[The Viewpoint] The future of India’s Competition Law

For lawyers who started practice in 2008 in India, the Competition Act, 2002 was one of the most widely anticipated legislations in the country. In fact, the scope of antitrust/Competition Law worldwide was promising and rather overwhelming.

To its credit, in its initial days, the legislation and the governing body, the Competition Commission of India (CCI), drew wide attention across the globe with multiple investigations, high penalties and an evolving jurisprudence. One could even say that the CCI was a fierce competitor to the Competition department of the European Commission.

India’s Act has since undergone a wide array of amendments, including substantive, procedural and institutional changes. 20 years since its original enactment and 13 years since its active enforcement, India now stands at the brink of effective Competition Law enforcement, given that technological advancements are far greater and faster today than in 2009.

While the Act was designed for brick and mortar services, the CCI was first intrigued when ‘taxi aggregator cab services’ threw up certain challenges. This then led to a series of different digital landscapes being targeted across the world. (See - Delhi Vyapar Mahasangh v Flipkart Internet & Anr, XYZ v Alphabet Inc & Ors, National Restaurant Association of India v Zomato & Anr, Together We Fight Society v Apple Inc)

Why then is this article relevant? Scores of commentators have given their views on this subject, (including us) on the subject of the interplay between Competition Law, data protection and digital markets. Two reasons, therefore, come to mind:

(1) The recently tabled Competition (Amendment) Bill, 2022 [which is a fall out of the Competition (Amendment) Bill, 2020], and

(2) The Standing Committee on Finance’s yet to be published report on the evolution of Competition Law for digital markets.

The 2022 Amendment was to be tabled in the Monsoon Session of the Lok Sabha early last month, but has been now pushed to the Winter Session later this year.

As a lot has transpired in the digital and data space in India, along with amendments to the Information Technology Act, 2000 and two rounds of discussion papers on the proposed data protection law (which has now been withdrawn for drafting a completely new framework), one would have anticipated that the 2022 Amendment carried changes to include the rapidly evolving digital and data spheres.

The disappointment, therefore, is apparent, as the current 2022 Amendment Bill proposes the following substantive amendments (among others):

a) Supply-side substitutability included within the definition of relevant product market;

b) Inclusion of ‘Hub and Spoke’ cartels within the scope of anti-competitive agreements;

c) Inclusion of agreements that do not fall either under horizontal or vertical agreements under Section 3(4);

d) Changes to the leniency regime in order to encourage reporting against cartels;

e) Introduction of deal value thresholds, clarifications on meaning of ‘control’ and ‘turnover’.

At a time when the EU has published multiple discussion papers on the possible intersection between Competition Law, data protection law and digital spaces, and enacted legislation such as the Digital Markets Act (DMA) and the Digital Services Act (DSA), India is yet to recognise the value and importance of these issues.

Notwithstanding the above critique, India is not the only country facing this clash. There are several bills pending in the British Parliament and the US Congress as well on these issues.

All is not lost, though. With the Standing Committee Report, there is a still a glimmer of hope. It is to be seen whether the recommendations of the Standing Committee Report will be incorporated in the already tabled Bill before the Winter Session or whether the Bill will be scrapped in its entirety and be replaced with a new Bill to incorporate the recommendations.

The brilliance of the EU and their remarkable journey of integrating enactments and thinking ahead of time comes to light with their study on digital services.

The rules specified in the DSA primarily concern online intermediaries and platforms, which include online marketplaces, social networks, content sharing platforms, app stores and online travel and accommodation platforms. The DMA include rules that govern gatekeeper online platforms which are digital platforms with a systemic role in the internal market that function as bottlenecks between businesses and consumers for important digital services. [Gatekeeper platforms are digital platforms with a systemic role in the internal market that function as bottlenecks between businesses and consumers for important digital services.]

There has been a periodic check even by the CCI on the dominant position enjoyed by large online multinational players having advantages over competitors and affecting consumer choice – we have also seen cases where, under the garb of privacy, certain companies have unilaterally changed their policies to be ‘compliant under law’. However, we are yet to have a concrete law on digital services/markets or even data protection. Under these circumstances, it becomes essential for the government to turn to Competition Law to ensure competitive market standards and practices are followed even in the digital and data spheres so that the local market sustains and thrives.

While both the DSA and the DMA have intersections with other areas of law, from a Competition Law perspective, the primary role of the DMA is to ensure a level playing field for all digital companies, regardless of size. The regulation, therefore, lays down clear rules for what are big platforms and a list of do’s and don’ts – which aim to stop them from imposing unfair conditions on businesses and consumers.

Gatekeepers are to be identified based on pre-defined conditions and will have to follow certain obligations, like:

a) Prohibitions to discriminate in favour of own services;

b) Ensure interoperability with its platforms;

c) Obligations to share

Some examples of do’s and don’ts for gatekeeper platforms are as under:

As a matter of fact, the DMA has split rules separately for users and businesses as under:

Users

1. Ban of unfair practices, opening up the possibility for business users to offer consumers more choices of innovative services;

2. Better interoperability with services that are alternatives to those of gatekeepers;

3. Easier possibilities for consumers to switch platforms if they wish so;

4. Better services and lower prices for consumers.

Businesses

1. Businesses will be able to innovate and compete against gatekeepers’ own services in equal terms;

2. Consumers will be able to see which are the best options available and not just those that the gatekeepers want them to see;

3. Businesses will have access to more information on how their products or services are performing on third party platforms;

4. No unfair ranking of gatekeepers’ own services and products compared to those offered by other businesses on the same platform;

5. Consumers will no longer be locked in by gatekeeper platforms, allowing businesses to grow more.

Interestingly, the EC has also taken it upon itself to regulate this sphere with fines up to 10% of the company’s worldwide annual turnover or up to 20% in the event of repeated infringements. There are also periodic penalties of up to 5% of the average daily turnover. Additional remedies may also be imposed in case of repeated infringements including behavioural and structural remedies.

Deliberations in the past have suggested that the Act and the CCI must adopt a similar approach to that of the EU in the form of guidelines for vertical agreements, making it easier for enterprises to assess their vertical agreements themselves. There have been many changes made to the merger control and regulation in India, but not much on substantive elements of anti-competitive agreements and abuse of dominance. It will be interesting to see if the recommendations of the Standing Committee are in the form of offences and penalties or guidelines and the manner of incorporation within the ambit of the existing legislation.

Prashanth Shivadass is a Partner with Shivadass & Shivadass (Law Chambers).