New laws, Indian context
Competition rules must be adapted to our needs
Given the slew of new government rules and the report of Committee on Digital Competition Law (CDCL), it would seem that the existing competition framework was inadequate.
On the contrary, the CCI has in the last 15 years developed an impressive track record of cracking down on anticompetitive cartels and abuse of dominance, including by large technology companies. What then, has motivated this spurt of regulation by the government?
One view is that the CCI had begun to flounder under the weight of protracted litigation. So the government in April 2023 introduced sweeping changes to the Competition Act to further empower the CCI.
With new changes, the CCI can now accept settlements and commitments in noncartel cases; and offer a more attractive incentive to cartel whistleblowers through a new “leniency plus” programme.
Simultaneously, the new regulations also strengthen deterrence by allowing the CCI to impose penalties as a percentage of a company’s global turnover, rather than be limited to its Indian revenue; and crucially, provide some guidance on how such penalties will be calculated.
But the new competition regulations will only be as effective as their implementation. If companies use the commitments and settlements mechanism to good effect, rather than contesting CCI proceedings, the rules will be considered a success.
THE SHORTCOMINGS
However, these regulations also have significant shortcomings: for one, companies that are currently being investigated in “legacy cases” cannot settle or offer commitments due to an incredibly short application time window.
Similarly, the new “leniency plus” regulations also provide whistleblowers a narrow window of opportunity to apply. Further, the CCI can use facts or admissions made by settlement and commitment applicants in proceedings before other courts, even outside India, as being admissions in their ongoing proceedings.
Such stringent requirements can be a deterrent to companies.
These sweeping changes that practices
Anti-competitive
have brought in a “competition law 2.0” regime, will empower the CCI to identify, detect, and swiftly address any anticompetitive conduct in the market. Why then, would the government propose another legislation — the Digital Competition Bill (DCB), to regulate competition — and that too specifically in digital markets?
A hint of the Government's motivations can be found in the report of the Committee on Digital Competition Law (CDCL) which suggests that current CCI investigations take too much time, and fastmoving technology markets require swift intervention.
Large companies that make the cut as “Systemically Significant Digital Enterprises” (SSDEs) must not cross the rubicon, irrespective of circumstances. The reason CCI takes time to investigate tech companies is because the digital economy has thrown up unique and innovative business models, many of which greatly benefit consumers.
Meaningful intervention requires indepth analysis and resolution of issues such as multihoming in the cab aggregation business, selfpreferencing in the food delivery industry, and bundling and tying in the mobile ecosystem, to name just a few. The CCI has in each instance, been mindful of the benefits that innovation and technology bring to Indian markets.
To replace meaningful consideration of market behaviour with a singular set of do’s and don'ts for technology markets does not sound like a solution; instead, it resembles the “command and control” mindset of preliberalisation India.
So instead of imitating European regulations, our digital laws must be suited to the needs of markets in Bengaluru not Brussels.
The writer is Co-Founder Axiom5 Law Chambers