Para A - Preamble - CCI (Competition Assessment Of Legislations And Bills) Guidelines, 2015

The Competition Commission of India (Competition Assessment of Legislations and Bills) Guidelines, 2015 (Framed under section 49 (1) and (3) of the Competition Act, 2002) The Competition Commission of India (the Commission) is established under the Competition Act, 2002 (the Act) with the objectives to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets, in India, and for matters connected therewith or incidental thereto. It is mandated, inter alia, to (a) give opinion on a reference from Central Government or a State Government on possible effect on competition of a proposed policy, and (b) take suitable measures for the promotion of competition advocacy, creating awareness and imparting training about competition issues. It pursues its objectives mainly through two sets of instruments, namely, advocacy and sanctions targeted at enterprises. While these two measures are complementary, advocacy ex ante ensures freedom of trade by enterprises and achieves fair competition for greater good . A. Preamble India adopted a new economic order in the early 1990s. This empowered the invisible hands of the market, namely, demand for and supply of goods and services to determine two major outcomes, namely, quantities to be produced / supplied in the economy and prices at which these are to be exchanged. The invisible hands may occasionally malfunction in the presence of information asymmetry, externalities or market power. State usually intervenes to address these concerns to prevent market failure. The State intervenes in the market and the economy by (a) enacting legislations and subordinate legislations that define the contour of the freedom of economic agents and their rights and obligations, and (b) formulating economic policies relating to trade, commerce, industry, business, investment, disinvestment, fisc, taxation, IPR, procurement, etc. These interventions usually strengthen the invisible hands of the market and promote competitive neutrality as well as competition. However, despite best intentions and exercise of the best of the skills, care and due diligence, these may inadvertently carry potential to restrict the ability of economic agents to effectively compete at the market place. The full benefits of competition can be realized if the market structure resembles perfect competition. A competitive market generally has four salient features, namely, (a) there is large participation on both sides - supply and demand; (b) there is free entry and exit of players; (c) there is perfect symmetry of information; and (d) every player is a price taker. It is necessary to ensure that no state intervention unnecessarily humbles any of these four features significantly. Many jurisdictions have programmes to evaluate the existing/upcoming economic legislations from the perspective of competition. This aims to identify the elements that may have potential to restrict the ability of economic agents to effectively compete at the market place or limit the choices of consumers. It is reported that Australian Government in mid-1990s launched competition impact assessment of its economic policies and found about 1800 instances of competition distortions. Removal of these distortions eventually allowed the economy to grow faster and benefitted the consumers substantially. In sync with its mandate and the role of competition in economic development, the Commission wishes to assess select economic legislations / bills from the perspective of competition and share the assessment with the associated stakeholders.