Mint Explainer: Why we need a new competition law for big tech companies

livemint.com:

Mint takes a look at what the expert committee has recommended and how it impacts the tech industry. Given the pace at which digital enterprises move, it was felt that affected parties would suffer irreparable damage by the time ex-post measures were ordered to remedy uncompetitive practices. The Competition Act’s ex-post measures involve several stages such as forming a prima facie view by the Competition Commission of India (CCI), an investigation by the director general, and passing of the final order, all of which are time-consuming.

Some cases of anti-competitive practices of digital enterprise before the CCI have taken four years or more to be adjudicated. In one instance, the CCI had adjudicated in 2018 on a complaint of abuse of dominant position filed in 2012. Yet, even after 11 years, the case has not reached a final resolution and is presently under review by the appellate tribunal.

Therefore, it is felt that the ex-ante framework will be more efficient at preventing anti-competitive conduct by large digital enterprises which have a significant presence in India and the ability to influence the Indian digital market. In a traditional physical market, there is a competitive disadvantage to become bigger due to diminishing returns to size. However, in the digital market, players experience increasing returns to size as marginal costs diminish rapidly, making scaling up quickly a good business strategy.

Therefore, the bigger the player, the more competitive it can be in the digital market. These entities gain from network effects – newer users would opt to use/join a platform that already has a large number of users, as is seen in the instances of social networking and messaging apps. The parliamentary committee