{"id":184982,"date":"2022-05-17T20:18:40","date_gmt":"2022-05-17T14:48:40","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=184982"},"modified":"2022-05-18T10:20:04","modified_gmt":"2022-05-18T04:50:04","slug":"digital-markets-must-be-defined-well-for-competition-regulation","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/digital-markets-must-be-defined-well-for-competition-regulation\/","title":{"rendered":"Digital markets must be defined well for competition regulation"},"content":{"rendered":"\n

Context<\/strong>: Digital markets operate differently than traditional markets. Hence, the rise of the digital sector has presented unique challenges for Indian regulatory authorities<\/strong>, including the Competition Commission of India (CCI).<\/p>\n

Further, several issues emerging from the growth of digital markets are being analysed by regulators in other countries simultaneously, resulting in a lack of guidance from other jurisdictions<\/strong>.<\/p>\n

There is growing demand, worldwide and in India, to hold digital platforms responsible and accountable for adverse impacts caused by them. This is evidenced by recent investigations initiated by the CCI into the operations of digital platforms such as Google, WhatsApp, Apple, Zomato, Swiggy, etc.<\/p>\n

Proper assessments of relevant markets<\/strong> is needed, so that India\u2019s digital emergence story doesn\u2019t end up stifled by over-regulation.<\/p>\n

How a relevant market can be defined?<\/h5>\n

The Competition Act of 2002 requires the CCI to define a \u2018relevant market\u2019 based on what is regarded as interchangeable or substitutable by a consumer<\/strong> (\u201cRelevant Market Test”).<\/p>\n

The factors required for consideration by the CCI while defining a \u2018relevant market\u2019 include<\/p>\n

–<\/strong> the physical characteristics or end use of goods<\/p>\n

–<\/strong> prices of goods or services<\/p>\n

–<\/strong> consumer preferences<\/p>\n

–<\/strong> Regulatory trade barriers<\/p>\n

– Local specification requirements<\/p>\n

What has been the CCI’s approach so far?<\/h5>\n

Until 2016,<\/strong> while defining a \u2018relevant market\u2019 for e-commerce companies and marketplaces (such as Snapdeal, Ebay, Yepme, Cloudtail, etc),<\/em> the CCI viewed online and offline segments as different channels of distribution and not different relevant markets.<\/strong><\/p>\n

In 2018<\/strong>, when examining a complaint filed against e-commerce companies that alleged \u2018abuse of dominance\u2019 by way of predatory pricing and preferential treatment to certain sellers, the CCI diverged from its initial view<\/strong> and recognized the possibility of a distinction between online and offline segments.<\/p>\n

In October 2019<\/strong>, the CCI drew a defined distinction in its prima facie order initiating a probe against MakeMyTrip by defining the \u2018relevant market\u2019 in its case as \u201cthe market for online intermediation services for booking of hotels in India<\/em>“. This case is still under consideration.<\/p>\n

What needs to be done?<\/h5>\n

Given the pace at which the digital sector is expanding in India, and the emergence of several issues prompted by this growth, it is essential that the CCI carefully consider the question of \u2018relevant market\u2019<\/strong>, and more particularly, the question of whether the online and offline distribution segments of such a market are substitutable in each case and industry.<\/p>\n

A \u2018one-size-fits-all\u2019 approach to this question will prove unsatisfactory, given the large variation in business models today and the significant number of businesses that have add-on \u2018online\u2019 delivery channels.<\/p>\n

Accordingly, the CCI should define a \u2018relevant market\u2019 in the digital sector<\/strong> by taking into consideration all substitutable and interchangeable products or services for each industry, including what\u2019s available offline.<\/p>\n

CCI should conduct market surveys to explore consumer preferences, habits and dependence on digital platforms,<\/strong> on a case-to-case basis. It needs to reach out to consumers on a wider scale and not limit its analysis to secondary studies or surveys.<\/p>\n

Way forward<\/h5>\n

It is critical that the CCI\u2019s approach in digital markets is well considered, consistent and proportionate, so that the digital sector gets space for growth while safeguarding the interests of competition and consumers.<\/p>\n

Source<\/strong>: This post is based on the article \u201cDigital markets must be defined well for competition regulation<\/strong>\u201d published in Livemint<\/strong> on 16th May 22<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Context: Digital markets operate differently than traditional markets. Hence, the rise of the digital sector has presented unique challenges for Indian regulatory authorities, including the Competition Commission of India (CCI). Further, several issues emerging from the growth of digital markets are being analysed by regulators in other countries simultaneously, resulting in a lack of guidance… Continue reading Digital markets must be defined well for competition regulation<\/span><\/a><\/p>\n","protected":false},"author":10328,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,10501],"class_list":["post-184982","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-live-mint","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704920191},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/184982","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10328"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=184982"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/184982\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=184982"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=184982"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=184982"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}