Syria is ruled by the Al Assad family since 1971 till date. Hafez Al-Assad, the father of the current ruler of Syria, Bashar al-Assad assumed power through a coup in 1970 and remained in power till he died on 10th June 2000. He was succeeded by his son Bashar al-Assad. The Al Assad family belongs to a minority Shia sect called Alawite which constitutes about 10 to 15 percent of the total population of Syria.
The Alawites had traditionally held most of the officer class positions in the military under the French Mandate Syria during the 1930s and 1940s. However it was the regime of Hafez that gave Alawites a disproportionate share in the country’s financial and economic structure as well as the military due to ultra-loyalty to the regime.
It was, however, the death of Hafez, which brought to light the complex equation between the strongly knit Alawite minority influence in Syria’s financial and military interests and the ruling Assad family. Mohammad Makhlouf, father of Rami Makhlouf, Syria’s richest man, and his sister Anissa, widow of Hafiz Al Assad had at that time ensured that the transfer of power to Bashar al-Assad went on smoothly.
Bashar al-Assad had to grapple with the mass movement dubbed Arab Spring in 2011 when people rose against the authoritarian rule of Bashar Al Assad and the preferential treatment received by the Alawites in the regime. The Arab spring later took the form of a civil war which is still raging in parts of Syria. Throughout this difficult period Alawite community stood solidly behind Bashar Al Assad. There was no bigger backer of Bashar Al Assad during all the ups and down, than his cousin and the richest man of Syria Rami Makhlouf.
However for the first time the absolute support for Bashar Al Assad in the tightly knit Alawite community seems to be shaking. In a recent Facebook video, Rami Makhlouf, is seen making allegations that the Syrian regime of Bashar has been going after him and his company assets because he raised voice for Alawite families which lost members while serving the regime, but were left to fend for themselves. There have been unconfirmed reports that Rami has been under house arrest since last summer.
Multiple reasons have been cited for the Assad governments’ sudden outburst against Rami. Some experts suggest it is because of Rami’s immense wealth, which in turn makes him a possible rival to Bashar, or the lavish lifestyle of the Makhlouf’s, as evidenced by Rami’s son Mohammad who was seen boasting about their wealth and showing off pictures of his private jet to multiple newspapers around the world. Whatever be the reason behind the regime going after Rami, it is quite evident that they are under severe pressure to churn out cash to revive the dwindling currency. While his son might have dented his family’s rather away from limelight public image with his public show-off stunts, it appears that Rami himself has not been up to the mark in rolling out enough credit for the Assad regime.
The ongoing saga of Rami Makhlouf brings to light the complex relationship between the Assad regime and the dominant Alawite minority, indicating a clear rift between them. A former Syrian diplomat who defected from the Syrian Embassy in Washington in 2012 said “It’s very big. Rami was in the inner circle from day one of Bashar’s rule. He’s built into the regime. To take him out would be like a divorce.”
It will be interesting to see whether the Alawite community will continue to back Bashar Al Assad or Rami Makhlouf will be able to sway a significant section of the community to take a stand against Bashar Al Assad. Watch this space for further updates
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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.
