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India antitrust agency squeezed by staff vacancies and workload

A void at the top rung of India’s competition agency underscores a chronic resource crunch and is undermining its capacity to regulate major companies in the world’s fifth-largest economy.

The Competition Commission of India, which has imposed million dollar penalties on Alphabet Inc.’s Google to Inc., is functioning with just two members — half the sanctioned strength and one short of quorum. It’s also still missing a chairperson, four months after the previous chairperson retired and seven months since the search for his replacement began.

For months, the vacancies stalled approval of mergers and acquisitions until reported reliance on a necessity-led legal concept allowed the process to restart in early February. Enforcement matters that require adjudication remain in limbo.

It’s an “unprecedented crisis and a first-time occurrence,” said Avaantika Kakkar, head of competition law practice at Mumbai-based law firm Cyril Amarchand Mangaldas.

The CCI has completed more than a thousand combination cases, indicating a growing workload. Among the youngest antitrust regulators in the world, CCI has acted against cement to beer cartels, penalized bid-rigging and gun jumping, and recently fined Google twice.

Even before it lost quorum, the commission suffered from a staff shortage, with at least 30% of positions unfilled through the last decade, according to data collated from annual reports.

The CCI been facing a resource crunch since inception and current vacancies have virtually paralyzed competition regulation in India, said Pradeep Mehta, secretary general at advocacy group CUTS Institute for Regulation & Competition.

CCI’s resource problem has many dimensions.

In 2018, faced with rising vacancies at the top, the government “rightsized” the commission from seven to four members in the interest of “minimum government — maximum governance,” it said. The change may have streamlined decision-making but robbed orders of diversity in opinion, Kakkar said. Managing quorum became tougher too.

Most members are retired bureaucrats, which results in leaders “who are not familiar with regulation but very comfortable with control,” Mehta said.

Over the years, deputation from other government departments has decreased, but even now comprises the full staff in the Director General’s office charged with investigating anticompetitive practices.

There have been some exceptionally talented individuals, but their deputation ends by the time they settle in, said Karan Chandhiok, head of competition and dispute resolution at Delhi-based Chandhiok & Mahajan Advocates & Solicitors. “Some thought could be given to achieve permanency of that office,” he said.

So far, this has not manifested in significant delays or pendency, a chronic problem across India’s judicial system. Last year it took CCI 17 working days on average to clear a combination case, and only 20 antitrust cases continued into the next fiscal year. Penalties imposed were over 13 billion rupees ($158 million). But the quality of outcomes is suffering, said Rahul Singh, associate professor of law at the National Law School of India University.

“One way to judge a regulator’s effectiveness is to see the manner in which its opinions have been treated by the appeal tribunal and the Supreme Court of India. Both forums take a dim view of the CCI’s so-called expertise,” Singh said.

Yet CCI’s work is set to grow: the agency plans to set up a digital market unit, chairperson Ashok Kumar Gupta said days before his term ended in October.

As the government searches for his replacement, it has also advertised to fill the posts of three members, with the current two up for retirement over the next 16 months. That puts all four top positions in play, heightening concerns about case logjams and institutional memory gaps. This weakening of the CCI doesn’t inspire confidence in stakeholders, Singh said. Bloomberg

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