ROLE OF COMPETITION ADVOCACY IN DIGITAL MARKETS

    Competition laws across the world work on two major tenets- enforcement and advocacy. While it is important for every competition legislation to have a strong and effective enforcement system, it is even more important to create a culture in the market and the economy that respects competition and that understands the role that competition plays in ensuring the robustness of the overall market system. This is where competition advocacy comes in. Competition advocacy is one of the most effective ways of ensuring that a robust competition culture works in the country’s market.

    Furthermore, in sectors which are in their nascent stages of development, competition advocacy takes on a crucial role in spreading awareness and contributing to the creation of a regulatory and enforcement system which has been built by the feedback and input of all the major stakeholders and which consequently works for their benefit.

    In this article, the author will look at the competition advocacy initiatives undertaken in relation to the regulation of the digital markets. The second part of this article will focus on such initiatives undertaken at the international stage as well as in other countries, while the third part will analyze the general competition advocacy framework in India and the steps which are being taken with respect to the digital markets. The fourth section will conclude.

    COMPETITION ADVOCACY IN DIGITAL MARKETS

    The most widely known definition of competition advocacy (also accepted in India[1]) was given by the ICN in its report on Advocacy and competition policy[2]. “Competition advocacy refers to those activities conducted by the competition authority related to the promotion of a competitive environment for economic activities by means of non-enforcement mechanisms, mainly through its relationships with other governmental entities and by increasing public awareness of the benefits of competition[3].”

    Therefore, apart from competition enforcement, competition advocacy played a crucial part in developing a competition culture in any market or sector. With the rapid development of technology, digital markets have seen a significant upsurge in recent years. This development has drastically changed the way a market functions as well as the competition law concerns which may be involved therein. For instance, in the new model of a digital setup, there are competition issues such as “multi-sided markets, platform-based models and network effects[4].” All these new issues require a new and different way of looking at the competitive landscape when it comes to the digital market.

    Due to all these reasons, a need has been felt across the world to carry out an in-depth analysis and exploration of this new field in order to better understand the competition issues possible therein[5]. This exploration also includes the examination of assessment and advocacy tools to see whether they are still suitable for the different landscape and to review and rewire them as needed[6].  

    One of the key organizations working on advocacy initiatives among other things in the international forum is the International Competition Network (ICN). The ICN is an international organization formed in 2001 by top antitrust officials from different jurisdictions. The main objective of this body is to provide a platform for competition authorities to maintain “regular contacts and dynamic dialogue about practical competition concerns and to build a consensus towards global competition policy across the global antitrust community[7].” To foster this objective the organization also undertakes certain advocacy initiatives to inform and spread awareness about the current competitive climate and the issues therein. For instance, in order to scrutinize and assess the various practices undertaken by different countries around the world with respect to the digital market, the ICN called for submissions from its member countries regarding their efforts in advocacy when it comes to the digital market.

    In its report, called, “Report on ICN members’ recent experiences (2015-18) in conducting Competition Advocacy in Digital Markets”, the ICN records the data sent by countries from 16 jurisdictions across the world, regarding their advocacy practices in the digital markets[8].  This report is a very useful tool in itself as it provides detailed information about the various advocacy experiences of the countries in their markets. The report reflects data under the following broad heads[9]:

    1. Objectives or reasons for conducting the advocacy effort;
    2. Sectors or industries targeted;
    3. Targeted audience;
    4. Non-competition related considerations;
    5. Advocacy tools, strategies and approaches used and whether they were any different in the digital market as compared to other markets;
    6. Key advocacy messages and
    7. Outcomes of the advocacy initiatives.

    The information provided herein can act as guidelines or suggestions for other countries, like India, which may be looking to undertake advocacy measures in their digital markets.

    Other than the ICN, many countries have also undertaken an analysis of the role played by competition law in the digital market considering its global relevance. For instance, the United States’ Subcommittee on Antitrust, Commercial and Administrative law released a report called, Investigation of competition in Digital markets”[10].

     This report was the result of a “top-to-bottom review of the market” wherein the subcommittee “examined the dominance of Amazon, Apple, Facebook and Google and their business practices to determine how their power affects the American economy and their democracy”[11]. In order to achieve this task, the subcommittee examined and reviewed the existing antitrust laws, policies and enforcement tools to see whether the framework was adequate to address the issues prevalent in the digital market.

    While this report in itself could be said to be an advocacy effort, to spread awareness regarding the condition of the digital market in the USA; within the report, another report has been cited wherein a survey was conducted by the Consumer Reports (CR) Survey Research Department and Advocacy Division called, “Platform Perceptions- Consumer attitudes on Competition and Fairness in Online Platforms”[12]. Consumer Reports is an American non-profit consumer organization which is engaged in consumer advocacy amongst other things[13].

    In the abovementioned report, the CR tried to gauge through an online survey the “consumers’ perceptions and reactions to the business practices of online platforms; whether the consumers felt that the current digital market fostered competition and was fair; and whether they were concerned about the data collection and other related practices of such online platforms”[14].

    Since consumers and the general public are one of the major stakeholders in the competitive culture of any country, it is crucial to keep them informed and to make the government bodies and regulators aware of their levels of engagement and understanding of the existing legal framework and its interaction with any market. Therefore, this report can be seen as an apt example of an advocacy initiative undertaken by a private non-profit organization representing the interests of one of the stakeholders (the public).

    Another example of such advocacy undertaken with respect to digital markets is the report released by the European Consumer Organization-the BEUC called, “The Role of Competition Policy in Protecting Consumers’ Well-Being in the Digital Era”[15]. This report is a very good example of how competition advocacy can better inform and guide competition enforcement. This report was the result of a number of advocacy measures undertaken by the organization such as discussion paper[16] and symposium[17] organized to explore and discuss the different facets of implementing competition law in a digitalized economy.

    Herein, under the chapter “proposals for optimizing enforcement of EU competition law,” the report talks about certain competition advocacy measures such as carrying out market studies and sector investigations, as well as advocacy initiatives and co-operation with consumer groups[18]. Both of these tools can help in gathering information and data from the interested stakeholders (companies and the consumers) about the grassroots level reality. The awareness of how a specific law or regulation is reacting on the ground in the real world can provide the enforcement agencies with valuable feedback regarding any reforms or revisions the legal framework might need to bring the letter of the law closer to the practice[19].

    Furthermore, such advocacy initiatives will also assist in educating the general public about the costs and risks of engaging in transactions with the digital market players and will inform them of other options available, so that they are not restricted in their choices and can make well-informed decisions which are in their best interests[20].

    Therefore, the combined operation of the above-mentioned tools could result in creating a competition culture of compliance which is beneficial for the enforcement agencies, the companies and the market.

    All of the abovementioned reports show the symbiotic relationship between competition enforcement and advocacy and how advocacy can play a crucial role in the better implementation of the enforcement mechanisms of a competition law framework.

    COMPETITION ADVOCACY FRAMEWORK IN INDIA

    The role and importance of competition advocacy have been recognized in India and reflected in the Competition Act, 2002, from its very inception. The Raghavan Committee which was set up for advising on a new and effective competition law, emphasized the importance of competition advocacy in its report and therefore, this concept found its place within the Competition Act, 2002. Section 49, which lays down the provision regarding the CCI’s role in competition advocacy, reads thus,

    “The Central Government may, in formulating a policy on competition (including review of laws related to competition) or any other matter, and a State Government may, in formulating a policy on competition or on any other matter, as the case may be, make a reference to the Commission for its opinion on possible effect of such policy on competition and on the receipt of such a reference, the Commission shall, within sixty days of making such reference, give its opinion to the Central Government, or the State Government, as the case may be, which may thereafter take further action as it deems fit. The opinion given by the Commission under sub-section (1) shall not be binding upon the Central Government [or the State Government, as the case may be] in formulating such policy. The Commission shall take suitable measures for the promotion of competition advocacy, creating awareness and imparting training about competition issues.”                (emphasis supplied)

    It can be clearly seen from this section that the CCI is tasked with the duty to take “suitable measures to promote competition advocacy” and create awareness regarding competition issues.

    https://legalreadings.com/constitutional-framework-of-gst-laws/

    It may also be pointed out that the main stakeholders when it comes to competition policies are-

    1. The Government,
    2. The Sectoral Regulators,
    3. The businesses, and
    4. The general public

    All these stakeholders need to be aware of the changing dynamic of the market and the role that competition law plays in it. In order to make them aware, the CCI has taken a number of steps under the advocacy umbrella, such as[21],

    • Organizing seminars and workshops on various facets of competition law in association with public/experts/policymakers/ regulatory bodies to name a few;
    • Creating papers and studies on various competition issues;
    • Creating opportunities and training workshops for stakeholders’ capacity building in the competition regulatory process;
    • Organizing sectoral /regulatory impact assessment and related market studies as well as research papers on issues relating to competition law. 
    • Publishing consultation papers on various topics which are relevant from the point of view of competition law.
    • Creating an advisory booklet series available on the CCI website to generate awareness about the general topics of competition law[22].

    These are a few of the many steps undertaken by the CCI under their advocacy mandate to ensure that there is an increasing awareness about the benefits and role of competition law amongst all the stakeholders. Other than these general measures the CCI has also been focusing its energies on undertaking advocacy measures in the digital market. In order to achieve this, the CCI has recently undertaken a market study on e-commerce in India, which was released in January 2020. The purpose of this study was to “better understand the functioning of e-commerce in India and its implications for markets and competition[23].”

    In this study through various tools such as “secondary research, questionnaire survey, focused group discussion, one-on-one meetings and multi-stakeholders’ workshop as well as written submission from stakeholders[24]” the CCI focused on three main aspects of the e-commerce industry- “consumer goods, payment service providers, 16 online platforms and business entities[25]”

    This is one of the initial advocacy steps taken by the CCI in the field of digital markets. Through this study, the CCI accumulates and disseminates a better understanding of the current status of digital markets and its relationship with regular retailers. India has one of the fastest growing digital markets in the world with the revenue in the sector expected to grow from USD 39 billion in 2017 to USD 120 billion in 2020[26]. This makes Indian marketplace an attractive destination for online service providers, investors and consumers. Therefore, there is a huge potential for the competition law to grow and develop when it comes to the digital market in India.

    Although, the market study undertaken by the CCI is an important step and it has brought to light much needed information about the current status of e-commerce and the consequent competition concerns which may crop up, considering the unique nature of Indian businesses and consumers, it is crucial that CCI continues its advocacy efforts with respect to the digital markets.

    In this regard, the above-mentioned reports and studies were undertaken in the international realm as well as by other countries can act as a guiding post for India. The CCI can borrow ideas and strategies from these different economies and tailor them to operate in our economy. In the nascent stages of digital market competition policy-making, such advocacy efforts can substantially contribute to well-thought-out and reasoned legislation and enforcement machinery, which can benefit all the stakeholders.

    CONCLUSION

    This article strives to show the various ways in which competition advocacy is being undertaken around the world with respect to digital markets, the importance of such initiatives and the role they can play in formulating better performing and more effective laws and practices. In India, the Competition Commission has initiated the journey that the advocacy initiatives must undertake in relation to digital markets. However, considering the stakes involved it would be crucial for the CCI to continue this engagement in advocacy initiatives and rope in other regulatory bodies, private interest organizations and other interested parties into the process of creating a robust competition culture for this market, which informs and inspires a vibrant and dynamic enforcement mechanism.

    REFERENCES

    [1] S. V. S. Raghavan, “Committee Report on Competition Policy and Competition Law” (2000) available at https://theindiancompetitionlaw.files.wordpress.com/2013/02/report_of_high_level_committee_on_competition_policy_law_svs_raghavan_committee.pdf (last visited on October 28, 2020).

    [2] International Competition Network, “Advocacy and Competition Policy” (2002) available at https://www.internationalcompetitionnetwork.org/wp-content/uploads/2018/09/AWG_AdvocacyReport2002.pdf (last visited on October 28, 2020).

    [3] Ibid. 

    [4] International Competition Network, “Report on ICN members’ recent experiences (2015-18) in conducting Competition Advocacy in Digital Markets”, (2019) available at https://www.internationalcompetitionnetwork.org/wp-content/uploads/2019/06/AWG_AdvDigitalMktsReport2019.pdf   (last visited on October 28, 2020).

    [5] Ibid.

    [6] Ibid.

    [7] International Competition Network, What is the ICN available at  https://www.internationalcompetitionnetwork.org/about/  (last visited on October 28, 2020).

    [8] Supra note 1.

    [9] Ibid.

    [10] United States’ Subcommittee on Antitrust, Commercial and Administrative law, “Investigation of competition in Digital markets” (2020) available at https://judiciary.house.gov/uploadedfiles/competition_in_digital_markets.pdf (last visited on October 28, 2020).

    [11] Ibid.

    [12] Consumer Reports, “Platform Perceptions- Consumer Attitudes on Competition and Fairness in Online Platforms” (2020) available at https://advocacy.consumerreports.org/wp-content/uploads/2020/09/FINAL-CR-survey-report.platform-perceptions-consumer-attitudes-.september-2020.pdf.  

    [13] ICN, What we do, available at  https://www.consumerreports.org/cro/about-us/what-we-do/index.htm (last visited on October 28, 2020).

    [14] Supra note 9.

    [15] BEUC, “The Role of Competition Policy in Protecting Consumers’ Well-Being in the Digital Era” (Oct, 2019) available at https://www.beuc.eu/publications/beuc-x-2019-054_competition_policy_in_digital_markets.pdf (last visited on October 28, 2020).

    [16] Ariel Ezrachi, “Discussion paper: The Goals of EU Competition law and the Digital Economy” (2018) available at https://www.beuc.eu/publications/beuc-x-2018-071_goals_of_eu_competition_law_and_digital_economy.pdf (last visited on October 28, 2020).

    [17] Supra note 12.

    [18] Ibid at 21.

    [19] Ibid.

    [20] Ibid.

    [21] Competition Commission of India, “Measures on Competition Advocacy and Annexures- for 2014-15” available at https://www.cci.gov.in/sites/default/files/Web%20Annual%20Return%202015.pdf (last visited on October 28, 2020).

    [22]Competition Commission of India, “Advocacy booklets”, available at http://www.cci.gov.in/advocacy-booklet/78 (last visited on October 28, 2020).

    [23] Competition Commission of India, “Market study on e-commerce in India” 3 (January, 2020) available at https://www.cci.gov.in/sites/default/files/whats_newdocument/Market-study-on-e-Commerce-in-India.pdf (last visited on October 28, 2020).

    [24] Ibid.

    [25] Ibid.

    [26] Ibid at 6.


    BY APOORV PRAGYA | NALSAR UNIVERSITY OF LAW, HYDERABAD

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