Antitrust Law in Platform Governance & Media Reforms
The emergence of digital commerce is the new economic revolution that is regarded as the Platform economy. This digital commerce is driven by technological advancements and the development of Artificial Intelligence. The revolutionary business practices by these platforms stimulate overall economic growth and consumer satisfaction. However, it does provide a lot of problems. Advanced companies involve themselves in business practices by utilizing the internet and various mobile phone applications.
These companies indulge in platform governance in the newly established markets. It essentially means the rules and regulations put forth to filter and present content concerning the behavior of society. Although they have attained success and made a big alteration in the structure of the society, it has become a burden to the legislature to protect the users of these platforms compared from exploitation. Law is an entity that regulates and maintain the conduct of the society. But it struggles as a whole to regulate the anti-trust activities by these media platforms in this digitized modern world.
ANTI-TRUST LAW IN INDIA
The main concern, most countries face today are the regulation of anti-competitive activities. These predatory forms of actions exploit the consumers, market, and flow of competition. The main issue with regards to this form of cruel business is that most of the time it is the well-known and so-called trustworthy companies who indulge in these kinds of activities. The monopolistic market is the main problem and so the Sherman Act 1890 was made in the U.S. It considered an agreement as illegal if it established a monopolistic market. India’s antitrust laws were inspired by the form of the United States. Firstly, the Monopolistic and Restrictive Trade Practices Act, 1969 was constituted. However, it had various disadvantages and so could not attain its purpose of commencement. So, a new Act the Competition Act, 2002 was constituted in 2009 replacing the previous act.
These laws are vehemently needed for the development of the economy. They tend to protect the economic environment from all kinds of economic disruptions. Even developed countries like the U.S, Russia, and China face numerous anti-trust issues that collide the economy as well the exploits the consumers. Also, sudden Pop up of digital markets in essence with their platform governance involves themselves in predatory Data steeling activities. This Prevails as a huge challenge in countries to make reforms in the existing anti-trust laws, especially in India.
DIGITAL PLATFORMS AND THEIR PREDATORY PRACTICES
The traditional world was filled with human influencers and guided the society but today’s modern world is full of digital influencers that dominate the entire livelihood of the society. The digital platforms which are business influencers use various technological means to collect the consumer data and expand their business. One of the major harms of these platforms is Privacy infringement. This invasion results in various other issues such as personal harassment, defamation, mislead results, property infringement, and social harassment. These various digital platforms maintain the database of all searches and understand consumer preferences.
With the help demonstrated data they influence the preference of consumers which is a clear cut anti-competitive activity. Kill zone phenomenon is another vicious business activity where the owner or the manager of the platform has access to see the innovations and working happening in his platform. If a person develops a new application, the owner can easily steal it. This anti-competitive activity has led many lives at stake. The acquisition of a rival platform is said to be another issue. The owner of the platform acquires another platform that could grow into a rival. Although it is argumentative whether the acquisition is anti-trust or not, it doesn’t promote ethical competition.
OBSERVATIONS AND CLAIMS BY CCI AGAINST E-PLATFORMS
Competition Commission of India did a study on e-commerce in April 2019. It published its observations and claims in the report titled “Market Study on E-commerce in India”. The observation reports were published in August 2019, it dealt with various claims of consumers and also the consideration from customers in utilizing the services. One of the important contentions against the platforms is that they are very much biased in its approach. A marketing enterprise acts as both retailers as well as a market place that attracts the consumers in a misconduct manner. Also, there are various situations where the platform provides the dealers with specific tags like “preferred” or “most trusted” and so for additional commissions which is a clear-cut anti-trust action.
The disparity with price congruence is a notable anti-trust issue with the concept of platform governance. The platforms maintain good coordination with the retailers and typically enter into anti-competitive activities. The retailers sell products at different prices In similar platforms. This is done to de-promote and decrease the efficiency of the same. For example, Cost of food from restaurants varies with online food ordering platforms with that of their respective websites. This is to allow people to attract towards their website. While platforms indulge in this anti-competitive activity, the enterprises also setup deep discounts to attract consumers. Online food platforms, travel platforms engage their customers with low discount rates with a very huge discount. This might result in brand goodwill loss and a problem with the structure of other platform enterprises.
WHY THE REFORMATION IS NECESSARY?
The lack of transparency, commercial term algorithms, search criteria algorithms causes disadvantages to the retailers. So in view of that strong legislation is required to regulate the mechanism. The imbalance in bargaining power between the parties and problematic contractual terms creates an anti-competitive environment. So, there should be ways implemented to have transparent contract terms and policies. Issues are that the price parity and exclusive agreements need special attention. The discrimination in price causes an unfair condition which creates dominance in the sales environment. Also, in case of finding agreements, arriving at conclusive decisions after proper research findings should be promoted.
Platforms should set up search ranking parameters in accordance with their terms and conditions without the option of disclosure by third parties. This should also have an impact on the remuneration of retailers. There should be a transparent policy constituted to regulate the data collected. The agreement should mention the kind and amount of data sharable to third parties. Digital platforms like Amazon, Flipkart publish user reviews which acts as a vital role in the selling of the product. The user ratings and reviews should be published in accordance with due regulation prescribed by the competition commission or concerned ministry.
The role of anti-trust laws in a country is to smoothen the process of trade and promote competition. The efficiency of competition in the market is necessary for the proper functioning of the same. The main motive of the implementation of anti-trust law is to ensure whether the competitive practices impact negative effects on consumer welfare. India, being a developing economy with numerous sectors involving themselves in digitalizing the role of platforms and their governance plays a vital role in the market.
The competition law in India is more argumentative whether the traditional effect-based or form-based approach is better whereas the real concern is entirely a different path. Deciding a case has become more difficult due to the development of science. These rules and regulations act incoherence to the administration of law. The Anti-trust laws in India should be made adaptable to the new developments in the economy as well as technology. The legislations need to be made wider and decisions should be out to clear ambiguity so that no entity is out of the roof and the essence of consumer welfare and satisfaction can be attained.
1. Chris Ciligot, ‘What Is Platform Governance and why is it a Big deal?’ ( G2 Learning Hub, Feb 24,2020) < https://learn.g2.com/platform-governance> accessed 19-Aug-2020.
2. Khaitan & Co, ‘CCI’S Study on E-Commerce in India: Antitrust Issues and Recommendations’ (Mondaq, 13 January 2020)< https://www.mondaq.com/india/antitrust-eu-competition-/882580/cci39s-study-on-e-commerce-in-india-antitrust-issues-and-recommendations> accessed 20-Aug-2020 .
3. Gazala Parveen, ’The Complete Guide to Anti-Trust laws in India in relation to world’ (ipleaders, October 12, 2019) < https://blog.ipleaders.in/complete-guide-anti-trust-laws-india-relation-world/> accessed 20-Aug-2020.
4. Competition Act, 2002 accessed 19-Aug-2020.
5. Vishwannth Pingali. Manas Kumar Chaudhari, Payal Malik & Ors, ‘ Competition Law in India: Perspectives’[April-June 2016 Volume (41) Isue(2)]<https://journals.sagepub.com/doi/pdf/10.1177/0256090916647222> Accessed 21-Aug-2020.
6. Ministry of corporate affairs, Competition Commission of India, “Market Study on E-commerce in India: Key Findings and Observations" ( January 08,2020) < https://www.cci.gov.in/sites/default/files/whats_newdocument/Market-study-on-e-Commerce-in-India.pdf> Accessed 22-Aug-2020.
7. Keith Hylton, Digital Platforms and Antitrust Law, Boston University School of Law and Economics Research Paper(2019) <https://scholarship.law.bu.edu/cgi/viewcontent.cgi?article=1606&context=faculty_scholarship>.
ABOUT THE AUTHOR
This blog has been authored by Lokheshvaran Arumugam, who is a 3rd Year B.B.A., LL.B. (Hons.) student at School of Law, Christ University, Bangalore.
[PUBLICATION NO. TLG_BLOG_20_132_04]