Adam Smith’s free-market economy pivots around the quintessential prospect of minimal government intervention so that markets can self-regulate and operate rationally. Unfortunately, in most of the cases, such an unregulated environment allows the rise of monopolies through organic or inorganic growth.
Why antitrust laws in general are needed
Though the monopoly situation of Microsoft was buried long ago in 2001, the embers have again been fanned with growing consensus that big tech now wield overwhelming power, so much so that they cause tangible harm to competitors and consumers alike. Given Amazon’s alleged report of mistreatment of its employees, with plummeting social welfare, such monopolies need curtailment.
Now, if the problem is considered in Indian context, such firms do operate in India too, to such a large extent that they are increasing taking over the ecommerce and welfare sector in India. Given the precarious presence of such tech giants in the country, it is time that India starts considering a revamp strategy for its anti-trust laws.
But are India’s Antitrust laws ready for such significant change? Perhaps not. The western countries were the first to introduce the mammoth Competition laws to mitigate unfair advantages that money mongers enjoyed and to divest monopolies to protect the competitive integrity of relevant markets. But the story of the Competition Commission of India is quite different.
It is to be noted that the Indian competition law is not bothered about dominance by any single money monger or player in the market. The competition commission of India only objects to the use of such prominent power by an entity to unfairly control the market and manipulate prices for their products and services.
Moreover, Section 28 of the Competition Act, 2002 which effectively empowers the CCI to divide a dominant firm to ensure that no firm can abuse its dominant position is ill planned and doesn’t lay out a coherent, robust foundation for the act. This is due to the fact that the said section does not effectively require the CCI to make an actual finding of abuse to direct a firm’s division.
It is to be noted that just mere apprehension of abuse by a dominant firm is sufficient to trigger the operation of this provision. Thus, it is quite surprising that robust foundation on which CCI laws are based are ill-defined and thus ill omened. The Act itself does not effectively provide any guidance for determining justifiable triggers.
Mere apprehension, in many cases can led to unjustifiable and ill-omened divestment because many firms go for mergers and acquisition to expand capital and to earn large scale benefits and economies of scale, which as a matter of fact is good for economy. But a mere apprehension of unjust takeover can have debilitating consequences. Thus, such apprehensions, can in many cases also lead to slower growth, restrictive business environment and threat of being mishandled.
Given India’s NPA crisis, acquisition and merger seems to be perfect way out for various debilitating firms, thus mere apprehension as a base of divestment and antitrust procedures does not speak well of the antitrust laws in India. But on the other hand, this lack of guidance severely expands the scope of this provision and strengthens the CCI’s power.
Some glaring examples of the same are Reliance Jio and ‘Salt to Steel’, a nice catch line associated with Tatas for long. There is hardly any activity that one can cite, where these group entities are not present in India. In fact, Reliance has expanded so much across India that even the agriculture sector has not been spared of its charms.
Reliance’s footprint in the country’s agricultural sector might be new but Mr. Anil Ambani is leaving no stone unturned to sweep the market with his all-pervading presence. As a matter of fact, Reliance has launched all-encompassing ‘farm-to-fork business’, which offers to deliver on many grounds like providing prominent help with delivery cycle from harvest to the store by sourcing nearly half of all vegetables and fruits required for its retail chain.
Thus, all in all, in view of the fast-paced development, the recent surge of investigations by the CCI against big tech like Google and Amazon and growing power of Ambanis, Adanis and Tatas in the country can significantly and effectively act as a catalyst for the CCI to test the waters within the realm of its powers. Thus, what will happen in future will be interesting to witness.