Competition Law 2.0 marks a new era for India's anti-trust regulations

The Competition Commission of India investigates Google Play Store over unfair service fees, tests new provisions of the Competition Amendment Act

Last week Google’s Play Store billing policy came under the scanner of the Competition Commission of India (CCI) for imposing unfair service fees on app developers. This, perhaps, is one of the first investigations ordered by the antitrust watchdog since the Competition Amendment Act 2023 was notified. It is therefore being called by some experts – the litmus test for the new provisions of the 2.0 version of the Act.

Whether the global search engine opts for the settlement and commitment scheme – among the new facets of the law – in the days to come would be closely watched by the competition law practitioners and digital companies.

“Proof of the pudding is in the eating. How CCI implements the new provisions and ensures that the legislative intent is not compromised would be of utmost importance now. The CCI has to build trust among stakeholders now,” an industry expert said.

Competition law, originally designed for brick-and-mortar companies, has seen a tectonic shift to the digital era in the past decade. While it has been applied thus far in what some may call a ‘jugaad’ way to address the gig and digital economy, it appears that the law has finally caught up with the times.

From introducing the ‘leniency plus’ and settlement & commitment mechanisms for companies flouting rules, the competition law for the first time also includes a deal-value threshold instead of just asset value for approving M&As. Add to this, the latest Digital Competition Bill and the legal framework for competition law are now all set for a historic turning point.

“These are all progressive steps and in line with international best practices. It is a sign that the law and regulator are more mature and prepared to undertake scrutiny of intricate and complex market issues. Also, everything is no longer black or white, there are several shades of grey in terms of anti-competitive behaviour and remedies,” said Neelambera Sandeepan, Partner at Lakshmikumaran & Sridharan Attorneys.

Laws for Indian scenarios

Experts feel that while the Competition Law amendments have drawn from the more mature jurisdictions like the European Union and the UK, the competition law regime in India is based on the specific requirements and challenges of the domestic markets.

“This is the reason why, unlike an arbitration convention, it is next to impossible to have a global competition treaty or convention. Rather than comparing our regime with any other frameworks, we must adapt to determining the successes and failures of our competition regime on its ability to truly grapple with the changing Indian scenarios,” said Sukrit Kapoor, Partner, King Stubb & Kasiva, Advocates and Attorneys.

Most agree that many of the recent changes are business-friendly and realistic. For instance, companies can without admission of guilt opt for the settlement or commitment option and provide a full and true disclosure of facts in respect of the alleged contraventions of the Act.

Similarly, under ‘leniency plus’, a cartelist who is cooperating with CCI for leniency, can disclose the existence of another cartel in an unrelated market. The said cartelist can do so in the course of original leniency proceedings in exchange for an additional reduction in penalty.

“There is now flexibility for the CCI as well as the market participants to correct anti-competitive practices instead of expending time and resources in protracted proceedings,” said Unnati Agrawal, Partner, IndusLaw.

Regulation vs innovation

However, the recent Digital Competition Bill has not received the full support of all stakeholders, with many from the Big Techs calling for light-touch regulation that does not stifle innovation.

Finance Minister Nirmala Sitharaman recently highlighted the same concern in her meeting with financial sector regulators and the new age fintech companies and startups. The FM encouraged new-age firms to continue to innovate while keeping a close watch on regulatory norms.

“Lawmakers would need to be nimble-footed and quickly address any changes that may be required to ensure that India remains on the technology and innovation bandwagon and regulatory oversight does not become burdensome for industry,” said Anshuman Sakle, Partner, Khaitan & Co.

However, balancing innovation and regulation is not the only challenge for CCI. It is staring at a triple mandate of implementing the existing Competition Act, the cases under the National Anti-Profiteering Act and the proposed Digital Competition Bill. Its sanctioned strength however, has not only remained the same, 70 of the total 195 vacancies are vacant, according to a parliamentary panel’s report.

“One challenge that both companies and lawmakers might face in the future is ensuring effective enforcement of the competition law across all sectors, including emerging digital markets since the ex ante regulation requires the companies and lawmakers to be on a continuous vigil to ensure that non-compliance does not go scot-free,” said Sucharita Basu, Managing Partner, Aquilaw.

Meanwhile, the Commission itself is going to be reviewed by the Ministry of Corporate Affairs over its state of affairs, amid concerns over inaction on pending complaints and regulations that are yet to be notified.

The latest report by the expert committee on digital competition law also noted the time-consuming nature of investigation and enforcement proceedings by CCI. It cited the case of Matrimony.com Ltd vs Google LLC where CCI took six years to adjudicate on the matter but found that even after 11 years, the matter had not reached finality and was still sub-judice before the NCLAT.