Millennium Post

‘We must boost M&As to create big Indian corporates to take on world’

Mergers and acquisitions have to be encouraged to promote the size of domestic companies but there is also a need to understand when to draw the red line while implementing the competition law, Corporate Affairs Minister Arun Jaitley said on Monday.

He also underlined the need for applying the "principle of proportionality" while taking into consideration the consequences of competition norms.

"People learn from global experience. When our own corporates are of moderate size, mergers, acquisitions and consolidation need to be encouraged to promote size. So when it is that we draw the red line (in implementing competition law)," Jaitley said. According to him, Competition Commission of India (CCI) is becoming "extremely mature".

M&As involving significant business activities and those meeting a certain threshold under competition norms are required to get clearance from CCI.

"Another issue, what are the kind of consequences and penalties that we impose in the larger implementation of the law. Do we look at the evil sought to be curbed (or) the capacity of our own economy and therefore apply the principle of proportionality," the minister said.

Emphasising that people learn from global experiences, Jaitley said "jurisdiction" is emerging with regard to common turf issues on account of multiple regulators. "If two telecom majors are to amalgamate, will there be common turf areas between the telecom regulator and market regulator CCI. Therefore how do you built the jurisdiction of the two. Obviously jurisdiction in this area is emerging," he noted.

Active and responsive regulators ensure fair play but emergence of multi-sectoral regulators raises concerns about their crossing each other’s jurisdictional areas, added Jaitley.

Mergers and acquisitions would continue to create big corporate conglomerates but there is a need to draw a red line to avoid dominance and curbing of open competition in market by them, he said while addressing a conference on competition issues here. According to him, there is a need to have an active and responsive regulator.

However, Jaitley cautioned about growth of multi- sectoral regulators in recent times and chances of their crossing in each other’s jurisdictional areas. He was inaugurating the International Competition Network (ICN) Merger workshop here, organised by Competition Commission of India (CCI). 

Stressing that people learn from global experiences, Meanwhile, the government is in the process of implementing a large number of legislative and administrative recommendations of the Financial Sector Reforms Commission (FSLRC), which had suggested a major overhauling of financial sector regulations.

“As the change in process of reform continues... I have not the least doubt that a large number of these (FSLRC) recommendations will actually see implementation in the days to come,” Jaitley had said last week.

FSLRC, chaired by Justice B N Srikrishna, has suggested a non-sectoral, principle-based approach to revamp the existing framework.

Among various suggestions, the FSLRC has suggested creation of a unified financial sector regulator comprising SEBI, IRDA, FMC and part of RBI.
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