Free and fair competition has received a significant fillip from the Competition Commission of India (CCI) – India’s competition regulator which turns a decade old today.

Credible statistics

In this decade, the CCI has busted cartels across sectors, including entertainment, pharmaceuticals, public procurement, transport, and construction. In order to crackdown against anti-competitive behaviour, the CCI has conducted four dawn raids. The CCI has also held individuals, i.e., both current and former employees, to be liable for their conduct.

As part of its successful advocacy rollout, the CCI has passed nine leniency orders. The leniency regime, as a whistleblower’s tool has given a boost to the CCI’s cartel enforcement particularly post the recent amendments in 2017 which removed the cap on the number of leniency applicants and provided access to file to non-leniency applicants.

The CCI in the eight years of the Indian merger control regime allayed industry concerns of M&A timelines being impacted by expeditiously clearing over 650 merger notifications with an average disposal time of 23 days in 2018. The CCI has not blocked a single transaction to date and has conducted eight in-depth phase - II reviews of transactions involving high market shares, of which 7 have led to conditional approvals subject to divestitures. However, the recent acquisition of L&T’s E&A business by Schneider and MacRitchie was approved by the CCI subject to a set of novel behavioural remedies, demonstrating how each transaction is assessed by the CCI based on individual characteristics and market dynamics, resulting in a tailored remedy package which meets the perceived competition harm. The acceptance of purely behavioural remedies is a laudable step for the development of the merger control regime in India.

Challenges for the future

As a relatively nascent competition regulator, the CCI has done commendable work in shaping the competition environment in India. However, there are several challenges ahead for the regulator in tackling the antitrust issues involving new age economy and evolving ways in which business is done globally.

The growing digital economy and online marketplace model is gaining importance from a competition perspective. When assessing this sector, the disruptive nature of technology-based innovations, concerns of data concentration arising from mergers, potential creation of entry barriers and foreclosure of markets, are some competition law concerns which the regulator needs to balance while ensuring sufficiency of choice for consumers, innovation, and provision of better-quality products and services. So far, the CCI has recognised the importance of innovation and played a key role in allowing businesses in the digital economy to thrive, both from the perspective of merger control (such as the recent Walmart-Flipkart deal, investments by Amazon and BigBasket, etc.) as well on the enforcement front (while investigating the alleged abuse of dominance by Ola). However, the dynamic nature of this sector and its ongoing consolidation will likely lead to interesting regulatory outcomes in the future.

The marketplace platform has increasingly contributed to the collection of extremely large data sets or what is referred to as ‘big data’. Globally, competition authorities are assessing the potential anti-competitive concerns involving big data, ranging from creation of entry barriers, exploitative and exclusionary conduct related issues involving the use of data, collusive behaviour pertaining to data accumulation and utilization (particularly when data is used with algorithms such as price determination algorithms which may inadvertently lead to price fixing) to the impact arising from the use of big data itself on competition. Increasingly, competition authorities are also debating whether they are equipped with the requisite tools to assess of such anticompetitive behaviour, or even the potential impact of mergers involving entities handling such big data and artificial intelligence.

Since digital companies typically tend to have low turnover and assets – a turnover based jurisdictional threshold often allows transactions involving such companies to escape the scrutiny of competition regulators. One instance of this is Facebook’s acquisition of WhatsApp, which affected a global consumer base but was assessed by a limited number of regulators (such as the United States and the European Commission) as it escaped the scrutiny of regulators having only turnover based thresholds. This situation has led to regulators such as Germany, Austria and South Korea moving towards alternative modes of screening transactions such as transaction value-based thresholds. The CCI may also consider similarly reviewing the current asset and turnover based thresholds, in line with this global trend.

Way forward

The CCI has the ability to levy the highest economic penalties in India and is statutorily mandated to prevent practices that have adverse effect on competition, promote and sustain competition, protect consumer interests, and ensure freedom of trade in light of the economic development of India. The statistics above demonstrate that the CCI has been a pro-active regulator which has effectively discharged its mandate and continues to do so. However, this wide mandate coupled with the penalty power exercised by the CCI emphasise that the need of the hour is for the formulation of penalty guidelines by the regulator which will serve as a barometer to guide industry.

The past decade has also witnessed the CCI successfully overcoming its initial hurdles in relation to its orders being reversed by the appellate tribunal on account of violation of the principles of natural justice. Now, a new quandary before the CCI is in relation to its composition, which was right-sized by the Central Government in April 2018 to 3 members from 6 members (excluding the Chairperson) and is again under discussion owing to the recent directions of the Delhi High Court. The Delhi High Court in its judgment in Mahindra & Mahindra v. CCI , directed that (a) CCI should frame guidelines to ensure that once final hearings in any complaint begin, the membership should not vary and should preferably be heard by a substantial number of seven or at least, five members; (b) Central Government should take expeditious steps to fill all vacancies in the membership of the CCI within six months, (c) CCI should ensure that a judicial member is present and participates in final hearings. The High Court also declared as void and unconstitutional the statutory right of a casting vote given to the presiding member in case of a tie at CCI meetings.

Given the scope of the CCI’s nationwide remit and the fact that a substantial majority of the CCI's matters originate in Mumbai, the Central Government should consider setting up benches of the CCI along with a dedicated appellate tribunal / bench to expeditiously decide competition cases. This is also imperative in the interest of facilitating wider access to justice and ease of doing business in India and in line with the model already implemented by SEBI, the securities market regulator.

Nisha Kaur Uberoi is Partner and National Head of the Competition Law practice at Trilegal. Gautam Chawla is a Counsel and Harshita Singh Parmar is an Associate in the Competition practice at Trilegal.

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