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Abuse Of Dominance In Digital Market

The enforcement of competition law in the digital market is the topic of ongoing debate in the competition jurisprudence. As of now, the digital market are more recent markets in which the traditional tools of competition law must be understood and applied. Though the challenges of competition law enforcement in digital marketing are numerous, this paper focuses on the evaluation of dominance and abuse in the digital market that is e-commerce site is particularly in the light of 2019 Supreme Court's decision in the Uber case1 .

The Supreme Court's decision that the loss-making pricing can be an indicator of dominance contradicts the views of Competition Commission of India, which had advised against the circular interpretation of dominance and puts the issue to the rest. Along with the rapid technological advancement, the digital markets have increased the ambit of relevant market and has rather become an alternative market.

The issue related to the traditional market delineation of relevant market assessment of dominance and its abuse have been pushed to limits by the digital market size and with the advent of this digital market it has become mandatory to introduce the concept of network effects and data as a determinant of market position. Furthermore, the enforcement of the competition law in the digital market had been challenging for the entire competition law jurisdictions.

The Competition Commission of India's decision in digital market have been quickly evolving with time and is commissioned by its own understanding about these markets rather than following the jurisprudence laid by the Competition Act 2002 and other jurisprudence from US and other competition law jurisdiction.

Also, the Competition Commission of India on January 8, 2020 had released its market study on The E-Commerce platform in India wherein it has highlighted the issues related to competition which might arise because of the digital markets and has further described how the commission would examine such issues. As of now, the competition issues which have been arising with respect to the E Commerce site or the digital markets includes imposing of unfair prices, exclusive agreements and providing heavy discounts to the customers. With respect to these issues, the commission has observed that such issues can be dealt under Section 4 which talks of abuse of dominance in the relevant market.

However, in order to deal with an issue as an abuse of dominance in the relevant market under Section 4 of the Competition Act 2002 it is very important that the enterprise or the E-Commerce site against which the issue of abuse has been raised, is holding a dominant position in the relevant market. In order to deal with this question, whether there has been an abuse of dominance in the digital market, it becomes important to examine whether the digital market is a relevant market and if it is then whether the enterprise was holding a dominant position in the relevant market or not under the competition law.

The Concept Of Relevant Market In Competition Law

A relevant market is described as a market in which a particular good or service is been sold. The Section 2� of the Competition Act 2002 states that a relevant market may be defined with reference to the relevant product market or the relevant geographical market of both. Further, Section 19 (6) and 19 (7) of the Act states the factors which are essential for the consideration of the relevant geographical and relevant product market respectively.

In comparison to the traditional markets like the stores and shops, the digital markets or the e-commerce sites sell the same goods to the customers at a comparatively lower price thereby forcing the stores to work hard to attract the customer. As a result of this price fixing techniques, there exists a competition between these two relevant markets. Further, over a long time it has been a bigger question that whether the online market is a separate relevant market or not. The Competition Commission through various cases has put forward the same.

In the case of Mohit Manglani v Flipkart2 , where the question was raised that if a book is exclusively distributed through any form inside it is not similar to another book distributed by the physical store hence making it a separate relevant market. However, the Competition Commission of India was of the opinion that individual product do not form a separate relevant market by themselves.

However, this position regarding the online market being a relevant market was cleared in 2014 case of Mr Ashish Ahuja v Snapdeal [3] , wherein the court stated that the two markets are different in terms of discount which they offer and the purchase experiences and that in such cases the customers have the choice available in both the market to decide accordingly. Therefore, the two markers are not distinct relevant market but are different channels of distribution of a same product.

Furthermore, in the 2018 case the All-India Online Vendor Association v Flipkart India Private Limited [4] , the Competition Commission of India tried to solve the problem with respect to the relevant market wherein AIOVA had accused Flipkart of abusing its dominant position in the market by permitting the discount and giving special treatment to some sellers. The commission, in order to deal with the question of abuse of dominance, firstly defined the relevant market as services which are provided by the online marketplace platforms for selling the goods in India.

The commission noted that in a digit market there are many market players and despite of the fact that Flipkart has a high market size and resource available, there cannot be any one player who holds a dominant position at the digit market level. Therefore, the commission was of the opinion that since flipkart was not dominant in the relevant market, no abuse of dominance occurred.

Data Related Issues In The Digital Market

Since the world is evolving rapidly there has been significant growth seen in the digital market. Competition in the digital market has become a major focus of the competition law, and policy framing with respect to all forms of online platforms. That is why it is important to demonstrate the term of abuse of dominance. No doubt in that digital markets to pose a challenge for the abuse of dominance in enforcement.

There is requirement for the more extensive laws in such areas because there are more chances that these digital markets can manifest more harm for which abuse of dominance laws were designed is such way to prevent the same, in case the competition authorities are unable to apply these prevention and prohibitions to the digital market business model. It is matter of fact that the competition in digital market has become one of the major focus when it comes to the competition policy.

It is quite evident that the size of the digital firms and their importance has much to do with their production towards the economy which particularly attracts a significant attention. Talking about the competition law policy, the notion that big is not bad is the core principle or the basis of competition policy.

But it is really important that firms size should be taken into consideration and all the factors should be taken into consideration like a novel business model, result of its own innovation or the size of the firm is large because of the fact that it has more efficient operations. At the same time the size or the growth of firm could be because of aggressive competition present in the market and ultimately benefiting consumers and economic productivity of entire territory at the more broader level. Whenever the question of abuse dominance comes to the surface, all these factors are taken into the consideration.

Though there are certain strategies which have been identified by the competition authorities which are generally used by the firms/dominant firms at the market level in order to enhance and protect their market power. In case there is no such innovation from these strategies then there is high possibility that this will harm consumers and ultimately leading to economic damage as well. Therefore, a proper determination is required to make sure that these digital markets don't abuse their position. From Indian perspective one the biggest challenges which tends to lie in the present context of the digital markets is the formulation of proper remedies which are specifically pertaining to the conduct of a digital markets.

Apart from this there is also problem with regards to the availability of credible data which can eventually help in determination of dominance and foreclosure/anti-competitive effects. The reason as why credibility is cannot be ascertained is because of the fact that these digital firms tend to operate globally and that is why it becomes difficult to get credible date or the information for ascertaining market share.

Observing from the perspective of data abuse of dominance in digital market. In order to have a strong hold on the relevance of data when it comes to internet economy, it is very much important to understand that upto what extent a data can actually means and its possible roles in the enforcement of the competition. It's very much evident that data, always has been relevant in competition analysis, it means that every piece of information can be termed as a data. This has been held in the Hoffman-Ra Roche decision in 1979 as well that the firm had a dominant position in that market because of its technical expertise which lead to an advantage, inclusive of the highly developed customer information.

Now discussing from the Indian legal framework, it can be observed that there is no framework or regulation which disable CCI for examining these data related abused. Like in section 4(2)(a)(i) which allows CCI authorities to take any action against any dominant enterprise which is found to be imposing unfair conditions for collection of the data and there is no such restriction as to what can amount to unfair condition within the ambit of the regulation.

Same goes with the section 4(2)(d) which gives authority to CCI to make an enterprise held responsible and fix liability if in case it is providing services with additional services and the unfair data processing (Here it is referred to give consent or agree to certain obligation which violates the customers/ who is availing services right to privacy).

The entire loophole does lies in the law specifically but the lack of robust jurisprudence with regards to privacy and data protection in India with regards to the European law. Another resolution can be adequately found by drawing analysis between the other countries, it's a matter of fact that the availability of digital services has quite often increased due to the on-going pandemic. Therefore, it is very much pertinent to know that where does India stands with respect governing tech firms' regulations.

The E-commerce market study done by the CCI has certainly raised several concerns of Indian stakeholders, like platforms are not acting impartial/unbiased way, imposing unfair contract conditions, exclusive agreements and often deep accounts.

 Though the CCI has been trying level best by ensuring a fairness in digital market like CCI mentioned a need for the need for adopting a model/paradigm approach by adopting self-regulation to ensure transparency by showcasing all the details like its revision in contract terms, user review and rating mechanism etc.

But still this form of model approach still falls short as compared to EU suggested regulations which is in the form of Digital Market Act, the said law will act as a gatekeeper for the online business platforms. At last, what is required, and the resolution could be to adoption of more strict regulations for digital business which can ensure good governance, accountability and fairness for the consumers/users.

Therefore, through the emerging trends and case laws it is evident that the Competition Commission of India's jurisdictional practice has evolved over the time. Previously, where there was no clear indication of an enterprise holding a dominant position, that is, then there was a lack of high market share of the enterprise in the relevant market, the commission used to close the cases.

Furthermore, consumer welfare was also a factor that was taken into consideration as the price fixing techniques and providing discounts were beneficial for the customers. Nonetheless, CCI in the recent cases has taken into cognizance the fact that the enterprises are sing the predatory pricing as a business tactic and that by providing deep discounts and free services, they are trying to drive out competitors. Further, the rise of big data has undoubtedly resulted in the development of the new business opportunities that would benefit the customers.

On one hand where the online market benefits the customers, on other hand it also introduces a number of new challenges because of which the competition authorities have to be cautious while dealing with such cases. Further, taking note from the foreign anti- trust laws where mostly the natural monopoly exists, the conduct of the enterprise to achieve this monopoly should be taken into consideration.

  1. Meru Travel Solutions Pvt. Ltd. v Uber India Systems Pvt. Ltd. & Ors., (Case No. 96 of 2015), order dated 14 July 2021
  2. Case No. 80 of 2014
  3. Case No. 17 of 2014
  4. Case No. 20 of 2018

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