CCI will be vigilant after FDI in retail by Shalini Singh

The Competition Commission of India (CCI) has given an assurance that as a regulator, it is committed to discharging its legal mandate on any anti-competitive behaviour by potential entrants arising from the government’s decision to raise the FDI limit to 51% in multi-brand and 100% in single brand retail. This statement is expected to soothe the nervousness of those with genuine concerns about the adverse competitive implications of this move.

CCI chairman, Ashok Chawla, clarifies that at this stage it is solely in the purview of the relevant authorities to apply the competition filter while formulating the policy. "The Commission’s role in protecting consumer interest would be relevent only post the policy implementation based on actual market behaviour". In the event of abuse of market dominance or predatory pricing, the CCI is adequately empowered under the CCI Act, sections 3, 4 and 5 to protect consumer interest.

Liberalising FDI in multi-brand retail is expected to pave the entry of global mega chains like Tesco, Carrefour, Wal-Mart and others. While the government has placed many safeguards, including a minimum investment limit of $100 million, 50% investment in back-end and 30% local sourcing, consumer activists believe that there is insufficient regulation to prevent anti-competitive behavior.

Consumer activist, Bejon Misra believes "the government should have first brought in the national consumer policy which has been pending for 10 years rather than being in a hurry to hike FDI limits in the retail sector. "There needs to be a study of consumer behaviour to determine whether the consumer will really benefit", he said.

Complaining about the "trust deficit" vis-a-vis consumers, Misra said, "this should not become a bailout for modern retailers who are running short of money and need foreign investment just like in the aviation sector. The objective should be consumer interest, not M&A’s designed to make wealthy businessmen richer".