The Competition Commission of India (CCI) has recently completed 14 years of its enforcement mandate. This journey of India’s competition watchdog has remained eventful and tumultuous as it faced vociferous constitutional challenges to its very composition to due process issues during this period. It, however, emerged and established itself as a mature and robust regulator through quick learnings and un-learnings, and by resolutely focussing on its mandate which it discharged through its nuanced and targeted enforcement actions. CCI has also remained steadfast in promoting inorganic growth through faster clearance of deals. In fact, it has taken several initiatives to facilitate ease of doing business and lessening compliance burden upon the stakeholders.
In the first decade of its existence, CCI intervened in traditional markets and has gone after sectors that were prone to cartelisation such as sugar, steel, cement and other commodities, besides looking at abusive conduct of dominant players in various markets including real estate and mining. In the next five years, CCI was grappling with competition issues arising out of fast evolving new age markets.
To address these issues, CCI switched gears swiftly and started learning on the feet for interventions in digital markets. Its early interventions in these markets were cautious, targeted and measured which is borne out from the approach it adopted in first set of cases against big tech in 2018 where it emphasised the need for carefully crafted interventions lest they stifle innovation and deny consumers the benefits of innovations.
However, since 2018, CCI recalibrated itself for full throttle interventions in technological markets, which culminated in its three rulings issued in October 2022 which sought to change the digital markets structurally in a fundamental way. It also shed its regulatory forbearance and swung the penalty pendulum to the other extreme by levying the maximum penalty upon the tech giant Google in the second set of interventions, besides issuing epoch-making behavioural remedies. This was as much a leap of faith for the market regulator as it was a sign of heralding the arrival of a confident and resurgent market watchdog.
Legislative process
During this period, the government also initiated the legislative process to overhaul the existing law to make it future ready and to address the difficulties faced by CCI in discharge of its statutory duties. This process concluded in April 2023 when the Competition (Amendment) Act received Presidential assent. The changes effected in the statute are futuristic in nature and will go a long way in ensuring swift market corrections.
The amendments broadened the scope of anti-competitive agreements by providing for ‘catch all’ clause in the framework of anti-competitive agreements and now the regulator can examine any type of anti-competitive arrangement even if it does not fit in the traditional binary of horizontal and vertical agreements.
The amendments also included facilitators of certain anti-competitive agreements within the framework of law; reduced time limit for approval of mergers & acquisitions; introduced deal value threshold as an additional criteria for notifying M&As; provided limitation period for filing cases relating to anti-competitive agreements and abuse of dominant position; brought in settlement & commitment framework; broadened and deepened scope of inter-regulatory consultations; incentivised parties in an ongoing cartel investigations in terms of lesser penalty to disclose information regarding other cartels. The thrust of the reforms has been to facilitate ease of doing business by providing regulatory certainty, framework for faster market correction and a trust-based business environment.
Concurrently, in February 2023 , the government constituted a Committee on Digital Competition Law (CDCL) to review whether existing provisions in the Competition Act, 2002 and the Rules and Regulations framed thereunder are sufficient to deal with the challenges that have emerged from the digital economy; to examine the need for an ex-ante regulatory mechanism for digital markets through a separate legislation; to study the international best practices on regulation in the field of digital markets; to study other regulatory regimes/ institutional mechanisms/ government policies regarding competition in digital markets; to study the practices of leading players/ Systemically Important Digital Intermediaries (SIDIs) which limit or have the potential to cause harm in digital markets; and any other matters related to competition in digital markets as may be considered relevant by the Committee.
The expert panel is likely to submit its report to the government including a Draft Digital Competition Act very shortly.
Regulatory changes
Moving forward, CCI is poised to adapt to significant regulatory changes, particularly with the recent legislative amendments and the forthcoming recommendations from the Committee on Digital Competition Law. The Commission will need to focus on implementing these changes efficiently, aiming for swifter market corrections and a more conducive business environment. Moreover, CCI needs to augment its human resources, including the recruitment of domain experts and data scientists, to bolster its analytical and investigative capacities. In essence, the Commission aims to evolve into a more agile, responsive, and effective regulator, capable of addressing the complexities of both traditional and digital markets.
Very recently, the CCI has undergone a complete transformation with the induction of a new set of competition commissioners. In addition, a new Secretary has been appointed to facilitate administrative functions, and the engagement of a new Director General for Investigations is imminent. This change is pivotal for defining the enforcement landscape for the next half-decade. The newly constituted collegium is a blend of expertise across various domains, including administration, investigation, and leadership, all reinforced by adequate experience. Furthermore, the gender-balanced composition of the Commission, comprising two male and two female members, enhances its diversity. This balanced and multi-faceted leadership is poised to guide the Commission with quiet determination. The nation can thus look forward with optimism to the Commission’s potential achievements in the near future.
CCI is sitting on a cusp of tectonic change in regulatory landscape and it needs to act fast and now.