‘Merger regulations needed to protect consumers’

April 14th, 2011 - 9:16 pm ICT by IANS  

New Delhi, April 14 (IANS) Proper norms are needed to regulate mergers and acquisitions to avoid monopolistic situations in the market and protect the interests of consumers, advocacy group Consumer Unity and Trust Society (CUTS) International said Thursday.

“Merger regulations are not a hurdle to industrial growth but are rather a necessary check to ensure that mergers do not end up in creating situations which can lead to abuse of dominance and thus harm consumer and business welfare, and orderly economic growth,” CUTS International said in a statement.

The statement comes after a section of India Inc expressed discomfort with the merger norms drafted by the Competition Commission of India.

All over the world, competition agencies, except a few, operate mandatory merger notification systems to vet mergers, take-overs, alliances and joint ventures to ensure that they are benign to the economy and do not end up creating adverse situations, the global research and advocacy organisation said.

“India too is following the best practices, as it aims towards becoming one of the biggest economies in the world,” it said.

Competitors and small firms also suffer from market dominance when large firms combine as it reduces their space for operating in a healthy competitive market, thus affecting business welfare.

CUTS International said that there have been mergers in various sectors in India recently with potential outcomes which can lead to market distortions.

“For instance, takeovers by foreign companies of some Indian pharma companies clearly shows that production of cheaper generic medicines with the intent to promote patented medicines will lead to higher costs to consumers,” the statement added.

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