India is moving into unchartered territory with the government’s decision to empower the Competition Commission with authority to split any large corporation guilty of monopoly abuse.

Regulatory authorities in the US and the major European countries have long had such powers. In the Indian context this is a welcome enabling legislation but it has limited practical use. In increasingly contestable markets, competition authority should focus more on encouraging competition.

The competition authority in India already has powers to regulate anti-competitive agreements or mergers and acquisitions, which should help prevent creation of new monopolies. The power to break-up a monopoly found to be abusing its market dominance is, therefore, relevant only in respect of historical monopolies that have come about through wrong policies or state protection.

Indeed, if we look around most such monopolies are in the state sector. From coal mining to railways, there is a long list of government corporations that could easily interest the Competition Commission if it were to exercise its powers.

Then there are state electricity boards that are very reluctant to allow private producers to evacuate power to other states. Would the Commission look into possible monopoly abuse by the state sector and suggest splitting of, say, the Railways, into freight and passenger business? If it does, it could make a difference.

AT&T is a famous example of a monopoly being broken up. Microsoft escaped a similar fate by reaching a negotiated settlement with the US justice department. As a general proposition, the easy availability of capital has also made sustained monopoly abuse difficult.

The essential task before any competition authority is to advance the case of market economy, which would in many instances include opposing anti-competitive government regulation.

It may be a good idea, therefore, to empower the competition commission to seek a review of tariffs or government regulation impeding market access in case they are found to be stymieing import competition particularly in those cases where there is reasonable local dominance.

TIMES NEWS NETWORK, SATURDAY, NOVEMBER 25, 2006

A 39% increase in share prices and a hot real estate market have raised the combined net worth of India’s 40 richest people by 60% this year, and helped make nine more billionaires in Forbes Asia’s 2006 India’s 40 Richest List.

The combined fortunes of the top 40 richest Indians stood at US$170 billion (RM620.91 million), an increase of US$64 billion. The 10 richest account for two-thirds of the wealth of the group or US$112 billion.

There were 36 billionaires on the list, and nine new ones including Ramesh Chandra (US$5.3 billion), Grandhi Rao (US$2.2 billion) and Kalanithi Maran (US$1.9 billion).

Topping the list again was steel tycoon Lakshmi Mittal, who in June won the battle for rival Arcelor in a US$34 billion merger that created an industry behemoth that now accounts for 10% of the world’s production.

Mittal, 56, has a net worth of US$25 billion and lives in London.

While the top position remains the same, the two Ambani brothers of Reliance have taken over Azim Premji’s position as the “richest resident in India.”

Premji, who runs technology services giant Wipro, has a net worth of US$14 billion. He dropped from the second to the fourth spot.

Mukesh and Anil Ambani held the second and third positions, respectively.

After splitting their company over a very public spat, Mukesh Ambani saw his net worth rise by US$11.5 billion to US$18.5 billion. Anil’s fortune saw a US$9.3 billion gain to US$14.8 billion as a result of a listing of Reliance Communications.

In fifth place is Kushal Pal Singh, who inherited his father-in-law’s Delhi Land & Finance and turned it into India’s leading property developer. He is also building the Mall of India, the nation’s biggest shopping complex.

In the news lately were number 26, Venugopal Dhoot (US$1.75 billion), who is set to acquire Daewoo Electronics for US$700 million, and number 27, Uday Kotak (US$1.59 billion) who bought out Goldman Sach’s stake in his investment and banking arms.

Youngest on the list is 31-year-old Shivinder Singh who holds the number 24th position with his 34-year-old brother Malvinder. They are the largest shareholders of Ranbaxy Laboratories, India’s largest pharmaceutical firm by sales, and have a net worth of US$1.8 billion.

The minimum net worth criteria to make it onto this year’s list increased to US$790 million from last year’s US$590 million.

This year’s dropouts included India’s richest self-made woman, Kiran Mazumdar-Shaw.

The stock of her biopharmaceutical firm Biocon dropped 26% in the past 12 months. The list’s biggest loser was Anurag Dikshit, number 29, whose PartyGaming stock tanked over regulatory issues.

The Edge Daily, November 17, 2006