Competition : A boon

Competition has turned out to be the most precious gift of a forward looking economic system. It not only brings efficiency in production and cost-competitiveness in pricing, but also enhances productivity and innovation. All the stakeholders including the consumers, business, society and more importantly, the economy as a whole get immensely benefited due to a healthy competition. While nations are realising this fast, the most important question before them is how to create, nurture and encourage healthy competition in business?

This realisation has led to large number of nations frame a comprehensive competition policy. Ironically, only 111 countries (which is more than 50 per cent of the total countries) have enacted competition laws. And surprisingly, 81 of them have adopted their competition laws during the last 20 years, signifying the spread of competition law. However, barring a few, the effectiveness and enforcement of this law remain questionable. This has motivated intellectuals to ponder over some critical factors to ensure successful enactment of competition law.

Firstly, what nations fail to comprehend and what international experience taught is that the government alone cannot ensure successful enforcement unless it actively engages the key stakeholders which are academic bodies, consumer groups, the society, trade associations and most importantly, the media. The competition commission should formulate strategies to engage them over time. No effective system can perform without a strong academic system. Educational institutes or universities should come forward in providing solutions to fundamental problems of the society.

The second important aspect in promoting competition is sharing of data and information. Research conducted by think tanks or academic bodies should be taken into consideration as only timely and reliable data help to make policies effective. The third crucial factor is communication. The agency needs to develop a two-way communication channel. Trade associations and agencies need to communicate with businesses about what they expect from them. This two-way communication works like a wake-up call. Engagement of consumer groups works like ghost watchers informing business groups about consumers’ concerns and apathy. And finally, education plays a key role. Educating people about what the agency is doing not only increase business awareness but will also change people’s perception about the increasing importance of competition.

India has formulated Competition Act in 2002 which got enacted in 2009. It is half-way to form a comprehensive National Competition Policy. Thus, it becomes all the more important for policymakers to look at these areas for an effective policy mechanism.