On 29 January 2021, NASSCOM organized an online Panel Discussion on Competition Issues in Digital Markets and their Impact on the Start-up Ecosystem. The Panel comprised of Jon J. Nathan, International Counsel Antitrust with the United States Federal Trade Commission (FTC), Payal Malik, Advisor (Economics) with the Competition Commission of India (CCI), and Violeta Staykova, Case Officer with the Office of the Director General (Competition), European Commission (EC). The session was moderated by Ashish Agarwal, Head of Public Policy at NASSCOM.
The session was kicked off with the Panellists providing their take on the regulatory agenda across jurisdictions, about competition issues in digital markets and their impact on start-ups. The Panellists highlighted the recent spate of investigations initiated to take a close look at the ways in which platforms and technology markets have an impact on contestability for start-ups. Initiatives by the CCI such as the e-Commerce Market Study and the Telecom Market Study were highlighted as crucial step towards gaining deeper understanding of the issues involved and working towards complementary solutions to address the market access barriers faced by start-ups. The EC’s own Digital Markets Act proposal being one such complementary framework, which is intended to work alongside the framework under Articles 101 and 102 of the Treaty of the Functioning of the European Union (TFEU).
Likewise, in the United States, antitrust enforcement itself has come into spotlight in recent times, with increased attention to the business models and actions by several large platforms. The FTC’s own Section 6(b) inquiry into mergers and acquisitions entered by major technology companies, is expected to contribute in a similar manner to understanding both the pro-competitive efficiencies, and harms that have followed because of these deals.
Commenting on whether a need is felt to review the substantive merger control thresholds in context of digital markets, it was discussed that the US is unlikely to revise the substantive thresholds, given the provisions that enable the US regulator to sue in courts, should a merger be viewed as problematic. India, however, would be exploring certain additional criteria for merger review in digital markets under the proposed Competition (Amendment) Bill, 2020. While a deal-value threshold could be one such additional criteria, it would need to be tested and developed further with lessons drawn from evaluating digital markets.
The emerging position that flowed from the Panellists, indicated that competition law rules, continue to serve the purposes of ex-post facto enforcement, but a deeper understanding of digital markets was the priority. Elaborating more on the Digital Markets Act proposal, it was emphasised that mechanisms which enable regulators to be more informed of the market practices of core platform service providers and “gatekeeper platforms”, was the intended thrust of the regulatory proposals, rather than replacing existing ex-post facto enforcement frameworks, with an ex-ante regulatory framework altogether.
The Panellists also provided their views on how they expect regulatory developments to unfold over the course of the coming year, particularly those inquiries and legislative proposals that relate to data regulation. The Panellists recognised the overlaps between issues addressed by emerging data governance frameworks, and issues central to analysing competition issues in digital markets. However, it was felt that understanding on these issues would continue to develop as more and more jurisdictions start addressing these issues through appropriate data governance legislation, which work harmoniously with competition laws. Also recognised, was a need for greater coordination between competition regulators and other horizontal and sectoral regulators, to develop more effective regulatory oversight in digital markets.
Summing up the session and elaborating on the Panellist’s emphasis on effective regulatory oversight and the need for agile enforcement, NASSCOM emphasised the need for agile, speedy investigations aided by the mechanisms discussed by the Panellists, ranging from ex-ante rules for certain platforms and market studies. From the perspective of start-ups, protracted investigations could severely impact the start-up ecosystem in certain markets characterised by competitive imbalances, and even markets adjacent thereto, which rely on them as platform service providers.
We extend our apologies to all participants who were unable to join due to the last-minute migration of platforms. Due to certain restrictions, we did not record the event. Do note that the views expressed by the Panellists during the discussion are their own, and do not reflect the position of their associated institutions.
We will continue to engage with the industry, government, and relevant stakeholders on this issue. We are also closely tracking the Competition (Amendment) Bill, 2021, which has been listed amongst the Bill being considered for introduction in the Budget Session of the Parliament. While details about the contents of the Bill are still unclear, we plan to engage on the issue further with the industry, upon the introduction of the Bill in the Parliament.
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