Saturday, August 29, 2020

Asian countries & the race for COVID-19 Vaccine

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Charvi Trivedi

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Asian countries & the race for COVID-19 Vaccine

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Global Views 360

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August 29, 2020

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Representative image of Vaccine

Representative image of Vaccine | Source: Dimitri Houtteman via Unsplash

Our relationship with the new strain of coronavirus is almost 8 months strong now. Countries like the US, Russia, UK, China, India, and many more have already set their brainy scientists in the task of developing a vaccine, turning it into a race which desperately needs a winner, since no one wants this deadly relationship to endure. Several attempts have proved to be successful, especially in countries like Russia, USA, India, and China.

China was the first to start scouring for a vaccine the day WHO declared that the new strain of SARS-CoV, originating in Wuhan-China, has resulted in a pandemic. It is a fierce competitor, especially to the US, as almost 8 of the 24 promising vaccines approved for clinical trials are from China. It used the technology of ‘inactivated vaccine’ which basically means killing the actual virus and using that to create a vaccine. This method is quite useful in treating measles and influenza, thus, increasing the chances of success in the case of COVID-19 as well.

“It’s a tried and true strategy”, Paul Offit, director of the Vaccine Education Center at Children’s Hospital of Philadelphia, said  about the inactivated vaccine. One potential vaccine from China-based Sinopharm is already in the phase 3 of trials whereas Sinovac will enter the third phase this month. Moreover, China has permitted Sinovac and Sinopharm to dilute phase 1 and 2 of vaccine trials on humans to hasten the process.

The head of the Chinese Center for Disease Control and Prevention, Gao Fu, had also been injected with a potential vaccine on July 28, 2020. “I’m going to reveal something undercover: I am injected with one of the vaccines'' Gao Fu said in a webinar hosted by Alibaba Health, an arm of the Chinese e-commerce giant, and Cell Press, an American publisher of scientific journals. However, he did not reveal any more details about how and when exactly he administered himself with the vaccine and ‘hopes’ that the vaccine works.

Vladimir Putin, President of Russia | Source: Wikimedia

Elsewhere in Russia, on August 11, 2020, President Vladimir Putin proudly announced that Russia was the first country to grant regulatory approval to their vaccine after carrying out human trials for less than 2 months by the Gamalei Institute in Moscow. Regulatory approval permits vaccination of the masses. Although it has not undergone phase 3 of trials, Russia expects to initiate mass production of the vaccine by the end of this year. Kirill Dmitriev, head of Russia's sovereign wealth fund states that the vaccine will be called ‘Sputnik V’, named after Sputnik 1, the first satellite launched by Soveit Union which was a euphoric moment for Russia. More recently, China and Russia have joined hands in proceeding with the clinical trials of their vaccines.

These two instances seem to bring a new hope for the future, yet raise alarms and invite scepticism from the experts in the field of public health. One major concern is that without prolonged trials, vaccines should not be authorized for public use. Anthony Fauci, an infectious disease expert based in the US said “I do hope the Chinese and the Russians are actually testing the vaccines before they are administering the vaccine to anyone. Because claims of having a vaccine ready to distribute before you do testing is problematic at the very least”. Hence, some people are still in doubt regarding the safety of the product. Putin, however, rubbished such concerns and said "I know that it works quite effectively, forms strong immunity, and I repeat, it has passed all the needed checks".

An Indian biotechnological company, Bharat Biotech developed ‘Covaxin’ in collaboration with Indian Council for Medical Research (ICMR), using the mechanism of inactivated vaccine. It was successful in getting approval for human trials which were scheduled to begin in July, 2020. Initial reports stated that it would be ready for mass use by August 15, 2020, which also marked the 73rd Independence Day of India. However, Bharat biotech was clear in letting the public know that phase 1 of the trials are still on-going. ICMR cleared the confusion by stating that it would prepare the results of the phase 1 trials by August 15, 2020, not the actual vaccine for use. Phase 2 of the trials are awaited in September, 2020.

So far, the results of phase 1 trials have been positive as no serious side-effects are observed in the vaccine candidates. “The vaccine has been safe. No adverse effect has been reported. Even the point of injection pain, which is normal in vaccines, has been very mild” said Dr Kushwaha of Prakhar Hospital.

Meanwhile, the South Korean government stated on August 21, 2020, that it will secure adequate vaccine supply to its citizens by cooperating with international bodies and promoting local drug development. Three South Korean companies have started the process of making a vaccine and all are in the clinical trial phase. Bill Gates asserts that the South Korean pharmaceutical company, SK Bioscience, will have around 200 million vaccine doses ready by June 2021.

Japan is jointly collaborating with the UK, France and other European countries to establish a $20 billion fund to buy coronavirus vaccines, with Japan pledging a contribution of $800 million. It’s vaccine program aims to focus on giving primary attention to its medical workers and the elderly people of the country when the first doses of the vaccine are made. The state-funded vaccination program is believed to be officially adopted by Japan in September this year with negotiations with the UK and US based drug makers already in place.

With the race to bring COVID-19 vaccine seemingly coming to a close and it will hopefully be ready by the end of 2020 or early 2021. Till then, the entire world is watching this race with bated breath.

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April 13, 2021 7:47 AM

Are India's Antitrust laws effective at controlling monopolies?

On 15th of July 2020, Reliance Industries Ltd (RIL) held its annual general meeting of the shareholders. The chairman and managing director Mukesh Ambani, announced that global tech giant Google would be investing $4.5 billion in Jio Platforms. Facebook also has acquired a 9.99% stake in Jio Platforms. This is the first time in the world that both the global tech giants have invested in the same entity. These investments have boosted the confidence for Jio Platforms and also for India’s growth but there have been questions and speculations about the potential anti-competitive makeup of these deals.

The objective of this article is to explore the interpretation and the effectuality of Antitrust laws in India.

Anti-competitive practices are those business practices which firms engage in to emerge as the or one of the few dominant firms, who will then be able to restrict inter firm competition in the industry in a bid to preserve their dominant status. The Collins English dictionary defines antitrust laws as those laws that are intended to stop large firms taking over their competitors by fixing prices with their competitors, or interfering with free competition in any way. These laws focus on protecting consumer interests and promoting a competitive market. The word ‘Antitrust’ is derived from the word ‘trust’. A trust was an agreement by which stakeholders in several companies transferred their shares to a single set of trustees.

In present-day India, talking about market dominance Reliance Industries Ltd (RIL), resembles American company—John D Rockefeller's Standard Oil Company—of the early 20th century. Mukesh Ambani holds the highest ability to influence markets and policy in every sector in which RIL is present—petrochemicals, oil, telecom, and retail. Many industry experts and critics suggest that Ambani has used his political clout to twist the regulatory framework in his favor.

Gautam Adani, founder of Adani Group | Source: Twitter

Furthermore, economic power in aviation infrastructure is clustering into a few hands as well. In 2019, the Adani Group bagged the 50-year concession to operate all the six Airports Authority of India-operated airports—Lucknow, Jaipur, Guwahati, Ahmedabad, Trivandrum, and Mangaluru—which were put up for auction. The company also obtained a controlling stake in ‘The Chhatrapati Shivaji Maharaj International Airport, Mumbai’ from GVK Airports. Moreover, Adani Group is now set to construct the Navi Mumbai International Airport. The group is now eyeing Indian Railways while they have already established an alarming monopoly in green energy and sea ports. While Airports are natural monopolies, one private company controlling more than 8 important airports is not good news to airlines.

India has established antitrust laws to promote competition. For 40 years, India followed the Monopolies and Restrictive Trade Practices Act 1969 (MRTP). This act was based on principles of import substitution and a command-and-control economy. However, over time several amendments had to be made to the act. In 2002, the Indian approved a new comprehensive competition legislation. This is called the Competition Act 2002. The act focused on regulating business practices in order to prevent practices having an appreciable adverse effect on competition (AAEC) in India. The act primarily regulates three types of conduct: anti-competitive agreements (vertical and horizontal agreements), abuse of a dominant position, and combinations such as mergers and acquisitions. The act lists out the cartel agreements that it intends to prevent. This list includes price-fixing agreements, agreements between competitors seeking to limit or control production, market-sharing agreements between competitors and bid-rigging agreements. These agreements are called “cartel” arrangements.

The competition Act is enacted by the Competition Commission of India (CCI), which is exclusively responsible for the administration and enforcement of the Act. It comprises a team of 2 to 6 people appointed by the government of India. The CCI has previously handled high-profile cases. In 2018, CCI imposed a fine of Rs135.86 crore on Google on the grounds that Google misused its dominant position and powers to create a search bias. In another important case, the CCI, ordered a probe into Idea, Vodafone and Airtel when Reliance Jio owner Mukesh Ambani lodged a complaint against the three for forming a cartel and denying Jio the POI required for network connection, causing multiple call failures. The Cellular Operator Association of India was also probed for encouraging the same.

In some cases, the Competition Commission has been successful in tackling activities that are against the free competitive market. However, critics and economists believe that the act is now unable to adapt to the changing business environment in e-commerce, telecom, technology and the government’s role in distorting competition. Demonetization and GST drove the formalization of the economy. One consequence of them was that bigger, better organized players gained at the cost of smaller ones with lesser resources. The Insolvency and Bankruptcy Code (IBC) was designed to solve the problem of non-performing assets (NPAs) of banks. But consequentially, it has also led to a consolidation in many sectors.  

However, CCI has expressed inability to consistently adjudicate punitive measures due to obligation in several cases. This points to the loopholes in the very provisions of the Competition Act 2002. In an Economic and Political Weekly (EPW) article, Aditya Bhattacharjea—an Economist—argues that even though the 2002 Act represents an improvement from the MRTP Act which was extremely restrictive, the present act also remains riddled with loopholes and ambiguities. According to Bhattacharjea, this creates unnecessary legal uncertainty, which acts in advantage of lawyers and law firms. For instance, the act allows the CCI to leave some scope of flexibility for “relative advantage, by way of contribution to the economic development.” Bhattacharjea argues that this may allow large firms to justify their anti-competitive practices in the name of development.

Mark Zuckerberg and Mukesh Ambani having online interaction after Facebook invested in Jio Platforms | Source: NDTV

Data portability plays a significant role in determining market power of certain firms. In 2017, the CCI closed cases against both WhatsApp and Jio involving allegations of predatory pricing and privacy violations. In both these decisions, the regulator did not consider the restrictions around data portability as a competitive advantage. The possible data leveraging advantage for the attempted monopolization could be the ‘portfolio effect’. Portfolio effect refers to increasing the range of brands, by bundling of telecom or messaging service and other service offerings or illegal vertical restraints, even predatory pricing. This in turn may lead to greater ability of further leveraging, deterring innovation and results in degradation of quality. Another possible advantage is explained as the theory of leveraging. The best example of leveraging is when Microsoft entered the media-player market by extending its quasi-monopoly on the operating systems market by taking advantage of the indirect network effects. In case of Facebook acquiring 10% of Jio’s shares, it is a concern that both entities could potentially use WhatsApp’s market dominance in telecom and social networking services and establish dominance in e-commerce market through anticompetitive acts.

There was a consensus among Indian policymakers at the time of the 1991 economic reforms that economic liberalization would eliminate the nexus between the business elites and the policymakers. On the contrary, the relationship between these two groups got further strengthened.

On the other hand, few critics and industrialists argue that extreme restrictions on growing companies hampers the progressive growth of the national economy. While RIL’s Jio looks like a cause for concern, the company has also saved Rs. 60,000 crores for annual savings in India. In addition to that, the entry of Jio to the telecom industry has led to a rise in data consumption and improved accessibility and affordability of the internet across the nation.

However, the concern still lingers as the question of whether this growth is a result of actual innovation or crony capitalism remains unsolved.

However, the fact that telecom, organized retail, ports and airports have two or three players controlling the bulk of the sector needs to be addressed. A healthy competition is quintessential for long-term growth and innovation. Harmful trade practices and cartelization does not only affect small manufacturers but also the general public.

The government, CCI and other lawmakers must closely examine the present laws and provisions and need to see if they are required to amend the act.

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