Between 2014 and 2019, India’s “digital economy” (which includes digital technologies, products and services across a wide spectrum of sectors) grew 2.4 times faster than the Indian economy as a whole. A few large technology companies have significantly contributed to this growth. However, globally as well as in India, often these companies act both as intermediary platforms and providers of services and goods on those platforms. This has heightened concerns about potential economic harm brought about by the concentrated structure of the digital economy.[1] Therefore, competition regulators across jurisdictions have highlighted the need to regulate the behaviour of big-tech companies in digital markets.
In India, competition in digital markets is regulated by the Competition Commission of India (CCI) under the Competition Act, 2002 (Competition Act). The Competition Act contains several provisions that prohibit businesses with market power from entering into anti-competitive agreements and abusing their dominant position. The Competition Act also reviews mergers and acquisitions that cross certain jurisdictional thresholds, to avoid concentration of power and a potential appreciable adverse effect on competition (AAEC).
Despite this existing regulation, due to the rapid pace at which digital businesses grow a need was felt to evaluate competition in digital markets ex-ante. Accordingly, the Parliamentary Standing Committee on Finance (Standing Committee) presented its 53rd Report on ‘Anti-competitive Practices by Big Tech Companies’ (Report) in December 2022. The Report, among other things, recommended the introduction of an ex-ante regime through a new ‘Digital Competition Act’ (DCA), to ensure a fair, transparent and contestable digital ecosystem in India. The objective of the DCA would be to: (a) identify ‘market winners’ or ‘Systemically Important Digital Intermediaries’ (SIDIs), based on their revenue, market capitalisation and number of active business and end users; (b) impose ex-ante obligations on them to deter self-preferencing, deep discounting, anti-steering, exclusive tie-ups, and bundling and tying of services; and (c) allow for scrutiny of their potential mergers and acquisitions, and regulation of their internal advertising, data, and search policies.
Following the Standing Committee’s recommendations, the Ministry of Corporate Affairs (MCA) constituted a Committee on Digital Competition Law (CDCL) to evaluate the need for a separate competition law for digital markets.
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While correcting competition distortions in digital markets is (and ought to be) a top priority for the government and the CCI, the requirement for ex-ante competition regulation needs to be assessed against two parameters. First, whether the existing regime can sufficiently tackle competition issues in the digital ecosystem (i.e., is ex-ante regulation necessary?). Second, whether the benefits of ex ante regulation outweigh the potential costs, in terms of over-regulation, false positives, regulatory tussles, and the potential chilling of innovation in evolving digital markets.
The first part of this article discusses the sufficiency of the existing regime to tackle the issues identified by the Standing Committee in digital markets. The second, assesses whether the benefits of ex-ante regulation outweigh its potential costs. The third, provides the authors’ recommendations on whether additional ex-ante regulation is required in India.
The goal of the Competition Act set out in its preamble, namely “to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets, in India…”, remains relevant and valid even for digital markets.
This basic framework of the Competition Act (including Section 3 (anti-competitive agreements), Section 4 (abuse of dominant position) and Section 5 (combinations)) provides a sufficient basis for addressing competition issues in digital markets identified by the Standing Committee (see table below). In fact, the high-level Competition Law Review Committee (CLRC)[2] conducted extensive consultations and review, and concluded that the existing provisions were sufficient to address pressing enforcement issues in digital markets.[3][4]
Competition Issues identified by the Standing Committee | Provisions of the Competition Act |
Anti-steering provisions
(i.e., provisions where a platform prevents the business users of the platform from ‘steering’ its consumers to offers other than those provided by the platform that may be cheaper or otherwise potentially attractive alternatives)34 |
Section 4(2)(a) (Imposing unfair or discriminatory conditions or prices)
Section 4(2)(c) (Denial of market access) |
Self-preferencing / Platform neutrality
(i.e., practice where a platform favours its own services or its subsidiaries directly or indirectly in situations when it has a dual role of providing the platform and competing on the same platform)45 |
Section 4(2)(a)
Section 4(2)(e) (Using its dominant position in one relevant market to enter into, or protect, another relevant market) Section 3(4) (Vertical anti-competitive agreements) |
Bundling and Tying
(i.e., binding developers into taking all services from app store operators and removing competition from the market”)[5] |
Section 4(2)(a)
Section 4(2)(d) (Making conclusion of contracts subject to acceptance of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts) Section 3(4)(a) (Tie-in arrangements) |
Data usage
(i.e., leading platforms leveraging their position and putting consumer preference data to their own use, or platforms collecting and storing large amounts of data for profiling consumers, or using privileged data from one market to gain competitive advantage in another market)[6] |
Section 4(2)(a)
Section 4(2)(c) Section 4(2)(e) |
Pricing / deep discounting
(i.e., platforms offering bogus sales and markdowns, resulting in service providers losing control over the final price of their services)[7] |
Section 4(2)(a) |
Exclusive tie-ups
(i.e., an agreement with a brand to allow sale of the brand’s products on the platform, absolutely exclusively)[8] |
Section 4(2)(a)
Section 4(2)(c) Section 3(4) |
Search and ranking preferencing
(i.e., search bias in favour of sponsored products, or orders fulfilled by the marketplace itself)[9] |
Section 4(2)(a)
Section 4(2)(e) Section 4(2)(c) |
Restricting third party applications
(i.e., restricting the installation or operation of third-party applications)[10] |
Section 4(2)(a)
Section 4(2)(b) (Limiting technical or scientific development relating to goods or services) Section 4(2)(c) Section 4(2)(e) Section 3(4)(d) (Refusal to deal) |
Advertising policies
(i.e., “policies through which consumer data can be leveraged with the help of artificial intelligence and machine learning for cost-effective targeted advertising”)[11] |
Section 4(2)(a)
Section 4(2)(c) Section 4(2)(e) |
Further, Section 5 of the Competition Act states that acquisitions, mergers and amalgamations crossing specified assets or turnover thresholds must be notified in advance to the CCI. Once notified, the CCI assesses whether the transaction causes or is likely to cause an AAEC. The Competition (Amendment) Bill, 2022 (which was introduced by the Government in the lower house of the Parliament in August 2022) introduces ‘deal value’ thresholds to target high value deals (especially within the digital space) which would have otherwise escaped the scrutiny of the of the CCI as the parties involved have few assets and low turnover in India. This amendment is likely to address the concern of the Standing Committee with regard to mergers and acquisitions.
The Competition Act also provides the CCI with powers to investigate and impose targeted remedies on digital platforms.[12] In fact, in the past 10 years, the CCI has initiated investigations / investigated digital companies in more than 30 cases (for similar issues identified by the Standing Committee) and has in many cases imposed effective remedies on large digital platforms (such as Google and MakeMyTrip). Some of these are discussed in this article.
In XYZ v. Alphabet Inc and Others[13] the CCI found that Google abused its dominant position by, amongst other things, imposing unfair and discriminatory conditions on app developers to mandatorily use Google Play’s Billing System (GPBS) for paid app downloads and in-app purchases. The CCI found that the mandatory imposition of the GPBS foreclosed other payment gateways such as PayPal and RazorPay (i.e., a restriction on third party applications, an issue identified by the Standing Committee). The CCI additionally imposed a monetary penalty of INR 937 crores on Google to deter it from indulging in such conduct in the future. Google appealed the CCI’s order on merits before the National Company Law Appellate Tribunal (NCLAT) and sought a stay on the behavioural remedies imposed. The NCLAT rejected Google’s application for interim stay on the remedies, and subsequently Google has publicly announced how it proposes to comply with the CCI’s directions.
The CCI has also initiated an investigation into Apple (in Together We Fight Society v. Apple Inc[14]) for similar conduct. These proceedings are ongoing. The CCI is also investigating Apple for prohibiting third party app stores from being listed on its App Store.
In Umar Javeed and Others v. Google LLC and Another,[15] the CCI found Google to have abused its dominant position by, amongst other things, pre-installation and premium placement of its applications. The CCI directed Google not to impose any restrictions on Original Equipement Manufacturers (OEMs) from: (a) choosing which Google’s proprietary apps were to be pre-installed on their smart mobile devices; and (b) deciding the placement of pre-installed apps. Further, the CCI also prohibited Google from restricting its users from uninstalling its pre-installed apps. The CCI also imposed a monetary penalty of INR 1337.6 crores on Google. Google appealed the CCI’s decision on merits and argued for a stay on the remedies imposed by the CCI before the NCLAT and the Supreme Court. Google’s application for an interim stay on remedies was rejected by both, and Google has subsequently announced significant changes to its Android OS business model in compliance with the CCI’s directions.
Previously, in Matrimony.com Limited v. Google and Others,[16] the CCI also found Google’s conduct in violation of Section 4 of the Competition Act for, amongst other things, engaging in search bias through prominent placement of Google’s Flights Unit on the results page. The CCI directed Google to display a disclaimer in the commercial flight unit box indicating clearly that the “search flights” link placed at the bottom led to Google’s Flights page, and not the results aggregated by any other third party service provider. The CCI imposed other remedies and a fine of INR 135.86 crores on Google for violating the Competition Act. Google subsequently challenged the CCI’s order before the NCLAT, which is still pending in appeal.
In Umar Javeed and Others v. Google LLC and Another,[17] the CCI found Google to have abused its dominant position by, amongst other things, tying the Play Store with Google Search, Google Chrome, and YouTube. The CCI directed Google to cease and desist from such tying.
Similarly, the CCI has initiated an investigation into Apple (in Together We Fight Society v. Apple Inc[18]) for allegedly tying its: (a) distribution service and payment processing service for in-app purchases; and (b) app store to the use of its in-app payment solution.
In Kshitiz Arya and Another v. Google LLC and Others,[19] the CCI has initiated an investigation into Google for allegedly entering into agreements with device manufacturers that require them to pre-install the entire suite of Google apps, and prohibit them from picking and choosingcamongst the Google apps. These proceedings are ongoing before the CCI.
The CCI has also initiated an investigation into WhatsApp and Meta (In Re: Updated Terms of Service and Privacy Policy for WhatsApp Users[20]) for allegedly abusing their dominance with respect to data practices pursuant to WhatsApp’s 2021 privacy policy. The proceedings before the CCI are ongoing.
In Delhi Vyapar Mahasangh v. Flipkart Internet Private Limited and Another,[21] the CCI initiated an investigation into Flipkart and Amazon for alleged deep discounting practices. Flipkart and Amazon challenged the CCI’s investigation order on jurisdictional grounds before the Karnataka High Court and the Supreme Court, where their appeal was finally dismissed. The proceedings before the CCI are ongoing.
In FHRAI and Others v. MakeMyTrip and Others,[22] the CCI found MakeMyTrip’s and GoIbibo’s (collectively referred to as MMT-Go) wide price parity clauses and exclusivity conditions with hotel partners, as well as misrepresentation of information to users, to be in violation of of the Competition Act. Further, the CCI found an exclusionary and mutually beneficial agreement between MMT-Go and Oravel Stays (OYO) to have resulted in denial of market access to FabHotels and Treebo hotels by delisting them. MMT-Go was ordered to modify its agreements with hotels to remove parity obligations, exclusivity conditions and provide access to its platform on fair, transparent and non-discriminatory terms. The CCI also imposed a penalty of INR 223.48 crores on MMT-Go and INR 168.88 crores on OYO for violating the Competition Act. MMT-Go and OYO have challenged the CCI’s findings before the NCLAT, which is still pending in appeal.
In NRAI v. Zomato Limited and Another ,[23] the CCI ordered investigation of leading online food aggregators Zomato and Swiggy in relation to allegations of preferential treatment, exclusivity, and imposition of price parity clauses. The allegations against Zomato and Swiggy are still being investigated.
The CCI has also initiated an investigation into Amazon and Flipkart (in Delhi Vyapar Mahasangh v. Flipkart Internet Private Limited and Another)[24] for their alleged exclusive tie-ups for the sale of certain mobile devices.
In Matrimony.com Limited v. Google and Others,[25] the CCI found Google to have engaged in search bias. It also found Google to be in contravention of the Competition Act for assigning, until 2010, predetermined fixed positions to universal search results which were not reflective of the most relevant results for the user’s queries. The CCI also prohibited Google from resorting to such fixing of positions in the future.
As discussed above, the CCI has also initiated an investigation into WhatsApp’s and Meta’s data practices including whether the data sharing provision may have exclusionary effects in the display advertising market (In Re: Updated Terms of Service and Privacy Policy for WhatsApp Users)[26].
Further, one of the primary reasons for the Standing Committee to recommend ex-ante regulation of the digital markets was that the “digital markets ‘tip’ quickly and one or two winners of leading players emerge in a short span of time”. Section 33 of the Competition Act provides enough armour to the CCI to impose interim measures to alleviate such concerns and avoid short term harms in cases of abuse of dominance, until the conclusion of the investigation. In fact, in FHRAI and Others v. MMT and Others,[27] while the matter was being investigated, the CCI used its powers under Section 33 of the Competition Act and directed MMT-Go to re-list certain affected hotels on its platforms that were excluded due to an agreement MMT-Go had with OYO. The Gujarat High Court set aside the CCI’s interim order as it was passed without hearing OYO and remanded the matter to the CCI for reconsideration. At the subsequent hearing, OYO and MMT-Go did not object to the re-listing of the excluded hotels and the CCI recorded this consent while disposing of the interim applications.
Section 49 of the Competition Act also allows for the CCI to undertake advocacy for promoting competition. Making use of such powers, the CCI had published a market study on e-commerce back in 2020, which identified competition issues similar to the ones identified in the Report (like anti-competitive exclusive agreements, deep discounting, platform neutrality, search rankings and usage and sharing of data) and clarified its position on examining these issues under the existing Competition Act on a case-by-case basis if required. Similarly, in 2021, the CCI published a discussion paper on competition issues in blockchain technology, advising stakeholders to be mindful of their conduct while using smart contracts to avoid enforcement action.
In addition to the CCI’s decisional practice in digital markets described above, it has been reported that the CCI is setting up a dedicated internal unit to deal with digital markets, in view of the number of cases and complexity in the digital sector and the increasing need for data and technology skills.[28] The unit should significantly complement the CCI’s enforcement as it is expected to: (a) be staffed with specialists with expertise on digital markets, including data scientists and algorithm experts; (b) monitor and govern the digital app ecosystem in the country; and (c) be a nodal point for stakeholder engagement across industry, academia, other regulators and the Government.
The above precedents and CCI’s advocacy initiatives evidence the CCI’s foresight and ability to effectively tackle abusive conduct including self-preferencing, deep discounting, anti-steering, exclusive tie-ups, and bundling and tying of services, and therefore reduces the need for new legislation to regulate competition in India’s digital markets.
As set out above, the Standing Committee recommends ex-ante measures to regulate competition in digital markets to deter possible monopolisation. However, regulating the digital sector ex-ante may lead to multiple “false positives”, i.e., where conduct which does not lead to anti-competitive effects is labelled anti-competitive. An ex-ante regime, by definition, would create rule-based restrictions, instead of effects-based restrictions. As a result, digital businesses will not be able to highlight consumer benefits or other positive effects that offset competition concerns when their conduct is being assessed. This is particularly relevant because there are a number of cases where the CCI has refrained from condemning allegedly abusive conduct which has served the purpose of fostering competition in digital markets.
In Harshita Chawla v. WhatsApp and Others,[29] an informant alleged that launching an integrated WhatsApp Pay feature in the WhatsApp application amounted to anti-competitive bundling with WhatsApp’s messaging services. The CCI, after considering WhatsApp’s submissions, concluded that WhatsApp pay was an optional feature which required users to sign in and register separately, and could not amount to any ‘imposition’ or implied or explicit coercion. The CCI also agreed with WhatsApp that, in the market for payment services, WhatsApp Pay was constrained by several large incumbents, including Google and Amazon, and the entry of WhatsApp Pay would not adversely affect competition. In doing so, the CCI adopted a nuanced approach by awarding WhatsApp a hearing at the prima facie stage of the proceedings, taking into account the potential effects of the alleged futuristic offending conduct, and thereafter concluding that no investigation was required into WhatsApp’s conduct. The CCI’s order was appealed, and the appeal was eventually dismissed by the NCLAT for want of prosecution.
In Vinod Kumar Gupta v. WhatsApp and Others,[30] the CCI prima facie dismissed allegations of abuse of dominance by WhatsApp in relation to its 2016 privacy policy. The CCI noted that WhatsApp collected limited information, and that the users had a choice to ‘opt out’ of sharing their account information with Facebook within 30 days of agreeing to the updated terms of service and privacy policy. The CCI also appreciated WhatsApp’s submission that the messages between users were end-to-end encrypted and could not be accessed by WhatsApp or any third party. This decision was appealed, and the NCLAT upheld the decision of the CCI.
In Meru Travel Solutions Private Limited v. Uber India Systems Private Limited and Others,[31] Meru filed a case before the CCI against Uber (a competing player) alleging abuse of dominance in the radio taxi services market in Kolkata. The CCI prima facie dismissed Meru’s allegations, holding that Uber was not dominant in the relevant market, inter alia, due to the presence of strong competitors in the market. In a separate case, while examining Uber’s pricing policies in the Delhi Market,[32] the CCI once again refrained from penalising Uber, reasoning that Uber’s incentives and introductory prices were justified to attract riders and driver partners to a growing platform.
In Prachi Agarwal v. Urbanclap Technologies India Private Limited,[33] the CCI refrained from acting against Urbanclap, a platform which offered salon services through an app / internet browsing, holding that the objective justifications offered by Urban Clap regarding its customer experience and quality of service were reasonable grounds to rebut the informant’s allegations of denial of market access and imposition of unfair conditions.
In Baglekar Akash Kumar v. Google LLC and Others,[34] the CCI prima facie dismissed allegations of abuse of dominance by Google in relation to the integration of Google Meet with Gmail considering the submissions made by Google that users had a choice to use either of the apps with all their functionalities without necessarily having to use the other. The CCI also noted that, even though the Meet tab had been incorporated in the Gmail app, Gmail did not coerce users to use Meet exclusively and the consumers were also free to use Meet or any other app for video conferencing.
The above cases are prime examples of digital markets flourishing when the CCI has examined allegedly abusive conduct ex-post and allowed businesses to highlight the efficiencies arising from their impugned conduct, and decided that intervention was not necessary. An ex-ante framework may not afford this protection to businesses, to defend themselves, provide objective justifications, and highlight efficiencies arising out of their conduct and, therefore, has a greater possibility of chilling innovation, competition, and consumer choice. In the absence of such protection, digital players in India may suffer and remain chary of innovating and producing consumer benefitting products in fear of violating the law.
The recommendation to identify SIDIs based on restricted criteria such as revenues, market capitalisation and number of users is a step back to the times of the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act) (the legislation which was eventually replaced by the Competition Act), which sought to provide control over monopolies.
The MRTP Act was criticised for a variety of reasons, but mainly for its assessment of dominance, which restricted expansion, diversification and competitiveness of businesses. Under the MRTP Act, dominance, if established, was considered bad per se, regardless of whether or not a party had abused it.
The MRTP Act envisaged a strict mathematical criterion to determine dominance; essentially, an enterprise with 25% or more market share (or control over it) would be considered dominant. However, this was a faulty approach because, at the same time, if an enterprise would have, say, a 24% market share (or control over it), it would not be considered dominant. This was unfair, and a huge price to pay for the extra one per cent.
In a bid to modernise the competition regulation of the country, the Government of India constituted the Raghavan Committee to advise on a new competition law for the country in line with international developments. It is noteworthy that, while comparing the MRTP Act and the (then) Competition Bill, 2001, the Raghavan Committee acknowledged that the MRTP Act frowned upon dominance, whereas the new legislation would frown upon the abuse of dominance.
However, the Standing Committee’s recommendation intends to take a step that will set Indian competition backwards. Similar to the MRTP Act, the Report states that the proposed DCA will identify ‘market winners’ that can negatively influence competitive conduct in the digital ecosystem based on mathematical criteria such as revenues, market capitalisation, and number of active business and end users.
The overarching ex-ante obligations sought to be imposed on such ‘big’ digital players under the proposed DCA contradicts modern competition jurisprudence, which functions on the principle that mere size is not an offence under competition law. Such obligations may fail to capture the diverse ways in which digital platforms compete and innovate, and eventually harm consumers and chill innovation.
Notably, the Report does not consider the inflexible nature of ex-ante competition regulation which is less attuned to the dynamics of the digital markets and carries a greater likelihood of error costs. On the other hand, as seen above, an ex-post regime provides competition regulators with the flexibility of utilising existing methods for competition assessment, which are specifically suited to assess allegedly offensive conduct in digital markets.
Moreover, an ex-ante regulation model is ill suited for digital markets as it is not placed to predict what the future of these markets holds, who the new market entrants will be, or how they will be entering into a certain market. On the other hand, ex-post competition policy remedies serve the objective of fostering competition for the incumbent and future digital platforms. They assume that concentration is not necessarily welfare diminishing, as direct and indirect network effects and economies of scale bring great value for consumers and suppliers that use the intermediation platform, i.e., big is not necessarily bad.
The Standing Committee’s recommendation for an ex-ante competition framework also does not consider that some digital players are already subject to / will be subject to multiple ex-ante regulations in India, including those that are / will clearly overlap with the Competition Act.
For example, e-commerce players in India have ex-ante obligations under the Foreign Direct Investment Policy (FDI Policy) under the Foreign Exchange Management Act, 1999, the Consumer Protection Act, 2019 and the Competition Act.
Under the FDI Policy, foreign funded e-commerce entities must not directly or indirectly influence the sale price of goods and services sold on its platforms, ensure parity between contracts to all sellers indiscriminately, and not mandate any seller to sell its goods on the platform exclusively. Under the Consumer Protection (E-commerce) Rules, 2020 (Consumer Protection Rules), e-commerce players must not manipulate prices, discriminate between consumers, or indulge in unfair trade practices.
An ex-ante competition regime may also clash with the proposed Digital Personal Data Protection Bill (DPDP Bill), which suggests that “data fiduciaries” must use data in a manner which is lawful, transparent and fair. The DPDP Bill also mandates organisations to collect only those items of personal data required for attaining a specific purpose, and not to use personal data for purposes except for what it was collected.
Further, the Government of India is close to drafting the Digital India Act, a proposed legislation to replace the Information Technology Act, 2000 and govern the digital space on key issues such as online harm, de-platforming, doxxing, and social media algorithms. While it is too early to comment on the detail, there may be an enforcement overlap between the Digital India Act and any proposed ex-ante competition legislation.
Therefore, ex-ante competition legislation for digital markets will further add another conflicting legal regime and create uncertainty in cases where the conduct in question is addressed by both ex-ante and ex-post regulation. The uncertainty may also lead to enforcement overlaps, forum shopping and regulatory arbitrage.
The Standing Committee’s recommendation for specialised legislation to regulate competition in the digital sector ex-ante mirrors developments in jurisdictions like the European Union (EU), the United States and the United Kingdom (UK), which have introduced or are currently developing their own legislation for similar purposes. However, the Standing Committee has not considered that there continues to be a lack of local and global consensus on the merits of such legislation.
The Digital Markets Act (DMA), which has been introduced in the EU has been criticised globally, including a critique by Fredric Jenny, the Chair of the OECD Competition Committee, who stated that the DMA could actually result in restriction on competition or innovation in the name of protecting competition in the digital ecosystem. The DMA has also been criticised for its lack of flexibility to adapt to future markets and platforms, its other anti-competitive practices, as well as its questionable impact on the acceleration of antitrust proceedings.[35]
Similarly, in the United States, the American Innovation and Choice Online Act and the Open App Market Act have failed to attain congressional support across the board due to substantive disagreements and concerns for unintended consequences of ex-ante regulation on consumers, growth and innovation.
In the UK, there is currently no ex-ante competition regime for digital markets. However, consultations are underway on a new pro-competitive regime to shape the behaviour of power technology firms with strategic market intent. It is noteworthy that, while the UK has a similar recommendation to tackle competition issues in the digital markets by adopting an ex-ante framework, the proposed approach is in stark contrast to the one adopted in the EU. The DMA adopts a one-size fits all approach, where all ex-ante obligations apply to all gatekeepers regardless of their activity. The UK government is critical of this stance and recommends imposing a code of conduct only on specific companies, which would be tailored to the exact circumstances of each firm.
Apart from failing to consider the lack of consensus, the Standing Committee has also not considered that legislation like the DMA has a long transition and implementation period and, therefore, there is a lack of any hard evidence that this new and experimental model is necessary and will be able to deliver the benefits that it claims.
The Standing Committee should have considered that, if individual nations introduce overarching ex-ante regulation in the absence of a global consensus, it will result in a multitude of conflicting legal positions. This will disproportionately affect the overall digital landscape in India, and across borders.
An analysis of the CCI’s decisional practice indicates that the existing competition regime is well equipped to tackle competition concerns in digital markets effectively and in a timely manner. As discussed above, a ‘big is bad’ approach has the potential to discourage global businesses from establishing a presence in India due to lower incentives, added regulatory costs and barriers to entry. It could also reduce incentives to innovate amongst local online businesses and start-ups, thus going against the Government’s “Digital India” mission. It is hoped that these potential implications find their way in the CDCL’s report to the government to enable the legislature to arrive at an informed decision before enacting any legislation.
It is important to note that the recommendations for a new Digital Competition Act and ex-ante regulation come at a time when the Parliament is at the threshold of approving the revised Digital Personal Data Protection Bill and the new Competition (Amendment) Bill, both of which are expected to plug existing loopholes and herald a new age of operation for tech companies in India.
In this precarious situation, competition in digital markets may be better regulated with an increase in competition advocacy initiatives in the digital sector, consultation with expert witnesses like data scientists and algorithm experts in digital competition cases and the addition of a digital markets and data monitoring unit in the CCI. Further, the CCI could continue to publish measures for self-regulation for digital players across markets, and follow-up with regulatory action if required.
Footnote
[1] S. Prado, T. (2020), “Assessing the Market Power of Digital Platforms”, SSRN Electronic Journal, (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3747793).
[2] The CLRC was constituted by the MCA in 2018 to review the Competition Act and to ensure that it was in sync with the needs of strong economic fundamentals.
[3] Report, Paragraph 1.12.
[4] Report, Paragraph 1.14.
[5] Report, Paragraph 1.16.
[6] Report, Paragraph 1.18.
[7] Report, Paragraph 1.22.
[8] Report, Paragraph 1.22.
[9] Report, Paragraph 1.26.
[10] Report, Paragraph 1.28.
[11] Report, Paragraph 1.30.
[12] For abusing its dominant position, Section 27 of the Competition Act enables the CCI to require changes to business practices, including cease and desist orders and targeted behavioural remedies. Section 28 of the Competition Act allows the CCI to order the division of a dominant enterprise and creates a strong deterrent against anti-competitive behaviour.
[13] XYZ v. Alphabet Inc. and Others, CCI, Case No. 07 of 2020 (25 October 2022).
[14] Together We Fight Society v. Apple Inc., CCI, Case No. 24 of 2021 (31 December 2021).
[15] Umar Javeed v. Google LLC and Others, CCI, Case No. 39 of 2018 (20 October 2022).
[16] Matrimony.com Limited v. Google LLC and Others, CCI, Case No. 07 and 30 of 2012 (8 February 2018).
[17] Umar Javeed v. Google LLC and Others, CCI, Case No. 39 of 2018 (20 October 2022).
[18] Together We Fight Society v. Apple Inc., CCI, Case No. 24 of 2021 (31 December 2021).
[19] Kshitiz Arya and Another v. Google LLC and Others, CCI, Case No. 19 of 2020 (22 June 2021).
[20] In Re: Updated Terms of Service and Privacy Policy for WhatsApp Users, CCI, Suo Moto Case No. 01 of 2021 (24 March 2021).
[21] Delhi Vyapar Mahasangh v. Flipkart Internet Private Limited and Another, CCI, Case No. 40 of 2019 (13 January 2020).
[22] Federation of Hotel and Restaurant Associations of India and Another v. MakeMyTrip India Private Limited and Others, CCI, Case No. 14 of 2019 (19 October 2022).
[23] National Restaurant Association of India v. Zomato Limited and Others, CCI, Case No. 16 of 2021 (4 April 2022).
[24] Delhi Vyapar Mahasangh v. Flipkart Internet Private Limited and Another, CCI, Case No. 40 of 2019 (13 January 2020).
[25] Matrimony.com Limited v. Google LLC and Others, CCI, Case No. 07 and 30 of 2012 (8 February 2018).
[26] In Re: Updated Terms of Service and Privacy Policy for WhatsApp Users, CCI, Suo Moto Case No. 01 of 2021 (24 March 2021).
[27] Federation of Hotel and Restaurant Associations of India and Another v. MakeMyTrip India Private Limited and Others, CCI, Case No. 14 of 2019 (19 October 2022).
[28] The Economic Times, “CCI to set up dedicated Digital Markets & Data Unit to address complexities in digital sector: Chairperson AK Gupta”, available at https://government.economictimes.indiatimes.com/news/governance/cci-to-set-up-dedicated-digital-markets-data-unit-to-address-complexities-in-digital-sector-chairperson-ak-gupta/94891185, last accessed on 9 March 2023.
[29] Harshita Chawla v. WhatsApp Inc. and Another, CCI, Case No. 15 of 2020 (18 August 2020).
[30] Shri Vinod Kumar Gupta v. WhatsApp Inc., CCI, Case No. 99 of 2016 (1 June 2017).
[31] Meru Travel Solutions Private Limited v. Uber India Systems Private Limited and Others, CCI, Case No. 81 of 2015 (22 December 2015).
[32] Meru Travel Solutions Private Limited v. Uber India Systems Private Limited, CCI, Case No. 95 of 2015 (14 July 2021).
[33] Prachi Agarwal v. Urbanclap Technologies India Private Limited, CCI, Case No. 30 of 2020 (24 March 2021).
[34] Baglekar Akash Kumar v. Google LLC and Others, CCI, Case No. 39 of 2020 (29 January 2021).
[35] Kluwer Competition Law Blog, “The Digital Markets Act – We gonna catch’em all?” (https://competitionlawblog.kluwercompetitionlaw.com/2022/06/13/the-digital-markets-act-we-gonna-catch-em-all/).
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Contributed by: Naval Satarawala Chopra, Partner; Yaman Verma, Partner; Supritha Prodaturi, Principal Associate; Shivek Sahai Endlaw, Associate
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