New regulators: Careful what you wish for

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New regulators: Careful what you wish for

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• Cabinet minister thinks: It seems that the Cabinet is pondering the creation of a new policy direction, as far as tackling cartelisation of businesses is concerned. They will be warned well to reconsider the implication of what they're thinking to do.
• Tackling cartelisation: A law exists for this - the Competition Act 2002 - and if the government feels that the Act and the agency (Competition Commission of India CCI) haven't done well, then it's better to find out why, rather than restructure the system. To create new regulators is not advisable. It's not wise to write new laws when encountering new problems, and setting up new regulators when encountering new market problems!
• What regulators do: Such regulators are supposed to protect the consumers of their respective markets. So capital markets regulator (SEBI) protects the investors, insurance regulator protects the policyholders, etc.

1. But the big firms that are regulated by SEBI or IRDAI are not protectees of unfair competition and infliction of injury on one another
2. So if all big players gang up to make entry of new, disruptive player impossible, then the newcomers may get more regulatory scrutiny not the incumbents
3. Such regulators always have motherly conduct statements including phrases like "good behaviour" or "professional conduct" or "orderly competition". But a well-codified competition law is missing.

• CCI and sectoral regulators: So when the CCI goes about enforcing the competition law, the regulated entities claim they are already under some other expert regulator that must examine the issue first. That starts a new war between the CCI and the regulator(s), and the players keep running their violative practices unhindered. They change formats in the meantime!
• Telecom regulation story: The Supreme Court ruling about some violation has had new consequences.

1. The SC found that allegations of violation were actually allegations of telecom regulations violated
2. So SC thought that TRAI must investigate first, a then CCI must enter the fray
3. The net meaning has come to be that the judgment has become a provision of tax law 

• Net impact: So anyone being investigated by CCI is now claiming that if there's a sectoral regulator, it ought to give a final view before CCI steps in! This is a jurisdictional challenge, and various courts are responding differently across India. 
• Legal aspect: If the CCI were to be permitted to form a "prima facie" view only after the S.C. has decided on the matter overall, then the Law made by Parliament itself is rendered useless. The abusive conduct that CCI has to check is simply turned into a tariff issue to be checked by a sector regulator.
• Worse still: So if a "Steel regulator" is created, say, then they may copy the financial sector regulator's model ("SEBI-like"). And that regulator will start registrations, and inspections. And that's what inspector raj was! The existing players won't object, and would happily raise concerns about risks to regulation from non-stringent regulation. So for new players, it gets tougher and tougher.
• Summary: It's a bad idea to create sector-specific regulator, and an eminently good idea to help the C.C.I. do its job much freely.

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