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SPOT LIGHT organise themselves by the use of their natural abilities as was witnessed in the former USSR in the wake of the collapse of Communism. The promo on of competition in the long run should lead to a much more honest, open and transparent society. In a country like India where there is s ll abject poverty, the most urgent task is the growth of output and income for the poor, their inclusion in na onal life by gainful employment. For this purpose, there is an urgent need to employ natural energies of people in their own self interest (telcos and handset manufacturers have connected millions of people and made India the fastest growing mobile market in the world) rather than for an over burdened State to make large plans without any realis c hope of a aining them. Compe on policy at the State level should make a direct difference to the growth rates of GDP of the States. The Need for State level Legisla on To be sure, there is a real ques on as to the need for addi onal legisla on and machinery at the State level when a central body, the CCI, is already present. As we have repeatedly stated, the principal reason for State level commissions is to supplement the enforcement efforts of the CCI. The task at hand is simply too large for a single body to handle, that too at the central level. There are other reasons - a monopoly supplier of government services might behave in ways that resemble that of a monopolist supplier of a service in a private market, essen ally too li le output at too high a price with a lot of deadweight loss to society! Fostering inter agency competition might yield superior outputs in terms of enforcement. Moreover, such competition, between compe on agencies, is certainly going to be useful in the monitoring/supervision/ oversight mechanism of the commissions by Parliament. The diversification of enforcement agencies is desirable under conditions of limited information and uncertainty, as is the case prevalent in India. Mul ple agencies also provide a

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safety net in the event that a single agency fails to discharge its responsibilities through inep tude, a lack of vigour or corrup on. The more vital a government func on is, as is the case with compe on policy, the stronger the case for its discharge by diverse sources. The above reasons also point to the need for a careful considera on of the form for such acts and agencies so that they yield the above benefits. I n t a n g i b l e G a i n s o f A n t i - Tr u s t Legisla on The enactment of antitrust legislation at the State level should be seen as part of third genera on reforms of economic policy whose focus is to achieve higher growth rates exclusively through a wider diffusion of the gains from growth, greater geographical spread of the benefits of liberalisa on to regional and local levels, a greater thrust on the spread of the benefits of a free market to the masses and the encouragement of small business, all of which can be achieved in part by a well enforced compe on policy. Among these reforms are the encouragement of entrepreneurship through the removal of barriers to entry and financial provisions for SMEs, and greater inclusion through the spread of educa on and the crea on of physical infrastructure. This is not, therefore, to be seen just as a ma er of increasing budgets for social sectors, but posi vely using State Compe on Acts as an instrument for the wider diffusion of the market economy and concomitant gains. The idea is that a greater spread of compe on policy and culture is necessary to bring about a wider diffusion of the gains from economic growth which, in turn, because of higher propensi es to spend among the middle and lower classes, will lead to higher growth rates by boos ng aggregate demand. This is achieved by pu ng greater downward pressure on prices through the enforcement of a strict compe on regime, which would help in curtailing inflation. For this reason, a certain amount of advocacy of the

benefits of compe on policy is required. It should be seen as a concrete but small first step in implementing the much touted inclusiveness agenda. An Illustration: Haryana Competition Act To get a concrete idea of the working of a State Compe on Act, let us take a par cular State, say Haryana, and imagine for a moment that the Haryana Compe on Act 2012 has been passed with sec ons three and four almost iden cal with the provisions of the Compe on Act 2002. Sec ons covering issues of geographical origin and procedures, penal es, private enforcement and others have been resolved and set up without any merger control. Mergers may be le to central jurisdiction and amendments can be taken up at a later date. Further, imagine that a Chairman and four members of the Compe on Commission of Haryana have been appointed, the office is opera onal and the required coordination with consumer and other courts has been established. We will consider the following sectors – healthcare, autos and auto parts, IT, transport services, real estate services, govt. contrac ng and food distribu on. In healthcare, there are e ups in hospitals between doctors and diagnos cians as also doctors and post prescrip on medical care. A doctor orders some diagnosis. You can get this in the hospital or outside. The doctor may not accept reports from anywhere. The lack of quality control and proper regula on impels doctors to get diagnostics from a known source and are o en ver cally integrated. However, the doctor may be receiving a kickback for sending patients or for prescribing par cular drugs, which is in viola on of medical ethics and should receive the a en on of the Medical Council of India (MCI). Alternately, it may also be an an compe ve prac ce called e-in sales, in viola on of 3(4)(a). This needs to be determined under a rule of reason.

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InTouch MCCI NOV-DEC 2012  

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