Competition policy to learn from Australia

Proposed policy will include salient features of Australian policy

sweta-ranjan

Sweta Ranjan | August 1, 2011



The proposed National Competition Policy (NCP) will include several salient features from Australia's competition policy, say sources involved in its drafting.

A committee working under former Competition Commission of India chairman Dhanendra Kumar is much impressed with the Australian policy, they say.

“The committee is taking almost 99 percent features from the Australian policy. Even the experience of the Australian Productivity Council suggests that it has delivered substantial benefits to the Australian community which, overall, have greatly outweighed the costs,” a source says.

The committee is also impressed with the Hilmer report on the Australian National Competition Policy which says: “A national competition policy aims to promote and maintain competitive forces to increase efficiency and community welfare, while recognising other social goals.”

Some of the features that the drafting committee is expected to learn from Australia is to bring all policies including policies of states within the purview of the competition policy. The stated objective of the Australian National Competition Policy, as it applies to the public sector, is to achieve the most efficient provision of publicly provided goods and services through reforms designed to minimise restrictions on competition and promote competitive neutrality.

Learning from Australia, the committee has also found it necessary to set up an institutional arrangement for monitoring the progress of the policy implementation. The committee is also likely to suggest setting up an autonomous Competition Policy Oversight Council to monitor the progress in the implementation of the National Competition Policy such as reviews of laws and policies, and the competition impact assessment of new laws and policies.

The drafting committee believes that there will be no overlapping of work between CCI and National Competition Policy Council as in Australia, which has two bodies: Australian Competition & Consumer Commission, the competition authority and the National Competition Policy Council, the policy advocate. There is no conflict between them.

CCI will remain as an enforcement body with powers to curb anticompetitive practices in the market place, while the National Competition Policy Council (NCPC) will be a high-level body to persuade adoption of healthy pro-competitive policies. While CCI has the power to advocate on policy, only when asked for by a government agency, but its opinion is not binding, the NCPC will have proactive powers to advocate for change on policies which result in anticompetitive outcomes.

Incidentally, the Planning Commission had in 2007 commissioned a working group to prepare a report on the competition policy. The group, headed by Vinod Dhall, a former member of the CCI, had made its recommendations for a comprehensive policy framework based on international practices.

One of the terms of reference for the group was to recommend ways of enhancing the role of competition and competitive markets in the government’s policymaking at the central and state levels and to advise on the most effective and workable institutional mechanism for a synergised relationship between sectoral regulators and CCI.

The need for NCP was felt when government policies started giving rise to anticompetitive outcomes. The aim of the competition policy is to create a framework of policies and regulations that will conform to other policies in order to facilitate competitive outcomes in the market.

Dhanendra Kumar says, “The competition policy is intended to promote efficiency and to maximise consumer/social welfare. It also promotes creation of a business environment, which improves static and dynamic efficiencies, leads to efficient resource allocation and consumer welfare, and in which abuse of market power is prevented/curbed. It also promotes good governance by restricting rent seeking practices of economic actors.”

The committee is also mulling over to start an incentive scheme which could be instituted by the government under which financial grants may be given to states linked to the progress in aligning their policies and laws with the principles of NCP. The grants could be released based on the progress made by the various states on the recommendations received from the Competition Policy Council.

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