The Hindu Editorial Analysis- 21st March 2025 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

The challenge of policing digital giants 

Why in News?

On November 18, 2024, the Competition Commission of India (CCI) issued a landmark order imposing a fine of ₹213.14 crore and forcing several behavioural remedies on Meta. This included a five year ban on sharing user data collected on WhatsApp with other Meta companies such as Facebook and Instagram, for advertising purposes. In turn, Meta approached the National Company Law Appellate Tribunal (NCLAT) in an appeal against CCI’s order. The NCLAT, on January 23, 2025, granted a stay on the five-year ban from sharing user data and the penalty, subject to Meta depositing 50% of the total penalty.

Introduction

• The Competition Commission of India (CCI) is a statutory body formed in 2003 under the Competition Act, 2002. Its primary role is to foster and maintain competition in Indian markets, prevent anti-competitive practices, and protect consumer interests.
• The CCI is crucial for regulating mergers and acquisitions, preventing the abuse of dominant positions, and ensuring a level playing field for all businesses.
• This topic is significant for the UPSC examination, particularly under General Studies Paper 2 and the Economy section.

What is the Competition Commission of India?

• The Competition Commission of India (CCI) is a legal body set up under the Competition Act 2002 to encourage fair competition in the Indian market.
• Its main job is to stop practices that could harm competition, like abuse of dominance, anti-competitive agreements, or mergers that could lead to monopolies.
• The CCI is an independent authority that enforces competition laws to create a competitive business environment and protect consumers and small businesses.
• It has the power to investigate and take action against anti-competitive practices, impose fines, and issue orders to ensure fairness in the market.

Formation of the Competition Commission of India

• The CCI was established by the Vajpayee government in 2003 under the Competition Act 2002.
• The Competition Amendment Act 2007 facilitated the CCI's establishment and the Competition Appellate Tribunal.
• The Tribunal, set up by the central government to hear appeals against CCI orders, was later replaced by the National Company Law Appellate Tribunal in 2017.

About the Competition Act 2002

• The Competition Act 2002 was enacted to promote and sustain competition in the Indian market.
• The objectives of the Competition Act 2002 include the following:
• It aims to prevent anti-competitive practices, promote and sustain competition, protect the interests of consumers, and ensure freedom of trade.
• The Act prohibits anti-competitive agreements and abuse of dominant position. It regulates combinations (mergers and acquisitions) that may have an adverse effect on competition.
• It is based on the principles of the modern competition law regimes prevalent in developed economies like the United States and the European Union.

Objectives of the Competition Commission of India

• Foster and sustain an environment where businesses can compete on a level playing field, enhancing overall market dynamics.
• Safeguard the interests and rights of consumers by ensuring they have access to fair prices and high-quality products/services, free from exploitative practices.
• Identify and curb anti-competitive agreements such as cartels and monitor to prevent activities that abuse market dominance.
• Scrutinize and regulate mergers and acquisitions to ensure they do not adversely affect market competition, preventing the creation of monopolies.
• Eliminate barriers for new businesses to enter the market, promoting diversity and innovation within the industry.
• Encourage the efficient use of resources within markets to drive productivity and innovation, ultimately benefiting the economy.

Composition of CCI

• The Competition Commission of India (CCI) is the statutory body established under the Competition Act 2002 to enforce the Act.
• The CCI is composed of a Chairperson and six other Members appointed by the Central Government.
• The Chairperson and Members of the CCI are selected from persons of ability, integrity, and standing who have special knowledge or experience in matters related to: competition, economics, business, commerce, law, finance, accounting, or management.
• The Chairperson and Members hold office for a term of five years and are not eligible for re-appointment.

Powers and Functions of Competition Commission of India

• The CCI has the power to inquire into and investigate any anti-competitive agreements, abuse of dominant position, and mergers and acquisitions.
• It can impose penalties on enterprises for engaging in anti-competitive practices.
• It can also order the modification or dissolution of anti-competitive agreements or mergers.
• The CCI has the power to summon and examine any person, require the production of documents, and conduct searches and seizures.
• It can also make recommendations to the Central Government on issues related to competition policy and law.
• The primary function of the CCI is to eliminate practices having an adverse effect on competition, promote and sustain competition, protect the interests of consumers, and ensure freedom of trade.
• The CCI investigates complaints of anti-competitive practices, such as price-fixing, bid-rigging, and abuse of dominant position.
• It also reviews and approves mergers and acquisitions above a certain threshold to ensure they do not harm competition.
• The CCI can also conduct suo moto inquiries and investigations into any anti-competitive practices.
• It can issue cease and desist orders, impose penalties, and make recommendations to the government on competition policy and law.

Achievements of the Competition Commission of India (CCI)

• Cartel Investigation and Penalties: The CCI has conducted significant investigations into various cartels in sectors like cement, pharmaceuticals, and automotive parts, imposing penalties to promote fair competition.
• Merger and Acquisition Approvals: The CCI has cleared over 650 merger and acquisition cases, ensuring they do not stifle competition and intervening in high-profile cases to prevent monopolistic dominance.
• Consumer Protection: The CCI has resolved numerous consumer complaints, protecting consumers against unfair trade practices and ensuring markets remain consumer-friendly.
• Advocacy Programs: The CCI has conducted over 300 advocacy programs to promote a culture of competition among businesses, policymakers, and the general public.
• International Collaboration: The CCI has engaged with foreign antitrust bodies and participated in international conferences to strengthen enforcement mechanisms and align with global best practices.
• Sectoral Studies: The CCI has conducted detailed studies on sectors like e-commerce, telecommunications, and pharmaceuticals to understand industry dynamics and identify anti-competitive practices.
• IT Initiatives: The CCI has implemented IT initiatives like online case filing to improve transparency and efficiency within the organization.
• Financial Penalties: The CCI has imposed substantial financial penalties on major corporations for anti-competitive practices, fostering a deterrent effect in the market.

Challenges Faced by the Competition Commission of India

• Lack of Awareness: Businesses and consumers may not fully understand competition laws, leading to fewer complaints about anti-competitive practices.
• Evidence Gathering: Proving anti-competitive behavior can be difficult, especially when collusion or dominance abuse is hidden.
• Legal Delays: The legal process can be slow, causing delays in resolving cases and enforcing actions.
• Resource Limitations: The CCI may face resource constraints, affecting its ability to manage a large number of cases effectively.
• Global Competition Issues: With markets becoming global, the CCI may struggle with competition issues that cross international borders.
• Balancing Competition and Development: It can be challenging to balance promoting competition with encouraging economic development, especially in sectors with competing interests.
• Information Access: Obtaining necessary information from businesses can be difficult, hindering investigation processes.
• E-commerce Challenges: The rise of e-commerce and digital markets brings new challenges in regulating competition, data privacy, and platform dominance.
• Penalty Sufficiency: Current penalty provisions may not be strong enough to deter some companies from engaging in anti-competitive practices.
• Judicial Interventions: Interventions by the judiciary challenging CCI decisions can undermine the strength of enforcement.

Way Forward

• Strengthening Enforcement: The CCI should enhance its enforcement capabilities and take prompt actions against anti-competitive practices.
• Advocacy and Awareness: Focus on building awareness and promoting a competition-friendly environment among businesses and consumers.
• Cross-sector Collaboration: Work closely with other regulatory agencies to address competition issues that span multiple sectors.
• Resource Allocation: The government should provide adequate resources and support to the CCI to enable effective case handling and enforcement.
• Continuous Review of Competition Act: Regularly review and update the Competition Act to ensure its relevance and effectiveness in tackling emerging competition challenges.