New Delhi Tech giants enjoy rule-making powers in a digital economy, which gives them a dominant position in the markets and enables its expansion in adjacent markets, according to Ashok Kumar Gupta, Chairman, Competition Commission of India (CCI). In an email interview to Mint, Gupta talks about how competition regulation has evolved over the years and why corporate practices in the digital economy are receiving regulatory attention. Gupta is completing his four-year term as CCI President on Tuesday. Edited excerpt:
The digital economy has seen explosive growth in recent times. What aspects and principles should these new age businesses keep in mind to remain in line with the spirit of competition law?
Digital platforms with enduring market power have a decisive impact on the online competition landscape. Their control over critical digital infrastructure and the power to set rules and conditions of access make them the de facto ‘gatekeepers’ of online markets. Such rule-making power, control over user data and user interface, helps to maintain and strengthen the platform’s long-term market position in key platform markets, as well as expand it to adjacent markets. The resulting irreparable/irreversible adverse consequences for competition and consumer welfare warrant effective regulatory scrutiny on large digital platforms. Thus, concierge firms, due to their market power, are required to discharge special obligations under the law to remain in compliance. We have provided enough clarity to the concierge firms through our decisions and going forward, they need to align their practices accordingly.
The rules for merger of CCI have undergone major changes over the years. Has it made compliance easier for businesses?
We are aware that in an emerging economy like India where industry is gearing up to make the nation self-reliant as well as enhance its global competitiveness, mergers and acquisitions will be a powerful tool. With its unwavering commitment to the merger objective and strong core valuation, CCI has taken several measures to ensure speedy clearance of non-problematic transactions, reduce procedural burden and ease filing. Notably, to ease compliance, CCI has amended the merger control rules to eliminate the need to provide information on non-competing arrangements. This has given the parties the necessary flexibility in negotiating non-compete clauses and has reduced the information requirements when informing the combination. A green channel route has also been introduced recently for automatic approval of connections. It is the first trust-based system of its kind in the world, where notified transactions with no overlap, whether horizontally, vertically or complementary between parties, are considered approved upon its filing. It is expected to strike a balance between facilitation and enforcement, promoting a prompt, transparent and accountable merger review. Showing the confidence of the stakeholders, the Green Channel route has gained traction with one in every five transactions being filed under this route. All these steps made the approval process business friendly and reduced the compliance cost. These are some of the measures that we have taken in the recent past. I must add that in addition to reducing the compliance burden, CCI constantly reviews its processes and procedures to facilitate ease of doing business.
How can CCI create awareness about the anti-competitive practices of digital economy firms and empower affected businesses and consumers to seek justice?
Our enforcement actions also serve a good purpose of sensitizing firms that are involved in anti-competitive conduct found by the CCI. We also have an advocacy mandate, which we are actively pursuing.
Is the CCI ready to take on the responsibility of administering a new digital market law recommended by the Parliamentary Standing Committee on Commerce?
Well, it is too early to say anything at this point of time.
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