State Interference To Protect Vested Interests Hampers Regulator’s Role: CCI

Urging the government to give greater freedom to regulatory bodies for efficient regulation of the industries, the Competition Commission of India (CCI) has said that continued interference by the state to protect vested interests of individuals and corporate has compromised the efficiency of the regulator.

“Continued interference by the state compromises the efficiency enhancement role of the regulator. For an independent regulator to deliver, state actors have to forbear. Intervention to promote public policy or redistribution objectives is to some extent ' understandable'. However, interference to protect vested interests is undesirable,” revealed Ashok Chawla, Chairman of CCI at an ASSOCHAM event.

He emphasized that to maintain the efficiency of a regulatory body requires both political and judicial maturity. “We are slowly moving in that direction. But it cannot happen in a day".

Addressing the issue of stringent actions taken by such bodies in recent times, Chawla noted that the country lacked a common regulatory philosophy, which would have cleared the confusion and maintained uniformity in the roles of the watchdogs. “Perhaps there is a need for a helicopter view of the regulatory structure and an over-arching legislation which brings about uniformity in design and structure to the extent necessary. There are perhaps one too many regulatory bodies, particularly in the financial sector”.

Catching him off-guard, KP Singh, the former president of the chamber and the current chairman of DLF Limited demanded that the government must come up with a law to hold regulators responsible for causing damage to the companies by passing judgments, which have serious repercussions on the company as well as its investors. “These regulators pass judgments and then go while companies suffer loss of reputation. By the time the aggrieved companies get justice, damage is already done to their reputation,” said Singh.

Last year, Securities and Exchange Board of India (SEBI) had taken stringent actions against defaulting companies, and barred real estate major DLF from entering the capital markets for three years. At that time, industry body had raised the red flag and termed the punishment too harsh for the corporate.

Image: official website of CCI