With the Reserve Bank of India (RBI), Securities And Exchange Board Of India (SEBI), Insurance Regulatory and Development Agency (IRDA), Pension Fund Regulatory & Development Authority (PFRDA), Telecom Regulatory Authority of India (TRAI) and Forward Markets Commission (FMC), India already has a plethora of regulators trying to set things right in the economic flux. It seems there is one more on its way.
The laws governing Indian competition are likely to undergo a major overhaul. The ministry of corporate affairs has proposed amendments to the Competition Act. The ministry has reportedly sought to bring all sectors including telecom and banking under the ambit of the Competition Commission of India (CCI). However this proposal is facing stiff opposition from the Department of Telecommunication (DoT) and Department of Finance (DFS). So is having a single competition watchdog for all sectors a good idea?
Well, there are arguments for both sides. The DoT and DFS argue that they have their own regulator, the RBI and TRAI, respectively, to deal with issues such as cartelization and unfair trade practices. Even more questionable is the move to extend the CCI's ambit to cover mergers and acquisitions in banks. Here the RBI is correct in arguing that bank mergers have to be evaluated not just from the point of view of competition, but from whether they add to the riskiness and fragility of the banking system, or do they make it more stable?.
The cabinet note however, contests these claim and has recommended introducing amendments so that coordination between the CCI and sector regulators becomes mandatory through suitable provisions added to the Act. And in case of conflicts, a cabinet committee on competition under a proposed National Competition Policy could be set up to be the forum of last resort. It will also be empowered to give directions in case of any conflict between the CCI and a sector regulator on competition-related issues.
The CCI's role is to oversee competition, check abuse of monopoly power and curtail unfair trade practices. The job cannot be left to sectoral regulators. This is not to say that the CCI should become a super-regulator. Instead, it should help sectoral regulators, be it the RBI or the telecom regulator to arrive at informed decisions in cases where there is a violation of fair play. However, at a time when the economy is already suffering from delayed decision making in reform matters, we are not sure if having more regulators on the scene will aggravate or solve the problem.