Privacy has been recognised as a non-price parameter by both European Commission (EC) and the Federal Trade Commission (FTC). The Report, drawing inspiration from global jurisprudence, has clarified that such privacy concerns may be examined under the Indian competition law domain. It observed that privacy is central to consumer welfare, any dilution or violation of the data protection standard by a firm with significant market power can be examined by CCI. Earlier CCI had expressed a divergent view in the case Vinod Kumar Gupta v. WhatsApp Inc o by stating that “allegations of breach of the IT Act, 2000 do not fall within the purview of examination under the provisions of the (Competition) Act.” The Report’s observation in converging the two domains of law is welcome at a time when the industry is witnessing rapid vertical integration. CCI may also consider examining the privacy and data protection standards of the merging entities as a metric of consumer welfare at the merger approval stage.
Digitally enabled markets are characterized by structural risks such as network effects and lock-in effects. The creation of walled gardens, as the Report describes, is a result of technological unification and vertical integration in the telecom sector; this tends to lock the consumers within the ecosystem, leaving no incentive for them to switch or cross-visit other TSPs. TSPs also perform platform roles between content providers and subscribers. A vertically integrated firm therefore can hinder competition and indulge in abusive conduct. However, none of the TSPs enjoys a dominant position in the market and therefore they cannot be brought under the purview of S.4 of the Act since it employs a dominance-based assessment. In consideration of the structural risks that sectors such as telecom may be exposed to, an alternative assessment may be considered on lines of Competition and Market Authority’s Market Investigation Regime.
This regime employs a market-structure-based assessment in lieu of dominance-based assessment. This is effective for two reasons; firstly, it does not require the presence of a dominant firm in the relevant market. Secondly, this assessment is useful in markets where none of the players engage in anti-competitive behaviour but the market is not competitive
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