Fairplay probe may cover whole family

NEW DELHI: The competition regulator will soon get powers to go beyond the conduct of individual companies and examine the activities of all the subsidiaries in a group while investigating abuse of dominance and anti-competitive practices. This would bring under regulatory scrutiny behaviour of all companies that are related to the entities under investigation.

The ministry of corporate affairs is amending the competition law to enable the regulaor to examine the activities of all companies in a group that collectively abuse their dominant position. The Competition Commission of India (CCI) will also have the power to look into cases of joint dominance by two or more enterprises.

The yet-to-be-notified provisions of the Act allow the commission to look into activities of a group only in cases of mergers and acquisitions. The current move will have major implications for sectors such as cement, where top players have cross-holding.

The law will be amended to make the regulator’s orders applicable not only to the enterprise indulging in anti-competitive practice but also to other members of the group that are party to it.

Anti-competitive agreements include deals regarding production and supply among enterprises selling similar goods or services that affect competition while abuse of dominance includes unfair or discriminatory conditions on sale of goods directly or indirectly.

The concept of inter-connected undertakings exists in the MRTP Act but is not applied as it was used to regulate concentration of economic power and expansion of corporates — a provision deleted from that law when the country embarked on the reforms process.

The law was removed as it was a tool to regulate growth rather than monopolistic practice, an MRTPC official said. This is now being reintroduced in the competition law not only to regulate mergers and acquisitions but also the anti-competitive behaviour of all entities in a group.

The Bill to amend the competition law will be finalised soon by a ministerial panel. The ministry of corporate affairs is consulting the law ministry on the legality of the proposed modifications before the panel gives its nod.