The CCI will publish new merger control rules after the elections

India’s antitrust body, the Competition Commission of India, is set to introduce new merger control rules to implement certain provisions of the Competition (Amendment) Act, 2023. Additionally, the regulator has made a case for greater scrutiny of digital companies and prevention of collusive-driven monopolistic tendencies algorithmic, among others

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New implementing regulations

Over the past year, the Competition Commission of India (CCI) has been developing a regulatory framework under the Competition (Amendment) Act, 2023. The framework incorporates global best practices to address emerging competition challenges in the market.

The new regulations include measures on negotiated anti-competitive settlements, M&A regulation based on the value of the transaction, and an expanded leniency program to encourage the disclosure of cartels.

The upcoming regulations will focus on merger control, aiming to clarify transaction value estimates and speed up the merger control process, shortening the decision-making time from 210 to 150 days.

An informed source speaking to the media on the condition of anonymity noted that the new regulations, expected after the elections following the repeal of the model code of conduct, will include mandatory CCI approval for transactions worth over INR 20 billion (approx. USD 240.2 million), even if meet traditional asset and sales thresholds. Additionally, the changes require CCI to formulate a preliminary position on the transaction within 30 days, otherwise the transaction will be automatically approved.

CCI’s position in the digital market

The Ministry of Corporate Affairs is currently working on a draft Digital Competition Act that will establish guidelines for systemically important digital economy companies. Public consultations on the bill have ended, and inter-ministerial consultations are scheduled to take place over the next few months before the bill is submitted to parliament. However, several industry stakeholders are demanding a longer feedback period.

The CCI wants to address the anti-competitive issues in digital markets raised in the bill.

On May 20, 2024, the CCI raised concerns about the “algorithm transparency” and “data dominance” of digital companies. CCI Chairperson Ravneet Kaur highlighted the competitive advantage gained by major technology companies by collecting, analyzing and leveraging massive amounts of data, which poses a huge challenge to competition regulators.

The CCI stressed the need for competition law enforcement to keep pace with digital innovation and trends to ensure consumer protection and fair competition between entities. The CCI chairman identified three key issues that could arise from the control of big data through digital platforms:

1. Barriers to entry
2. Platform neutrality issues
3. Algorithmic collusion

Kaur argues that because many digital platforms benefit from network effects, where the value of a service increases as more users join, there is a tendency for digital markets to become concentrated. This can result in one or two companies controlling the majority of the market in the digital economy.

In the case of the “algorithmic collusion” challenge, digital companies use algorithms to determine user experiences and determine pricing and product placement. However, the opacity of these algorithms may make it difficult for regulators such as the CCI to assess their impact on competition.

Artificial intelligence market research is ongoing

The CCI president also spoke about the need to develop a sophisticated strategy that combines traditional competitive analysis with an in-depth understanding of the dynamics of digital markets. To address current competition concerns in digital markets, Kaur proposed new analytical tools, regulatory flexibility and perhaps innovative regulatory frameworks that are specifically designed for the digital environment.

Therefore, the antitrust organization is working on analyzing the artificial intelligence (AI) market. The CCI chairman noted that while the revolutionary potential of artificial intelligence holds great promise in enhancing competitiveness, its use would also pose a number of related challenges. The study aims to gain a comprehensive understanding of the evolution of the competitive landscape, the development of ecosystems, and the impact of AI applications on productivity, innovation and competition in significant user industries.

Monopoly in the e-commerce industry

India’s Attorney General R. Venkataramani has made comments indicating that e-commerce platforms’ monopoly on user data “may be subject to scrutiny” and is likely to be addressed by the new administration as part of its e-commerce policy within the first year of the 100 days of forming the new government.

In 2019, the Department for Promotion of Industry and Internal Trade (DPIIT) released the draft of India’s National E-Commerce Policy for public consultation. The final draft of the policy has not yet been made public. The original draft of the policy was intended to strengthen consumer protections against unsolicited phone calls and emails. It also aimed to give the government the power to require access to an organization’s source code and algorithms and to implement data localization laws that place restrictions on cross-border data flows.