INTRODUCTION: HISTORICAL PRACTICES
“Relevant market” is considered to be the yardstick which analyses various anti- competitive practices in businesses through a competition law regulator, like the Competition Commission of India ( CCI). Hence, it is integral for the CCI to define concrete contours and delineate relevant markets.
Various researches have been conducted to analyse the behavior of consumer via the online and offline modes of shopping. Online shopping eliminates the use of intermediary service. However, Offline market utilizes offline media channels and strategies to spread awareness about a company’s product. It underscores that addresses the perception of the consumer through Online shopping versus the Traditional shopping. History of e- commerce can be traced back to 1990;s when online shopping was made possible due to internet. Amazon has its first breakthrough by becoming the first e- commerce site to sell the products online and various businesses followed the suit since then. The conveyance, quality, safety and price of e-commerce have improved exponentially since online shopping.
Historically, CCI considered online and offline markets as distinct modes of distribution, under the parent head of the same relevant market. However, lately, CCI appears to alter its approach with regard to the delineation of “relevant markets”. CCI now designates online distribution and offline distribution as compartmentalized and different relevant markets.
The rationale behind this re-interpretation of the definition by CCI was to ensure a vigilant check on potential departure from ethical practices of digital businesses with the proliferation of the Indian e- commerce sector in recent years. However, in doing the reformulation, the CCI has outlined a superficial distinction stating that offline and online distribution models don’t compete inter se. Consequently, this distinction has pitted online distribution models against each other. Furthermore, CCI discounted the fact mentioning that online businesses have inserted new products/ service categories that were non- existent previously. This has led to the reproduction of “ Copycats” in the offline market. If such an approach by the CCI becomes a full-fledged norm then it can have dangerous ramifications leading to a cloak of false positives with respect to the determination of the “ dominant position” of certain online businesses, which may have a chilling effect on the growth of the digital economic sector of India.
GROWING TRAJECTORY: EMERGENCE OF
With the exponential growth of online shopping and e-commerce in India, a typical consumer would only buy a product after researching online and comparing the best possible price of the product in online market with that of its brick and mortar presence. Consequently, a consumer would procure the best priced product comparing the product via the lens of both modes. Hence, both the online and offline distributed models compete fiercely. Therefore, a relook at the recent narrower interpretation approach taken by the CCI of “relevant market” becomes of paramount importance.
In Ashish Ahuja vs Snapdeal, the CCI explicitly discussed upon an important issue of considering two modes of distribution- online and offline as distinct or part of the larger head- relevant market. The 2014 CCI dismissal order guidelines came up with various guidelines of importance. CCI opines that both online and offline markets are different channels of distribution of the same product and should not be considered as two separate relevant markets. Furthermore, the CCI noted that both the markets differ in terms of the shopping experience, buyers and a typical buyer weighs all the options available on the platter to arrive at a final decision of buying the product. If the price in the offline market exponentially increases, then the consumer is likely to shift its preference towards the online market and vice versa.
The above approach was subsequently followed in the approval order of Make- my- trip ( MMT)/ Ibibo Case ( 2017) combination case, whereby CCI recognized the relevant market as “ sale of travel and travel related services”. The CCI added that travel channels operate through both the online and offline modes and from the lens of the demand side, it becomes easier for the consumer to switch between the two modes as per his/her convenience.
DELINEATION OF MARKET PRACTICES
In simpler terms, market delineation is termed as a method of determining the geographical extent of a market for a specific commercial property. This helps to fit a specific commercial property according to consumer demand.
With the growing trajectory of digital marketing, CCI is taking dynamic actions towards delineating relevant online markets. CCI for the very first time defined relevant markets in All India Online Vendors Association (Aiova) v. Flipkart. The order pinpointed the definition of the relevant market as the ‘services provided by online marketplaces for selling of goods in India’. However, the said order also brought some ambiguities by acknowledging the reciprocity that lies within both the domains of online and offline marketplaces as sometimes the sellers from offline platforms enter into partnership businesses with e-commerce companies.
Later on in the year 2019, CCI in the Cleartrip-MMT combination case narrowed down the interpretation of online markets and declared it as a distinct mode of distribution which cannot be substituted by other offline modes without hampering the consumer reach. However, the order did not clarify about the exact delineation of the relevant markets because of the lack of concerns regarding competition in either of the modes.
The recent orders of CCI in Delhi VyaparMahasangh v. Flipkart and Lifestyle Equities v. Amazon again highlighted the stark distinction that has been made by CCI between online and offline relevant markets. In the very first case the rationale behind drawing such distinction was based on the fact that the bulk of the online retail market in India for some specific categories of products come under the hold of Amazon and Flipkart.
In the second one, CCI emphasized the cross-sided network effects of online platforms. With regards to this, the CCI specifically remarked, “Delineation of relevant market and competitive assessment are based on market realities as they exist at the time of assessment, keeping in view the facts and allegations. In rapidly changing markets in particular such as the one in the present case, market assessment cannot have a static approach.”
Delineation of market is a very econometric approach which must be dealt with perceptions based on market realities. It plays a central role in the cases of antitrust. CCI is delineating relevant markets, particularly in case of online platforms for a certain category of products or services. Further, nothing can be concluded at this juncture of time regarding the exact distinction between both the online and offline modes that could be regarded as a precedent for the future cases. There is a requirement of empirical data to establish the delineation of relevant market by the CCI.
The present decade is witnessing large scale consumer participation in the digital ecosystem.
Further it has proved to penetrate through even the remote geographical markets, thus, widening the circumference of possible consumer reach. So, at this critical time when the digital ecosystem is at its zenith, any unnecessary and premature intervention is going to hamper not only the consumer interest but also the economic development of the country.
Declaration: The work represents our original contribution, and that it has not been copied or plagiarized in whole or in part from other works.