An overarching architecture for regulating anti-competitive conduct imperative

An overarching architecture that would help Competition authorities across the world to co-operate or adopt the same solution simultaneously for regulating anti-competitive conduct in the digital markets is the need of the hour, Frederic Jenny, Chairman, OECD Competition Committee said.

A consensus is “very much needed” on the issue given that digital markets are unique and global in nature unlike non-digital markets, where multinational firms operate on a very large number of national markets that may be slightly different from each other, Jenny told businessline.

He was responding to a question on whether a multilateral arrangement — instead of the current fragmented regulations — like the WTO was needed so as to have an uniform approach on competition law enforcement and policies for the digital markets.

It was pointed out to Jenny that each country was now bringing their own law to rein in Big Tech’s anti competitive conduct and with these firms operating in multiple jurisdictions, there is now fragmented regulation.

Markets differ
Jenny highlighted that there is a major difference between the usual markets, non-digital markets and the digital markets.

“On the non-digital markets, you have multinational firms who operate on a very large number of national markets, but those national markets may be slightly different from each other, because of either regulation or distance or whatever. In the digital world we do not have a large number of national markets, we have a global market by definition. So the situation is different there”, he said.

The type of cooperation between competition authorities which has existed in non-digital sector is not particularly useful or not as useful in the digital world, he added.

In the non-digital world, Competition authorities help each other by exchanging information to help each country bring its own cases. “So you have a transnational case, for example, in Europe, but the suppliers are in India. So the European Commission, well, for example, if it has an agreement with CCI in India, we will ask the CCI to provide whatever information it has on this that would help the Europeans to implement their domestic law.

Now this is fine when you have physical separation between markets, but when we are talking about a unique global market, this type of cooperation between competition authorities does not make much sense”, Jenny said.

Citing the example of booking.com, Jenny noted that many countries have had a problem or thought that they would want to look at the problem of price parity clauses in booking.com, which is the fact that the platform does not allow anyone to offer the same rooms in the same apartment at a cheaper price on a different platform.

“But the effect of the price parity clause on booking.com is exactly the same in the European Union as it is in India as it is in South Africa or anywhere. So it does not make a lot of sense for each competition authority to go after it and to repeat themselves. It could be much better if there could be some overarching architecture that would help competition authorities to co-operate, for example, or to adopt the same solution simultaneously”, Jenny said.

Jenny noted that consensus on having an overarching architecture is not there yet as there are lots of open questions about competition in the digital sector. “So I think the consensus is very much needed. Whether we have arrived for negotiations in the G20 or negotiations at WTO at this point, I think it’s a bit early”, he said.

Ex-ante regulations
Meanwhile, at a Round Table discussion on ‘Future of Competition Policy in Digital Markets’ moderated by Jenny, the panellists discussed the manner in which ex-ante regulations in competition law have developed across the world and the limited lessons they provide for the Indian landscape.

It was discussed that international frameworks on the subject have only been recently introduced and there is not sufficient evidence of their efficiency at the moment. It may be prudent, therefore, that a cautious and patient approach is deployed by India as it explores similar regimes, they submitted.

At the same time, the differences between Indian and international market and policy realities have to be kept in mind while analysing the proposed legislation. For instance, the significance of the start-up economy and its growth prospects in India have to be given due consideration while considering the need and feasibility of ex-ante regimes. The Hindu BusinessLine