Business Standard

GETTING IN TUNE WITH THE TIMES

The new competitio­n law catches up with the realities of a digital world, but now faces a litmus test in the Google Play billing case

- RUCHIKA CHITRAVANS­HI

Last week, Google Play billing policy came under the scanner of the Competitio­n Commission of India (CCI) for allegedly imposing unfair service fees on app developers. This, perhaps, is one of the first investigat­ions ordered by the antitrust watchdog since the Competitio­n Amendment Act 2023 was notified on February 20, with one of its highlights being the incentives to a cartel under investigat­ion to tell on other cartels.

But we will come to that in a moment.

India’s competitio­n law was originally designed for brickand-mortar companies. It was not in tune with the digital revolution that swept across the business landscape during the last decade or so. But the law made do by what some might call the Jugaad way to deal with the gig and the digital economy. Now, though, the law seems to have caught up with the times.

The litmus test of how well it has caught up, say experts, is how the provisions of the amended Act are applied in the matter of Google Play Store. Whether the search and software giant opts for the settlement and commitment scheme — one of the new facets of the law — in the days to come would be closely watched by competitio­n law practition­ers and digital companies alike.

“The proof of the pudding is in the eating. How the CCI implements the new provisions and ensures that the legislativ­e intent is not compromise­d would be of utmost importance. The CCI now has to build trust among stakeholde­rs,” says an industry expert.

Turning point

From introducin­g the leniency plus and settlement and commitment mechanisms for companies flouting the rules, the competitio­n law for the first time is also including a deal-value threshold, instead of just asset value, for approving mergers and acquisitio­ns. Add to this the latest Digital Competitio­n Bill and the legal framework for competitio­n law is now poised for a historic turning point. “These are all very progressiv­e steps and in line with internatio­nal best practices. It is a sign that the law and regulator are more mature and prepared to undertake scrutiny of intricate and complex market issues. Also, everything is no longer black or white, there are several shades of grey in terms of anti-competitiv­e behaviour and remedies,” says Neelambera Sandeepan, Partner at Lakshmikum­aran & Sridharan Attorneys.

Experts say though the Competitio­n Law amendments have drawn on the more mature jurisdicti­ons, such as the European Union and the United Kingdom, the competitio­n regime in India is based on the specific requiremen­ts and challenges of the domestic markets.

“This is the very reason why, unlike an arbitratio­n convention, it is next to impossible to have a global competitio­n treaty or convention. Rather than comparing our regime with any other frameworks, we must adapt to determinin­g the successes and failures of our competitio­n regime on its ability to truly grapple with the changing Indian scenarios,” says Sukrit Kapoor, Partner, King Stubb & Kasiva, Advocates and Attorneys.

Most experts agree that many of the recent changes are business-friendly and realistic. For instance, companies can, without admission of guilt, opt for the settlement or commitment option and provide a full and true disclosure of facts in respect of the alleged contravent­ions of the Act.

Similarly, under ‘Leniency

Plus’, a cartelist who is cooperatin­g with the CCI for leniency can disclose the existence of another cartel in an unrelated market. The cartelist can do so in the course of the original leniency proceeding­s in exchange for an additional reduction in penalty.

“There is now flexibilit­y for the CCI as well as the market participan­ts to correct anticompet­itive practices, instead of expending time and resources in protracted proceeding­s,” says Unnati Agrawal, Partner, Induslaw.

Balancing innovation and regulation

The recent Digital Competitio­n Bill has not received the full support of all stakeholde­rs, with many of the so-called Big Tech companies calling for lighttouch regulation that does not stifle innovation.

When the Ministry of Corporate Affairs invited comments on the expert committee report and the draft Digital Competitio­n Bill, Google, Apple, Flipkart, Amazon, and Uber opposed ex-ante regulation.

Ex-ante regulation­s are preemptive measures that prohibit companies from restrictin­g third-party apps, imposing antisteeri­ng provisions, engaging in self preferenci­ng, or misusing business users’ data. The Digital Competitio­n Bill has proposed that Systemical­ly Significan­t Digital Enterprise­s, which will be identified on the basis of the number of their users in India, turnover in the country, global turnover, global market capitalisa­tion, or other equivalent parameters, must declare themselves as such to the CCI.

While Twitter and Paytm were in favour, the latter said it was in favour as long as only large digital enterprise­s with a critical mass were subject to the regulation­s.

Finance Minister Nirmala Sitharaman, when she recently met financial sector regulators and fintech companies and startups, encouraged new-age firms to continue to innovate while keeping a close watch on the regulatory norms.

Some experts sound a note of caution.

“Lawmakers would need to be nimble-footed and quickly address any changes that may be required to ensure that India remains on the technology and innovation bandwagon and regulatory oversight does not become burdensome for the industry,” says Anshuman Sakle, Partner, Khaitan & Co.

However, balancing innovation and regulation is not the only challenge for the CCI. It is staring at a triple mandate of implementi­ng the existing Competitio­n Act, cases under the National Anti-profiteeri­ng Act, and the proposed Digital Competitio­n Bill. Its sanctioned strength, however, has remained the same and 70 of 195 places are vacant, according to a parliament­ary panel’s report.

“One challenge that both companies and lawmakers might face in the future is ensuring effective enforcemen­t of the Competitio­n Law across all sectors, including emerging digital markets, since the ex-ante regulation requires companies and lawmakers to be on a continuous vigil to ensure that non-compliance does not go scot-free,” says Sucharita Basu, Managing Partner, Aquilaw.

Meanwhile the CCI itself is going to have a review by the Ministry of Corporate Affairs over its state of affairs, amid concerns over inaction on pending complaints and regulation­s that are yet to be notified.

The latest report by the expert committee on digital competitio­n law also noted the time-consuming nature of investigat­ion and enforcemen­t proceeding­s by the CCI. It cited the case of Matrimony.com Limited vs Google LLC, where the CCI took six years to adjudicate on the matter, but found that even after a period of 11 years, the matter had not reached finality and was still sub-judice before the National Competitio­n Law Appellate Tribunal.

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