On the morning of January 11, 2020, the citizens of Oman awoke to the news that Sultan Qaboos Bin Said, the monarch of the small Gulf nation, had passed away the previous day after a 49-year rule.
The late Sultan Qaboos came to power in 1970, after he overthrew his conservative father in a palace coup with the help of the British. He then set about modernising his impoverished country, using Oman’s newfound oil wealth to fund its infrastructure. When he took over the throne, Oman had only three schools and harsh laws banning electricity, radios, eyeglasses and even umbrellas. By the time he left, Oman developed a good education system, a robust economy, and has become a tourist destination.
Apart from bringing about this ‘renaissance,’ Qaboos also gained worldwide fame for championing neutrality and constructive diplomacy. Despite being located in the Strait of Hormuz in the turbulent Middle East, he maintained relations with countries ranging from Saudi Arabia, Qatar, Iran, Israel, and Palestine, and also with the Houthi rebels in Yemen. Perhaps the greatest result of this long-standing policy was enabling backchannel talks between the US and Iran which led to an international nuclear deal.
Sultan Qaboos also introduced democratic institutions in Oman, issuing the country’s first constitution, granting universal suffrage to all citizens above 21, and allowing the country’s first municipal elections in December 2012. However, he also suppressed dissent to the extent of shutting down news outlets and arresting protestors, journalists and activists, sometimes for opinions expressed on social media.
Oman experienced ripple effects of the Arab Spring in the form of months of protests against corruption and unemployment; and eventually Sultan Qaboos relented by giving more legislative powers to the Council of Oman and promising to increase wages and create jobs. While this satisfied the protestors, it did not mean life under ‘Baba Qaboos’ was all roses and no thorns for everyone. As detailed in this 2020 Periodic Review by Human Rights Watch, Sultan Qaboos revised Oman’s penal code in January 2018, which included “increasing punishments for offenses that relate to the peaceful exercise of freedom of expression.
The last few years of Qaboos’ rule saw economic stagnation and a crash in global oil prices which resulted in high youth unemployment rates in a country where a significant portion of the population is under the age of 25. The large budget deficits and high debt have prompted the rating agencies such as Moody’s to downgrade Oman’s credit rating to ‘junk’ status. In an attempt to reduce the dependence on oil, Sultan Qaboos launched ‘Vision 2020’ to encourage innovation in other areas. This initiative failed to meet the objective and got renamed as ‘Vision 2040.’
This was the scene laid out for the new Sultan Haitham Bin Tarik, who was designated the new ruler of Oman as per a secret envelope containing late Sultan Qaboos’ choices for his successor.
Haitham bin Tarik was the Minister of Heritage and Culture before his accession to the throne, and also happens to have been the Chairman of the ‘Vision 2040’ committee, among other posts. In his first royal speech, he vowed to continue in the footsteps of his predecessor, especially in regards to the state’s foreign policy. In another royal speech in February, he charted a ‘future roadmap’ for Oman and claimed that he will prioritize education and youth employment. He has been active in these past six months, having issued 70 Royal Decrees concerning appointments, amendments, and new laws, among others.
Sultan Haitham is already being put to the test as Oman battles the COVID-19 along with the rest of the world. Omanis are looking at a new vision with renewed hope, one of the new sultan who brings with him great promises and perhaps a renaissance of its own kind. Will Oman be able to maintain its tradition of neutrality? Will the fight for a progressive and inclusive Oman find its voice? Will Oman be able to save itself from the consequences of a glut in crude oil economy? The citizens of Oman hope and wish that their new sultan will get the right answer and steer the country towards a more secure and prosperous future.
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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.
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