India

By Arindrajit Basu and Ian Brown. Last updated: 3 May 2022

The Competition Commission of India (CCI) is responsible for enforcement under the Competition Act, 2002 (amended in 2009). 

A review committee appointed by the Indian government concluded in 2019 the Competition Act was “sufficient to deal with the issues arising from new age markets”, but recommended the “adoption of transaction value test for reviewing combinations in the new age markets as such combinations generally escape scrutiny due to low value of assets or turnover”. The Ministry of Corporate Affairs published a draft Competition Amendment Bill in February 2020 implementing this recommendation, which was debated in Parliament but is still pending.

In January 2020, the CCI published a market study on e-commerce. This found significant growth in online sales of consumer goods (particularly mobile phones), travel and food service, with “an increased intensity of price competition” and a “central role” for concentrated online marketplaces. Most platform seller respondents were concerned with platform neutrality, with platforms competing against sellers and favouring “preferred sellers”, a lack of platform competition, and exploitative contracts. 

The Commission recommended greater transparency, and case-by-case investigations of unfair terms, platform parity clauses, exclusive agreements, and predatory pricing by dominant platforms. It proposed platforms adopt the following self-regulatory measures:

• Search ranking: describe main ranking parameters in terms and conditions, any effect of remuneration, while protecting algorithmic details that would facilitate third-party manipulation of results.
• Collection, use and sharing of data: publication of “clear and transparent” policy
• User review and rating mechanism: transparency and verification of purchases by reviewers, with measures to address fraudulent reviews.
• Revision in contract terms: give business users adequate notification.
• Discount policy: transparency policies, including platform-funded discount rates and the implications of participation/non-participation by sellers.

As a result of these grievances, the Indian government has published proposals for the Consumer Protection (E-Commerce) Rules, 2020. These would address a range of issues relating to liability, unfair trade practices, flash sales, (weak) data protection, and compliance (including with international trade law). 

The CCI chair, Ashok Kumar Gupta, gave a speech on 20 September 2021 celebrating Vision India@75 – Road to 2047, which mentioned the impact of digitisation on India, but does not suggest any competition law reform is needed to deal with it. This view was echoed by Commission member Sangeeta Verma in a November conference speech, while noting a “bargaining power imbalance between digital platforms and business suppliers in digital markets”.

Civil society advocacy

The Centre for Internet & Society (CIS) responded to the consumer protection consultation with a number of suggested amendments, including avoiding overlap with competition law. IT for Change also responded, suggesting larger companies should face stricter regulation; robust cooperation is needed between the CCI and Consumer Protection Authority to avoid regulatory overlap; ranking algorithms should be made transparent; and government access to e-commerce firm data should be replaced with consumer and seller access to their own data footprint.

Groups not usually involved in digital issues have also taken action, including an affiliate of the governing party-linked Hindu nationalist organisation Rashtriya Swayamsevak Sangh. It demanded in December 2020 that the “nexus of [Multi-National Corporations] and Indian business should not be allowed to operate in India”, due to the threat of online marketplaces damaging small retail stores. 

Speakers from IT for Change and SEWA Cooperative Federation participated in a November 2021 panel on Co-Ops for the Indian Digital Economy, as part of a hybrid conference on The New Common Sense: Forging the Cooperative Digital Economy.

Continuing the trend of a range of civil society groups across sectors making representations against ‘Big Tech,’ the Indian Newspaper Society (INS) requested a probe against Google for abusing its dominance among news publishers. In a statement INS said: “INS has stated Alphabet Inc, which is the parent company of Google, Google LLC, Google India Pvt Ltd, Google Ireland Ltd, and Google Asia Pacific were abusing their dominant position in the News Referral Services and Google Ad Tech Services in the Indian online news media market, which was in violation of Section 4 of the Competition Act, 2002.” Earlier in February 2021, the INS had written to Google asking them to “properly share advertising revenues” for content published by newspapers-inspired by the deal struck by Google in Australia with Newscorp to do exactly that.

The INS has also ostensibly been inspired by legislative developments around the world. Its statement further alluded to the fact that Australia, France and Spain have passed legislation requiring tech companies, including Google, to adequately compensate content providers.

The food delivery sector has also seen a potentially path-breaking order against two of India’s largest food delivery platforms. The National Restaurants Association of India, which represents the interests of over 500,000 restaurants in the country made allegations before the CCI against Indian food delivery platforms Zomato and Swiggy.

They raised the following concerns:

1. Zomato and Swiggy bundles food delivery services with food ordering services. Restaurants that are listed cannot self-deliver and often lose out on deliveries due to non-availability of delivery partners.
2. Zomato and Swiggy practice data masking as they do not inform restaurants about the end customers even though the privacy policies of both companies obtain customer consent to share data with the restaurant. Instead, these platforms use this information to their own advantage.
3. Online food delivery platforms play a dual role of intermediary and participant, as their own cloud kitchens and private labels are also listed on the platform with preferential business terms.
4. Online food delivery platforms urge restaurants to exclusively commit to be listed on their respective platforms.
5. The rates of commission (20% to 30%) are incredibly high and unviable for restaurants and the discounts are funded by restaurants.

Key enforcement actions

A December 2020 CCI report to the OECD noted complaints containing “allegations of anti-competitive practices by the e-marketplace platforms (against Amazon and Flipkart), Online search engine (Google), Online cab aggregators (UBER and OLA), Online Travel Agents (MakeMyTrip and OYO), Online food delivery apps (Swiggy), instant messaging apps (WhatsApp) etc.” Some were dismissed at the initial stage, while others are under investigation.

Since then, the CCI has opened an investigation in June 2021 into claims of an unfair condition on smart TV manufactures that all Google apps must be preinstalled on Android devices to offer Play Store, and illegal leveraging of dominance in Play Store to protect relevant markets such as video hosting services offered by YouTube. Reuters reported in September 2021 these claims had been upheld. And in March 2021, the Commission determined, following an own-initiative preliminary investigation, “the conduct of WhatsApp in sharing of users’ personalised data with other Facebook Companies, in a manner that is neither fully transparent nor based on voluntary and specific user consent, appears prima facie unfair to users.” It therefore opened a full investigation.

Most recently, Rajasthan non-profit “Together We Fight Society” complained in September 2021 to the CCI about Apple’s requirement for apps to use its own payment mechanisms. Amazon and Flipkart failed in August 2021 to persuade the Supreme Court to interfere with a CCI investigation into alleged unfair business practices relating to preferred sellers and preferential listings. Three other investigations into similar cases are ongoing. Competition lawyer MM Sharma expects the parties to lose these cases, but delay any enforcement by appealing them to the National Company Law Appellate Tribunal and then the Supreme Court. 

In its investigation order dated 31 December, 2021, the CCI ordered a detailed investigation into Apple after reasoning that there is prima facie evidence of Apple abusing its dominance in the market for the distribution of apps for iOS devices. The Commission noted the market for app stores for iOS in India is a relevant market and Apple has a monopoly in this market. CCI held that Apple’s mandatory use of in-app purchase restricts choice, the charging of high commission due to control of a significant volume of payments and imposing an unfair restraint by prohibiting app developers from informing the users about alternative options make up the prima facie case for abuse of dominance. The investigation into the abuse of dominance will either confirm or reject these findings advanced by the CCI.

The investigation ordered in November 2020 against Google’s new Play Store billing policy continued in full swing. CCI began in person depositions from a range of local Internet start-ups including edtech unicorn Unacademy, dating apps like TrulyMadly and matrimony sites on Google’s “hefty” 30% commission compared to just 2% from other payment gateways. In response to a petition filed at the Karnataka High Court by Google to delay enforcement action, CCI stated that the investigation would be completed within 60 days.

On 7 January, the CCI ordered yet another investigation into Google for its abuse of dominance in the market for news aggregation. CCI observed that prima facie Google imposes unfair and discriminatory conditions on publishers including a “lack of transparency and information asymmetry in the ad tech services provided by Google, which does not allow publishers to optimize the yield on their ad inventory.” CCI also stated that the alleged opacity exacerbates information asymmetry and is prima facie prejudicial to the interests of publishers, which could impact the quality of their services and innovation. CCI also held prima facie that scraping and displaying news snippets through ‘zero click’ searches allows Google to earn revenue directly or indirectly whereas the news publishers lose out as this impacts the traffic that is referred to their websites and their abilities to monetize that content. Most poignantly, the CCI observed that the critical role played by news media cannot be undermined in a well-functioning democracy and digital gatekeepers must not abuse their dominant position to adversely impact the competitive environment and fair revenue distribution.

After taking cognizance of the representations made by INS, the Competition Commission of India (CCI) passed an order stating that the information submitted by the INS should be clubbed with the submissions made by the Digital News Publishers Association (DNPA) in the Director-General’s investigation. The submission made by the DNPA was discussed in the January briefing.

With another pending case against Google, the Additional Director General of the CCI has submitted its report to the CCI on Google’s app store policy and found it “unfair and discriminatory.” This  is only a preliminary non-public report accessed by Bloomberg News the CCI’s final verdict but could impact the final decision significantly. The origins of this case was discussed in the January briefing and stemmed from a 2020 update to Google’s app store policy which compelled competing apps to use its billing system for several in-app purchases. In response to this enforcement action, Google said, “ We will continue to engage with the CCI and demonstrate that our practices benefit Indian consumers and developers, without in any way restricting competition”. 

On 5 April, the CCI took prima facie cognizance of  allegations raised by NRAI and ordered a probe by the Director-General to carry out a detailed investigation and submit a report within sixty days. Zomato has made a public statement in response to this order stating that it will work with the CCI and explain why its practices are in compliance with competition laws and do not have any adverse impact on competition in India.

Restructuring of the regulator

Thus far, the CCI has not been as active in undertaking enforcement action in the field of digital competition, often due to a lack of internal structure that would allocate capacity and resources towards doing so. This recently changed.

At a conference in December, the CCI chairperson Ashok Kumar Gupta told the Confederation of Indian Industry: “Since not all digital markets are alike, nor is all data, interventions in merger reviews in technology markets need to be guided by case-specific economic evidence of competition concerns.”The CCI has followed in the footsteps of several other jurisdictions such as South Korea and Australia which have undertaken enforcement actions related to the abuse of dominance in the app store and news revenue space respectively. This has been the product of direct advocacy by civil society groups representing start-ups who have filed petitions with the CCI. However, at this stage investigations have only been ordered and no conclusions have been reached in any of the cases.

Concluding Remarks

A number of civil society organisations and coalitions representing the interests of stakeholders affected by the potentially anti-competitive practices of digital platforms have legally asserted their interests before the CCI. This includes players operating directly through digital platforms such as digital payment companies as well as players in ‘traditional sectors’ such as restaurants that are compelled to engage with these platforms due to their disruptive impacts.

The recourse to CCI is driven,  in part by the CCI’s recent receptive approach to their concerns, demonstrating a willingness to act on these claims and ensure that both Indian and foreign large technology platforms operate within the confines of existing law (the Competition Act, 2002). Even as we await the final orders in these cases, this certainly gives cause for optimism. Should this positive trend continue, more actors may look to the CCI as a key institution for the preservation of fairness and equity in India’s digital markets.

Acknowledgment: this update was commissioned by Open Society Foundations.