Apparently, the CCI has sent a letter to the Department of Financial Services last month enquiring whether its  directions to four insurance companies to avoid any competition among themselves would lead to some sort of cartelisation. to quote from the report:

“….It asked the finance ministry to share the letter with it along with the justification for the move. In the absence of any reply from the finance ministry on the issue so far, the CCI is now planning to send a notice to the department to answer its queries.”

Now frankly, if the government wants the existence of a tacit cartel between four of the biggest Indian Insurance companies, then the Commission cannot do much about it. Government intervention, no matter how anti-competitive it may seem, is as of now justifiable under Indian competition law.

However, what is surprising is that the government seems to be least concerned about the procedure to be used by it in order to do so. Section 55 clearly allows the Central Government to issue directions to the Commission whenever it deems necessary on questions of policy. Furthermore, Section 56 also allows the Central Government to supersede the CCI, with Section 56(1)(c) clearly allowing such supersession when “circumstances exist which render it necessary in the public interest to do so.” by notification and for reasons to be specified therein.

We have highlighted this problem earlier in the Cement cartel case, wherein again the collection of information was not exempted by the Government via a notification and hence, became a ground for the action against the CMA on the grounds of cartelisation.