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One-size-fits-all doesn’t work for digital markets
Amid concerns about possible unfair business ways in the growing digital space, Competition Commission Chairperson Ashok Kumar Gupta has said that a “one-size-fits-all” approach does not work for digital markets and a nuanced assessment of cases based on facts is the need of the hour.
Competition Commission of India (CCI) has been closely watching digital markets and also came out with a detailed study on e-commerce space, among other initiatives.
Owing to their innate features such as network effects and data-driven complementarities, digital markets typically yield high concentration and are often “winner-take-all markets”, Gupta opined and acknowledged that concerns and implications of anti-competitive conduct get amplified in this context.
“The strength of network effects and consequent lock-ins for consumers differ from one market and one product to another. A one-size-fits-all approach does not work.
“A nuanced assessment, based on the facts of the case and the market and technology in question is the need of the hour. The Indian anti-trust law allows for the much-needed flexibility within a broad framework as the statutory framework is robust enough,” Gupta told in a recent e-mail interview.
Like any other competition authority, he said the challenge for the CCI is to ensure that these concentrated digital markets remain open to new entrants and that competition on and between the digital platforms is on the merits.
This has become all the more important during the pandemic as the integration of businesses with the digital mode is extremely important, he emphasised.
Among the studies being done or proposed by the fair trade watchdog is an ongoing one on mergers and acquisitions in the digital market to understand the emerging trends.
According to Gupta, the study will also look at those mergers and acquisitions in the digital space that might have escaped the CCI’s scrutiny owing to their asset/ turnover falling below the stipulated thresholds.
Under the Competition Act, deals beyond certain thresholds require the approval of the CCI.
When asked about his thoughts on digital companies gathering huge data and at times, emerging as a kind of monopolies that affect other competitors, Gupta said the regulator is cognizant of the fast-evolving digital markets and role of Big Data in the gig economy.
Elaborating, he noted that from a competition law perspective, data as a resource is a key element in the digital economy and is a significant metric in assessing market power of the firms.
“Data and, more specifically, the knowledge extracted from data are a source of a significant competitive advantage, which may work in favour of large incumbent platforms. The concern arises when large digital firms reinforce and exploit this data advantage through anti-competitive means,” he noted.
He said that in case such firms leverage the data controlled in some markets to achieve enhanced power in other markets, or discriminate in giving access to data to attempt to exclude a viable competitor, that may be a cause of concern requiring examination under the Competition Act, 2002.
“Further, if consumers value privacy, then, large collection of data may be analogue to a reduction in the quality of the service provided and/ or imposition of unfair condition which can be seen in competition law terms as an exploitative conduct,” he added. PTI
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