Role of a Chartered Accountant (CA) under the Competition Act, 2002

Table of Contents

1. Introduction
2. Advisory and Consultancy Services to Enterprises
3. Anti-Competitive Agreements
4. Compliance of Competition Law Audit
5. Work as an Expert for Commission
6. Appear before Commission
7. Appear before Competition Appellate Tribunal
8. Conclusion

1. Introduction

The Competition Act, 2002 was enacted to provide a formal and legal framework for ensuring a healthy and fair competition and preventing abuse of market power or dominance and regulating combinations in the Indian Economy. Competition Commission of India (CCI) was established as an institutional framework to curb the anti-competitive practices prevalent in the market. Competition law being an economic law, majorly covers the financial and economic perspective of the markets. Institute of Chartered Accountants (ICAI) having a pivotal role to play in the development of economic arena of the country, Chartered Accountants (CAs) can render a wide range of services in the field of Competition law. A gist of some of those roles played by a CA has been discussed herewith.

2. Advisory and Consultancy Services to Enterprises

Chartered Accountants can provide advisory services to the company/enterprise regarding the compliances to be undertaken by devising a Competition Compliance Programme (CCP) for the same. CCP would on one hand, assist the entity, in minimizing the risk of contraventions of the Act and its consequences, as also promoting a culture of compliance and good corporate citizenship.

CAs can also advise their clients of the high costs that have to be borne by the enterprise in case of non-compliance of the competition law, not just in terms of heavy monetary penalty but also in terms of damage to the goodwill that has been built over a period of time at a very high cost.

3. Anti-Competitive Agreements

Competition Act states about anti-competitive agreement comprising of vertical and horizontal agreements. Agreement in relation to production, supply, distribution, storage, acquisition or control of goods or services which cause or is likely to cause an adverse effect on competition in the country shall be void. Chartered Accountants can appear on behalf of their clients before the Competition Commission of India (CCI) in matters relating to such anti-competitive agreements like cartels, agreement to control production/supply, agreement to fix price, agreement to allocate markets, etc. Also, to determine the effect of these anti-competitive agreements on the economy, the expertise of Chartered Accountants in the fields of price parallelism, determination of production and supply levels, technical development in terms of productivity, investment and profitability, etc. would be of great help to substantiate the facts on behalf of their clients.

4. Compliance of Competition Law Audit

Audit being one of the core areas of Chartered Accountants, they can undertake competition law audit of their clients, for timely detection of contravention of any of the provisions of the said Act. The use of transparent financial accounting information under the guidance of CAs, enhances the effectiveness of the administration process, thus, preventing anti-competitive practices. CAs can play an effective role in the implementation of the competition law, by advising their clients about the leniency provisions in the Act regarding disclosure of information before the CCI, in relation to formation of ‘Cartels’, thus, helping the client come out of an illegality.

5. Work as an Expert for Commission

The Competition Act, 2002 empowers the CCI under Section 36(3), to call upon the services of experts from various fields, including accountancy, to assist the Commission in conduct of any inquiry by it. ICAI being known as an ‘Accounting Watchdog’, its members can well assist the commission, using the expertise gained through education and training in the respective field.

6. Appear before Commission

Chartered Accountants by virtue of their extensive training provided by the ICAI, have attained expertise in determination of the factors viz, unfair and discriminatory purchase and price levels, predatory pricing, conclusion of contract with supplementary obligations having no relation with the subject of contracts, entering or protecting other relevant market, etc. They can appear on behalf of their clients before the Commission in matters relating to abuse of dominant position in the markets.

7. Appear before Competition Appellate Tribunal

Powers have been vested with the Commission to order division of the dominant enterprise for abuse of dominant position. But in case of a violation determined by the Commission, affected parties may approach the Competition Appellate Tribunal (COMPAT) for compensation. Owing to the skill and expertise of CAs in representation matters, they can appear before COMPAT on behalf of their clients.

8. Conclusion

In order to contribute to the economic environment of the country, Chartered Accountants role is imperative in the successful implementation of the various areas of the Competition Act. The repute which the Chartered Accountancy profession has earned with regard to professional skepticism of its members, provides unknown opportunities from the material and professional perspective with the introduction of Competition Act, thus, enhancing the scope of CAs beyond the narrow boundaries of accounts and audit.