Competition Commission of India chairman Dhanendra Kumar explains the implications of the Competition Act to Forbes India
Name: Dhanendra Kumar
Age: 62 years
Interests: Music, Indian Art and Culture
Qualification: An Indian Administrative Service (IAS) officer (1968 batch). Physics (Electronics) graduate from University of Allahabad.
Work Experience: Resident director of India Investment Centre, London, from 1983 to 1986; Kumar joined the World Bank as executive director in charge of India, Bangladesh, Bhutan and Sri Lanka. He was chairman and managing director, Rural Electrification Corporation, under the Ministry of Power from May 2002 to October 2002. Additional secretary, Department of Telecommunication and secretary, Telecom Commission from September 1998 to May 2002.
When does competition become unhealthy?
We see competition as the process of rivalry among businesses to win customers. It is expected that the process of competition should bring in the best — what is best in terms of prices and quality — where the consumer should have either choice. We do not define competition in terms of market share. Nor is there a threshold except in the case of mergers and acquisitions. For instance, in section 5 of the Competition Act which deals with M&As, we have defined thresholds of Rs. 1,000 crores of assets or Rs. 3,000 crores turnover.
Markets today are global; therefore enterprises need to be of a certain minimum size to be able to compete in the global market place. Do you fragment domestic competition such that a company remains a pygmy or do you encourage it to push for greater market share in its global ambition?
It is not our concern to check monopolies – that was the concept under the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP). The Competition Act is a promotional, not a restrictive act. It punishes abuse of dominant position not dominance per se. A firm is free to grow as large as it pleases, or achieve as big a market share as it can. Firms can achieve dominant position legitimately through innovation or greater entrepreneurial effort, and many practices that on the surface look anti competitive can actually also serve very legitimate pro competitive functions.
(This story appears in the 06 November, 2009 issue of Forbes India. To visit our Archives, click here.)