Business Law

E-trade coverage risks placing the cart before the horse

On 24 February 2019, the Department for Promotion of Industry and Internal Trade published the draft National E-trade Policy (ECP), which sets out a proposed framework for the world. While the ECP states that it aims to fill within the regulatory gaps, it additionally highlights numerous competition troubles.

Ata is the principle premise around which the ECP established. It seems to suggest that statistics implies market strength and monopoly. It notes that get right of entry to data can give rise to market distortions and that businesses could locate that after it scales past a particular factor, it makes access into that region by way of a 2nd comer next to impossible. According to the ECP, all of these consequences in barriers to marketplace entry.

However, it does not perceive any unique marketplace, which is typically a place to begin to assess any competition problem. The ECP broadly defines e-commerce to include buying, selling, advertising or distribution of products, along with digital products, and services thru a digital community. Despite this definition, it appears to consist of social media networks and serps inside the ambit of e-commerce. Such a consolidated description of a market is contradictory to competition law jurisprudence.

The general assumption that the entire virtual sector will continually enjoy community effects seems overarching. Network effects have been taken into consideration as a feature of some markets, mainly multi-sided systems. However, this on it’s personal does not suggest an anti-competitive effect.

Notably, India’s antitrust regulator the Competition Commission of India (CCI) has assessed on-line platforms. For example, its selection even as determining the behavior of Uber and Ola is a tremendous example of the way markets with community results aren’t antithetical to an aggressive panorama.

Data as an essential facility
The ECP concludes that loss of getting right of entry to records for Indian groups might stop them from developing high-priced digital merchandise. This conclusion seems to be based totally on the idea that access to statistics is critical to working in the digital market, which isn’t supported via any considerable take a look at.

More importantly, the belief seems to expect that records are exclusionary. However, information gift a different structure. For example, customers may be on numerous social media programs on the equal time, which means that a user’s statistics are obtainable to various firms straight away. In the absence of any actual proof of exclusion, those conclusions are likely to bring about a fallacious evaluation of the marketplace.

Anticompetitive behavior
The ECP also lists out appropriate conduct as anti-aggressive, together with predatory behavior, diagnosed as large-scale capital dumping by companies with the deep wallet to finance sustained losses; and excessive prices charged for advertising with the aid of social media platforms and search engines like google and yahoo.

Both predatory and immoderate pricing require demonstrative financial proof to be identified as anti-aggressive behavior, which the ECP currently lacks.

The ECP is targeted on imparting treatments that appear to beautify the welfare of the competitors in the market. For instance, the ECP states that statistics need to be supplied to Indian entities so that they can compete. It also lauds the today’s overseas direct investment policy that prohibits foreign-owned on-line marketplaces from adopting a stock-based totally model.

The ECP expressly states that the e-commerce sector has improved customer welfare via the benefits of a more extensive variety of merchandise and multiplied competition by way of decrease fees. The ECP additionally diagnosed the accelerated innovation within the zone. However, it does no longer cope with the need to stability this increased client welfare with any available steps in regulating the arena.

The ECP, at first-class, may be defined as a start line for figuring out troubles that need to be discussed and assessed. Any law, based on this coverage, without an in-depth evaluation of the harm and benefits to all stakeholders, may honestly lessen competition inside the sector. One critical factor that it wishes to remember is coordination with the CCI. The competition regulation especially affords for reference to be made to the CCI to evaluate opposition problems.

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