The SITC, as part of the NUJS Online Lecture Series, hosted a webinar on August 8, 2020. The talk was delivered by Mr. K.P. Anand (Deputy Director of Law, Competition Commission of India) and moderated by Dr. Tilottama Raychaudhuri, Assistant Professor of Law, NUJS Kolkata. The topic for the webinar was ‘Latest developments and challenges u/s 3 of the Competition Act, 2002 (Prohibition of Anti-Competitive Agreements)’.
Mr. Anand first discussed the important milestones that led to the codification of the Competition Act, 2002 (Act). The first was the Monopolistic and Restrictive Trade Practice Act, 1969. The second was the liberalization of the economy in 1991. the administrators faced the challenge of creating a level playing field after the markets were opened to foreign corporations and to emerging private sector undertakings. This challenge led to the appointment of the Raghavan Committee. The Report published by this Committee formed the basis of the Act, which was aimed at preventing antitrust practices by corporations. The Act expressly defined competition concepts and unfair trade practices, and provided for the regulation of competition, advocacy and the power to impose penalties. It also adopted the rule of reason approach. He also discussed the amendments that brought in 2007, 2009 and 2017.
Mr. Anand discussed the objectives of the Act and the structure of the Competition Commission of India (CCI). He elaborated on who could approach the CCI, and what the enforcement, advisory and advocacy functions of the CCI were and gave examples of the same. He discussed cartels and bid-rigging, and the hierarchy of the appellate process and the disposal of alleged contraventions of Sections 3 and 4 of the Act till March 31, 2019. He briefly touched upon Section 3 of the Act, the amendments to the section and the latest challenges faced by this section. He discussed horizontal and vertical agreements and the per se rule in detail. He also discussed remedies available under Section 27 and 28 of the Act. He highlighted the importance of Section 48 and individual liability with respect to cartels.
Mr. Anand then looked into important case laws on Anti-competitive agreements. He discussed the Shri Shamser Kataria v. Honda Siel Cars India Ltd. automobile case and the Varca Druggist & Chemist v. Chemists and Druggist Association, Goa pharmaceutical case. He also discussed the landmark Cement Cartel case. He discussed the leniency programme that is used for the detection of cartels, along with the 2017 amendment to these regulations.
Mr. Anand highlighted the challenges faced by the enforcers because of pricing algorithms and digital markets. Big data and pricing algorithms allow for personalised and dynamic pricing. Third-party pricing platforms pose a different challenge because some platforms set the price while some recommend the price. Algorithms and collusions further complicate these problems. Algorithms change structural characteristics like transparency and frequency of interaction, and therefore make markets more prone to collusion. They also replace explicit collusion with tacit co-ordination, by providing companies with automatic tools to implement a collusive agreement without direct communication. This results in the obscurity of liability of individuals or firms that benefit from the autonomous decisions of the algorithm and the extent to which humans can control the activities of the algorithms.
This raises several key questions to be answered by competition agencies – whether antitrust liability can be established when pricing decisions are made by a machine using an algorithm and not by human beings; whether humans intentionally create algorithms to harm consumers; and whether liability can be charged automatically, jointly and severally, on the designer of the algorithm, the individual who used it, and the individual who benefited from the decision made by the algorithm. Clear answers to these questions would arise only when more antitrust cases involving independent algorithmic activities are litigated in the courts of law. He also highlighted the need to rethink fundamental antitrust concepts given that algorithms make tacit collusion more frequent.
Mr. Anand discussed some alternative approaches to algorithmic collusion. He discussed market studies and market investigations, ex-ante merger control and other possible remedies. He discussed the 2019 report of the Competition Law Review Committee and the amendments to the Act recommended therein to the governing body, the appellate authority, the definitions of ‘cartels’, ‘consumer’ and ‘turnover’, hub and spoke cartels, and settlement and commitments. He also discussed the recommendations made to enable speedy resolution of cases. He concluded by highlighting the issues posed by digitization and how regulatory intervention would function.
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