Wednesday, November 28, 2007

CCI - another legless joke?

Ok. So the Competition Act is here.

The Act says any company with assets of Rs 10 billion ($253 M) or more and a turnover of Rs 30 billion ($759 M) or more has to seek CCI approval for any “combination” (merger, acquisition or amalgamation) within 30 days of signing the deal.

Any company of a smaller size that belongs to a group with assets of Rs 40 billion ($1 billion) or a turnover of Rs 120 billion ( $3 billion) will have to go through the same process if it decides on an M&A.

Given that there are about 341 companies exceeding that asset limit and 106 companies meeting the sales cut-off, imagine the kind of paperwork that it implies ! What will CCI make of it all? Going through the pile of papers in itself will take months, then it has to digest and debate it internally before giving its verdict. What kind of database it has to make an informed judgment on whether a particular transaction will result in market dominance or will smother competition? Rely on the data provided by the applicant? Has it got another choice?

To me, it sounds like a charade. If you are serious about promoting competition and destroying anti-competitive moves by the big players that seek to consolidate, first establish a reliable network of market intelligence and set up a database. I don’t mean people coming on deputation from Ministry of Law, Justice and Company Affairs or Ministry of Commerce or retired judges sticking their legs into the grave. They will infect it with the bribe culture – the only thing they did all their lives. Those are couch potatoes. Hire CEO material, real caliber, people with stuff. Pay them well. Sniff out monopolies even if they exist by any other name or in splinter, disparate groups. When you find one, bring them to book, break it up. That’s how you control monopolies.

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