Competition Law

[By Aastha Gupta] The author is a student of National Law University Jodhpur.   INTRODUCTION The 21st century has witnessed a boom in digital markets powered by Information and Communication Technology. It has transformed market dynamics and spawned phenomena inexplicable by the traditional theories of harm in competition law. Consequently, The Competition Act, 2002 (Act) is deemed outmoded since it was drafted considering traditional brick-and-mortar markets. Pursuant to the Report of the Standing Committee on Finance (Report) titled ‘Anti-competitive practices by Big-Tech companies,’ the Ministry of Corporate Affairs set up a Committee on Digital Competition Law (Committee) to draft a Digital Competition Act (DCA) regulating competition in digital markets. Presently, the European Union (EU) and Germany have introduced such ex-ante laws to rein in the Big-Tech. However, the author argues that a separate DCA modelled on EU’s Digital Markets Act (DMA) is premature for a rapidly growing economy like India. The extant regime bolstered by certain amendments is well-equipped to deal with the challenges. This article will firstly, asses the challenges posed by digital markets; secondly, analyse the disadvantages of the proposed ex-ante framework; thirdly, suggest amendments to the extant regime in the backdrop of its overall suitability. CHALLENGES POSED BY DIGITAL MARKETS Defining the relevant market (RM) is the first step in antitrust scrutiny. Over the years, the Competition Commission of India’s (CCI) approach has evolved from Ashish Ahuja v. Snapdeal where it considered online and offline markets as merely separate distribution channels in the same RM; to Federation of Hotel & Other Restaurant Associations of India v. MakeMyTrip India Pvt. Ltd. (FHRAI) where the it segregated online and offline markets as different RM. However, the traditional touchstone of product substitutability is of limited assistance in digital markets. Digital ecosystems often involve two-sided and multi-sided platforms like Google, Uber, Swiggy characterised by zero-price services, network effects, positive-feedback loops etc. The interdependence of consumers on different ‘sides’ of the platform, warrant both sides to constitute the same RM as in Ohio v. Amex. However, in the Facebook/Whatsapp merger, the European Commission delineated separate RMs in a two-sided platform comprising platform users on one side and online advertising activity on the other. Thus, there is no uniform approach and novel approaches of delineation based on ecosystems, secondary-markets, cluster-markets are being explored. Additionally, these markets are prone to concentration of market share in a few dominant players due to low marginal costs, increasing returns to scale, monopoly leveraging through acquisition of complimentary assets which leads to a winner-takes-all situation. This,  is viewed as a perfect recipe for monopolistic outcomes and anti-competitive practices like self-preferencing, deep discounting, anti-steering provisions etc.; hence the call for an ex-ante regulation. CRITICISMS OF AN EX-ANTE FRAMEWORK Presently, Sections 3 and 4 are governed by an ex-post regime wherein firms may be penalized only after they have been adjudged guilty of contravening the Act. The Report recommended designating certain firms as ‘Systematically Important Digital Intermediaries’ (SIDI) and prescribed mandatory obligations for them. However, introducing objective quantitative thresholds to identify SIDIs is dubious since it paints disparate digital platforms like Uber and Amazon with the same brush. This is  undesirable in a dynamic market governed by multitudinous factors that require case-based analysis. It will increase false-positives that will further complicate enforcement, increase compliance costs and time for firms through a system of notices, approvals, disclosures, thus marking a step back in the government’s efforts to ensure ease-of-doing-business. Additionally, consider that presently, proving a charge of ‘abuse of dominance’ requires the enterprise firstly, to be dominant in the RM, i.e., be able act independently of market participants like suppliers, competitors, customers etc. which is a high threshold given the inherently inter-connected nature of the market system. Secondly, dominance must be abused. However, in the new framework, SIDIs will have to follow a list of obligations that limit their freedom of operation, which amounts to a regression to the outdated principle of the Monopolistic and Restrictive Trade Practices Act where dominance itself is bad. In CCI v. SAIL, it was held that the main objective of competition law is to promote creation of market responsive to consumer preferences. It is well-recognized that the innovations helmed by Big-Tech firms are responsible for the comfort and convenience we enjoy today, be it e-commerce, social-networking, or food-delivery. Contrarily, it is often argued that this innovation would have reached new heights absent Big-Tech. However, this is mere speculation. Consider for instance, the denunciation of acquisition of smaller firms by large firms as stifling competition. These acquisitions fuel the investment cycle since venture-capital firms often invest in startups hoping that these would be acquired by a large firm. Prohibiting these acquisitions might curb venture-capital investment. Moreover, small firms may not have the wherewithal to make their product successful, depriving consumers of its benefit. An over-intrusive regulation would be surprising considering CCI’s decisional practice of favouring innovative and fast-developing markets. In RKG Hospitalities Pvt. Ltd. v. Oravel Stays Pvt. Ltd., CCI viewed Oyo’s single largest market share  only as ‘significant’ noting that the market of franchising for budget hotels is still untapped. In Re: Bharti Airtel Limited and Reliance Industries Limited & Reliance Jio Infocomm Limited, CCI effectively allowed Reliance Jio to offer free services and gain share in the broadly-defined market for wireless communication services. PROPOSED AMENDMENTS Interestingly, the Report cited the need for a global harmonisation of the competition law regime. However, out of over 120 competition law jurisdictions across the globe, only the EU  and Germany have enforced ex-ante regulation; others are still considering the same. The DMA came into effect only on 2 May 2023 and has not been fully implemented. Thus, its actual effect is speculative. Further, India is still in the growth phase of its digital and technology industry as opposed to EU that has seen its heyday. Varied market conditions and consumer needs warrant broad-based market studies and consumer surveys before implementation. Thus, CCI must not jump the gun by introducing a DCA which would amount to choosing ‘fair’ over

[By Shivangi Paliwal] The author is a student of National Law University, Jodhpur.   I.          Introduction Blockchain technology has gained significant attention in recent years due to its potential to revolutionize various industries. India, currently, does not have any cryptocurrency legislation in place, although the parliament has proposed various bills to address the regulatory concerns associated with them. In January 2021, it was reported that the Indian Parliament was considering the “Cryptocurrency and Regulation of Official Digital Currency Bill, 2021.” The Competition Act, 2002 prohibits any practice which leads to adverse appreciable effect on competition. Cryptocurrency and blockchain technology can be used in an anti-competitive manner, thus it is pertinent to address concerns surrounding blockchain technology within the framework of the Competition Act, 2002, This article delves into key questions regarding blockchain technology, such as its classification as an enterprise, the treatment of agreements within the blockchain ecosystem, the jurisdiction of the Competition Commission of India (CCI) over blockchain enterprises, competitive concerns raised by blockchain, and the impact of algorithmically determined prices. Additionally, relevant case laws from USA too, are analyzed to provide a comprehensive understanding of the legal landscape surrounding blockchain technology. II.          Classification of Blockchain Applications as an Enterprise Section 2(h) of the Competition Act defines an enterprise as “a person or a department of the government engaged in any activity.” In the case of Re: Dilip Modwil and Insurance Regulatory and Development Authority, the CCI adopted an expansive interpretation of the term “enterprise,” encompassing entities engaged in economic and commercial activities. Accordingly, based on the joint discussion paper released by the CCI, blockchain applications providing distributed ledger technology (DLT) services can be regarded as enterprises governed by the Competition Act. III.          Agreements within the Blockchain Ecosystem The Competition Act’s Section 2(b) defines an agreement as any arrangement, understanding, or action in concert, regardless of its form or enforceability. Section 3 encompasses the prohibition of anti-competitive agreements among enterprises, individuals, or groups of enterprises or individuals, pertaining to various aspects such as production, supply, distribution, storage, sale, pricing, and trade of goods, as well as the provision of services. More specifically, the Act imposes restrictions on firms, or associations of firms, from engaging in collusion with other firms or associations of firms, regardless of whether they operate within the same or different levels of the production chain. In the context of competitors engaged in the same economic activity, these anti-competitive agreements commonly manifest as collusion, encompassing practices such as cartelization or bid rigging. The CCI’s joint guidance paper acknowledges that when two firms or individuals participate in a blockchain application with pre-defined rules, they have effectively entered into an “agreement.” Consequently, any anti-competitive conduct arising from participation in a blockchain application may be deemed a contravention of the Competition Act. IV.          Jurisdiction of the CCI over Blo. ckchain Enterprises Blockchain technology transcends geographical boundaries, and participants often remain anonymous. While this poses challenges, the CCI retains jurisdiction over global blockchains if it can demonstrate that significant adverse effects on competition in the relevant Indian market have occurred, as stipulated in Section 32 of the Competition Act. V.          Competitive Concerns Raised by Blockchains Opacity Effect of Permissionless Blockchains Permissionless blockchains, characterized by data encryption and pseudonymous nodes, pose challenges for competition authorities in analyzing blockchain application data. This opacity effect makes it difficult to identify economic evidence of anti-competitive conduct. However, the CCI has acknowledged this challenge in Re: XYZ Corporation, emphasizing the need for innovative approaches to address anti-competitive concerns within permissionless blockchains. Enforceability of Permissioned Blockchains In contrast to permissionless blockchains, permissioned blockchains are governed by centralized entities that scrutinize and list participants. As a result, concerns regarding enforcement and anti-competitive behavior are minimized within permissioned blockchains. Exchange of Sensitive Information Blockchains often contain sensitive information, including pricing, discounts, production, sales, costs, and strategies. The CCI has established, in various orders, that the exchange of commercially sensitive information can lead to an appreciable adverse effect on competition, contravening Section 3 of the Competition Act. For instance, in Re: Cartelization in Industrial and Automotive Bearings, the CCI held that the exchange of commercially sensitive information is an anti-competitive practice. Therefore, if a blockchain application involves the exchange of such information, the CCI has the jurisdiction to investigate the matter. Smart Contracts and Anti-competitive Behavior Smart contracts, integral to the functioning of blockchains, are self-executed digital contracts that automatically execute based on predetermined conditions without human intervention. In the case of Hyundai Motor Company and Kia Motors Corporation, the CCI ruled that the mere use of algorithms in smart contracts is not inherently discriminatory. However, it emphasized that such algorithmic means should not be utilized to promote anti-competitive behavior in the relevant market. Given that algorithms are an essential component of blockchain technology, the CCI will closely scrutinize any instances where algorithms are employed to facilitate anti-competitive conduct, raising concerns for blockchain applications. Impact of Algorithmically Determined Prices on Collusion The Competition Act stipulates that human involvement is necessary to provide relief in cases of collusion. The CCI’s decision in Samir Agarwal v. ANI Technologies affirmed that algorithmically determined prices do not automatically lead to collusion or cartelization within the scope of competition law. However, it is worth noting that every process involved in the functioning of a blockchain is algorithm-based, presenting a quandary for the CCI in assessing the potential for collusion or anti-competitive behavior within blockchain ecosystems. VI.          Position in USA Under the U.S. antitrust regime, the following are the major cases which shed light on competition concerns associated with Bitcoin technology. In the case of Gallagher v. Bitcointalk.org, a Bitcoin enthusiast filed a claim against the Bitcoin Foundation and the forum owners, alleging that they conspired to exclude him from the website, thereby stifling competition in the Bitcoin space. The plaintiff argued that this conduct violated Section 1 of the Sherman Act, which prohibits anti-competitive agreements and conspiracies. The court considered whether denying access to a blockchain facility, in this case, Bitcointalk.org, could constitute an

[By Himanshi Srivastava] The author is a student of Dharmashastra National Law University.   Introduction With the Competition (Amendment) Bill of 2023, receiving the President’s assent, the market is abuzz with questions revolving around the major amendment which has empowered the Competition Commission of India (CCI) to levy penalties on global turnover. In Section 27(b) of the Competition Act, the definition of turnover has been now enhanced to mean ‘global turnover’ derived from all the products and services by a person or an enterprise. This contrasts the earlier meaning of turnover, which was restricted to ‘relevant turnover’, as interpreted by the Supreme Court in the landmark judgement in the Excel Crop Care Ltd. case. In this case, the Apex Court determined that the penalty under Section 27(b) must be on the relevant turnover, i.e., relating to the specific product(s) in relation to the breaches. Until now, the definition of ‘turnover’ in Section 2(y) did not specify anything, it is for the first time that the words of the statute explicitly provide for the nature of the turnover to be global, extinguishing any possible ambiguities and room for judicial discretion. Thus, it will be quite crucial to see the development which will follow this unprecedented change in the Indian economy and the stakeholders. The amendment brings into discourse, the aspects of proportionate penalties, determining turnover, and the nuances of the constitutionality of the amendment. To understand the potential impact of this change in a global paradigm, a comparative assessment of jurisdictions like- the European Union (EU), the United Kingdom (UK), and Germany would be immensely fruitful. Analysing the penalty on turnover in a global paradigm For the purpose of contextualising the analysis, a parallel comparison could be drawn in the global paradigm, to ascertain the practical nuances of this amendment from a broader perspective. The EU, CMA guidelines, and the German Competition Act are relevant to this discourse. Article 30 of the EU’s Digital Markets Act penalises the gatekeepers with a fine of up to 10-20% of the total worldwide turnover in the preceding financial year, on breaches of the Act. However, as a precaution, this provision is followed by the ‘right to be heard and access to the file’ in Article 34 of the Act. By virtue of this provision, the gatekeepers have the right to the defence which includes the right to access the file of the Commission and submit their observations regarding the preliminary findings of the Commission. Similarly, the Competition and Markets Authority (CMA) of the UK has permitted a maximum penalty of 10% of the worldwide turnover of the entity in the last business year for engaging in anti-competitive conduct.      The guidance also provides for mitigating factors, assessing whether the undertaking is operating under duress, if the infringement is halted upon CMA’s intervention and cooperation with the process. Section 36 of the Competition Act, 1998, provides for a mandatory requirement of a notice in writing, while also directing the CMA to consider the seriousness of the breach and the deterrence for ascertaining the penalty. A like provision is present in Section 81(c) of the Competition Act of Germany, which has fixed the upper limit of the fine amount from an undertaking to 10% of the total turnover generated in the business year preceding the authority’s decision. Various factors like- the nature and gravity of the infringement, its duration and manner, the economic condition of the undertaking, its efforts to redress the consequential harm, etc. are also required to be considered to determine the fine. Hence, we see a likeness in all these legislations, which provide for penalties on global turnover, while equally ensuring the rights of the defaulters. However, one fails to see similar provisions in both the Indian legislation as well as the current amendment bill. It is thus vital for the lawmakers to provide for certain leniency reductions or settlement reductions in fines imposed, lest the defaulting enterprise may suffer due to the unbridled powers bestowed upon the CCI. Since the antitrust regime in India is still nascent, unlike the mature and highly volatile market structures of economies like the EU, UK, Germany, etc., it is reasonable to say that the novel change in India’s Competition law necessitates including various precautionary measures, to maintain an equilibrium in the CCI’s approach to a case of a breach. A lack of such measures may pose a possible threat to the regime against the anti-competitive conduct of corporations. Possible implications in the Indian scenario The meaning of turnover in the Indian context can be traced from the Excel Crop Care Ltd. case. In this case, the CCI imposed a penalty of 9% on the average ‘total turnover’ for the last three years on establishments accused of entering into an anti-competitive agreement. The Court concurred with the decision of the Competition Appellate Tribunal (COMPAT) in its interpretation of turnover in Section 27(b) as relevant instead of total. To arrive at this conclusion, the Court considered factors, the first being the possibility of any inequitable and discriminatory outcomes of the penalty imposed on multi-product and single-product companies alike. Further, an analysis in light of the principle of strict interpretation of statutes and the doctrine of proportionality also suggested that the usage of relevant turnover would be proportionate and not antithetical to the entities. The novel provision of penalties on global turnover will undoubtedly have far-reaching consequences for businesses operating in India. Penalty for anti-competitive practices on global turnover will not only increase corporations’ pecuniary liability manifolds but may also have adverse impacts on the competition in the market. The expansion in the scope of the powers of the CCI will certainly increase regulatory oversight and scrutiny of multinational companies in India. The enormous amount of penalties resulting from this amendment could potentially sabotage business operations, draining their balances, eventually leading to unnecessary compliance burden and discrimination against multi-product corporations. Big enterprises could be denied potential investments if there is a lack of transparency and uncertainty in the market.

[By Vanshika Agarwal] The author is a student of the West Bengal University of Juridical Sciences.   Abstract The burgeoning growth of the gaming industry has necessitated its need for regulation. The Central Government by proposing amendments to the already contentious IT Rules, 2021, has sought to bring online gaming platforms within its ambit of regulation through a template for self-regulation. Self-regulation of industries are steps taken to supplement the rules and regulations provided by government that oversee their activities. Self-regulation of any industry can pose various challenges relating to accountability, fair competition, market integrity and privacy which may render such schemes unfeasible. The paper analyses the ambiguities and complexities in the proposed amendment for the self-regulation of gaming platforms. It examines the regulatory-proportionality theories to demonstrate the issues associated with the powers and discretion provided to self-regulatory bodies in classification of online games and online gaming intermediaries. Finally, the paper shows that by an application of these regulatory theories, the present mechanism for self-regulation is not feasible. I.          Introduction The Ministry of Electronics and Information Technology [‘MeitY’] introduced further amendments to the IT Rules, 2021 on 2nd January, 2023,[1] post its appointment as the nodal ministry for online gaming.[2] These draft amendments introduce provisions for the regulation of online gaming platforms by expanding the purview of Part II of the IT Rules, 2021.[3] These rules provide for the establishment of self-regulatory bodies (‘SRB’), which would be responsible for registering and approving games as well as providing a grievance redressal mechanism.[4] The proposed laws mandate, among other things, that gaming companies adhere to SRBs,[5] only publish games recognised by such bodies, adhere to know-your-customer (KYC) standards,[6] establish a grievance resolution system,[7] and define online gaming platforms as intermediaries.[8] The ambiguities and wide discretionary powers afforded to SRBs under this regulation must be assessed to determine the feasibility of the proposed mechanism. Part II of the paper explores the shortcomings in the proposed regulation for online gaming, specifically in relation to self-regulatory bodies. It discusses how the membership of the SRBs as envisioned in the regulation can lead to regulatory capture, allowing for competitive distortions by larger gaming firms. Part III examines the ambiguity surrounding the classification of online games by SRBs. By briefly explaining the theories of regulatory-proportionality to assess fintech regulations, the paper analyses how this ambiguity is not in conformity with regulatory principles and its potential effects on innovation and growth. Part IV concludes the discussion on this topic by holding the present self-regulation mechanism to be not feasible. II.          The risk of regulatory capture There are several concerns with the proposed mechanism relating to definitional ambiguity for ‘online game,’ the role of SRBs and the excessive powers conferred to the government for the governing of online gaming platforms.[9] In this section, the risk of regulatory capture is explored in light of the roles of the SRBs. According to the guidelines, membership in multiple SRBs is possible for online gaming intermediaries.[10] SRBs must ensure due diligence,[11] in addition to making sure that the game does not prejudice national security and public order.[12] These wide reasons of public order can be interpreted differently by each SRB.  Liberal or biased interpretation can result from conflict in interest which would be detriment to the consumers. It affords online gaming intermediaries the opportunity to forum-shop for an SRB that interprets these provisions in a manner favourable to their interests, or to construct a separate SRB in a race to the bottom.[13] Evidently, this would be deleterious, by permitting discriminatory conduct and enlarging the scope for regulatory arbitrage.[14] When a self-regulatory body is “closely” connected with the business that it oversees there exists a risk of regulatory capture.[15] Regulatory capture is the consequence or process whereby regulation, in statute or application, is steered continuously or repeatedly away from the public interest and towards the interest of the regulated industry, by the intent and activity of the industry itself.[16] Dominance by industry specialists and insiders can result in regulatory capture by well-organized groups with specialised but powerful interests.[17] SRBs with diverse stakeholders, as is likely in the gaming industry, have an even higher probability of regulatory capture. This is because the differential size and influence of gaming firms can concomitantly affect their influence in the SRB, precluding the SRB’s ability to be unbiased.[18] Due to the regulatory bodies being highly specialized and compartmentalized there can be absence of transparency in the rules followed.[19] The online gaming platform is a nascent market whereby having online gaming intermediaries approach membership in SRBs can potentially harm the common standards of the industry. As the governing body of the SRBs are constituted by comprising of individuals that are specialists,[20] lack of transparency as to their decisions poses a high risk of regulatory capture. Further, as the online gaming intermediaries themselves can become part of these SRBs, there is an extreme “close” connection. Online gaming intermediaries that are dominant can submit to SRBs whose interpretations are beneficial to them,[21] leading to questionable abilities of such bodies to ensure equal treatment for all intermediaries. SRBs have charged exponentially large registration fees offering large corporations an unfair competitive edge because startups and small businesses cannot pay such exorbitant costs.[22] Furthermore, the decision of the SRB in case of a grievance redressal is final and there is no appellate body to safeguard game publishers if SRB chooses not to register a game.[23] Without measures for transparency,[24] to show the reasons for the assessment of online gaming intermediaries for membership, not only conflict but regulatory capture can also exist. III.          AMBIGUITY IN DEFINING ‘ONLINE GAME’ Under the proposed amendments, SRBs can register an online game following conformity to certain rules which includes ensuring that an online game complies with Indian laws, including state laws on betting and gambling.[25] This can be seen as a step towards getting SRBs to certify whether the online game is one of skill or chance and what constitutes as an ‘online game. [26] In this part, the

[By Tanya Maheshwari ] The author is a student of University School of Law and Legal Studies, GGSIPU.   Introduction The digital industry has outgrown itself tremendously worldwide, which has led to the expansion of the business sector due to its ease and availability. It’s rightly said that every boon comes with a bane. In this case, as the digitalization of the business sector grew, so did the frets about how the dominant companies or big players might use the user data they possess to increase their dominance and manipulate them by allowing millions of people and companies to engage and deal with one another on daily basis. Concealed practices such as horizontal cartel agreements, anti-competitive agreements, data privacy breaches, and abuse of market dominance are promoting the “winner gets it all” philosophy. These concerns are also shared by countries like United States and European Union. President of Bundeskartellant, Andreas Mundt, also said that consumers are not misled about it, still Facebook showed its dominance worldwide after gathering user data and abused the market power. On the contrary, Facebook’s conduct of misleading the user data to have a control on market dominance was fined by the US federal trade commission of USD 5 Billion. Concerns over privacy arise when companies use user data for their own purposes. This results in the denial of new players’ access to the market and the monopolization of existing dominant players, as the latter make the most of the user data they have acquired. It’s time for an emphasis on how existing players and consumers are impacted by the accumulating consumer data, privacy concerns, market power in the event of dominance, and user data. The firms block access to the “relevant market” for new players by accumulating a tonne of valuable user data with the help of AI or in exchange for permissions in order to establish market power and leverage their market dominance. What is a relevant market? While examining the effects on company and monopolistic data dominance, it is crucial to pinpoint the market in question. The denial of relevant market access to existing and new players is a critical concern that can hinder fair market competition and stifle innovation. The facts and circumstances of the case, however, determine the relevant market. The nature of the product, the target market, and the market dynamics all vary and go beyond purely physical barriers. The concept of a “relevant market” in competition law refers to a market that offers a specific good or service with available alternatives. Defining the relevant market has a significant impact on competition scope and the market power of companies. Determining the relevant market involves considering the relevant product/services, geographical market, and mode of distribution, as illustrated in the Ashish Ahuja and Snapdeal case. The lack of synergy between companies and the presence of overlapping products or services have a significant impact on the relevant market, affecting both new entrants and established players. For instance, in the Intel Corporation case, CCI rejected section 4 claims based on Intel’s distribution agreements because the distributors were not restricted from dealing with competitors’ products, and they were even found dealing in competing products. Hence, there was no foreclosure of the market for Intel’s competitors. Regulatory authorities employ tests like SSNIP (Small but Significant Non-transitory Increase in Price) and HM (Hypothetical Monopolist) to determine the relevant market. However, these tests face challenges in digital markets and zero-pricing strategies. SSNIP struggles with its pricing-centric approach and the complexities of multi-sided platforms, making it an inadequate tool for market determination. The SSNDQ (Small but Significant Non-transitory Decrease in Quality) test serves as an alternative, but no definitive method exists due to the limitations of each approach. By denying new entrants’ access to user data, competition is hindered, making it difficult for them to enter the market. Consequently, denying relevant data access for existing and new players paves the way for market dominance, which can be exploited to abuse market power. Defining the relevant market is crucial in terms of data access and sharing, as it directly influences competition levels and the potential for new competitors to enter the market through agreements. Impact of Horizontal cartel and anti- competitive agreements on market access denial Data exchanges between companies could lead to anticompetitive agreements that leads to anti-competitive practices and pave the way for market dominance through data manipulation. The CCI has consistently taken a strong stance against such practices, imposing heavy penalties on companies found guilty of engaging in anti-competitive behavior and is banned under the act. As in the FHRAI vs. MMT case, MMT-Go utilized predatory pricing tactics, entering into concealed commercial agreements to favor OYO while denying market access to FabHotels and Treebo. This resulted in entry barriers for other industry players, limiting their market reach. Similar practices were observed in the case of HUL and Kingfisher Airlines, where market dominance and denial of market access were facilitated through agreements. Likewise, TISCO’s actions in the flat steel products market were found to deny market access. Such agreements enable data exchange, providing a competitive advantage and market dominance. Incumbents who have established dominance in multiple markets and utilize economies of scope through tie-up agreements pose significant barriers for new entrants in the digital market. In the case of Excel crop care, the involved parties engaged in an anti-competitive agreement to determine prices for their goods, thus violating section 3 of the act. A similar verdict was reached in the All India Flat Tape Manufacturers Association case, where the association participated in a horizontal cartel to fix prices, divide markets, and restrict production, leading to the determination of anti-competitive conduct. Also, it’s not necessary that actual agreements have to be in place, rather circumstantial evidence can be used to support the same argument, as was in the case of Builders associations of India. The denial of relevant market access through tie-up agreements and horizontal cartels can have far-reaching consequences for market competition and the accumulation of consumer data.

[By Sehaj Mahajan] The author is a student of Bharati Vidyapeeth University, New Delhi.   Introduction Recently, the Indian leniency regime has displayed a fair bit of uncertainty on a particular proposition i.e. Whether or not an admission of guilt is necessary in case of a lesser penalty application. On 27 June 2017, the Competition Commission of India (CCI) in Suo Motu Case No. 06 of 2017 (Beer Cartel case) received a Lesser Penalty application filed by Anheuser-Busch InBev SA/NV (AB InBev), containing vital disclosures of cartelisation among five major beer manufacturers. AB InBev, along with all the other lesser penalty applicants, was granted a reduction in penalty to be paid to the regulator. The order of the CCI, which held four of the five beer manufacturers guilty of cartel activity, was challenged before the National Company Law Appellate Tribunal (NCLAT). The appellants argued that a leniency applicant is not sufficient to establish guilt. The NCLAT maintained that a lesser penalty application is considered to be an admission of guilt. Penning down the judgment, Justice Rakesh Kumar stated that enterprises cannot be allowed to “approbate and reprobate simultaneously”, which confirms that enterprises could not be allowed to seek the benefit of a lesser penalty and deny the existence of a cartel. The NCLAT’s analysis drew a comparative framework and analogized the leniency regime with plea bargaining in criminal law. A plea bargaining agreement, essentially involves the accused admitting to the crime in exchange for a more lenient sentence. In their view, just as a plea bargaining agreement, a lesser penalty application also establishes guilt purely on the basis of the application being presented to the regulator. If we boil this down to a grassroots level, a reduction in penalty can only be granted once the party has either admitted wrongdoing, or malfeasance has been established. Hence, the element of autogenous assistance in uncovering proof of cartel activity cannot be disregarded. Regime in India As far as the Indian regime is concerned, moving a lesser penalty application is not considered ipso facto evidence of cartelisation. Point (a) of Regulation 4 of the CCI Lesser Penalty Regulations 2009 (Lesser Penalty rules) allows the CCI to make only a prima facie assumption of cartelisation. Under Point 1(A) of Regulation 3 of the Lesser Penalty rules, an applicant is required to cease all participation in a cartel at the time of filing a lesser penalty application. This can be construed as an admission of participation in cartel activity and of infringement of Section 3(3) of the Competition Act, 2002. The precarious nature of the lesser penalty regime is evident in the lack of clarity on three things – Whether admission of guilt is a condition precedent to furnish a lesser penalty application. Whether an applicant can be found innocent of any wrongdoing, despite filing a lesser penalty application. Whether the existence of a cartel or participation in it, can be presumed solely on the basis of a lesser penalty application.  As far as the existence of a cartel is concerned, the order of the NCLAT in the Beer Cartel appeal has specifically stipulated that the existence of a cartel is assumed once a whistle-blower comes forward. But, in the past, applicants have been exonerated, despite coming forward and making material disclosures. In Suo Motu Case No. 01 of 2017 (Flashlights case), it was established that the parties had exchanged sales data, production data and price information. This was, however, not considered sufficient to amount to a violation of Section 3(3)(a) which talks about the determination of sales or purchase prices by entities engaged in identical trades. The CCI, in its observations, stated that there was no cogent evidence to show that the actions of the parties resulted in determining sale prices. No increase in the prices of flashlights in the markets also contributed to CCI’s decision in the concerned case. This clearly demonstrates that despite assuming the position of a lesser penalty applicant, enterprises and individuals can be absolved. In consonance with the Flashlights case, the Beer Cartel case charted a similar path. Three lesser penalty applicants -, AB InBev (Applicant Number 1),  United Breweries Ltd (Applicant Number 2) and Carlsberg India Pvt Ltd (Applicant Number 3) were held guilty. But, it is important to point out that their guilt is established through evidence unearthed during the DG investigation stage. It is also of consequence that Crown Beers India Pvt Ltd, joint lesser penalty applicant with AB InBev, was not found guilty of any wrongdoing. The judgment of the CCI in the Beer Cartel case inadvertently reaffirmed the precedent in the Flashlights case. In both cases, enterprises were found innocent despite being lesser penalty applicants. If consistency in adjudication is material, then the judgment of the NCLAT can be considered an outlier. Provided the NCLAT decision is to be considered bereft of any legal flaw, then a lesser penalty applicant has admitted the existence of a cartel and their participation in it, by petitioning for a lesser penalty. If the precedent set in the Flashlights case and the Beer Cartel case is considered supreme, then the lesser penalty application has to be followed up with more potent evidence to pronounce the parties guilty. If the NCLAT order is to prevail, the CCI will have to change its approach towards dealing with cartel cases in the future. Contemporary Jurisdictions In the United Kingdom, the Competition and Markets Authority has provided detailed guidelines for leniency applicants, both corporate and individual. Applications are only considered once the applicant enterprise submits an admission of their guilt in cartel activity. Individual applicants must admit participation in the cartel offence under Section 188 of the Enterprise Act, 2002. In the United States, the Department of Justice and the Federal Trade Commission jointly administer the realm of Competition Law enforcement. The Antitrust Division Leniency Policy and Procedures provide procedural guidelines to leniency applicants, for antitrust violations in the United States. These rules provide incentives for corporations and individuals to self-report antitrust

[By Rajdeep Bhattacharjee and Tanishq Rahuja] The authors are students of Symbiosis Law School, Pune.   Introduction The Competition (Amendment) Bill, 2022 proposes the addition of sub-section d in section 5(B) of the Competition Act, 2002. This new provision requires companies to have “substantial business operations” in India to come under the act’s scrutiny. The Director General of the CCI can only launch a probe if there is suspicion of adverse effects on competition in the relevant market in India under sections 5 and 6 of the principal acts. Without a specific definition provided in the bill, the interpretation of the term “substantial business operations” is unjustifiably wide. Hence, it is significant to note that how the term “substantial business operations” is finally construed by the Indian judicial system may determine how the parameter is applied. As a result, in instances of amalgamations, the ability to initiate a probe without any objective parameters may compromise the generality that the law is intended to promote. Therefore, this development opens a wide ambit of interpretations and may be misused by entities as a substantive loophole in this legislation as there exists no specific and distinctive criteria which is laid down for an entity to be regarded as occupied in substantial business operations. Addressing the Issue The lack of a clear definition of “substantial business operations” in the Competition (Amendment) Bill, 2022, poses a threat to the objective efficacy which is sought to be bolstered by this Bill. The primary concern arising out of this ambiguity is that of objectivity and legal inconsistencies that may arise due to the lack of clarity. A probable outcome of this might be prolonged litigation as was in the case of the redundant Monopolies and Restrictive Trade Practices Commission. Hence, such an approach could potentially undermine the fundamental objective of the amendment to make India an attractive destination for foreign investment and businesses by creating unnecessary uncertainty and jeopardizing investment inflows. Furthermore, the absence of an objective definition creates a legislative cavity that is not addressed by the subsequent sub-section/s of the amendment either. Such legislative cavity leaves room for interpretation, which could be exploited by businesses to evade scrutiny. Therefore, definition of “substantial business operations” is essential for the effective implementation of the legislation and the promotion of a level playing field for enterprises. Moreover, without a precise definition, unforeseen repercussions may arise, defeating the primary objective of the act. Possible interpretations Some possible objective criteria which can be employed to measure the extent of substantial business operations, are as follows: –           Geographic scope –           Market share –           Revenue –           An amalgamation of the above three factors The manner in which a lack of objective definition may be misused by entities to escape scrutiny are as follows: Setting up a shell company, wherein they will have a negligible presence in India while the majority of its business operations are conducted through the parent company outside India. Creating complex ownership structures, by setting up multiple subsidiaries or using a network of affiliated companies which will jeopardize the ability of CCI to determine whether the company has substantial business operations in India or not. Misrepresenting data by understating revenue or market share in India, or by overemphasizing the significance of its operations outside India. In furtherance of addressing this conundrum, this piece strives to briefly analyse the future possibilities and comparative models to mitigate the ensuing roadblocks which may arise due to lack of objectivity/clarity. Locus standi of United States of America The Supreme Court of America (SCOTUS) in the case of Goodyear Dunlop Tires Operations, S.A. v. Brown has held that mere presence of substantial sales in a particular jurisdiction does not amount to an entity having substantial business operations in a specific jurisdiction. It was further held that mere exercise of legitimate jurisdiction of a US court over a foreign enterprise, does not indicate that the enterprise necessarily owns or controls a significant amount of tangible or intangible assets there. The fact that a foreign defendant has a US subsidiary with sizeable assets typically will not be enough to “pierce the corporate veil” of the subsidiary and establish a claim against the parent, when full control is not with the parent. Consequently, in accordance with the Horizontal Merger Guidelines, market share, customer base, and resources are evaluated to identify “substantial business operations” for a horizontal merger and weigh the effects on market competition. In the landmark case of U.S. v Waste Management, Inc, the court stated that to determine whether an entity has substantial business operations, it is quintessential to determine whether the entity in question is engaged in competitive activity in the relevant market or markets, and if the disputed activities are competitive in nature. Despite that, it is noteworthy that the US lacks a specific definition of substantial market operations or a threshold, assessing on a case-by-case basis. This jeopardizes business operation standardization and creates investor uncertainty. Precedents have led to some standardization over time. Generally, determination of “substantial business operations” is based on various factors such as: Revenue Assets Physical presence. The German & Austrian Model Through the Joint Guidance on Transaction Value Thresholds for Mandatory Pre-Merger Notification, issued jointly by the German Federal Cartel Office along with the Austrian Federal Competition Authority, the definition of substantial domestic operations has been clearly established. The criteria laid down by the regulatory bodies in their joint notification for assessing substantial domestic operations can be summarised as: Measurement of Domestic Activity; Geographical Allocation of Domestic Activity; Market Orientation and Significance of the same. The sections dealing with the same are Section 35(1a) no. 4 GWB of the German code and its Austrian counterpart, Section 9(4) KartG. In accordance with these sections, merger control will come to the fore where the target company whose acquisition is to be done or its acquisitions have substantial operations in either of the respective jurisdictions. The criteria are also mentioned wherein the specific thresholds for domestic and global turnover have been

[By Vanshika Arora and Kritika Oberoi] The authors are students of Army Institute of Law, Mohali.   Introduction India is on the verge of formulating a Digital Competition Act (‘DCA’) however we are experiencing a divide in opinion with respect to the relevance of a special regulation, given the supposed sufficiency of the present regulatory framework. On one end of the spectrum lie proponents of an ex-ante framework who are mulling around the enactment of an enabling, comprehensive regulation (DCA) that embodies the quick tip, fast-moving nature of the platform economy. On the other end of the spectrum, there is discourse regarding the redundancy of this exercise, and the adequacy of the current regulatory mechanism, in addressing issues arising out of the digital ecosystem. There is also debate on the probability of amendment in the current regulatory framework, inter-regulatory coordination, and the creation of a Digital Markets Division within the Competition Commission of India (‘CCI’), to affix accountability on a single identifiable body. We explore the polar ends and the grey areas of this spectrum through the lens of innovation in the start-up ecosystem. Ultimately, through this piece, the authors intend to shift the attention towards innovative competition with a special focus on the startup ecosystem hoping that a discourse to meet that end spurs in the antitrust community. This article hinges on pertinent questions that address the relationship between competition and innovation. To what extent can antitrust intervention and regulation promote innovation in digital markets? Should this intervention necessarily come through a peculiar regulation? We start by assessing why digital competition should be understood from a lens of innovation, now more than ever. We next delve into the context of innovation in India and highlight gaps in the existing regime. Lastly, the authors propose a way forward. Understanding Innovation: Why Bolster a Conversation about it? Innovation is the focal determinant of progress and welfare. We believe that the core goal of competition law should remain consumer welfare, through innovation in the digital markets landscape. The relationship of innovation and competition was addressed first, by Schumpeter and Arrow. Schumpeter popularized creative destruction (disruption of the market through innovation). He was a proponent of monopolistic innovation and believed that monopolies and larger firms have more incentive and resources to innovate, hence are the face of an innovative, disruptive economy. While Arrow argued that competition between incumbents and entrants favors innovation. Beyond the Schumpeter-Arrow debate, proponents believe that antitrust intervention can promote innovation competition and pre-innovation competition in the product market, by targeting types of conduct across industries. Hence, integrating innovation in the competition policy practice is important as innovation is the key engine of economic development and a major driver of growth, employment, and prosperity in a national economy. Promoting innovation is a central feature of the antitrust law, with antitrust practitioners in recent decades addressing pertinent issues such as: whether incentives and possibilities to innovate can be negatively influenced by changes in the market structure resulting in an entrenched position of an incumbent, in the market or whether an incumbent’s powerful market position can be challenged by innovative competitors. Because of the significant adverse repercussions of the ‘innovation discouraging’ approach, any competition policy must be very cognisant of the role played by innovation in preserving the dynamism of markets. As innovation plays such a significant role in an economy, competition policy needs to be streamlined in order to promote innovation and ensure an atmosphere for innovators to generate faster and shared growth. Innovation Competition in the Indian Context The discourse regarding implications on innovation is relevant in the Indian context because of the backlash to the prevalent legislative deliberation regarding a prospective special regulation for platform economy. This article assesses the various avenues of antitrust enforcement and intervention in the Indian digital platform economy. Inadequacy of existing regulatory framework Maximizing innovation is possible by addressing not only the anti-competitive practices of the big tech platforms but also the entire competitive ecosystem, mindful of small-tech innovators such as startups and SMEs. There are certain regulatory gaps in the present scheme of available framework. While addressing anti-competitive conduct, specific to the digital economy, the market regulator has to account for the unique features of the digital platforms. CCI in a host of cases, traveling from Ashish Ahuja v Snapdeal to the recent MMT-Go case, has identified the peculiarity of these platforms which includes network externalities, economies of scale, etc. The Competition Act, 2002 is not adept in either establishing abuse or delineating relevant markets through Sections 19, 4, and 5, in this regard. The Competition Law Review Committee in its 2019 Report has suggested a re-look on factors enlisted under Section 19, to include accounting factors for digital platforms such as the creation of network externalities. While Section 4 accounts for abuse through ‘Predatory Pricing’ and contains sufficient safeguards for the same, there is no regulatory framework to address ‘Predatory Innovation’ (a rising anti-competitive conduct). Therefore, in order to fill this regulatory void, a unique regulation is indeed a pressing priority. A word of caution however, is that such a regulation should not be a blanket, non-consultative copy-paste of the EU Digital Services Package, but should be remolded to the Indian fabric and local market conditions. The present discourse regarding a prospective special regulation is heavily inspired by the Report of the Standing Committee on Finance. However, this report pivots on the EU standards of Digital Market regulation and is unfortunately not nuanced to the Indian market fabric. A Digital Competition Act, dressed in the clothing of the EU Digital Markets Act, is inexpedient to the perspective of innovation in the Indian conditions, because of the foregoing reasons: Overregulation Ostensibly, if the antitrust regulator acts like an autocrat, large firms will be tempted to reach accommodations with the government in exchange for not being broken up. Those accommodations will usually include protections and guarantees that act as entry barriers against potential innovative challengers resulting in less competition, fewer innovations, and lower

[ByShubham Gandhi and Adhiraj Lath] The authors are students of National Law University, Jabalpur.   Introduction The Google Shopping Judgment (“Google Shopping”), passed by the General Court of the European Union, has once again brought to light the much-debated concept of the Super-Dominance of an undertaking. The judgment,while addressing how Google allegedly used its dominance in the overall internet search market to keep competitors out,     , meaning thereby that in the general internet search towards a product, Google was promoting its services or the services of the enterprise that paid Google in this behalf and was demoting the access links of other competitors, thereby abusing its dominance in the market and leading to violation of Article 102 of Treaty on the Functioning of the European Union (“TFEU”). The judgment, though concluded upon the principle of the effect-based approach of an enterprise, which means that the effect of the abuse by the dominant undertaking in the market will be the considerate factor, interestingly discusses the scope of the concept of super-dominance, which was denounced by the European Court of Justice (“ECJ”) in its judgment of TeliaSonera, passed in the year 2011. The authors, while dealing with the rationale of the judgment, will succinctly lie down the historical development of the concept of super-dominance in the European competition law jurisprudence, highlight the importance it may bring to the new advent of digital market and digital players’ dominance, and will finally comment whether roots of super-dominance can be interpreted from the existing Competition Act, 2002. The Historical Development of Super-Dominance In simple terms, the concept of abuse of dominance means that if an enterprise has a significant share of power in the market, it will construe that the enterprise dominates the relevant market. Suppose they abuse this power by conducting their practice against the principles in Article 102 of Treaty on the Functioning of the European Union; then, it will be liable for punishment for abusing its dominance in the market. It becomes important to mention the four elements which may lead to abuse by a dominant enterprise as provided under Article 102, namely: – (a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; (b) limiting production, markets, or technical development to the prejudice of consumers; (c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (d) concluding contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts. It is interesting to note that Article 102 of TFEU nowhere distinguishes between a dominant enterprise and a super-super dominant enterprise, as the creation of this characterization is the result of the judgment passed in the case of Compagnie Maritime Belge SA v Commission of the European Communities by the European Court of First Instance. However, the concept was briefly discussed for the first time in ECJ’s decision in Tetra Pak International SA v Commission of the European Communities, wherein the Court held that “the actual scope of the special responsibility imposed on a dominant undertaking must be considered in the light of the specific circumstances of each case.” This new distinction implies that the same conduct may breach Article 102 when performed by a super-dominant but not by the “regular” dominant undertaking. Although this further differentiation might seem to follow from the distinction between dominant and non-dominant undertakings, the super-dominance concept sits uneasily with the text and the enforcement of Article 102. The rationale is because it might impose obligations on super-dominant enterprises that regular dominant undertakings do not have, which would mean that obligations might be applied to undertakings based on their market position rather than their actual conduct, something that the treaty does not contemplate. These two judgments succinctly described the concept of super-dominance, wherein the enterprise has a monopolistic or quasi-monopolistic position and that the undertaking with an exceedingly high degree of dominance has a “particularly onerous special obligation” towards the market and they shall not abuse the same. The European Union commissions followed this position in cases such as Football World Cup and Deutsche Post. In the case of  Microsoft, the Commission deemed that Microsoft’s market share of over 90% in the client PC operating systems market put it in a “quasi-monopoly” and an “overwhelmingly dominant” position. However, the transition towards a more “economic approach” soon occurred in the European Union Commission. After that, the TeliaSonera’s judgment soon ended this discriminatory concept by holding that there is no textual existence of such distinction. In the opinion, it was noted that “…the degree of market power of the dominant undertaking should not be decisive for the existence of the abuse. Indeed, the concept of a dominant position arguably already implies a high threshold, so it is unnecessary to grade market power based on its degree.” The inception of super-dominance in the digital market space The judgment in Google Shopping discusses the scenario where Google acts both as a gateway to the internet space and a player in the market. It is in a super-dominance position, offering the platform to access the online market sphere and acting as a digital market player. The platforms such as Meta, Google, Amazon, and Microsoft have taken a structure wherein they act as a quasi-monopolistic player and take a superior position that having a competitor does not necessarily affect their dominance. The author argues in favor of bringing a separate class or distinction wherein the fintech platforms and the digital market player who holds ‘significant dominance’ must be viewed not as per the traditional approach of ‘effect-based principle’ but viewed from the sphere of super-dominance which may result in abuse if kept unregulated. The court also highlighted their potential dominance of abuse in the market by referring to Google’s case. The general internet search market in the countries considered in the Commission’s investigation has almost entirely tipped towards Google; as there was