Competition Commission of India tries to bring order to the Wild West Indian Industry

India has for long lacked an agency to control the monopolistic and predatory practices of Indian companies . The old MTRP Act had become quite toothless after the 1991 reforms and the Indian industry had turned into the wild west. Monopolies and oligopolies could operate quite freely and there was nobody to investigate price fixing and cartelization . Industries like telecom, cement and others saw many such abuses. However the situation is changing with the advent of a new authority Competition Commission of India.

Most of the developed countries like USA and European Union have highly developed and advanced competition regulators which impose hundreds of millions in fines against domestic and international companies who indulge in anti-market practices.The huge fines serve as a great deterrence where powerful corporates try to undermine the market forces through their sheer size. India’s new anti monopoly watchdog Competition Commission of India (CCI) has belatedly started operations.India has become large economy and it needs effective competition regulators against the giant conglomerates which manage to subvert the governing forces in the country.

This new agency has already made a mark imposing a stiff fine on the country’s largest real estate company DLF for using its market power to provide bad service to its customers . Note the real estate companies in India are notorious for various corrupt practices which have been written many times in this blog like creative accounting ,black money usage etc. Now the commission has started to examine the practices of powerful foreign MNCs like Apple and Google . The commission is examining whether Google is using its market share in search to stifle competition. The company is also looking at Apple selling its iconic iPhone through selected telecom operators only. While CCI was badly needed to ensure the rights of Indian consumers which are mostly a victimized lot, it should see that it does not waste its time on frivolous complaints.

From WSJ

The Competition Commission of India has begun an investigation of Apple Inc. for marketing the iPhone 4 in India through select mobile-phone operators, an approach that could allegedly harm other companies in the industry, a government official said late Wednesday. It was also revealed this week that the agency is investigating Google Inc. for alleged abusive behavior in online advertising in India. And the commission is targeting a wide range of industries, including cement and tire manufacturing, for alleged price fixing.

The Competition Commission has issued 10 orders totaling more than $250 million in penalties since it was established and is working through a slate of cases that could push that figure up substantially. The agency has targeted a number of companies for forming cartels, from explosives manufacturers, to film distributors, to pesticide makers, issuing fines large enough to wipe out a large chunk of several companies’ earnings.