Open Access Research Article
E-COMMERCE AND COMPETITION LAW: CHALLENGES AND WAY AHEAD
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E-COMMERCE
AND COMPETITION LAW: CHALLENGES AND WAY AHEAD
AUTHORED BY
- RICHA KUMARI
ABSTRACT
Due
to a rise in e-commerce, the Indian economy has seen considerable changes
recently. The rise of e-commerce has a number of economic, governmental, and
social ramifications. For the purpose of regulating foreign direct investment in
the industry, the Department of Industrial Policy and Promotion released a
press note in March 2016. In order to ensure an equal playing field, the
policy, among other requirements, had placed a number of limitations on
international web shops. In view of the competition difficulties in e-commerce
in the current economic climate, the research work aims to determine whether
such limits are indeed required or if they obstruct the convenience of
conducting business. The paper discusses about how the competition law is
beneficial in the economy and its drawbacks.
KEYWORDS
Digital
markets, e-commerce, innovation, competition law, competition commission of
India
INTRODUCTION
The
term "digital market" broadly describes the use of the internet,
mobile devices, social media websites, and search engines to connect with a
wider range of consumers. E-Commerce transactions are included, in which
suppliers, producers, and manufacturers can offer their goods for sale to
customers online. The fact that actual monetary transactions and data
interchange to carry out the stated transactions take place, increasing the
seller's overall sales, is a vital aspect of the e-commerce industry.
COMPETITON LAW AND
E-COMMERCE
More
market efficiency is produced by market competition, which also fosters
innovation, development, higher product quality, quicker service, and overall
customer welfare. Yet, when there are more competitors on the market, there is
a bigger chance that the market would fail since the dominant firms don't
hesitate to push their dominance over weaker players, occasionally even
engaging in cartels and bid-rigging.[1]
Consequently, the necessity for a regulatory agency to oversee the enforcement
of competition law and policy remains. The core element of Indian competition
law is that market forces and the agreements that govern them must be
structured in a competitive way.
Hence,
the Directive Principles of State Policy and Articles 38[2] and
39 [3]of
the Indian Constitution serve as the foundation for the country's competition
policy. The Competition Act 2002, which created the Competition Commission of
India , was passed in 2003. After the substantive sections of the Act relating
to antitrust enforcement and regulation of combinations came into force in the
years 2009 and 2011, respectively, the Commission was given its enforcement and
regulatory authority. The Act is applicable to E-Commerce in the same manner as
it is applicable to other business-related areas in many other markets. Two
elements, namely competition laws and policies, govern competition in India.
Given that markets may experience failures if there are no competition laws in
effect.
These
are government actions that "directly affect the conduct of firms and
structure of the industry" because competition policy is necessary to
create competition.[4]In
order to promote competition, competition policy entails reforms in specific
areas, such as a) industrial policy, which includes measures relating to licensing
requirements, restrictions on foreign technology tie-ups, guidelines on the
location of industries, etc.
b)
trade policy, which includes measures relating to trade restrictions, reduction
of tariffs, removal of investment controls, etc.
c)
disinvestment and privatization of state-owned enterprises as they receive more
benefits. Government agencies implement competition laws.
Relationships
between the administration of Prime Minister Narendra Modi and many major
technology firms have been strained, and New Delhi has been tightening
regulations on companies like Facebook, YouTube, and Twitter. The Competition
Commission of India (CCI), the nation's competition watchdog, is investigating
these IT companies for alleged misuse of the application market. The Committee
recommends that the government consider and enact a digital competition act to
guarantee a fair, transparent, and contestable digital ecosystem, which will be
beneficial for not only our nation and its developing start-up economy, but
also for the entire world, the panel stated in a report submitted to India's
lower House of Parliament.[5] In
order to prevent monopolies, the panel advised designating leading technology
companies as systemically important digital intermediaries. However, it also
cautioned that these companies "must not favour its own offers over the
offers of its competitors" when serving as market intermediaries for
supply and sales. Amazon and its rival Flipkart are accused of engaging in anti-competitive
behave our in India, including pushing preferred sellers online and providing
priority.
The
study comes as companies like Google, Apple, Facebook, Amazon, and others are
coming under increasing international investigation for allegedly abusing their
market positions by utilizing large amounts of customer data. In its
discussions with the parliamentary panel earlier this year, the Competition
Commission of India (CCI) slammed Google and Facebook India, saying: "By
and large, data is not collected but actually generated by businesses as they
build the ability to capture signals through their services and technologies.
Any company is able to do this to build its own data space. The CCI's
investigation of WhatsApp's privacy policy modification, which is related to
claims that it shares user data with its parent company Facebook's advertising
division, has recently received approval from the Indian Supreme Court.
According
to experts, the committee's recommendations were a positive move. "This
desire (by the panel) is in line with the level of market maturity in India.
Yet the rules shouldn't put too much pressure on the businesses. Because of its
digital environment, India has been able to withstand the consequences of the
global economic downturn. So, the regulations should balance minimising
pointless obstacles with preventing unfair market circumstances.
More
market efficiency is produced by market competition, which also fosters
innovation, development, higher product quality, quicker service, and overall customer
welfare. Yet, when there are more competitors on the market, there is a bigger
chance that the market would fail since the dominant firms don't hesitate to
push their dominance over weaker players, occasionally even engaging in cartels
and bid-rigging. Consequently, the necessity for a regulatory agency to oversee
the enforcement of competition law and policy remains. The fundamental tenet of
Indian competition law is that market forces and the agreements that govern
them must be structured in a competitive way. However, when such contracts
impose restrictions on specific other market participants encouraging unfair
competition, the competition authorities step in to take action. The
competition policy in India deals with Articles 38 and 39 of the Constitution
of India under the Directive Principles of State Policy.
In
the case of TRAI vs CCI[6] in
Telecommunications Sector, In 2016, Reliance Jio Infocomm Limited (Reliance Jio),
a newcomer to the telecom industry, filed a complaint with the CCI alleging
that Airtel, Vodafone, and Idea (the incumbent dominant operators, or IDOs), as
well as the Cellular Operators Association of India, had engaged in
cartelization and abused their dominant position in violation of Sections [7]3
and 4 [8]of
the Competition Act, 2002. (Competition Act). The IDOs and the COAI were
determined to have engaged in cartel activity, according to the CCI (Prima
Facie Order). After then, the CCI notified the parties and the investigation
got going.
We
can also examine the ambitious Jio-Amazon deal's compliance with competition
law challenges. 10% of the ownership in Jio Platforms Limited is contributed by
Facebook. The social media behemoth declared its desire to use whatsaap to link
Jio's e-commerce platform, Jiomart, to retailers and small enterprises.[9]
We
are aware that Facebook and Jio both appear to be market leaders in their
respective fields. According to data from the Telecom Regulatory Authority of
India, Jio has a larger market share than its rivals Bharati Airtel and
Vodafone- Idea in terms of user base and revenue sharing in the Indian mobile
service marketplaces.
Currently,
Facebook -and-pop businesses in the local market. Secondly, it would try to break
into another market by leveraging WhatsApp's influences .Furthermore, WhatsApp
might consent to JioMart using its messaging service. If done so and in the way
that WhatsApp already includes the JioMart platform, it may constitute abuse of
dominance in violation of Section 4(2)(d)[10] of
the Competition Act. Installing WhatsApp would be the primary commitment, while
pre-installing JioMart would be the unrelated secondary commitment.[11]
Do we really need a digital
Act?
The
rise of the internet economy has presented both significant obstacles and a
wealth of opportunities. Competitor authorities throughout the world are
finding it more and more challenging to successfully control the "digital
market," and the main reason for that is probably the basic difference
between how digital markets and traditional markets function. It is obvious
that the competition authorities around the world have challenges ahead since
they can no longer depend on decades of competition jurisprudence.[12]
As a
result, authorities from many countries are considering either a total revamp
of their competition law framework or the introduction of additional laws that
are especially intended to punish the largest participants in the digital
markets.
Even
if the Competition Commission of India has taken action against big-tech
corporations and launched multiple inquiries, heavy fines, and corrective
action orders in numerous cases in compliance with the competition already in
place.
CONCLUSION
The
Indian Competition Act is fairly comprehensive and was created to address the
needs of the expanding economy and global trends in economics with regard to
competition law. As a result, the 2002 competition law is acknowledged as a
landmark statute. The law prohibits the abuse of authority. In order to
increase the commercial sustainability of the industry, this law primarily
encourages market competition while also allowing flexibility in the
distribution of profits to businesses of all sizes. Even though the complete
law has yet to be put into practise, its approval will surely boost both
domestic and global market competition.
[1] Geetanjali Phatke,, Effects on Competition Law and Policy on
Digital Markets in India, (2019) 4 ICLR 14
https :
//www.cci.gov.in/sites/default/files/annual%20reports/CCI AR-2016-11
English.pdf
[5] Competition policy: The challenge
of digital markets, https://www.monopolkommission.de/images/PDF/SG/SG68/S68_summary.pdf
[9]
Samanvi Narang and Prateek Gupta, Analysing
the Competition Law Issues in the Ambitious Jio-Facebook Deal, 2020 SCC
OnLine Blog OpEd 41.
[12] Does India need
a separate Competition Law for Digital Markets, https://www.medianama.com/2023/02/223-quick-take-india-competition-law-digital-market/.
Article Information
E-COMMERCE AND COMPETITION LAW: CHALLENGES AND WAY AHEAD
Authors: RICHA KUMARI
- Journal IJLRA
- ISSN 2582-6433
- Published 2023/05/01
- Volume 2
- Issue 7
About Journal
International Journal for Legal Research and Analysis
- Abbreviation IJLRA
- ISSN 2582-6433
- Access Open Access
- License CC 4.0
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