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Competitive Neutrality Issues in India
... At present, developing countries are the main entities facing the challenge of competition neutrality. Gaur, Seema [23] studied the competitive neutrality in India; Nawawi et al. [24] studied the management and competitive neutrality of state-owned enterprises in Malaysia; Alice, Pham [25] and Tang Van et al. [26] studied the state-owned enterprises and competitive neutrality in Vietnam; and Svetlicini [27] studied competitive neutrality in the Association of Southeast Asian Nations. Developing countries are generally faced with the challenge of competitive neutrality. ...
A Deviation from competitive neutrality is one of the main problems faced by Chinese state-owned enterprises. Based on the orientation of the classification reform of state-owned enterprises to all kinds of enterprises, we discuss the competitive neutrality of state-owned enterprises with special functions from the perspectives of enterprise policy burden and enterprise profits. The research herein shows that state-owned enterprises, as the main entities of policy burden, have undertaken social responsibilities such as helping the government to stabilize employment, which has caused problems such as creating redundant employees, reducing the efficiency of employees, and reducing the profits of enterprises. To make up for the loss of profits of enterprises that bear the policy burden, the government provides them with implicit guarantees, which makes it easier for them to obtain bank loans and other external factors, and the asset–liability ratio of enterprises increases, which comprises the problem concerning a deviation from competitive neutrality that the United States and other western countries have surmised. However, the empirical study found that the deviation from competitive neutrality in financing actually reduced the profits of enterprises, that is, the state-owned enterprises faced a certain competitive disadvantage. Based on the research conclusion herein, this paper puts forward some enlightening findings on state-owned enterprise reform.
Can adoption of an antitrust/competition law substitute for a formal competition policy that lays down principles for reforming other government policies that affect competition? We address this question in the context of India, which has a track record of antitrust enforcement as well as a history of extensive controls over the private sector and domination of key sectors by state owned firms. After briefly summarizing these features, we argue that several clauses of the Competition Act, 2002, allow the Competition Commission of India (CCI) to challenge public restraints on competition. We then undertake a detailed review of several cases that have addressed public restraints and that have gradually extended the jurisdiction of the Act. We also identify some areas that remain beyond its reach—government policies that violate competitive neutrality, and discretionary purchases by public buyers—and we note possible social or business justifications for such restraints. Finally, we briefly discuss conflicts between the CCI and other regulatory agencies. We suggest that these remaining challenges can be addressed without laying down a broader policy.
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