Anti-Gaddafi rebels near Ras Lanuf, Libya March 8, 2011 | Source: BRQ Network, via Flickr
Ever since the people of Libya toppled the long reigning dictator Muammar Gaddafi in 2011 during the Arab spring, the country is going through internal turmoil and civil wars. The ongoing power struggle between two major factions: the UN-backed General National Accord (GNA) government and the Libyan National Army (LNA) and its associated House of Representatives is the face of the current phase of Libyan civil war.
A man who recently entered into Tunisia from Libya is given food at a transit camp on March 01, 2011 in Ras Jdir, Tunisia | Source: BRQ Network, via Flickr
Libya has become a pawn in a great power game in which many Middle-Eastern and Western countries have put their resources behind different factions of civil war. These countries have poured in military hardware, mercenaries and diplomatic support to “internationalize” the tribal and political conflict of Libya.
Libyan men walk by burned vehicles while visiting the stormed al-Katiba base in Benghazi, Libya | Source: BRQ Network, via Flickr
France and Italy have seen an opening to assert their colonial-era influence which was on the wane after Colonel Gaddafi took the reign of the country. UAE, Turkey, and Russia on the other hand are trying to fish in the trouble waters of Libya by actively aiding in the armed conflict. The European Union has allied with Libyan coast guard to intercept migrants trying to sail for Europe and also funding prison camps for refugees to prevent them from reaching Europe through Libya.
The UNHCR reported that it registered almost 50,000 migrants in Libya in 2019. The World Food Programme estimates that over four hundred thousand people got displaced and also lost their sources of income due the ongoing conflict. The proportion of people with access to electricity has been steadily declining, and as little as 26.11% has access to basic and safe sanitation services. There are almost 3 million vulnerable people, which includes 55% women and children need “some form of humanitarian assistance.”
In January 2020 the United Nations released a statement particularly concerning the “dire situation” in Libya for tens of thousands of children. This includes those internally displaced after fleeing their homes, hundreds of thousands of children facing school shutdowns, and refugee and migrant children especially those being held in detention centres. The statement also points out that attacks on essential health facilities as well as water and waste management systems have “limited access to protection and essential services.”
The lifeline of Libyan economy is its oil industry which has taken a major hit during the civil war. It is estimated that Libya has lost more than $502 million in just 10-day period in January 2020 when major oil fields and production facilities were shut down due to the ongoing conflict. Most of the other business sectors are barely functioning in Libya.
The healthcare infrastructure of Libya was nearly destroyed during the last ten years and is staring at near-certain doom due to the prevalence of COVID-19 pandemic. The risk of community outbreaks and the inability of the healthcare system to handle this inevitability is a major risk for the country. Refugee camps and detention centers are more prone to the spread of pandemic as it is nearly impossible to maintain basic hygiene and social distancing over there.
While the warring sides in the civil wars have announced curfews and closures of restaurants, no official ceasefire has been announced, despite requests of the UN for the same. In fact, fighting has been documented to have continued well into March 2020 and April 2020 in which densely populated civilian areas, as well as health facilities have been targeted.
For the people of Libya, this has meant going from living under the stable but dictatorial rule of Colonel Gaddafi which provided a fairly decent civic infrastructure to being caught in brutal crossfire between a recognised government and a renegade military commander, which has destroyed the social and civic infrastructure of the country and impoverished the citizens.
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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.
