Top
Columns

The Relevance Of 'Relevant Market' In Digital Market Under Competition Law In India

Surabhi Sarawgi
3 Aug 2020 11:13 AM GMT
The Relevance Of Relevant Market In Digital Market Under Competition Law In India
x
Your free access to Live Law has expired
To read the article, get a premium account.
    Your Subscription Supports Independent Journalism
Subscription starts from
599+GST
(For 6 Months)
Premium account gives you:
  • Unlimited access to Live Law Archives, Weekly/Monthly Digest, Exclusive Notifications, Comments.
  • Reading experience of Ad Free Version, Petition Copies, Judgement/Order Copies.
Already a subscriber?

The Indian Market paradigm has undergone a sea change over the past decade. The digital market has had a profound impact on competition laws and has witnessed a metamorphosis.

Digitalization has led to a new trends and development in the commercial practice and has caused a redeployment of competitive forces. This reprisal of market power has lead proactive steps in the market disruption. For Instance, the German Federal Cartel Office has set up a "Task Force for Internet Platforms" to give appropriate attention to 'the mounting importance of digital economy in all sectors'. The Digital Market has a far-reaching impact and the application of competition law has become increasingly complex. A plethora of regulatory and legal issues have arisen including alleged anti-competitive. In India the cards have been reshuffled and the existing toolkit for competition law analysis is difficult to apply to this new business model. The digital market has been directly impacting the micro, small & medium enterprises (MSME) in India by providing means of funding, infrastructure and technology and training and has a favorable cascading effect on other industries as well. The Indian digital market has been on an upward growth trail and is expected to surpass the US to become the second largest digital market in the world by 2034. The number of internet users is expected to nearly double to 850 million in five years from 450 in 2017. Of the total, 150 million users are expected to transact digitally and will appear mainly from tier-2 and 3 cities with varied language choices, payment modes and products.

"Relevant Market" means the market which may be determined by the commission with reference to the relevant product market or the relevant geographic market or with reference to both the markets.[1]The general definition and ways to determine the Relevant Market seems outdated in case of digital market. The first question therefore is to determine whether online and offline market should be regarded as the same market? "Relevant product market" means a market comprising all those products or services which are regarded as interchangeable or substitutable by the consumer, by reason of characteristics of the products or services, their prices and intended use.[2] In this light a consumer usually tend to weigh the options available to them in offline and online markets before making a final decision. A significant increase in price will make the consumer shift to the other thus causing Demand Substitutability. Demand Substitutability refers to small, permanent change in relative prices and thus evaluating the likely reaction of consumers to that increase. Therefore, these two markets are different channels of distribution of the same product and are not two different relevant market as held in Ashish Ahuja v. Snapdeal and others.[3] In case of abusive practices by Goggle in the case Albion InfoTel Limited V. Google Inc in respect to its online searches and advertising business, the Competition Commission of India delineated the market for online search advertising in India as the relevant market and was held to be in a dominant position.[4] In case of Fast track Call Cab Private ltd. V. Ani Technologies Pvt. Ltd. Competition Commission of India concluded it to have a relevant market of its own as consumers do not find such services to be substitutable with other means of transport. It laid down convenience in terms of time saving, point-to-point pick up and drop, pre -booking facility etc. are facilities that not available in other forms of transport.[5] However in another case filed by Meru Cabs in Kolkata, the Competition Commission of India concluded the yellow cabs to be a part of the same relevant market. The relevant market will also be assessed by examining the presence of brick and mortar stores, thus looking for the relevant geographical market. "Relevant geographic market" means a market comprising the area in which the conditions of competition for supply of goods or provision of services or demand of goods or services are distinctly homogenous and can be distinguished from the conditions prevailing in the neighboring areas.[6]In case of the taxi aggregation case the Competition Commission of India concluded that the relevant geographic market would be that of the specific city. Thus we can conclude as regard the relevant market the more specific the characteristics of a product, the lesser possibility of interchanging it with the substitutes.

With the recent growth in internet users, easy availability of smart phones and the subsequent moves towards a digital economy; the digital market has witnessed exponential growth in India. Being one of the fastest developing sectors in the Indian economy; it is expected to grow at a compound annual development rate (CGPR) of 52 percent by 2020.[7] The Competition Commission of India needs to understand that the competitive strategy of such digital market in providing discounting and incurring losses. However at the same time, the Competition Commission of India needs to rationalize the losses as an introductory offer for the new entrants in the market. A sequential approach should be adopted by the Commission to determine relevant market.

Views are personal only.

[1]Section 2(r) of The Competition Act, 2002.

[2] Section 2(t) of The Competition Act, 2002.

[3]Ashish Ahuja v. Snapdeal and others.(Case No. 17 of 2014).

[4] Albion InfoTel Limited V. Google Inc (Case No.46 of 2014).

[5]Fast track Call Cab Private ltd. V. Ani Technologies Pvt. Ltd. (Case No. 6of 2015)

[6]Section 2(s) of The Competition Act. 2002.

[7]Dr. Ravikant Bhardwaj, "Competition Issues in E-Commerce Sector in India", 2016, 1st July, available at: http://media.leidenuniv.nl/legacy/ravikant-bhardwaj.pdf.

Next Story