Author: Anusha Chand, Student at Jindal Global Law School.
E-commerce and competition law have never always been on even terms and the venture of big data in the market only causes waves of turbulence and disturbances. As much as the access to big data can help in enhancing business in the online sphere, it can also be a potential concern and may lead to some players in the market occupying position of dominance and eventually abusing the position that they hold and indulging in anti-competitive practices. The concept of ‘Big Data’ and firms which deal with such data has revolutionized the concepts of, inter alia, network effects, platform markets, essential facilities, dominance, consumer welfare, and the relevant market. The primary aim of the paper is to understand the complexities and challenges that arise when big data, e-commerce and competition law regulations meet at cross roads. This paper intends to examine whether the Competition Act, 2002 sufficiently equips the Competition Commission of India to define the relevant market in order to account for and deal with the growing abuses of dominant position using big data analytics by e-commerce platforms and what necessary changes have to be made to the competition tools available. Chalking down the position of the Competition Act, 2002, the paper will also shed light on the US anti-trust laws that govern the e-commerce market and how are they different from the provisions under the Indian law.
Keywords: E-Commerce, Competition Law, Big Data, Anti-Trust Laws.
The traditional relationship between producers and consumers has undergone significant transformation in the recent times because of the increasing reliance on the data collected to understand and to infer consumer preferences.The e-commerce platform being a two-sided platform heavily relies on the valuable information collected from users to derive profits. Firms engaged in the e-commerce business have accurate tools to collect, store, analyse, treat, monetise and disseminate voluminous amount of data. The information collected helps companies analyse and evaluate the behaviour, preferences, needs, expectations and desires of the customers in order to cater to their changing needs and facilitate their demands in a better fashion. This data enables online platforms to offer targeted advertising services to advertisers and this in turn funds the platform.
It is imperative for the relationship between law and technological advancement to be interactive, dynamic and complex. An effort is being made across nations to harmonise the laws regulating e-commerce platforms and competition laws in order to ensure that competition in the market is not hindered and customers derive maximum benefit.
Every interaction with the consumer is a way of collecting valuable data that is used by the company. Data collected by online platforms comprise of data that is provided by users themselves like their profile information, pictures and it also consists of the data obtained by the platforms by analysing the behaviour and habits of the users. Data driven markets make it difficult for the competition authorities to define relevant markets, assess the degree of market concentration and the potential detriment to the consumers. The Indian competition law regime is required to be fine tuned in order to capture the new kind of anti-competitive conducts in the technology enabled market.
In markets driven by data, companies that have access and the capability of having access to such consumer data tend to climb up the ladder, obtaining a dominant position more rapidly than their competitors having limited access to such data. Firms like Apple, Google, Amazon, Facebook, Microsoft, or General Electric have first mover advantage in the field and become analytics leaders. Refusal to provide access to data, discriminatory access, exclusive contracts, tied sales, cross usage and discriminatory pricing are five kinds of exclusionary conducts that can potentially impair competition in the market. Problem arises in the data driven market when the data collected is not equally and uniformly accessible by all players in the market.
Systematic data collection, processing and analysis of the data helps enterprises understand the interests of consumers and improvise their products and offer services that are personalised. Collection of data also helps the enterprises to target advertisements, provide new services, and target potential customers by observing their surfing habits and so on. The market share held by the enterprise and the market concentration determines the ‘market power’ of an enterprise. New entrants may face barriers to entry when they do not have access to the kind of data that the established company does.
As big data firms are fewer in number, the market is relatively more concentrated and may harm consumers and the economic efficiency by reduced competition and increase in entry barriers. Using the data and the market dominance that such firms enjoy, they can indulge in anti-competitive conducts by depriving other enterprises from accessing data that are essential facilities. Excluding rivals from accessing such data and thus making it difficult for the consumers to adopt their platforms is also anti-competitive. It is also problematic when the data collected is used to study the buying pattern and purchasing power of customers and different prices are set for different groups of customers leading to a breach of consumer equality.
The Competition Act, 2002 (“Competition Act”) through Section 4 empowers the Competition Commission of India (“CCI”) to scrutinise the abusive behaviour of a firm holding dominant position in the market and can only take action after the market has already been rendered anti-competitive. It becomes difficult to determine the relevant market in the digital sector as many platforms provide free services and benefit through data inflow or collection and no change has been incorporated in the Indian anti-trust regime to accommodate the changing trends in the definition of market and hence it is difficult to define relevant market for data.
Although the Competition Act has dealt with matters related to data, digital market and online platform markets in the past, it needs to bring in changes in the present competition regime to handle the newer challenges brought by technology and data intensive companies in the country.
GROWING RELIANCE OF E-COMMERCE PLATFORMS ON BIG DATA
Network effects occur when a consumer’s benefit from a product or service increases with an increase in the number of other users.  In other words, utility goes up with the overall size of the network. Network effects are important in two-sided markets, where users on either side of the market gain positively from addition of users on the other end. Buyers and sellers on an online marketplace are always attracted to a platform that has a large number of users on the other side. The growth potential of online businesses is also amplified by the tremendous value gained by collecting behavioural data and usage patterns of consumers. This data is then used to generate better and more efficient services, once again highlighting the importance of acquiring more and more users at an early stage. For example, the benefits of using online platforms like Facebook, Whatsapp, Ola and Uber increases as the number of users using such platforms increases.
In order to substantially do well and establish market power in the online sphere, firms have to obtain a competitive advantage in order to attract users by adopting technological innovations and starting a network effect. Network effect helps the firms to eventually establish a strong market power. Big data plays a significant role in helping firms establish such hold or grip over the market. Using their financial capital to entice users through deep discounting, cash back offers and similar schemes and user information gathered through big data, firms target customers better and eventually expand their reach.
Big data is the huge volume of information that is generated from each and every search conducted on online platforms. Big data enhances shopping choice analysis and thus aids in predicting the shopping behaviour of customers in order to adopt better business tactics. It is easier to track consumer preference on online platforms in comparison to the physical markets where the customers may compare prices by physically manoeuvring from shop to shop. Relevant data includes information about the amount of time spent by the user on the webpage, the advertisements clicked on by the user and whether or not a purchase was made by the user. Such data allows the online platforms to attract more customers and advertisers by targeting advertisements.
By tracking preferences the companies dealing with such analytical information can target certain groups of consumers in accordance to their preference. Using this data that is collected, platforms attract advertisers, target relevant ads, offer innovative, high quality and customised products and services at low prices. The data accumulated by companies are treated as products and are being sold and purchased by entities like commodities. There can be anti-competitive agreements involving big data, where the use and access to such data can be made exclusive and selective thus depriving many of such usage and limiting the access to a certain group of people. Companies can either collect data directly from their own assets, services and customers or may purchase data as products from third parties and such data procured are termed as ‘third-party data’. Big data can be a concern as not all enterprises have the potential of collecting or purchasing such large volumes of data. The concentration of data can thus act as an entry barrier.
Refusal of access to data can be anti-competitive if such data is an essential facility for the company seeking access. The essential facilities doctrine determines certain facilities to be ‘crucial’ or ‘bottleneck’ without access to which services cannot be provided to the consumers by the competitors at a ‘reasonable price’.
Online platforms employ business models that are dependent on the acquisition and monetisation of personal data of users. The data collected from the customers is analysed thoroughly and is used to provide a competitive advantage to the online platforms. The usage of big data helps online platforms improve their services and also helps the advertisers by providing better search results, targeted advertising and purchase recommendations.
Data network effect occurs when the online platforms through their product manage to get more data from their users. Facebook’s news feed for example manages to collect more information about the users’ choices and preferences and so does Zomato’s restaurant recommendations. Online platforms thus use the ‘user generated data’ in order to make the product smarter and more useful. By accommodating the user preferences, such online platforms expand their scale effects by attracting more users.
BIG DATA – A CHALLENGE TO COMPETITION LAW
Although the use of big data may be extremely fruitful for online platforms, it does not come without a cost. The use of big data may prove to be disadvantageous for the consumers as they may face a loss of control over their data and may be exposed to ‘intrusive advertising and behavioural discrimination’. Reliance on such data to provide customised goods and services to the customers may lead to the loss of innovation in such markets and may also substantially intrude the privacy of the consumers by collecting such detailed information without their prior consent.
Availability or access to data and algorithms can potentially lead to collusion and misuse of the same for gaining anti-competitive advantage. Platforms with exclusive access to such data and analytics will have an upper hand and can bar entry into the market or throw smaller players out of the market. When online platforms serve as marketplaces and also compete on the same, they have an incentive to favour their preferred vendors or private label products to the disadvantage of other service providers on the platform.
The intermediary role of the platform allows it to gather relevant data like price, quantities sold, demand etc. pertaining inter alia to each product, seller and geography. On the consumers’ side, this enables the platform to better target product recommendations for users and improve the quality of the platform. On the sellers’ side, this may allow it to use such data to introduce its own private label or boost its own sale or that of its ‘preferred sellers’. Sellers’ access to customers on such platforms depends on their ranking on the platform’s website in response to related search queries. Organic search ranking is generated by search algorithm of the platform and thus the platform is in control of the search parameters and results. The dual role of the platform gives rise to the concern of ranking biases that may be created by the platform as a discriminatory device. 
The role of competition authorities, in assessing the competitive behaviour of firms in the new economy, should not be limited to preventing the abuse of dominance, once acquired, but should also include an investigation into the abusive market conduct of a firm which is in a position of imminent dominance. The CCI should therefore be explicitly empowered to look into the unilateral abusive conduct of a firm, which, although may not be dominant at the given point of time, but is indulging in anti-competitive practices that create a strong and imminent possibility of its dominance. If the competition regulators do not jump in before there is an actual abuse of dominance, the firms may refuse to share the data with other competitors on the online platform.
Google search for example, makes its index faster, smarter and more personal as more people use the platform. Similarly, users provide more data to the social network platforms like Facebook with their increasing usage of the same and such data is used by the social networking site to become more appealing to the user by catering to their personal choices.
The discounting practice adopted by the online platforms and their continued use for sustained periods hampers competition in the market. Such discounting practices are systematic competitive strategy adopted by the platforms and financial capital available to them becomes their weapon. The platforms readily incur losses in the early years as introductory prices and such scheme may prove beneficial for the consumers initially but in the long run such practices raise competition concerns in the market and losses that are incurred in the early years are recouped by elevated prices for consumers.
Exclusionary conducts like depriving competitors from access to data can lead to hampering competition in the market and exclusion of competitors in extreme situations. When data is an essential facility in the said market, the refusal to access data or discriminatory access to data can be anti competitive. The doctrine of essential facility determines certain facilities to be ‘crucial’ without access to which services cannot be provided by the competitors at a ‘reasonable price’.
COMPETITION LAW ISSUES IN THE E-COMMERCE MARKET
The CCI in a survey conducted, identified the key competition law issues in the e-commerce market in India. According to the market study conducted by the CCI, a major competition law issue comes to the limelight when the online platforms serve as a marketplace and also compete on the same. Serving as a market place gives them a competitive advantage to leverage their control over the platform and favour their private label products. This gives them an upper hand over the other sellers or service providers using the same platform to sell their product and can be anti-competitive if misused by the said platform that serves as the marketplace.
Access to such data allows the platform to target product recommendations for users and improvise quality to match consumer demands. Online platforms are in control of the search parameters and the search ranking of the service provider is generated by search algorithm of the platform. In cases where the platforms play a dual role, the search ranking developed by the platform could be biased giving prominent placement to their own products or services.
For the accommodation services available online, deep discounting and bundling of services is the main grievance in their relationship with the online platforms. Non-participation of the service providers in the discount schemes allegedly affects their visibility on the online platform and thus in turn affects the ‘customer access’ and their ability to compete effectively.
There have been allegations by restaurateurs that critical customer information instead of being shared with them is used by the platform to promote their own cloud kitchens. Access to such data and the misuse of the same has an irreversible impact on the competition in the market and can prove to be disadvantageous for not just the competing service providers but also the consumers.
Data is critical for such industry and does not only help in understanding the customer profile but also in getting direct feedback from the customers. Online platforms in India not only provide technological infrastructure to connect service provider to the buyers but also engage in pricing by funding price discounts for the products that are listed on the platform.
US ANTI-TRUST LAWS GOVERNING THE E-COMMERCE MARKET
The Sherman Act in the United States (“US”) under Section 2 not only recognises monopolisation but also makes the attempt to monopolise and conspiracy to monopolise a punishable offence. This section has two basic elements, firstly the possession of monopoly power in the relevant market and secondly the wilful acquisition or maintenance of the power. However, establishing an attempt to monopolise requires proof that the defendant engaged in predatory conduct with intent to monopolise and has a dangerous probability of achieving monopoly power. Thus, under the Sherman Act, it is not necessary to establish the abuse of the dominant position held by the firm but even using anti-competitive strategies to tip a networked market in its favour can be taken into cognizance. The Indian Competition Act, on the other hand necessitates the abuse of dominant power held by the firm to bring them under scrutiny and has not included conspiracy to monopolise as an offence. In order to establish conspiracy to monopolise, it is necessary to prove that there was a conspiracy and a specific intent to monopolise and an overt act was undertaken in furtherance of the same. Thus the establishment of market power is not necessary under the Sherman Act.
E-commerce firms in the US with substantial market power are prohibited by the United States anti-trust laws from engaging in a conduct that excludes rival or competitors anti-competitively. Having a significantly large market share is not punishable under the US laws as under the Indian laws. However, any potential abuse of such market power held by the e-commerce firms are stringently scrutinised by the anti-trust authorities in the US.
Exclusive dealing can be brought under the radar of the anti-trust regulator if such dealings have the potential to cause any vertical restraint in the market. The anti-trust laws in the US are flexible enough to address the new forms of competition and curb the potential harm that may be incurred in such changing competition environment. Consumer welfare being the primary concern, the anti-trust authorities in the US determine each case based on the facts and circumstances and intend to determine whether or not such conduct by the firm being scrutinised reduces consumer welfare by ‘reducing output, raising prices and stifling innovation’.
SUGGESTED MEASURES TO IMPROVISE THE EXISTING COMPETITION REGULATION IN INDIA
The CCI, during their investigation into the anti-competitive conduct of the platform, should also take into consideration the ‘economic features of such high-technology businesses’ like the practises of deep discounting and cash back offers.
The CCI can also make some amendments to the Competition Act to enable the Commission to deal with anti-competitive practices in the online sphere more effectively. As per the current provisions under the Competition Act, CCI has to follow a three staged process to determine whether the entity under question has abused its dominant position. Determination of the relevant market is the first stage followed by determining whether or not the said entity holds a dominant position in the market and finally whether it has abused the position that it holds. This long process is not best suited to prevent anti-competitive behaviour by the firms in the online sphere. The role of CCI should not be limited to an ‘ex-post facto scrutiny of abuse of dominance’ but should prevent the harm before it is done. The firms that are in the position of imminent dominance should be reviewed by CCI and the regulator should investigate the abusive practices carried out by the firms in this position like the anti-trust regulators in the US do.
Adopting the ‘test of recoupment’ will allow CCI to determine which discounting practices will harm competition and the consumers in the long run and preventive measures can be taken to avoid such harm when the player attains a dominant position in the market and uses the same to recover the losses that have been incurred. Further, in order to keep up with the pace of the growing technology-driven market, CCI can maintain a strict time bound process to investigate the conduct of the player.
Thus on the whole CCI has taken some cognizance of the dynamic and fast growing technology market. Some specific policy or guidance notes to deal with the digital era or the big data firms would prove to be beneficial. CCI has already released its preliminary observations with regard to its e-commerce market study thus it on its own accord is trying to understand the dynamics of the market as well. The Act equips the Commission to take action but only after the dominant firm has abused its dominance and impaired competition in the market and not when abuse of dominance is anticipated. The Act does not empower the CCI to take precautionary measures to prevent abuse of dominance. The CCI undertakes a very difficult task of balancing the technological boom and innovation on the one hand and protection of competition in the digital market on the other.
Lastly in the advent of big data it also must be kept in mind that consumer welfare may not only be lower prices or more variety of services but may also include privacy protection, data protection and innovation. Although the Competition Act has dealt with matters related to data, digital market and online platform markets in the past, it needs to bring in changes in the present competition regime to handle the newer challenges brought by technology and data-intensive companies in the country and prove to be an effective regulator.
 Mira Burri, ‘Understanding the Implications of Big Data and Big Data Analytics for Competition Law: An Attempt for a Primer’ in Klaus Mathis and Avishalom Tor (eds), New Developments in Competition Law and Economics (Springer 2018).
 Inge Graef, Sih Yuliana Wahyuningtyas & Peggy Valcke, ‘Assessing data access issues in online platforms’ (2015) 39 The International Journal of Digital Economy, Data Sciences and New Media 375, 376.
 Roberto Augusto Castellanos Pfeiffer,‘Digital Economy, Big Data and Competition Law’ (2019) 3 Market and Competition Law Review 53, 64.
 Graef (n 2).
 Siddharth Jain and Sameer Jain, ‘E-commerce and Competition Law: Challenges and the Way Ahead’ (2018) 3 Indian Competition Law Review 7, 10.
 Ibid .
 Graef (n 2).
 Burri (n 1).
 Smriti Parsheera, Ajay Shah & Aviroop Bose, ‘Competition Issues in India’s Online Economy’ (2017) NIPFP Working Paper Series, No.194 < https://www.nipfp.org.in/media/medialibrary/2017/04/WP_2017_194.pdf > accessed 18 December 2020.
 Roberto (n 3) 66, 67.
 Autorité de la Concurrence and Bundeskartellamt. Competition Law and Data (2016), 23. <https://www.bundeskartellamt.de/SharedDocs/Publikation/DE/Berichte/Big%20Data%20Papier.pdf?__blob=publicationFile&v=2> accessed 16 May 2020.
 Ibid .
 Ibid .
 Ibid .
 The Competition Act, 2002, s 4; Parsheera (n 9).
Parsheera (n 9).
 Avirup Bose and Smriti Parsheera, ‘Network Effects in India’s Online Businesses: A Competition Law Analysis’, <http://www.cresse.info/uploadfiles/2017_pa14_pa2.pdf> accessed 15 May 2020.
RitamArora, ‘E-commerce, (Big) Data and Competition Law- Need for New Framework for the Application of Competition Law to Online Platforms’ <https://economics.hse.ru/data/2018/05/27/1149475986/Ritam%20Arora.pdf> accessed 17 May 2020.
 Bose (n 20).
 Parsheera (n 9).
 Graef (n 2) 382.
 Matrimony.com Vs Google, Cases Nos. 7 and 30 of 2012.
 Victoria Moorcroft & Ariane Le Strat, ‘The rise of Big Data- Intersection between Competition Law and Consumer Data’ (Bird & Bird, January 2018) <https://www.twobirds.com/en/news/articles/2018/uk/the-rise-of-big-data-intersection-between-competition-law-and-customer-data> accessed 9 November 2019.
 Jay Modrall, ‘Anti-Trust Risks and Big Data, Competition World, A global survey of recent competition and antitrust law developments with practical relevance’,  Norton Rose Fulbright, 14.
 Shamsher Kataria v. Honda Siel & Ors., Case No. 3/2011.
 Arora (n 21) 1.
 Parsheera (n 9) 10.
 Matrimony.com (n 26) .
 Burri (n 1) 257.
 Arora (n 21) 1.
 Market study on the E-commerce Market, Competition Commission of India (2020) <https://www.cci.gov.in/sites/default/files/press_release/ccipress.pdf> accessed 16 May 2020.
 Bose (n 21) 4.
 Parsheera (n 9) 4.
 Supra n 13.
 Ibid; Kataria (n 31).
 Kataria (n 31).
 Market study (n 40).
 Ibid .
 Ibid .
 Market study (n 40) .
 Ibid .
 Parsheera (n 9) 28.
 Ibid .
 The Sherman Act, s. 2.
 Implications of E-commerce for Competition Plicy – Note by the United States, Directorate for Financial and Enterprise Affairs Competition Committee. May , DAF/COMP/WD(2018)48.
 Parsheera (n 9) 5.
 Bose (n 21) 36.
 The Sherman Act, s 2.
 Bose (n 21) 37.
UNCTAD (2019). Competition Issues in the Digital Economy 2019: Intergovernmental Group of Experts on Competition Law and Policy. Geneva: United Nations.