On Friday, Nov 10, we had an insightful session by Dr K D Singh, Director of the Competition Commission of India (CCI).
About Dr KD Singh
Dr K D Singh is a legal professional with expertise in anti-trust & public policy matters. He is presently posted as Director in Digital Markets & Data Unit of CCI. Previously, he was with CCI’s Anti-Trust Division.
Dr Singh has earlier taught at the Campus Law Centre of Faculty of Law of University of Delhi. He has also practiced in various Courts/ Tribunals/ Regulatory Bodies. Dr Singh holds a Ph.D. in Law, along with LL. B and LL. M degrees, all from the University of Delhi.
Dr Singh began his journey in law as a researcher, transitioning into teaching and legal practice, before finally joining CCI in 2010 i.e. immediately after the competition regime became operational in India. During his stint at CCI, he gained global exposure by participating in events organized by UNCTAD, OECD and various Competition Agencies.
In 2015, Dr Singh was selected as Fellow for the prestigious International Visitor Leadership Program (IVLP) hosted by US Department of State at Washington D.C., California, and other locations in US. In 2018, Dr Singh went on foreign deputation/ secondment to Competition Bureau, Canada. In 2023, he attended the Competition Policy Seminar/ Summer School at College of Europe in Belgium, as part of Competition Cooperation, EU- India.
Introduction
The rise of the digital economy marks a paradigm shift in India’s economic development. A vibrant start up ecosystem has evolved. We need to harness this entrepreneurial energy for the benefit of the nation.
If innovation is one side of the digital revolution, regulation is the other. Regulation should keep pace with the needs of the day. If the regulatory architecture is not proper, entrepreneurs may spend too much of their energy on compliance instead of focusing on their core competence. So, it is important to strike a balance between innovation and regulation.
The digital markets continue to evolve. From the days of ecommerce, we have seen the emergence of Fintech and now AI/ML. The pace of innovation has accelerated.
For the tech companies, with great power comes great responsibility. In the digital economy, market boundaries are not clearly defined. Time and geography are increasingly irrelevant.
The digital economy has provided a fertile breeding ground for startups. It has become possible for startups to compete with large companies.
The digital economy has spawned off customer centric business models with a greater emphasis on customer satisfaction. Traditional products can be enhanced with digital features.
Data is king. By collecting and analyzing data, it is possible to create a sustainable competitive advantage. But there are also unique challenges like privacy, security, and the digital divide.
Role of competition in a market economy
Compliance is important. But regulation should also be enabling for new start ups so that they can compete effectively with dominant entrenched players. It is difficult for new entrants to compete if the incumbents abuse their market power.
The CCI attempts to create a level playing field and acts as the guardian of fair play. The primary functions of CCI are to enforce antitrust laws and prevent abuse of monopoly power by the enterprises. The CCI tries to keep the marketplace vibrant and open to new entrants. By acting as the custodian of fair market practices, CCI attempts to benefit the widest range of stakeholders.
CCI educates and informs both consumers (making them aware of their rights) and businesses. It collaborates with its international counterparts and tries to ensure that competition policies are applied in a coherent manner across the world.
The CCI tries to strike a fine balance between enabling innovation to thrive and safeguarding consumer protection and fair competition. Regulations should not just be hurdles. They must also serve as catalysts for innovation. Regulations should not merely exist to check businesses but must also serve as checkpoints that consider the horizon of possibilities.
On their part, businesses must not only understand regulations but also anticipate them. They must think ahead and innovate with integrity.
The regulations of today will shape the markets of tomorrow. It is important to build a legacy that stands the test of time.
Q&A
The MRTP Act was introduced in 1969. Those days India was a closed economy aptly described as “command and control”. The budget of 1991 introduced liberalization. Markets were opened. Dr Manmohan Singh, the then finance minister quoted Victor Hugo in his budget speech: “No power on Earth can stop an idea whose time has come.” In 1995, India joined the WTO.
Since then, competition has become the buzzword.
Competition has indeed done wonders for us. Pre 1991, a landline telephone connection was a luxury. Dr Singh recalled that during his student days, in his hostel there was just one phone connection. There would be a long queue to take advantage of the lower rate after 7 pm (Rates were even lower after 11 pm.) From the monopoly days of P&T, DOT, BSNL and VSNL, we have come a long way. We now have a vibrant telecom sector.
Dr Singh also recalled that when he was a student it was difficult to open a bank account. SBI insisted on a guarantor who had an account for 10 years with the bank. It was a bizarre situation. Instead of the bank providing the guarantee to safeguard the depositor’s money, the consumer had to provide the guarantee! Today, thanks to deregulation and competition, a bank account can be opened with the click of a mouse.
When it came to cars, we just had Premier and Ambassador. Now, thanks to competition, we have many manufacturers. We are even exporting cars to overseas markets.
As the markets opened and competition increased, the MRTP Act became obsolete. The Competition Bill was introduced in the Parliament in 2002 and CCI became operational in 2009. At that point of time, the digital markets were evolving. The focus was on traditional industries such as cartels in cement, tyres, and sugar sectors.
CCI has learnt on the job and evolved with the needs of the economy. Digitalization is a global phenomenon. The opportunities and challenges are similar though the solution may have to be tailored to suit the needs of the local market.
Yes. There is a pleasure in going to a shop, physically examining the products and then buying what one desires. But online shopping may provide better prices. Moreover, many services (such as cinema tickets) can be purchased and consumed sitting in the comfort of our home. So online shopping does offer a high degree of convenience. Ultimately the customer is the best judge. Many Indian customers are price sensitive and are looking for deals.
Prof Sudhakar added that hybrid forms of shopping (also called phygital) which combine the best of physical and online shopping are also emerging.
Data and Network effects are the defining characteristics of digital markets.
A physical store can only reach a limited number of customers. But the digital markets have unlimited reach with respect to both suppliers and consumers. The network effect can be harnessed using data. Targeted advertising changes the dynamics completely, enabling lower prices to be offered to customers.
It is due to the network effect that typically, there are only one or two major players in a particular segment. Amazon/Flipkart, Ola/Uber and LinkedIn in are good examples. It is difficult for new players to enter.
Size/dominance/market share by itself is not the problem. It is the abuse of market power which creates problems. With data being such a big competitive advantage for the incumbents, the challenge for CCI is how to create a level playing field.
Since the IT Act of 2000 was enacted, there have been many revisions and amendments (IT Act Amendment of 2008, IT Rules 2011). The IT Act was originally designed only to protect e-commerce transactions and define cybercrime offenses. So, it did not deal with the nuances of the current cybersecurity landscape adequately nor did it address data privacy rights.
There are now reports that IT Act would be replaced by a new law i.e. the Digital India Act that would act as a catalyst for the Indian economy by enabling more innovation, more startups, and at the same time safeguarding safety, trust, and accountability. It is reported to focus on online safety and trust, with a commitment to safeguarding citizen’s rights in the digital realm while remaining adaptable to shifting market dynamics and international legal principles.
Digital offers great opportunities in terms of market access and serving a large population. Risks include data security, breach of privacy and the emergence of monopolies who may abuse their market power.
As PRS Legislative Research explains, India did not have a standalone law on data protection. Use of personal data was regulated under the Information Technology (IT) Act, 2000. In 2017, the central government constituted a Committee of Experts on Data Protection, chaired by Justice B. N. Srikrishna, to examine issues relating to data protection in the country. The Committee submitted its report in July 2018. Based on the recommendations of the Committee, the Personal Data Protection Bill, was introduced in the Lok Sabha in December 2019. The Bill was passed in August 2023.
The Bill will apply to the processing of digital personal data within India where such data is collected online, or collected offline and is digitised. It will also apply to such processing outside India, if it is for offering goods or services in India. Personal data may be processed only for a lawful purpose upon the consent of an individual. Consent may not be required for specified legitimate uses such as voluntary sharing of data by the individual or processing by the State for permits, licenses, benefits, and services. Data fiduciaries will be obligated to maintain the accuracy of data, keep data secure, and delete data once its purpose has been met. The Bill grants certain rights to individuals including the right to obtain information, seek correction and erasure, and grievance redressal. The central government may exempt government agencies from the application of provisions of the Bill in the interest of specified grounds such as security of the state, public order, and prevention of offences. The central government will establish the Data Protection Board of India to adjudicate on non-compliance with the provisions of the Bill.
Misleading and disparaging advertisements can affect competition. These are being monitored by the Central Consumer Protection Authority.
Self-regulation is important. Organizations like Advertising Standards Council of India (ASCI) have an important role to play.
Note: The Consumer Protection Act, 2019 came into force from 20th July, 2020. The Central Consumer Protection Authority (CCPA) has been established w.e.f. 24th July, 2020. The objective of CCPA is to promote, protect and enforce the rights of consumers as a class. CCPA is empowered to conduct investigations into violation of consumer rights and institute complaints / prosecution, order recall of unsafe goods and services, order the discontinuation of unfair trade practices and misleading advertisements, impose penalties on manufacturers, endorsers, and publishers of misleading advertisements.
The digital revolution cannot succeed without the participation of the rural population. But things are moving in the right direction. Internet density has increased across the country. Data access is cheap. UPI has spread across the country. The digital reach has expanded to the rural areas. Rural India is increasingly a part of the digital revolution. Technology is enabling us to reach the nooks and corners of the country. But more can be done to improve digital inclusion.