The CCI & its Digital Marketspace Woes: what might lie ahead?
The CCI & its Digital Marketspace Woes: what might lie ahead?

The CCI & its Digital Marketspace Woes: what might lie ahead?

This article is written by Ranjul Malik and Neelanjana Ghosh, 3rd year, B.A. LL.B. Students, Army Institute of Law, Mohali.


Traditionally antitrust agencies have been known to investigate a variety of companies from different sectors. Investigations into companies like Kodak Eastman Co, Standard Oil, American Tobacco Co in USA and United Brands, Consten & Grunding in European Union have become so prominent that they form a part of every standard antitrust textbook. But the trend has seen a drastic shift in recent years, with most cases across the world related to companies in tech or digital space. The reason has been the sheer concentration of power in the hands of a few at the very top, with companies like Google, Amazon, Microsoft, Facebook and Apple having a share of over 90% in the global internet marketplace. Such antitrust problems have leaked their way into India, too. Google has been under the scanner of the Competition Commission of India (“CCI”) on more than one occasion for multiple reasons, including its search algorithms, Android OS, and Play Store, and others including Flipkart, Amazon, Microsoft, Apple have all had their fair share of visits to the CCI too. From this, the importance of digital space and its regulation becomes evident, resultant of which, steps are now being taken to fill the void within the conventional competition law jurisprudence with respect to digital markets. Whether it be the latest Standing Committee on Finance’s report on suggestions for digital markets or the Competition Law amendment bill which proposes a change within Section 3(4) of the Competition Law to include all sorts of agreements, again, a step primarily to tackle with transactions in digital markets better. The present article tries to analyse in depth the issues vis-à-vis digital markets in India and give out possible solutions, including developments abroad.


The digital markets-related issues in Indian antitrust can be compartmentalised into two broader heads, one being definition based and the others under the collective umbrella of regulatory issues.

  1. Definition Based:

Defining a relevant market for a business forms the very basic and most important step for any antitrust investigation. But the CCI has largely struggled to define relevant markets in digital space. The main reasons are CCI deciding to stick with traditional relevant market tests based on substitutability or interchangeability and small but significant non-transitory increase in price test (SSNIP). Recent trends suggest that regulators, including the CCI, have tried to come up with more qualitative tests like the significant non-transitory decrease in quality test (SSNDQ) for digital market places but they remain very vague and end up narrowing the scope for businesses when one considers the multi-faceted operations businesses in digital space operate in. For example, only recognizing Apple as “the market for app stores for iOS in India” ignores other retail operations undertaken by Apple and even other functions within iOS. The CCI has again been unclear on this front; in cases like the Google case, they did consider using two separate relevant markets as part of one definition, but in cases like that of the cab aggregators, they decided to define the relevant market based on only one definition without a plausible explanation to the different approach.  Similarly, in consideration of offline and online market spaces, especially for e-commerce businesses related cases, the CCI shifted from its traditional approach in MakeMyTrip order in demarcating both offline and online segments as different relevant markets and not mere separate channels of distribution. This approach was readopted in the Harshita Chawla case regarding Whatsapp and the Apple order, but subsequent orders didn’t apply this test thus making it unclear as to when online and offline segments can be treated as separate relevant markets.

  • The Regulatory Predicament:

Regulatory issues within the digital antitrust space include a series of issues which make enforcement and regulations for the CCI difficult. The very base of these issues rests in the fact that the CCI is an ex-post regulator and the fact that the digital marketspace in India is still growing. CCI cannot force dormancy like the instance when it passed the interim relief to MakeMyTrip and didn’t allow delisting of its website listings for long, keeping in view the loss in business it might cause.

Then there are a host of other issues which may or may not arise with mergers in digital spaces like net neutrality, leveraging, network effects and collection of data leading to accumulation of market power. These need to be looked at on a case-by-case basis while striking a balance with growth. The example of CCI’s approval to a Facebook subsidiary’s acquisition of a 9.99% stake in Reliance Jio fits the bill perfectly. The CCI showed a green light to the merger to encourage synergy in the telecom and tech space whilst also considering the possible impact on market power with the exchange of data which is complementary in nature, and also on net neutrality due to the complementary nature of the two enterprises. But in such cases, often, the regulators may revisit their approval orders if data sharing against what was intended happens which is the case in the Jio-Facebook merger.

However, there is also a lack of regulatory clarity on the anti-competitiveness of activities undertaken with the help of AI, especially with the help of price algorithms to determine maximum profitability and set prices to achieve targets. Collusion is hence more elusive than open. The digital eye is an advanced example of the same, which allows two competitors to separately deploy programs to achieve their own vested interests. Along with these new state-of-the-line price discriminatory techniques, settled solutions to market foreclosure and exclusionary practices using AI remain unanswered even after being hotly contested. While the CCI, in its E-Marketplace study, suggested changes emphasising self-regulation in areas like search ranking transparency, data gathering, usage and data sharing; user review and rating system; contractual reviews and discount policies, better and more effective solutions can be drawn from changes taking place in other jurisdictions.

Lessons from Abroad and Possible Solutions

An ideal solution to defining relevant market in digital space lies in the CCI conducting primary research surveys on both industry trends and consumer preferences in major industries to the maximum extent possible. While the idea may seem rather resource consuming but given the importance of defining relevant markets in the contemporary antitrust and what might be at stake if the ambiguity in defining relevant markets in digital spaces carries on for long, the primary market surveys seem to be the ideal way ahead.

Developments in different jurisdictions can be analysed too, to find answers to our own problems. For instance, Germany has added to its definition of relevant market by including “service providers which provide free of cost services”,which effectively puts most digital giants whose services are free to use but are focused on using data to sell advertisements within its ambit. On the issue of mergers in the digital space, many jurisdictions like Austria and Germany have recognised deal/transaction-based thresholds to regulate mergers instead of the traditional asset turnover-based approach, which allowed many digital giants to skip the radar of the regulator. However, the same, if applied in India, needs to be done with caution since a wider scope may disincentivise innovation in the Indian start-up culture. India is at a relatively nascent stage for its start-up growth and is the fastest growing nation in quantitative terms on number of start-ups. Any deal/transaction-based threshold will bring newer names under the scrutiny of the regulator even when their assets and net turnover might be inconsequential to any effect on the market. This problem is exacerbated even further due to the fact that most Indian start-ups have been cash strapped for years now.

Another worthy point which needs to be addressed is the difference in valuation of shares notified by the companies and the variation with how the regulator values their share. This only creates another hindrance especially given that the deal value does not reflect the true competitive significance of a transaction. All in all, a robust way to present and verify objective data which is aptly quantifiable and has less scope for misuse needs to be found to proceed with the deal value threshold instead of copying the entire German or Austrian model to the Indian ecosystem. The Digital Markets Act (“DMA”) of the EU also introduces various provisions which might alleviate some of our regulatory woes. By referring to “gatekeepers” / “core-platform services”, the DMA introduces a term for the tech giants which fittingly resonates with their functionality and even touches on enforcement of data regulation by the intermediatory service providers (the gatekeepers). But most importantly, it grants ex-ante regulatory powers to the regulator, which theoretically solves most troubles by introducing a pro-active approach in the system.


The German definition of “free of cost service providers” and the EU’s known gatekeeper provisions which “define intermediatory service providers”, or the Austrian deal value thresholds for notifying the regulator are various solutions introduced abroad to both definition based and regulatory issues, but none of those can be brought in and implemented as they are. The nascency of India’s digital market space and start-up space has time and again had experts warn not to blindly replicate changes happening elsewhere and instead craft well-tailored definitive and regulatory answers to our own problems. In conclusion, the message of Ashok Kumar Gupta (Chairman, CCI) at the Annual Conference on Competition Law and Practice organised by the Confederation of Indian Industry (CII) along with Competition Commission of India (CCI) carries a fitting undertone on what needs to be done next, wherein he says “the regulatory framework needed to adapt and reflect digital market complexities, reframe classic categories and concerns around personal and non-personal data and add other dimensions of quality and privacy, identify issues early on and cause faster remedial interventions.”

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