Could you tell us a bit about your background and how you got interested in digital competition regulation?
I am a competition lawyer, and have been practicing competition law in India since the early days of its enforcement. A big part of my work has been related to the enforcement of behavioral provisions, and I’ve been lucky to have been part of cases balancing regulation with innovation.
In recent years, that has included the way competition law can—and should—regulate digital markets: with the Competition Commission of India’s (CCI) increased focus on digital competition regulation, I’ve been advising and representing tech companies on competition law matters in India.
When did the CCI become interested in digital markets?
The CCI began focusing on digital markets in around 2018-19, and its interest has increased significantly in recent years. The CCI is actively engaged in understanding the complexities of digital markets—including by conducting market studies, building capacity by establishing a dedicated digital-markets unit, and examining a number of issues in ongoing investigations.
Could you give us an overview of the landmark cases?
The CCI’s interventions and investigations in digital markets have spanned multiple sectors, including e-commerce (examining issues of preferential treatment by Flipkart, for example); operating systems (examining allegations relating to Android, for example); and social media (examining the impact of Whatsapp’s privacy policy, for example).
There’s also been interest in looking at various types of intermediation services, such as online travel booking, food-delivery services, and transportation services. So, in sum, the CCI’s experience with the digital sector has been quite broad.
Have these cases been brought under standard theories of harm under competition law?
The CCI has generally adopted a hybrid approach to tech cases, drawing elements from both the Chicago School and the Harvard School. While the CCI has leaned toward a more consumer-welfare-focused approach, influenced by the Chicago School, it has also incorporated some elements of the Harvard School’s structural analysis.
All of these cases have been brought under the Competition Act, which is the primary legislation governing competition law in India. The Competition Act has also been amended recently to equip the CCI to do a lot more. For example, there’s now a framework for settlements and commitments for parties under investigation. Another recent development is the introduction of the draft Digital Competition Bill (DCB), which proposes to regulate certain types of conduct by certain types of companies ex ante, and will overhaul the way in which India regulates digital markets. Needless to say, it has received a lot of attention from stakeholders.
Can you tell me more about the DCB and some of the issues raised by stakeholders?
The DCB is a new regulation that proposes to supplement the existing Competition Act to regulate markets in India. It’s still at the draft stage, and inter-ministerial consultations appear to be ongoing.
It’s a little like the European Union’s Digital Markets Act (DMA), because it involves certain obligations for “systemically significant digital enterprises” (SSDEs)—the equivalent of gatekeepers under the DMA. But at the same time, it is also like the United Kingdom’s Digital Markets, Competition and Consumers bill (DMCC), because the principles are fairly high-level, with specific conduct requirements being detailed through regulations.
While it looks like a hybrid legislation, there are also some notable differences. For example, if you’re an SSDE, you don’t really have the ability to justify your conduct based on consumer benefits, unlike under the DMCC. You also cannot demonstrate that you are not, in fact, systemically significant on the basis of qualitative criteria, even if you meet the quantitative thresholds for designation, which differs from the DMA.
One feature of the DCB that has received pushback is the fact that there’s no need to prove anticompetitive effects. If you are an SSDE, you simply cannot deviate from specific conduct requirements, even if you have objective justifications or the practice benefits consumers (i.e., there are no anticompetitive effects). To this extent, the basis of the DCB deviates from the principles underlying the Competition Act.
Let me give you an example: the CCI has in the past allowed tying and bundling and set out specific conditions when it is and isn’t anticompetitive. This means that not all tying and bundling is problematic from a competition-law perspective. But the DCB altogether prohibits tying and bundling, representing a shift toward stricter regulation of the very same conduct.
Another feature of the DCB that has been discussed is the breadth of the obligations. Take, for example, the self-preferencing obligation in the DCB, which prohibits SSDEs from favorably treating not only their own services or products, but even those of “related parties” or third parties with whom they have previously had commercial arrangements. Quite apart from the fact that the meaning of some of these terms (who is a “related party”?) are open to interpretation, a question is whether this obligation goes too far and captures legitimate conduct that doesn’t actually harm competition.
How would the CCI normally assess conduct covered by the DCB?
The CCI would assess conduct covered by the DCB by examining whether it is an anticompetitive vertical agreement or an abuse of dominant position.
The Competition Act prohibits vertical agreements that have the potential to restrict competition. This includes practices such as tying arrangements. The CCI assesses whether such agreements are likely to have a significant adverse effect on competition, taking into account factors such as the market shares of the parties, and the presence of barriers to entry.
In its assessment of abuse of dominant positions, the CCI typically defines the relevant market, assesses dominance, and assesses whether the conduct complained of falls within any of the five listed types of abuse. There is no express requirement in the statute for the CCI to consider effects but, in practice, the CCI looks at both effects and objective justifications in deciding whether conduct is abusive.
Going back to what you said earlier about the DCB deviating from the principles of competition law, is there a paradigm/philosophical shift going on here?
Yes. The DCB is premised on the understanding that the traditional competition-law framework isn’t sufficient to address challenges posed by digital markets. This is evidenced by the preface to the Committee on Digital Competition Law (CDCL) report, which argued that the current ex-post framework isn’t working and that ex-ante measures would help the CCI in effective intervention.
The DCB prohibits conduct that the CCI would otherwise consider more carefully under the Competition Act, in an effort to promote competition. Even if you were to look at the DCB as legislation trying to promote competition in India, there are some unique challenges that require consideration.
First, on a practical level, this is going to massively increase the administrative costs of the CCI, over and above other amendments to Indian competition law. For example, the latest set of amendments also introduced deal-value thresholds in India, which means more notifications and, consequently, more resources to review those notifications. This means that the CCI will need to significantly bolster capacity.
Second, we can expect jurisdictional overlap and conflict between CCI and other regulators. Two examples: The Digital Personal Data Protection Act (DPDP Act), which relates to personal data, and the Digital India Act (DIA), which is very overarching. Because of these pieces of legislation that are coming up, you can expect significant confusion about the remit of respective bodies. This is not new to India—we’ve seen jurisdictional conflicts in competition law play out for well over a decade—but the conflict will likely be exacerbated.
There is a third point: we have to assess what this means for our growth trajectory as a country. This should make us think if we want additional regulation, or whether we can continue to enforce the existing framework to address any problematic conduct.
On that note, what do you think the draft DCB is going to achieve?
There is a view that the DCB can ensure a level playing field, and potentially limit tech companies’ ability to challenge orders in court, and proactively address conduct that would eventually become an abuse-of-dominance issue. But there’s another view that suggests that the DCB could risk overregulation and regulatory conflict.
In my view, I’m not sure why the existing framework isn’t enough. The CCI has a strong enforcement record, and the recent changes to the law allow it to do even more. The DCB should give us pause from both a policy and enforcement perspective.
Take, for example, the prohibition on the cross-use of data. An SSDE is not allowed to cross-use data without consent. This requires us to ask at least three types of questions to which I’m not sure we have the answer (yet).
First, there is a reference to the DPDP Act in the meaning of “consent.” But the DPDP only deals with personal data, whereas the DCB also deals with business users. So what do we mean by business users’ consent? There is bound to be confusion about how the DCB will interact with the DPDP Act.
Second, are we sure this is going to improve consumers’ lives? Take, for example, the regulation of cookies. We’re seeing literature from the EU on consent fatigue. Do we want to replicate the same thing in India?
Third, do we have evidence regarding the implications of this obligation on costs for businesses that leverage tech platforms? What does this mean for costs for consumers?
Unless we have these answers, I’d imagine that prescriptive rules can do more harm than good.
Is there an element of protectionism here? Who is the DCB trying to protect, and from whom?
Yes, it’s possible to look at the DCB as mirroring the DMA, which in my reading is protectionist legislation. The CDCL report, which suggested the DCB, refers to the need to protect India’s thriving digital economy and the need to regulate those enterprises that have the ability to influence the Indian economy.
To recap, do you think that ex-ante rules, such as those in the DCB, are necessary in India?
I’m not sure the DCB is required. It is premised on the idea that the current mechanism isn’t working, but that isn’t necessarily true. Just look at the range of companies and the types of services the CCI has scrutinized. Also, consider the ways in which the current framework has been strengthened by amendments.
So do you think this is a case in which piecemeal reform might be more warranted than passing new, sweeping regulation?
Yes, but I’d think of it as evidence-based reform, rather than piecemeal reform.
Can you tell us a bit about the politics behind the DCB? Who’s pushing for what?
A few stakeholders that represent app developers, gaming companies, news publishers, and restaurants are pushing for ex-ante regulation in the form of the DCB. Other stakeholders, such as some tech companies, argue that ex-ante regulation is not warranted.
What is the timeline on the DCB, if it passes?
Realistically, I don’t think it’s going to be enacted this year. We can maybe expect a version of the DCB next year or the year after that.
Do you think that unicorns and startups might be affected by the DCB?
Yes. Take, for example, the prohibition on the cross-use of data, which would impact targeted advertising, a strategy upon which smaller businesses have typically relied. To the extent that the DCB makes it more expensive for these companies to reach consumers, it will disadvantage them. Their costs of making goods available for consumers could increase.
New merger-value thresholds meant to control ‘killer acquisitions’ have also been introduced recently. Do you think this is a plausible theory of harm in India?
The newly introduced deal-value thresholds (DVT) require mandatory notification of deals above 2,000 crore (20 billion Indian rupees), and where the target firm has “substantial business operations in India.” It definitely could affect tech companies’ ability to buy highly valued startups. The DVT increases the range of transactions subject to CCI scrutiny, and potentially increases compliance costs and extends transaction timelines. Willingness to engage with stakeholders on any bottlenecks in implementation will be key in the days ahead.
Is India looking at the development surrounding the DMA and how that is progressing?
I think the government will take the experience in other jurisdictions into account—just as the CCI has looked at the treatment of various issues in other jurisdictions before deciding what works best for India—before enacting any additional regulations. We are on the cusp of change, and it is such an interesting time to be in this field!
Shivanghi, this has been a great conversation. Could you please tell us if we should look out for any of your past or future papers, articles or op-eds and, if so, which ones?
Likewise, I’ve really enjoyed our chat. Articles I’ve written on the DCB and Indian competition law more generally are available on our website.