By Dhanendra Kumar
As the Competition Commission of India (CCI) completes its 13 years of enforcement on May 20 this year, it can legitimately celebrate its stellar achievements. Being one of the youngest market regulator of one of the world’s largest economies, it has achieved its rightful place on the high table of the world’s most advanced competition regulators. The Commission has adjudicated more than 1,200 antitrust cases many of which were highly complex, traversed till the apex court and stood the judicial scrutiny, and in the process, developed world-class jurisprudence. It has also reviewed more than 900 mergers and acquisitions till date, cleared most of them, within a record average time of 30 days. The Commission has also come up with several innovations like the ‘green channel’ provision for automated approval on combinations which do not have appreciable adverse effect on competition, and cleared more than 50 of such transactions. It has conducted several market studies helping dynamics of market.
India’s competition law is a dynamic law and, as the preamble of the Competition Act indicates, aims at accelerating economic development of the country, protect the interest of consumers and promote and sustain competition in markets. Since the primary legislation dates back to 2002, the transformation of the market with the explosive growth of digital economy in all sectors, particularly during the pandemic, has posed new challenges for the market regulator. The industry is awaiting the amendments in upcoming Competition (Amendment) Bill, expected to include several features from recommendations of the Competition Law Review Committee (CLRC). These may include change in merger thresholds from asset-size and turnover to ‘deal value’ and ‘size of transaction’, measures to check ‘killer acquisitions’, provision for ‘settlements and commitments’ etc.
During the pandemic, e-commerce has grown in a big way. Consumers prefer to have freedom to compare prices, speed, ease and quality of service with customer reviews, and most traders also shifted to the hybrid mode and hyperlocal deliveries. The difference between online and offline transactions has been blurred. In the financial space, digital transactions are the preferred mode, both in offline and online. Several e-commerce biggies like Flipkart and Amazon are integrating local kirana merchants and traders, as also artisans and craftsmen in a big way, helping in their digitisation and global outreach. In fact, the government has piloted a new Open Network for Digital Commerce (ONDC), a free accessible online system for traders as well as consumers. This will truly democratise e-commerce, where even existing platforms may be joining, as also local kirana merchants, and consumers can place their demand and anybody can supply. This will virtually obliterate the distinction between offline and online.
E-commerce these days is growing exponentially across the world, and is not restricted just to buying and selling products and services online but also includes intermediary processes which also gets intertwined with offline markets. In today’s world, it is the convenience of consumers and efficiency in trade that drives the market, which is promoting competition. Therefore, the definition of relevant market in the present situation cannot be made based on offline and online modes; rather, it is to arrived at on the basis integrated presence. In complex cases, there could be market surveys and users’ preferences compiled, to view substitutability.
It is high time, therefore, for the Commission to keep in mind the contours of its definition of ‘relevant market’, as defined in Sections 2(r), (s) and (t) of the Act. We didn’t have a robust digital economy at the time of enactment of the Act (2002) nor at the time of initiating its enforcement. The time is now. On January 18, 2022, the United States Federal Trade Commission (FTC) and department of justice (DOJ)’s antitrust division launched a joint public inquiry to revise and modernise merger guidelines to keep up with market realities. In its Staff Working Document in July 2021 on evaluation of Market Definition, the European Commission analysed the market definition (relevant market, as we call in Indian Competition Law) as per the changes that occurred after the 1997 Notice on Market Definition issued by the Commission. The report analysed that in some areas, including digital markets, the market definition notice is not up to date. In February 2022, the Australian Competition and Consumer Commission released a discussion paper on updating competition and consumer law for digital platform services and sought public opinion of abuse of dominance by digital platforms.
India’s Commission needs to update its definition now, when all eyes are on the upcoming Bill and merger regulations. Since, there are no boundaries in the digital space, defining relevant market has been a tough task for regulators around the globe. With the advent of Web 3.0, AI, IoT, Blockchain and other technological developments, and emergence of issues like data protection and privacy (Data Protection Bill is pending), search bias, platform neutrality, deep discounting, killer acquisitions, hostile takeovers, confidentiality, etc, the need for a robust competition law, attuned to meet the needs of present day techno-legal world, is important for India, which enables a true level playing field for the digital market players.
(The author is former chairman, CCI, and former executive director for India, Bangladesh, Sri Lanka and Bhutan at the World Bank. Views expressed are personal and not necessarily that of Financial Express Online.)