Independent regulation and competition law

That market forces and competition can improve efficiencies in the delivery of infrastructure services without affecting economies of scale, and till such competition arrives, monopoly service providers should be regulated, have now been recognised. The regulator?s role in promoting such competition for ensuring efficiencies and protecting consumer interests has also been globally accepted. In India too, regulatory legislation calls upon electricity regulators to promote competition in the power sector, while the telecom regulator is required to recommend measures for facilitating competition in the telecom sector. These enactments are, however, silent on the regulators role in dealing with anti-competitive behaviour of firms in the concerned sectors. In contrast, the new electricity Bill, 2000, while specifying the regulators? role in promoting competition, lays down their role in preventing market domination and anti-competitive behaviour of a licensee. All these legislation are, however, silent on the regulators? relationship with the umbrella anti-trust agency such as the MRTP Commission, now likely to be replaced by the Competition Commission of India as proposed in the Raghavan Committee Report on Competition Policy and Law. Recognising that competition subserves consumer interests as well as national interests, the report has proposed a framework for a competition law replacing the existing MRTP Act, 1969. The report has further recommended that the CCI "will havepowers to review the orders of other regulatory authorities on the touchstone of competition"and "all complaints will be made only to CCI". What this implies is that the regulators would have no role in promoting competition in the sectors under their jurisdiction, that they would be debarred from entertaining complaints against licensees who are allegedly practising anti-competitive behaviour, and finally, their decisions would be subject to scrutiny by the CCI. The relationship between regulators and umbrella anti-trust agencies has been deliberated in detail in many countries. The Competition Law 1998 of UK provides for concurrent jurisdictions between the regulators in sectors such as electricity, telecom, gas, and water, and the Director General of Fair Trading created under the law. The general principle for deciding on jurisdiction is that the authority dealing with a case or complaint should be better or best placed to handle them. Appeals against the regulatory decisions lie to the Competition Commission of UK. A complementary approach towards promoting competition by the regulators as well as the Competition Commission should be adopted in India. First, the sectoral legislation should continue to give powers to regulators to deal with anti-competitive behaviour or practices in the concerned sector. Second, a complaint on the subject should be allowed to be made either to the sector regulators or to the CCI. Third, regulators dealing with sectoral activities, should enjoy concurrent powers with the Competition Commission, and the authority who is better placed to deal with a complaint should proceed to entertain it. And there should be a cooperative mechanism between the sector regulators and competition agency to ensure consistency in decision making. The Raghavan committee?s report has just been presented, and the new competition law is yet to be enacted. This is an appropriate time for government to recognise that the committee?s recommendation that the CCI should have the powers to review regulatory decisions on competition issues will only lead to avoidable conflict between sector regulators and the CCI, that there are issues relating to competition which the regulators are better placed to deal with, and that it might be best to provide for concurrent jurisdiction and a mechanism for ensuring consistency. A stitch in time would save nine.