Introduction:
Apple Inc. has become a 2 trillion-market capital company, which is way larger than economies of several states in the world. This is a dominating position. Whatsapp on the other hand, has a user base of around 250 to 300 million in India alone. This too is an example of dominating position. Such dominating position can be often abused. Recently, Whatsapp was updating its privacy policy which asked an access for more information of the users which if denied will lead to no services from the application. A grave abuse of dominating position by Whatsapp.
At times, it happens that companies have large capture of markets like 60-70 and at times 100 percent of the market. Budding companies get weeded out. And such sole providers of commodities or services impose any quality or any price over the customers leaving no option to them. This makes competition necessary. Understanding the importance of competition an act was passed. The Competition Act, 2002. Such laws under it are called as Antitrust laws.
Background to the Competition Act, 2002:
Before the said act, MRTP (Monopolies and Restrictive Trade Practices Act), 1966 existed to curb the monopolistic trade practices, restrictive trade practices and unfair trade practices. Although it tried to curb all of these it still didn’t allow a liberal environment for flourishing of businesses. Several licenses and restrictions were imposed. Thus, to promote businesses and eventually grow competition for the monopolies, Competition Act, 2002 was enacted. MRTP still prevailed until 2009. In 2009, MRTP got repealed and the Competition Act came into force which handles issues regarding monopolistic trade practices and restrictive trade practices. The unfair trade practices on the other hand were dealt under Consumer Protection Act, 1986 which got replaced with Consumer Protection Act, 2019.
The Competition Act, 2002:
Competition Commission of India under the Act takes cognizance of any abuse of dominating positions or the matters dealt by the act. It has brought into existence Competition Appellate Tribunal to decide such cases. The objective of the act is to stop the practices bringing an adverse effect on competition, to promote and sustain competition, to protect the interests of the consumers and promote freedom of trade. It prohibits certain agreements committing an abuse of dominant position, prohibits it and regulates the amalgamation of companies. When the major capturers of market of a particular commodity or service amalgamate, thus affecting the competition grievously, such amalgamations are made void under this Act. Facebook’s purchase of Whatsapp for 19.3 billion dollars is a big example of this.
The Competition Commission of India can pass any order of cease or desist against any agreement or abuse of dominating position to stop or discontinue it and penalize up to 10 percent of the average of 3-year turnover of the company. In case of cartel, that is mutually manipulating the prices by independent businesses collectively to reduce competition, the penalty is 3 times profit of each year during which such agreement was continued or the 10 percent of its turnover of each such year whichever is higher. Noncompliance to such order leads to fine upto 1 lac for each day of default which cannot cross 10 crores in total and failing to produce such fine may lead to 3 years of imprisonment or fine upto 25 crores or both. Despite of such legal provisions in India and other states, abuse of dominant position continues to exist.
The scenario in India :
There are several examples of such an abuse of dominating position. One is in the power supply industry. The power supply industry is dominated by the State through its distributive companies. A surcharge for obtaining electricity from other power suppliers and the cross-subsidy surcharge levied on the customers is a clear example of an abuse of dominating position. Moreover, an anti-competitive tendency can be seen when 239 orders are passed by the Central Electricity Regulatory Commission in denial of open access.
Global scenario :
Amazon, itself is a big threat to several small shopping websites. European Union targeting it for use of rivals’ sales data on its platform, several antitrust cases in India and US are filed against it and several concerns raised against it in countries like Canada and Spain. Predatory pricing at times makes the situation worse. Predatory pricing is basically selling the commodities in prices less than the cost of production to decrease competition. Social media algorithms are increasing extremist tendencies in several states ripping off the democracy and leading to nightmares of civil war. The social media algorithms show you content related to what you usually love to explore, search and watch on social media. Google too is dealing with antitrust issues. Several Big Tech companies based in different home nations are a threat to the other states. And at times with huge capital market to the home state itself.
Limitations in Antitrust Laws:
There are several limitations in limiting these companies. The biggest one is their global jurisdiction. Secondly, most of them provide free of cost services in turn of data compromise. Thirdly the internet-based business is non-rival in nature for the consumption of one doesn’t leads to a decrease in value for other internet-based service providers. There are several limitations as such.
The economies at times of the states have started relying on such services and a hit to them will blow a big hit to the people of the country and the economy of the State as whole. Many businesses are working over these platforms. The IT industry is a big example.
Conclusion:
Despite of such limitations, there are several cases in positive. The European Commission fined Google an equivalent of 5 billion dollars for an abuse of its dominance in Android for unfairly favouring its own services. It forced smartphone makers to pre-install its applications.
It isn’t correct to completely view the Big Techs, the monopoly in India in a completely dark shade. Being in dominant position too isn’t in itself a crime under the Competition Act, 2002. But abuse of it is. It is a truth that such companies have blood and sweat of its team making it the most favoured. They have brought the modern world into great ease and luxury. And thus, the approach towards the Antitrust segment should be made sensibly.
References:
1. The Competition Act, 2002
2.V. Sridhar, Global Antitrust and the Challenge of Big Tech, The Hindu, 29th of Jan 2021
3. M. Ramesh, No ‘power’ of choice for consumers, The Hindu, 18th of March 2018
4. Reuters Staff, Amazon to hike fees for Spanish users after new digital tax, Reuters, 22nd of Jan 2021
5. R. Nazareth, K. Leach, Tech Stocks Lead Market Declines After Big Rally : Markets Wrap, Bloomberg, 10th of November 2020
6. K. Bolongaro, Amazon ‘Abuse of Dominance’ Concerns Trigger probe in Canada, Bloomberg, 14th of August 2020
7. Tom Warren, Google fines a record $5 billion by the EU for Android antitrust violations, The Verge, 18th of July, 2018
8.https://www.channele2e.com/business/compliance/big-tech-antitrust-regulatory-breakup-updates/
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