The Competition Commission of India (CCI) is studying the “relevance and feasibility” of introducing “ex-ante” regulations to deal with digital markets in the Indian context, its Chairperson Ashok Kumar Gupta said on Saturday.

This remark of Gupta is significant as it comes at a time when competition authorities globally are grappling with challenges posed by the new age markets, i.e. whether the existing antitrust framework is well equipped to deal with the challenges posed by the digital platforms or there is a need to introduce new enforcement tools, including by way of “ex-ante regulations” to deal with their conduct.

Put simply, “ex-ante regulations” does not apply to everyone, but only to “gatekeeper” platforms. It’s introduction would mean such gatekeeper digital platforms would have to be ready for a new set of compliances.

“Some tweaking of Competition laws has happened and, in some jurisdictions, new legislations with ex-ante powers to regulate digital markets are either proposed or at an advanced stage of becoming law. The CCI is following such developments to ascertain their relevance and feasibility in the Indian context”, Gupta said at the Annual Conference on Competition Law and Practice organised by Confederation of Indian Industry (CII).

Faster market corrections

Unlike conventional tools of anti-trust which operates ex-post level, i.e after anti-competitive conduct taking place, ex-ante measures preemptively put certain obligations to be followed by “gatekeeper” platforms. This mechanism does not require competition agencies to show any adverse effect in markets in case of breaches of such norms, thereby ensuring faster corrections obviating the need for lengthy investigations and inquiries marred by delays due to judicial challenge during the course of investigations. 

The European Union has already introduced preemptive ex-ante regulation through its recently enacted Digital Markets Act for ‘gatekeeper’ platforms. There is now an increasing clamour that India too should adopt binding ex-ante regulations for digital ‘gatekeepers” to ensure market contestability for businesses including start-ups.

Anti-competitive practices by big tech

Standing Committee on Finance headed by Jayant Sinha has already identified anti-competitive practices by big tech as a subject for examination and its report is likely to be submitted this month. This panel is also likely to recommend in its report an ex-ante framework for digital markets, sources close to the developments said. 

Meanwhile, Gupta had highlighted the rapid growth of India’s digital economy reaching a significant stage. The Covid-19 accelerated the digitalisation of markets, thereby increasing the influence of digital platforms operated by the big tech.

“With control over user data and online real estate, these platforms are in an unique position to shape and influence consumer choices on the one hand and steer consumer traffic to the businesses on the other.

The ‘gatekeeper position’ of the platforms, seen in conjunction with their innate features, is giving rise to concerns for competition and contestability. Moreover these firms can bundle a range of digital services that enables them to expand into adjacent markets”, Gupta said.

The impact of these so-called ecosystems is compounded by the opacity in policies and the data advantage they have over both business users and potential competitors, he said.

“While India emerges as one of the biggest and fastest growing digital consumer bases, market distortions need to be corrected promptly”, Gupta added.

Multi-dimensional challenges

He said that the challenges these pose for antitrust enforcement and policy are multi-dimensional. First, the antitrust analytical and conceptual frameworks need necessary adaptation to reflect digital market complexities. Second, data-related conduct of deals require not only reframing the classic categories of antitrust concerns around personal and non-personal data as the relevant asset, but also adding other dimensions of competition such as quality and privacy. Third, given that digital markets are prone to tipping, early identification of issues and faster remedial interventions are of paramount importance, Gupta said.

Gupta also said that CCI is in the process of setting up a Digital Markets and Data Unit (DMDU) within the Commission as a centre of expertise for digital markets.