Ashok Kumar Gupta, Chairperson, CCI, completed his four-year tenure on Tuesday. His term was eventful with major interventions in digital markets, both on the enforcement and policy side. Gupta took Big Tech head-on and issued key rulings, which have ushered in behavioural and structural changes in digital markets. 

Gupta spoke to businessline at length. Excerpts:  

During your term, CCI opened many investigations and passed orders against Big Tech. What are the key challenges digital markets pose for the regulator?

The digital platforms, with enduring market power, have a decisive influence on the online competition landscape. Their control over critical digital infrastructure, and power to set rules and determine terms of access, makes them de facto gatekeepers of online markets. Such rule-setting power, control over user data and user interface, help maintain and strengthen the platforms’ long-term position in the core platform markets, while also expanding the same in adjacent markets. The resultant irreparable/ irreversible adverse consequences for competition and consumer welfare warrant effective regulatory scrutiny over large digital platforms.

Governments across jurisdictions have proposed/ advocated that enforcement of competition law, which is an important and potent tool to protect and promote competition in markets, including those in the digital sphere, may be supplemented with suitable ex-ante legislative measures so that the digital markets can be effectively regulated. Many jurisdictions have already proposed such measures, which aim to set well-defined enforceable ground rules for critical digital platforms, with a view to ensure contestable, fair and transparent digital markets that support long-term innovation, economic development and welfare.

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What are your views on regulating Big Tech through ex ante measures?

We, at CCI, are currently addressing competition concerns in digital markets through our antitrust enforcement measures, which are essentially ex post. However, the need and rationale for ex ante regulation to supplement these efforts cannot be over-emphasised in view of the experience gained and difficulties faced by CCI in effecting timely market correction in digital markets.

It is imperative to adequately address the concerns that arise from the systemic/ structural infirmities of these markets, and to be able to do so rapidly before the platforms can entrench and leverage their position by eliminating potential competition and/ or by disadvantaging users. Case-by-case antitrust adjudication by CCI allows for a nuanced, evidence-based analysis of the effect of a specific business conduct. However, the requirement of gathering ‘sufficient’ evidence to discern the complex effects of conduct and establish liability, ensuring procedural fairness in the investigation/ adjudication process, and judicial review of decisions, make this a long route to effectuate regulatory interventions in markets. In fast-moving digital markets, protracted litigations and delayed interventions could prove to be expensive or even futile. 

Considering that India has the world’s third-largest start-up ecosystem, with a tech-based start-up ecosystem permeating across sectors, it would be entirely appropriate and timely that we, in India, stay aligned with the frameworks being evolved by our counterparts in regulating digital markets through ex ante measures, lest we remain behind the curve. We need to consider feasibility of the ex ante framework to address our domestic needs, to effectively regulate digital markets that will supplement the ex post enforcement actions of CCI. 

CCI has imposed heavy penalties on Big Tech, but was accommodative when it came to contravention by MSMEs. What has been the approach and underlying philosophy in levying penalties? 

At the outset, let me clarify that our purpose is to ensure faster market correction and not to enforce a regime characterised by heavy imposition of penalties, which in any event, gets mired in litigation, making the other remedies a casualty in the appellate process. 

We have been pragmatic in levying and quantifying penalties as our enforcement actions are not divorced of business and economic realities.

Jurisprudentially, the decision of the Supreme Court in the Excel Corp case (2017) is the guiding light for determination of penalty, which provides relevant turnover as the basis for imposing penalties. The court, based on the principle of proportionality, had directed a two-step calculation while imposing penalties. 

First is the determination of relevant turnover, which is the entity’s turnover pertaining to products and services that have been affected by the contravention. For this, CCI may rely upon the entity’s audited financial statements, or, in the absence of that, estimate the relevant turnover based on available information. The second step involves determination of appropriate percentage of penalty, based on aggravating and mitigating circumstances. 

After the initial determination of relevant turnover, CCI may take into account the nature, gravity, extent of contravention, role played by the infringer, the duration of participation, the intensity of participation, loss or damage suffered as a result of such contravention, market circumstances in which contravention took place, nature of product, market share  of the entity, barriers to entry in the market, nature of involvement of the company, bona fides of the company, profit derived from the contravention, etc. These factors are only illustrative and may vary as per the facts and circumstances of the case.  

Thus, CCI has been providing guidance through its decisional practice as to what constitute mitigating and aggravating factors, which, in turn, are weighed to arrive at the appropriate amount of penalty. 

Can you share the status and profile of the proposed Digital Markets and Data Unit (DMDU) ?

It is a work in progress. We have made a beginning. 

In the context of digital markets, regulatory capacities in terms of understanding new-age business models and underlying technologies are of paramount importance for any effective, targeted and nuanced interventions. In the process of regulating anti-competitive business conduct of big tech, it is imperative that incentives for innovations are not stifled. Realising these challenges and needs, we are in the process of setting up DMDU in CCI, that will act as a specialised interdisciplinary centre of expertise for Digital Markets. The DMDU will connect with experts; engage with industry, academia, other regulators/ departments, international agencies; provide inputs on policy issues; support in data analytics/ management; and undertake any other task assigned to it in the context of digital markets. 

Can you highlight key achievements of your term at CCI?

It would be for the stakeholders to judge my helming of the institution and I would refrain from counting and citing achievements. 

Having said that, let me highlight some of the key initiatives undertaken in the last four years. These include setting up regional offices at Chennai, Kolkata and recently Mumbai.

Secondly, as part of its ongoing and regular efforts to make M&A filings approval faster, we introduced in 2019 an automatic system of approval for M&As under the Green Channel route. Under this process, a combination is deemed to have been approved upon filing the notice in the prescribed format. This is a first of its kind trust-based system in the world and should sustain a speedy, transparent and accountable merger review, striking a balance between facilitation and enforcement, and creating a culture of voluntary compliance that supports economic growth. The Green Channel has received a positive response and almost 30 per cent of transactions have been filed under this route since its inception in August 2019 till March 2022.

Thirdly, we have increasingly deployed market studies as regulatory instrument to gather information about structural infirmities, consumer behaviour, market practices, stakeholder perspectives and regulatory architecture governing the sector and their implications on competition in or or the market. Market studies give us a wider ambit to understand the characteristics of the market and industry practices that may give rise to anti-competitive concerns.

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