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Lawyers wary of new competition body's teeth

Lawyers are adopting a wait-and-see approach to India's newly-established Competition Commission, which was given its executive powers today.

Question marks remain over how the new body will exercise its powers and whether it will be able to do so free from government interference.

Brussels competition partner Jonas Koponen of international firm Linklaters said: "It will be interesting to see what position and approach the Indian Commission will take. One can only hope that it is purely competition-based interests they will look after."

One particular concern is that the Indian Competition Commission does not go the way of the Chinese competition authority, which has interfered significantly with several corporate transactions since its inception in the summer of 2008.

Particularly, the Chinese government blocked Coca-Cola Co.'s $2.3bn bid for China Huiyuan Juice Group in March of this year, which was perceived by lawyers and commentators as a clear breach of its powers.

But Indian competition law expert Vinod Dhall (pictured) argues that there are sufficient safeguards in place in India to prevent such undue interference.

"There are certain things which favour the autonomous functioning of the Commission," he told Legally India. "First, it is an autonomous commission and is not located within a ministry. And second, all of the Commission's decisions are subject to judicial review and can go to the [especially formed Competition Appeals Tribunal]."

Dhall was the founding chairman of the Indian Competition Commission in 2002 and has since set up in private practice as competition and regulatory boutique Dhall Law Chambers, which has a best friends arrangement with Linklaters (as reported by UK legal trade magazine The Lawyer in September 2008).

Linklaters' Koponen added that the structure of the Indian Commission was comparable to the European competition bodies in many respects. Linklaters and several other international firms were heavily involved in commenting on the evolution of India's draft competition regime.

However, one lawyer in India, who spoke on condition of anonymity, said: "The Competition Commission is staffed by a lot of people who were earlier in the MRTP Commission [Monopolies and Restrictive Trade Practices Commission]. While they have some expertise in looking at trade agreements, I do not believe they have sufficient exposure looking at international agreements and transactions."

"MRTP had very limited ambit and suddenly for the same people to be catapulted onto the international stage where they have to look at mega funding and pooling arrangements will be quite a tough transition process," he added.

The MRTP Commission was established under India's MRTP Act of 1969. The body was replaced by the Competition Commission in 2002. It has a staff of around 30 and its board of five is government appointed.

The Competition Commission was today vested with full powers of enforcement, investigation and whistle-blowing over horizontal and vertical agreements.

Its third ambit, M&A transactions, will only launch once the body has recruited enough staff to enable it to cope with M&A investigations adequately.

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