With the Competition Act, 2002, being amended recently by the Amendment Act of 2007, the Indian industry has expressed serious concerns over its provisions, which it believes, might have serious repercussions on India’s economic growth.

In a letter addressed to minister for company affairs Prem Chand Gupta, the Federation of Indian Chambers of Commerce and Industry (FICCI) has highlighted certain issues in the act that are likely to hamper India’s economic growth led by mergers and acquisitions (M&As).

“India has reached a stage of development where scaling up to meet Chinese competition has become necessary. In order to achieve economies of scale, most Indian companies have to rely on M&As. However, the Competition Act has come up at a time when this process should be stimulated and not deterred. The Act will only hamper M&A activities but also FDI in India,” said Amit Mitra, secretary general of FICCI.

One of the main demands of the industry chamber, as articulated in the letter, is that the implementation of certain provisions of the Act be deferred until the Competition Commission of India (CCI) develops the requisite infrastructure and capabilities to enforce them.

Currently, the Act does not specify any quantitative thresholds for determining what would qualify as dominance of an undertaking or group, rather it specifies only qualitative restrictions. This, according to FICCI, is likely to lead to subjectivity and ambiguity, which might perpetuate “inspector raj.” Further, even thresholds cannot be generalised and should be industry specific since one standard may not hold good for all industries.

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