cases in the recent past where the regulator issued cease and desist orders – a warning against any repeat of such practices – against MSMEs found guilty of cartelisation. CCI must not become like its toothless predecessor, the Monopolies and Restrictive Trade Practices Commission (MRTPC), whose cease and desist orders were ignored by cartels.

The regulator has reportedly stepped up its ante against large firms involved in antitrust violations by imposing steep fines. The good news is that the leniency framework in the Competition Act – which allows companies that provide sufficient information about a cartel in which they have participated to receive partial immunity for penalty – is gaining traction. The regulator must also ensure better working of competitive markets, without going over to over-regulation.