22-05-2025
Competition: We must raise the CCI's tooth-to-tail ratio
India's new-age antitrust regulator turned 16 recently, bravely battling the symptoms and causes of its troublesome teens. The Competition Commission of India (CCI), the country's post-autarkic inheritor of a role once played by the Monopolies and Restrictive Trade Practices Commission, was born with a lag.
The CCI was created by the Competition Act of 2002, more than a decade after India opened its economy to global rivalry, but became fully operational as an antitrust watchdog only in 2009; it was bogged down by court cases against its founding.
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It found itself hobbled by a conflict between its mandate to enforce a modern competition law—one that seeks to address abuses of market dominance, other anti-competitive practices and hurdles erected against free and fair forces of rivalry—and illusions within India Inc of a free-market turn in economic policy spelling a free-for-all in terms of business conduct.
Government controls over it, especially through the selection of its chair, placed its independence in a grey zone. As an institution, it struggles with gaps in capacity that make it harder to foster a market system that's always just to all participants and never loaded against the consumer.
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Finance minister Nirmala Sitharaman's address on the CCI's 16th annual day offers some key markers for the regulator's journey into an uncertain future. While she outlined the importance of its basic role, the minister emphasized a need for it to strike a balance between its regulatory alertness and the cause of securing the economy's growth impulses.
A resilient, equitable and innovation-driven economic framework would become increasingly indispensable if the economy had to depend more on domestic growth levers in the face of adverse trade winds and steep energy-transition pathways.
The CCI's task has been complicated by a globalized digital economy full of monopolies, to handle which she said global cooperation was required. She flagged the risk of value erosion due to delayed clearances and reminded us that India's regulatory efficiency was under global watch.
Sitharaman's speech also alluded to her budget-speech mention of light-touch regulation that trusts economic agents to abide by rules as they deliver on productivity, job creation and other variables to drive up India's output. It is true that over-regulation gets in the way of enterprise. Yet, the CCI can hardly be faulted on that score.
As far as antitrust goes, it has long been clear that the regulator needs to be more effective. Most visibly, the country seems to have little relief from the impact on airfares of an oligopoly in our aviation market.
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The CCI's core operations need an upgrade. Perceptions of its weak tooth-to-tail ratio have persisted, which only makes it harder for it to keep corporate abuse of market power in check. There have been various reports of how the CCI has been unable to collect the monetary penalties it imposed as part of its job, primarily due to perverse incentives available in challenging CCI decisions.
In any case, the CCI faces numerous legal suits, which is not a surprise given how often courts have ruled that its actions trespassed on the turf of other regulators; the Competition Act's prerogative over other economic laws (or lack thereof) is clouded in ambiguity. Also, the CCI's bench-capacity inadequacy must be addressed right away. The economy must expand as fast as it can, no doubt, but it cannot afford to let the CCI trail market dynamics. Digital complexity alone demands antitrust urgency.
