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THE NEXUS BETWEEN BIG DATA AND COMPETITION LAW

Kunal Lohani, Sr. Associate
Richa Bhandari, Associate

Date | Version June 21, 2022| 1.0
Keywords ‘Big Data’, ‘Dominant Position’, ‘Abuse of dominance’, ‘Relevant Market’
List of Legislation Referred The Competition Act, 2002
Jurisdiction India

 

Abstract- This write-up examines the concept of big data and its commercial value in the digital space, in light of the provisions of the Competition Act, 2002.

INTRODUCTION 

Over the course of time, the meaning of data and its capitalization has changed drastically, primarily owing to the rapid shift from the traditional to the digital era, which has increased the role of digital platforms immensely.Although the concept of pooling of data is not a new one and has been carried on by multiple organizationsto provide better services to their customers for a very long time, in recent times, this practice has been put to use in such an aggressive manner that it has led tothe commission of such acts which may be considered to be anti-competitive.

In order to understand how data pooling adversely impacts market competition, it is essential first to take a glance at the meaning and importance of data in the digital economy. The Article is thus an attempt to determine the concerns arising from the relationship between big data and competition law.

What is Big Data and its concerns regarding Competition Law?

While data has no such definition accepted universally as a principle or an algorithm, it is anything and everything which is either in the form of facts, stats, or any information relevant to one individual or another in any manner whatsoever possible. Big data, on the other hand, refers to such data/information which is possessed in large volumes and varieties by companies, which are then processed to produce unique data sets.Such unique data sets help the companies grow immensely and get ahead of their competitors in the digital market by constantly checking the preferences, buying patterns & trends followed by the consumers.

It may be clear by now that the only difference between the meaning of the terms data and big data is that of the prominent presence of the four V’s, which are volume, velocity, variety, and value[1]in the latter, each representing a characteristic of the term Big Data that is being equated with oil.[2]

The utilization of volumes of data acquired by gigantic companies to monitor the needs and demands of the consumers has the potential to control the rest of the market. The case of Walmart Inc., wherein Walmart had collected consumer data, through analysis of which it had found out that there existed a direct relation between the consumption of strawberry pop-tarts and the hurricane, is a classic example of the role data plays in the economy. While the acquisition of data is not an anti-competitive practice per se, it is essential to ensure that the accumulation of such data is not concerted in the hands of just one player in the market, resulting in obtaining a dominant position by such player.

Big Data and Competition Law Concerns

Section 4(1) of the Competition Act, 2002, restricts all enterprises from abusing their dominant position[1] which refers to a position of strength enjoyed by an enterprise, in the relevant market, in India, which enables it to (i) operate independently of competitive forces prevailing in the market or, (ii) affect its competitors or consumers or the relevant market in its favor.[2]In the case of United Brand v. Commission of the European Communities[3], it was observed by the Court that the position of dominance is a position of strength that allows an organization to avoid effective competition in a given market by enabling it to act independently of its competitors, consumers, and, ultimately, its customers.[4]

Further, Section 19(4) of the Competition Act, 2002 provides for the factors which must be taken into consideration by the Commission to determine whether an enterprise holds a dominant position in the relevant market.[5]

However, for an enterprise to be held liable for abusing its dominant position, it is pertinent to ensure that, (a) the enterprise must be dominant in the ‘relevant market’, and (b) the enterprise must ‘abuse’ its dominant position in such market.[6]

  1. What is a Relevant Market?

Defined under Section 2(r) of the Competition Act, 2002, relevant market refers to the “market which may be determined by the Commission with reference to the relevant product market or the relevant geographic market or with reference to both the

market.”The Competition Commission of India had earlier decided upon the definition of relevant market and had observed that online and offline markets are different channels of distribution of the same product and are not two distinct markets. [1]

However, recently in the case of All India Online Vendors Association and Flipkart India Private Limited & others[2], the NCLAT took into consideration the view of the Competition Commission, wherein it had distinguishedbetween online and offline markets and had observed that the geographical market is India, and the relevant market is “services provided by online marketplace platforms for selling goods in India”, while deciding upon an appeal regarding the abuse of dominance by Flipkart.[3]

In 2019, the Competition Law Review Committee submitted its report, the objective of which was to be “in sync with the needs of strong economic fundamentals[4], wherein it had made suggestions regarding expansion of factors considered for determining relevant product and geographic market under Sections 19(6) and 19(7), making it inclusive of other factors applicable to digital markets. [5]

  1. Dominance and Abuse of Dominant Position

As correctly pointed out by the Competition Commission of India time and again, a dominant enterprise should abuse its position of dominance for it to be held accountable. Precisely put, “the Act does not prohibit the dominant position per se, but its abuse is prohibited under the scheme of the Act.”[6]

While the CCI has clarified its position with respect to the meaning of dominant position and the factors to be considered while deciding on this position, with the digitalization of the market, the concerns about competition and abuse of dominant position are rising as well. The Competition Commission of India, in the case of Matrimony.com, wherein it was alleged that Google was running its business of search and search advertising by resorting to unfair as well as discriminatory practices and was also favoring its own services, thereby creating an uneven playing field[7], considered the following issues, i.e., “(i) what is the relevant market(s) in the present case? (ii) whether Google is dominant in the said relevant market(s)? (iii) if Google is dominant, whether Google has abused its dominant position in the relevant market(s)?

In the instant case, two relevant markets were determined to be “online general web search services” and “online search advertising services” in India, and the Competition Commission observed that Google was dominant in both the relevant marketsand that it had abused its dominant position. The Commission observed that Google was in a position to stifle fresh innovation or hinder consumer welfare due to its access to the whole internet landscape as well as vast volumes of personal data and that it had done so by (a) displaying universal results in the search engine page, not taking into consideration the relevancy of the search, and (b) manipulating this algorithm by providing results in its favor, directing the user to its own vertical services such as Google Maps, YouTube, etc.[1]

While the jurisprudence on the concerns raised by the accumulation of huge data sets in the hands of a dominant player is limited, the Competition Commission has indeed recognized that such data has the potential to disrupt healthy competition in the market. The Commission, while examining the existence of a cartel between different airlines, had noted that “with the use of algorithms, there exists a high possibility of collusion with or without the need of human intervention or coordination between competitors” and had consequently ordered an investigation.[2]

IN CONCLUSION

With the noticeable shift from a conventional market to a digital one, the need to constantly check the competition practices of such big technological giants has increased. Therefore, it has become essential to ensure that ‘data’ is considered as one of the factors for determining the dominance of an enterprise which will help the Commission scrutinize such practices of the companies.

Recently, a presentation was given by the Competition Commission of India to the Parliamentary Standing Committee on Finance concerning the numerous investigations against technological giants carried on by the CCI in the digital space, wherein it had also informed the Panel about establishing a ‘Digital Markets and Data Unit’ and amending the CCI Act to efficiently deal with anti-competitive practices emerging in the digital space. As a consequence, the Committee has expressed its concern and is planning to conduct a discussion with giants such as Google, Twitter, Amazon, etc.[1] This approach of the Parliamentary Committee and the CCI is commendable and will help in the formulation of a regulatory regime for digital space.