Artificial intelligence (AI) can enable anti-competitive conduct such as predatory pricing, “self-preferencing,” and price discrimination, the Competition Commission of India (CCI) said in a market study report on “AI and Competition.” The study recommended industry-led self-regulation, proportionate safeguards and transparency standards to ensure safe and ethical use of AI technologies.
The regulator noted that dominant firms can dynamically adjust prices to eliminate competitors and then recoup losses – a strategy that harms long-term market health.
What did the report say?
“Bundling AI solutions with existing products may further consolidate market power, making it harder for independent providers to survive. Personalised pricing may raise competition concerns, especially when transparency is lacking,” the report said.
The report also carried a survey of different stakeholders including start-ups who indicated AI-facilitated collusion (37%), price discrimination (32%) , new entry barriers (22%), predatory pricing and (22%) as potential competition concerns associated with adoption of AI.
Globally, entities such as OpenAI, Microsoft, Google, Meta are major players in foundation model/generative AI segment while leading generative AI startups in India include Observe.AI, Pixis, Ola Krutrim, InVideo, Sarvam AI, Avaamo AI, Senseforth.ai, etc.
What did Modhulika Bose say?
“The market study recommends self-regulation and offers clear guidance, giving tech companies a road map to build competition-compliant AI ecosystems and products,” said Modhulika Bose, partner (competition law), Chandhiok and Mahajan Advocates and Solicitors.
Meanwhile, the study said that the AI platform companies operating in India have advocated for a risk-based and proportionate regulatory framework focusing on specific AI applications rather than broad sector-wide regulations.
The CCI study said that AI is posing a challenge for regulators as well, especially in areas like AI algorithms where the lines are blurring between explicit and tacit collusion. “Algorithms can independently learn to coordinate prices and monitor competitors’ actions without human involvement.
Essentially, algorithms can replace explicit collusion with tacit coordination, creating new challenges for competition law enforcement,” it said.
“The study does not shy away from pointing out potential risks, algorithmic collusion, and discriminatory pricing. However, it is equally important to note that the study does not yet provide conclusive evidence or establish clear theories of harm around these practices in the Indian context. The risks flagged remain largely indicative. The study should be seen as a valuable starting point, a foundation for vigilance and preparedness” said Bhoomika Agarwal, Programme manager at The Dialogue.
In the study, the CCI has also assessed how AI is influencing market dynamics in other jurisdictions such as the European Union (EU), the United Kingdom (UK), the United States (US), Japan, and China. In EU, it said that the regulators are focusing on compliance and accountability with strict penalties for violations. “Companies that fail to comply with the AI Act could face fines of up to €35 million or 7% of global annual revenue whichever is higher, reflecting the EU’s strong commitment to ensuring a safe and trustworthy AI ecosystem,” the report said.
Shivanghi Sukumar, partner at Axiom 5 law chambers said that the test now lies in translating these insights into clear, workable compliance expectations for businesses.