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Tag: Competition Commission of India

  • Piyush Goyal: ‘Arrogant’ US e-commerce giants flout Indian legal guidelines

    Commerce Minister Piyush Goyal has ratcheted up the warmth on US e-commerce giants like Amazon and Walmart, accusing them of vanity and of flouting native legal guidelines by indulging in predatory pricing practices.
    Goyal stated firms have been utilizing their scale and entry to massive swimming pools of low-cost capital to bask in predatory pricing practices “to the detriment of mom-and-pop stores”.
    “A number of these large e-commerce companies have come into India and very blatantly flouted the laws of the land in more ways than one,” he informed a digital occasion late on Saturday. “I’ve had several engagements with these large companies, particularly the American ones, and I can see a little bit of arrogance,” he stated.
    Goyal didn’t straight title Amazon.com or Walmart Inc’s Flipkart — the 2 dominant e-commerce gamers in India — or specify which legal guidelines had been flouted. But his feedback come at a time of rising clamour from small Indian merchants and retailers, who accuse the US giants of circumventing Indian client safety and competitors legal guidelines.

    Amazon and Flipkart didn’t instantly reply to requests for touch upon Goyal’s scathing criticism.
    The two firms have denied the allegations levelled towards them by the merchants. Goyal additionally criticised firms for indulging in “forum shopping” in courts and failing to adjust to an investigation launched by the Competition Commission of India (CCI).
    Flipkart and Amazon have appealed towards the CCI’s bid to restart an investigation into their enterprise practices, after a decide this month dismissed the businesses’ unique pleas.
    “To my mind, if they have nothing to hide, if they are doing honest business practices, why don’t they respond to the CCI?” Goyal stated on the digital occasion organised by the Stanford India Policy and Economics Club.
    His feedback got here days after the Centre unveiled a brand new set of e-commerce rules that would dent each Amazon and Flipkart’s ambitions in India, and drive the duo to assessment sure enterprise constructions.

    Separately, in a letter to Prime Minister Narendra Modi on Sunday, the Confederation of All India Traders, accused e-commerce firms of treating India like a “banana republic” with weak legal guidelines.
    The physique urged the federal government to make sure that the proposed e-commerce guidelines weren’t diluted, regardless of the lobbying efforts of ecommerce giants.
    The US-India Business Council, a prime US foyer group, described India’s proposed new e-commerce guidelines as regarding in an inner memo this week.

  • Delhi High Court seeks CCI stand on Facebook, WhatsApp appeals towards single decide order on privateness coverage

    The Delhi High Court on Thursday sought response of the Competition Commission of India (CCI) on the appeals of Facebook and WhatsApp towards a single decide order dismissing their pleas towards a probe ordered into the messaging app’s new privateness coverage.
    A bench of Chief Justice D N Patel and Justice Jasmeet Singh issued discover to the CCI that had ordered the probe and sought its response by May 21, the subsequent date of listening to.

    The single decide on April 22 had mentioned although it could have been “prudent” for the CCI to await the end result of petitions within the Supreme Court and the Delhi HC towards WhatsApp’s new privateness coverage, however not doing so wouldn’t make the regulator’s order “perverse” or “wanting of jurisdiction”.

  • CCI: Jurisdiction overlap must be harmonised for strong choices

    The Competition Commission of India (CCI) has known as for formal and casual traces of communication between the Telecom Department, telecom sector regulator Trai, the antitrust physique and the envisaged Data Protection Authority to make sure strong and constant regulatory choices in a “complex data-centric converged” telecom business.
    The CCI, in its key observations and findings of the telecom sector’s market examine carried out by ICRIER, additionally notes the battle between permitting entry and defending shopper privateness.
    The competitors regulator stated that abuse of dominance can take the type of reducing the privateness safety and, subsequently, fall inside the ambit of antitrust as low privateness customary implies lack of shopper welfare.
    “Privacy can take the form of non-price competition. In the era of data aggregation, competition analysis must also focus on the extent to which a consumer can ‘freely consent’ to action by a dominant player,” the Competition Commission stated in its report.
    Further, based on a senior CCI official, the regulator is probably going to have a look at options reminiscent of knowledge portability as a method of making certain that a number of corporations holding important quantity of information doesn’t lead to entry obstacles for contemporary entrants into this rising sector.
    Additionally, for the digital sector, the CCI is seeking to transfer away from a turnover-based threshold to a deal value-based threshold for corporations to inform the regulator in case of a merger and/or acquisition (M&A).

    The official stated that within the digital sector, the asset/turnover-based notification thresholds have left potential enforcement gaps on condition that the businesses being acquired might function on a zero or low turnover, or an asset-light mannequin.
    To this extent, the competitors watchdog has initiated one other examine on M&A offers within the digital markets to trace the non-notified offers.
    This is being completed with an goal to determine tendencies and patterns of such transactions to offer an empirical foundation for a legislative modification to herald the deal-value based mostly threshold for the digital sector.
    However, with regard to the telecom sector, the CCI has noticed from the market examine that the antitrust regulation framework is broad sufficient “to address the exploitative and exclusionary behaviour arising out of privacy standards, of entities commanding market power”.
    “While overlapping jurisdiction between institutions cannot be completely eliminated, it ought to be harmonised through better regulatory design and improved lines of communication,” it famous, including the CCI will stay the physique to resolve antitrust and competitors associated points.

  • Risk of duopoly in telecom, ‘survival’ in curiosity of competitors: CCI research

    Underscoring that the moniker of being the “lowest priced telecom market in the world” for India shouldn’t be and not using a tradeoff, the Competition Commission of India (CCI) stated any exit from the nation’s telecom sector would imply a digital duopoly and that “survival” was within the long-term curiosity of competitors.
    In a report on key findings and observations of a market research on India’s telecom sector, the antitrust physique has alluded to the truth that not less than two key strikes by the Telecom Regulatory Authority of India (Trai) — the 2018 determination on defining a big market energy (SMP) and the 2017 downward revision of cell termination fees — formed the aggressive panorama of the business after the launch of Jio in 2016.
    Firstly, the CCI has identified that Reliance Jio’s pricing technique didn’t advantage regulatory consideration, provided that the ex-ante competitors evaluation — the one based mostly on forecasts slightly than precise outcomes — by Trai relies on the definition of a big market energy, and that solely an entity with SMP can interact in conduct that’s anti-competitive. “A new entrant with no presence in the relevant market is thus at once precluded from such conduct. Reliance’s entry into telecom through Jio did not merit regulatory attention despite its discounted pricing strategy. Based on Trai’s definition of SMP, Jio did not qualify as an entity with SMP and by definition ‘predatory’,” it famous.
    Reliance Jio launched companies in September 2016 providing free voice companies and rock-bottom knowledge tariffs. This led to the incumbent operators on the time responding to the tariff decline by matching the brand new tariffs, whereby voice, which accounted for 70 per cent of their revenues changing into free, and knowledge costs falling by roughly 85 per cent. “The sharp decline in prices led to several exits, and industry revenue in 2018-19 amounted to nearly the same as the revenue from almost a decade ago,” the CCI report stated.The CCI stated whereas general welfare implications of such “price shocks” have been laborious to evaluate, it was sure that weakened competitors will delay entry to new applied sciences similar to 5G. It has stated making a aggressive marketplace for 5G shall be essential to its success, and {that a} weak sector will boring the incentives to innovate and compete.

    The observations made by CCI are based mostly on a market research carried out by the Indian Council for Research on International Economic Relations (ICRIER), which is learnt to have submitted its report in May 2020. The CCI will work together with telecom business and authorities officers on competitors points within the telecom sector based mostly on the ICRIER report on February 5.
    Secondly, the 2017 determination by the telecom sector watchdog to slash the cell termination fees from 14 paise per minute to six paise per minute additionally “adversely impacted the competitive position of incumbent operators”. For each name that’s made, the calling firm used to pay the recipient community a cell termination cost, or an interconnect utilization cost (IUC). In September 2017, when the choice was introduced, a roadmap was additionally laid down of utterly removing the cost by January 1, 2020. The scrapping of the cost was then delayed and has been carried out efficient January 1, 2021. Given that visitors had skewed on account of Jio’s free choices with the incumbents getting excessive volumes of incoming calls, the minimize in IUC severely affected a possible income stream of the established gamers.
    On the consolidation within the telecom sector publish the 2016 begin of tariff declines, the competitors regulator has stated that to decrease prices and enhance survival, smaller gamers have been acquired, whereas huge operators like Vodafone India and Idea Cellular merged. “The prevailing market structure validates the empirical finding expressed as the rule of three, which predicts that mature markets normally support three main competitors, others who survive, are limited to the fringes or a niche. The three major private sector operators, namely Jio, Airtel and Vodafone-Idea own almost 88.4 per cent of the market,” it stated.
    The CCI additionally stated excessive prices of spectrum acquisition, and the calls for of community upgradation had elevated the business debt burden. Technological disruption and tariff competitors “triggered by the entry of Reliance Jio jointly aggravated the financial distress reflected in the unprecedented decline in revenue of the industry through the years 2017 and 2019”.
    In an earlier interview, CCI Chairman Ashok Kumar Gupta informed this newspaper that telecom is a sector that requires giant investments, with the gamers being there for the lengthy haul, and that “exit by certain players is as much an indicator of competition as entry”. Going forward, CCI predicts available in the market research report that along with price-based competitors, non-tariff based mostly differentiators like high quality of companies, bundled choices would be the focus areas for service suppliers to enhance buyer retention. However, it additionally stated bundling in type of strategic partnerships between telecom operators and content material suppliers, e-commerce platforms, digital cost platforms, and many others is designed to create “dependency”. The report cited the examples of Jio’s investments in varied media corporations and the investments into it from tech giants like Google and Facebook, other than Airtel’s potential to vertically combine illustrated by its presence throughout all communications applied sciences.
    “The stakeholders in India do not yet perceive vertical integration as a threat to competition. However, cross-country examples do suggest a need for deeper scrutiny,” the CCI famous.

  • Ashok Kumar Gupta: ‘Concentration of power by itself not a concern … CCI can see if dominance abused or not’

    From market analysis into the telecom, prescribed drugs and the digital market sectors to a evaluation of the model concession agreements in key infrastructure sectors along with airports, ports, railways and electrical power, the Competition Commission of India (CCI) is reassessing India’s aggressive panorama, the antitrust panel’s Chairperson Ashok Kumar Gupta suggested The Indian Express in a September interview. Edited excerpts:
    The CCI is learnt to have initiated analysis on the telecom, prescribed drugs and digital market sectors. How have been these sectors chosen?
    The Commission has now decided to undertake market analysis in pharmaceutical sector, telecom sector and digital market sector. Over a interval of larger than 10 years of enforcement of rivals regulation, the Commission has had the occasion to look into plenty of rivals factors in these sectors. The Commission has acquired circumstances with allegations of anti-competitive conduct by market avid gamers in these sectors along with reviewed diverse combination notices in these sectors.
    Thus, the Commission intends to conduct market analysis in these sectors. Specifically, the genesis of the analysis inside the prescribed drugs is a workshop on the sector organised by the Commission in 2018 and a observe that was formulated based totally on the issues raised by stakeholders on the dialogue board.
    The analysis that is now underway is an attempt to empirically research these factors, e.g. rivals factors in pharma distribution part, the extent of prevalence of branded generic remedy in India and their implications for rivals, entry obstacles for bio-equivalent remedy and so forth. Appropriate enforcement of regulation and the rivals regulation units, based totally on a clear understanding of how rivals works on this sector and that of the interplay between rivals and regulation, might improve market outcomes. The analysis, thus, moreover objectives to ascertain areas of cooperation between the Commission and the associated sector regulators.
    What is the scope of the analysis into the digital sector?
    The analysis on digital mergers could also be very completely completely different in scope and focuses on a specific scenario. In view of the potential enforcement gap that asset/turnover based totally notification thresholds might go away in digital markets (provided that the aim enterprises in digital markets might operate on a zero/low turnover, asset delicate model), the Competition Law Review Committee (CLRC) advisable introduction of an enabling provision throughout the Competition Act empowering the Government in session with the Commission to introduce each different requirements for notification which is able to embrace a deal-value threshold. As on date, there is not a out there full dataset on digital mergers in India.
    The Study on Mergers and Acquisitions in Digital Markets has been initiated to hint the non-notified acquisitions and mergers throughout the digital sector in India, their deal values and the tendencies and patterns of such transactions to supply an empirical basis for the legislative modification. The analysis is anticipated to operate the groundwork important to offer you doable notification requirements that could possibly be acceptable to grab digital transactions for merger scrutiny. In the digital market, we might look to facilitate the entry for a model new platform by guaranteeing parameters like data portability are adopted, significantly in circumstances the place there could also be amassing of monumental portions of knowledge. If amassing of knowledge acts as a barrier to entry, then the CCI can, through its power, suggest therapies contained in the regulatory framework.
    Does the CCI see a difficulty of focus of power in certain sectors like airports, ports, highways, and so forth?
    Concentration of power by itself should not be a precedence. Policy of the federal authorities is to make monetary system further setting pleasant, and in that course of what the CCI can do is take a look at whether or not or not the dominance is abused or not. If there could also be abuse of dominance, CCI can take movement beneath Section 4 of the Competition Act … Sectors like airports, ports, highways, and so forth are these with pure monopolies, the place the rivals should not be on the market, nevertheless for the market.
    What is important is that the tender design for award of concessions ensures that rivals for the market is vibrant — that there are adequate avid gamers who’re able to participate. Competition for the market through correctly designed tender paperwork and concession agreements will be sure that the outcomes are pro-competitive. It is rather like the digital sector, the place the winner takes all of it.
    Once an entity has competed throughout the tender course of and emerged as a result of the worthwhile bidder, they’ve acquired the market — which might probably be an airport or a port or a freeway. Then they’ve that market for the next 30 or 40 or 50 years based totally on the time required for the entity to recoup their investments made into the endeavor.
    What is important that the incentives created are correct, on this context we’re reviewing among the many Model Concession agreements in sectors equal to ports, airports, railways, electrical power, and so forth.
    What was the set off behind the market analysis of the telecom sector?
    The need for a analysis throughout the telecom sector emanated from the arrival/adoption of latest know-how with its obvious bearing on rivals. The dynamic nature of the sector and constantly evolving enterprise interactions between and all through industries have led to new rivals dimensions. The key tendencies and observations which have emerged from the analysis inter alia relate to vertical integration, parameters of rivals, infrastructure sharing, unbundling of infrastructure and restore, website guests administration, spectrum acquisition and assortment of knowledge. Telecom isn’t a pure voice market and with data-centric nature of the sector and convergence, many enterprise fashions are rising. So, we attempt to set up what factors we’d run into going forward which will impression the rivals panorama. Data prices in India are the underside on this planet. On tariff will improve by telecom operators, commonplace monetary precept guides us that in oligopolistic industries with solely a handful of avid gamers, the worth modifications often happen in tandem and price parallelism itself should not be an indicator of cartelisation. In neighborhood industries like telecom, airways, and even e-commerce, reaching a important mass of buyers is crucial for the entity to make enterprise sense and as quickly as that has occurred, usually these sectors see the companies making an attempt to attain an equilibrium price that specify price actions throughout the temporary run.
    Telecom significantly is a sector that requires large investments and the avid gamers are there for the prolonged haul and exit by certain avid gamers is as quite a bit an indicator of rivals as entry. ICRIER has submitted its market report, and correct now we’re throughout the technique of consulting with the Department of Telecommunications and completely different stakeholders. We would rapidly apprise them of the areas that we see might pose a difficulty eventually from a contest standpoint. This may even help us to be increased outfitted to deal with any anti-competitive conduct if it arises.
    Given that markets mustn’t static and that the regulatory stance should be periodically nuanced and the enforcement toolbox should be tailor-made to these modifications, is the Commission wanting on the up to date consolidation and the resultant focus of market power in numerous sectors equal to airports, ports, metropolis gasoline distribution, photo voltaic power and retail?
    Consolidation might stem from numerous desires and can end in completely completely different market outcomes relying inter alia on the rivals dynamic throughout the sector in question, the aggressive relationship between the enterprise enterprises involved, technological modifications and so forth. Under its combination evaluation mandate, the Commission examines the problem of consolidation and resultant focus of market power all through sectors on the time of assessing transactions that meet the asset/turnover threshold for notification. The Competition Act, 2002 (the Act), lays down a holistic framework for analysis of mergers and acquisitions, along with elements equal to the extent of focus on the market, the change in focus owing to the transaction and the extent of environment friendly rivals susceptible to keep up on the market post- transaction. Thus, it is a case-by-case, evidence-based practice, which allows the Commission to keep in mind the specificities of each sector, the dynamic nature of the market/know-how involved, the implications of the transaction on rivals and the synergies that could possibly be derived from the transaction.

    Combinations which may adversely impact rivals are licensed matter to therapies with a view to guard rivals throughout the associated markets and defend shopper welfare that could be misplaced in another case. Remedies have been ordered up to now to forestall potential market distortions ensuing from combos in industries equal to cement, prescribed drugs, seeds, agro-chemicals, car elements, electrical gear, leisure, industrial gasoline, e-platforms and mineral processing. Divestments have been ordered the place the occasions have been shut rivals and their affords would have resulted in elevated prices, lowered selections to buyers and/or lesser innovation. Behavioral compliances have been stipulated in vertical mergers liable to foreclose inputs to rivals or impression stage having fun with self-discipline. Mergers exhibiting every elements have been subjected to hybrid therapies

  • Concentration of energy in India Inc: Regulator opinions seven key sectors

    AMID the unprecedented focus of energy in not less than seven core sectors in company India, from pharma and telecom to airports and ports, the Competition Commission of India has launched a set of detailed investigations in the marketplace dynamics of every sector.
    Simultaneously, it has began a overview of all mannequin concession agreements — the authorized contract that varieties the premise of the public-private partnership — throughout 4 key infrastructure sectors: airports, ports, electrical energy and railways.
    The objective is to make sure that competitors stays “vibrant” and “there are enough players who are able to participate in the award of concessions,” CCI Chairperson Ashok Kumar Gupta informed The Indian Express.
    “The policy of the government is to make the economy more efficient, and, in that process, what the CCI can do is look at whether the dominance is abused or not. If there is abuse of dominance, CCI can take action under Section 4 of the Competition Act,” Gupta stated.
    Section 4 bars an enterprise from abusing its dominance and defines abuse by way of a variety of steps that embody denial of entry, predatory pricing, limiting items or providers in a specific market.
    In sectors comparable to airports, ports and highways, and electrical energy, focus of energy by itself was not a priority, the regulator stated.
    “In this context, we are reviewing some of the Model Concession Agreements in these sectors — those with natural monopolies. What is important is that the tender design for award of Concessions ensures that competition for the market is vibrant — that there are enough players who are able to participate,” Gupta stated.
    Indeed, as a part of the sectoral research, an interim report on the telecom sector by the Indian Council for Research on International Economic Relations (ICRIER) submitted to the CCI is at present being “looked at”, an official stated. The launch of Reliance Jio in September 2016 triggered a contemporary wave of consolidation within the telecom sector. This resulted within the business shrinking to simply three gamers from near a dozen a decade in the past and Jio rising as the most important participant in lower than 5 years.
    The CCI chief stated that given the adoption of latest know-how, the regulator would apprise the Department of Telecommunications of the areas that might pose an issue from the competitors perspective sooner or later.
    An earlier examine by the regulator had highlighted new competitors dimensions together with information assortment, spectrum acquisition, unbundling of infrastructure and repair, visitors administration and the mixing between telecom operators on one facet and e-com platforms, OTT (Over The Top) gamers, and resolution suppliers on the opposite.
    Given the variety of M&A offers within the digital sector, the CCI’s new examine is anticipated to provide you with doable standards to seize transactions for scrutiny. “Dependence of consumers and enterprises on a few large digital platforms raises many novel questions for regulation and regulators,” Gupta stated.
    While consolidation is a theme that has picked up sharply during the last 5 years, this pattern has performed out since liberalisation with an ever-expanding checklist of sectors the place the highest one or two corporations account for 80 per cent or extra of the income generated.
    In paints (Asian Paints, Berger Paints); premium cooking oil (Marico, Adani); biscuits (Britannia, Parle); hair oil (Marico, Bajaj Corp); toddler milk powder (Nestle); cigarettes (ITC); adhesives (Pidilite), waterproofing (Pidilite); vehicles (Tata Motors, Ashok Leyland); small automobiles (Maruti, Hyundai) – one or two corporations account for 80 per cent of the income generated within the sector, in accordance with Mumbai-based funding advisory agency Marcellus.