Equipped to implement competition policies, the Competition Commission of India (the commission) stands in for India’s regulator of competitiveness. Sometimes known as antitrust law, competition law is the legislation considering any kind of market distribution and obstacles; the competition regulator is the entity keeping an eye on market activities. The Competition Act, 2002 (the “Act”) authorises the commission to eradicate anti-competitive action, maintain and preserve market competitiveness, safeguard consumer interests, and so guarantee the freedom of trade among other market players. Section 18 of the Act gives the Commission authority to eradicate activities undermining competitiveness, support the preservation of competition, protect consumer interests, and guarantee the freedom of commerce conducted by other market players in India.[1]
Since it cannot exist spontaneously, competition calls for regulatory systems to be encouraged, protected, and supported. Among other things, these systems remove distortions and eliminate market barriers, therefore increasing access to relevant productive inputs including capital, markets, technologies, infrastructure, and human resources. [2]The Commission’s main goal is to keep “fair competition” in markets open for all. Any form of activity by market players that compromises innovation in the e-commerce sector, reduces customer welfare in markets, and hence compromises competition. The Commission can help to guarantee sufficient competition in the online shopping industry and stimulate innovation by acting in the following ways: In compliance with Section 3 of the Act, any agreements in the e-commerce sector between parties or companies that might have a major detrimental impact on competitiveness (AAEC) will be rigorously investigated.
Section 4 of the Act scrutinises e-commerce businesses holding a dominant presence in the pertinent market should they abuse their position.
Section 6 of the Act still requires notification of mergers and amalgamations of e-commerce enterprises, domestic or foreign, that satisfy the requirements of the Act regarding competition in India.
DELINEATION OF RELEVANT MARKET
Any study of competitiveness begins with the Commission’s definition of the relevant market. “Tanaka v. University of Southern California ruled that failure to identify a relevant market is a proper ground for dismissing a claim”[3]Determining the pertinent Indian market is the first step in the Act”s Sections 3 to 5 examination into the e-commerce sector.[4]The Act specifies particularly the relevant geographic market, appropriate market, and relevant product market. The relevant market is decided upon by the market commission depending on the suitable product market, the pertinent geographical market, or both..[5]The legal test, sometimes known as the Test of Interchangeability, is the main tool used to decide whether market an item or service is fit for. According to the legal requirements, two things judged to be substitutable or interchangeable with one another will fall under the same relevant product market. Still another element of the relevant market is the corresponding geographical one.[6]
The Act states that the pertinent geographical area is a market where the conditions of supply of commodities, demand for services, or service provision are clearly comparable and unique from those found in surrounding areas.[7].The Act further characterises the relevant product as a market consisting of all goods and services consumers view as interchangeable depending on their features, price range, and intended use. Section 19 (6) enumerates the elements one should consider in order to determine the pertinent geographical market.[8] The factors are as follows:
- “regulatory trade barriers;
- local specification requirements;
- national procurement policies;
- adequate distribution facilities;
- transport costs;
- language;
- consumer preferences;
- need for secure or regular supplies or rapid after-sales services.”
The topic of whether online and offline markets are different or comparable is crucial when determining relevant markets in e-commerce. In this sense, the Commission”s function in defining the pertinent e-commerce market is essential.
[1]D.P. Mittal, Competition Law and Practice 404 (ed.3rd 2011)
[2]Ministry of Corporate Affairs -Govt. of India, National Competition Policy 4 (2011)
[3]Tanaka v. University of Southern California, 252 F.3d 1059, 1063, 154 Ed. Law Rep. 788, 9th Cir.
[4]M. Govindarajan, Relevant Market under Competition Act 2002, 2015, available at: https://www.taxmanagementindia.com/visitor/detail_article.asp?ArticleID=6256 (Last visited on June 1, 2021). 7
[5]Supra note 172
[6]Richard Whish and David Bailey, Competition Law 190 (Oxford University Press, 2012).
[7]Supra note 85 at Section 2 (s).
[8]Supra note 85 at Section 2 (t).