The past few months have seen an unprecedented uprising against Israeli Prime Minister Benjamin Netanyahu, owing to rapidly rising unemployment rates and mismanagement of the COVID-19 crisis. Protestors have been gathering at Netanyahu’s residences and demanding that he resign.
Many claim that while the government was initially able to control the spread of the coronavirus, it was too quick to reopen the economy, which led to a more devastating second wave of cases and ended up only hurting small businesses and employment even more. The crashing down of the economy and public healthcare system is touted as evidence of a selfish government which is too distant from the interests of its citizens.
Additionally, Netanyahu is facing trial for charges of corruption. Though the charges first began to surface back in 2016, the indictment came last November. On top of that, it is being alleged that Netanyahu is trying to leverage the pandemic to delay court hearings. In light of the corruption charges, calling Netanyahu “Crime Minister” has emerged as a popular slogan at the protests.
The protests seem to be mostly organised and led by Israeli leftists, who hold up black flags representing their anti-Netanyahu, anti-corruption and pro-democracy stance. Some protestors have also taken to dressing up in space-themed costumes, in response to a comment by Netanyahu’s son calling the protestor’s “aliens.”
The biggests protests are those held regularly outside Netanyahu’s official residence in Jerusalem and his private home in the high-profile neighbourhood of Caesarea. The police presence at the protests has been heavy; clashes and arrestsare common. Small international protests in support of the ones in Israel have been organised in the United States and Britain.
The protests usually bring a mixed crowd of those protesting corruption charges and business In terms of demographics, some have noted that religious Israelis and Israeli Arabs have been a minority presence in the protests, perhaps the former due to political leanings and the latter due to marginalisation and disenfranchisement. At the same time, the protests are beingadmired for bringing together citizens across political lines, religious beliefs, and ages, as well as the sight of many families attending protests together.
Protests against Netanyahu 2020 Jerusalem | Source: Nir Hirshman Communication via Wikimedia
The supposed political leanings of the majority of the protestors is the key argument Netanyahu has given while dismissing them, calling them “anarchists,” while also reportedly accusing local media of giving them more coverage than they deserve. He has also denied the allegations of corruption levelled against him.
There have been many reports of counter-protests by right-wing groups, often alongside the anti-Netanyahu ones. Supporters of Netanyahu, attempted to ram a car into a protest, called protestors “germs”, pepper sprayed and attacked them with bottles and clubs. For now, the courts seem to be protecting the Israelis’ rights to freedom of speech and to protest from appeals to curtail the protests in any manner.
There is speculation regarding whether resignation is the “right” demand, since it seems unlikely that someone like Netanyahu will ever follow through on that. But the people of Israel are out in the streets in the thousands. They are called aliens or anarchists all day but denial is a facade that can only last for so long.
Benny Gantz leader of Blue and White Party | Source: Reuven Kapuchinsky via Wikimedia
Netanyahu is now the longest serving prime minister of Israel. He started the new term when his right-wing Likud party signed a coalition deal with Benny Gantz led Blue and White Party which provisioned 18 month long terms for both of them. Gantz’s term is to begin from November 2021 and some analysts predict that Netanyahu might hold early elections to deny prime ministership to Gantz and in the process, delay Israel’s next budget.
The biggest ally of Netanyahu so far in his political career was his luck which finally seems to desert him. He might be thinking that the protests can be waited out and accountability can be avoided. However this time, his political instinct and survival skill may come up short in the face of determined opposition from the common citizens of Israel.
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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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