Look who’s watching you…

06 Jan 11 Look who’s watching you…

Watching

The Competition Commission of India can now choose to scrutinize all external communication of individual employees, particularly in companies that are dominant in their markets. What does this mean for the CI analyst?

The Competition Act 2002 in India (CA02) is significantly different from its earlier avataar, the MRTP in many ways. It has far sharper teeth than MRTP ever did. It also prohibits some of the anti-competitve practices of corporate India that were considered acceptable, as they were widely used for many years.

Though CA02 was enacted in 2003, it really came into effect only in 2009. Since then, the Competition Commission of India (CCI) has shown that it is serious about its business by the taking on several well publicised cases. It probed the possible cartelisation of airlines, took on the state film associations who holding up film releases to impose their demands on the distributors, investigated prepayment charges by housing finance companies, probed unfair conditions on home buyers by DLF and took on DTH service providers, to name just a few.

For competitive intelligence practitioners and indeed every one working in the corporate sector in India, the key point to note, is that unlike the MRTP, the CA02 can hold every employee who is in charge responsible and individually liable, irrespective of their seniority – from the director to manager to secretary.

This is a good enough reason for all employees and particularly those dealing with the external world, to be totally aware what CA02 means for them.

There are three key parts of CA02:

  • It prohibits agreements in respect of production, supply, distribution, storage, acquisition or control of goods or services, which is likely to have an adverse effect on competition
  • It prohibits abuse of dominant position
  • It regulates combinations (M&A activity)

So if you are in the competitive intelligence function in an organisation, here are some things you should be wary of doing:

  • Talking to your competitors or trade associations about commercially sensitive information such as pricing, bidding, market shares, production, etc. Essentially avoid any activity that may be construed as collaborating with the competition
  • Sharing with competition, marketing information such as pricing policies, current and future discounts & promotions, terms and conditions of sale, etc.
  • Talking to trade (distributors, dealers, etc) about
    • Final selling (resale) prices of your products
    • Loyalty enhancing discounts and rebates (volume based discounts are OK)

Many companies in India in the B2C industries are already implementing competition compliance programs internally.  Some of them need their employees to sign undertakings to adhere to the law and others have even gone to the extent of blocking off access to certain websites at their offices.

Are your CI practices CA02 compliant? What steps is your company taking towards this? Do share your views and experiences.

Varsha Chitale
Varsha Chitale

Varsha led the competitive intelligence practice at ValueNotes. As part of her drive to educate India Inc. on the merits of competitive intelligence, she often conducted webinars and seminars on CI for senior executives of Indian companies.

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