The Competition Commission will shortly release its study on the telecom sector and one of the key trends that has emerged is the vertical integration between telcos and digital solution providers, including OTTs and e-commerce platforms.
As the Competition Commission of India (CCI) continues to step up its vigil to curb possible unfair business practices, the regulator's Chairperson Ashok Kumar Gupta opined that for the digital space, enforcement has to be complemented with non-enforcement tools such as market studies.
Currently, the watchdog is studying mergers and acquisitions in the digital market, including those deals that might have escaped its scrutiny due to lower thresholds, and pharmaceutical sector.
Gupta said the market study on the country's telecom sector, which was initiated in January this year to have a clear understanding of competition in that space, is complete and will be released shortly. "The key trends and observations that have emerged from the study inter-alia relate to vertical integration in the industry between telecom operators and digital solutions providers, including OTTs (Over The Top), e-commerce platforms, digital payment platforms and other cloud-based technology solutions," he told PTI.
In recent years, the domestic telecom sector has witnessed the exit of some prominent players amid stiff competition and legal cases. According to Gupta, there is an ongoing study on mergers and acquisitions in the digital market to understand the emerging trends.
The study will also look at "those mergers and acquisitions in the digital space that might have escaped the scrutiny of CCI owing to their asset/ turnover falling below the stipulated thresholds," he said in an e-mail interview. Across sectors, only those mergers and acquisitions beyond certain thresholds are required to get clearance from CCI.
In recent times, there have been concerns in various quarters about possible anti-competitive practices in the digital market, especially in the wake of the coronavirus pandemic and digital economy emerging more prominent. The challenge for CCI, like any other competition authority, is to ensure that concentrated digital markets remain open to new entrants and that competition on and between the digital platforms is on the merits, Gupta said.
Noting that this has become all the more important during the pandemic as integration of businesses with the digital mode is extremely important, he said the regulator feels that for the digital space, enforcement has to be complemented with non-enforcement tools such as market studies. "Non-enforcement tools help in engaging with the stakeholders without any regulatory pressure and highlighting to them the potential areas of concerns. For instance, the market study on e-commerce helped us gather useful insights into the emerging trends and concerns in the sector.
"Bargaining power imbalance and information asymmetry between platforms and their business users underpinned most of the emerging issues in e-commerce," he noted. Among other efforts, the regulator has urged e-commerce platforms to put in place a set of self-regulatory measures over certain areas such as search ranking, collection/ use/ sharing of data, user review mechanism, revision in contract terms and discount policy.
"It is always a challenge for competition agencies across the globe to strike a right balance, while undertaking enforcement actions, so that anti-competitive practices are curbed and at the same time, the incentives for the technology players to innovate are not curtailed," Gupta said.