2 min read.Updated: 21 Oct 2016, 03:22 PM ISTMihir Dalal
So far, the antitrust regulator CCI has largely ruled in favour of internet businesses when they have been accused of predatory pricing and other unfair practices
Bengaluru: As India’s Internet businesses mature, a time may come when the anti-trust regulator will have to take a closer look at companies that are changing several industries including travel, retail and advertising.
So far, the antitrust regulator Competition Commission of India (CCI) has almost always ruled in favour of Internet businesses when they were accused of predatory pricing and other unfair practices.
The reasoning has mostly been that the digital business as a whole and online companies individually (local start-ups and the Indian units of US-based technology giants) are too small to affect their respective industries meaningfully.
In the last two years, CCI has rejected allegations of predatory pricing against Flipkart, Amazon India and Snapdeal (Jaspers Infotech Pvt. Ltd)— India’s three largest online retailers. It has also ruled in favour of Ola (ANI Technologies Ltd) and Uber India, which constitute a duopoly in cab-hailing services.
Meanwhile, many of them have grown. Local start-ups have received billions of dollars from investors, which has been matched by the investments made by tech companies such as Amazon and Uber.
Flipkart and Amazon India jointly account for over 70% of online retail in a given month; Ola and Uber India together account for over 90% of all online cab bookings; Google dominates search and advertising.
On Tuesday, MakeMyTrip Ltd, India’s largest online travel platform, said that it will buy smaller rival Ibibo Group. The merged entity will dominate flight bookings and become the largest platform in hotel bookings as well.
The CCI looks at two kinds of cases largely: one, where an existing monopolistic or large company can abuse its power; two, when a merger of companies can result in a monopoly or an entity that can potentially dictate prices to consumers and suppliers.
On the web, both these situations are now possible.
In the case of online travel, MakeMyTrip and GoIbibo de-listed OYO Rooms and some other hotel start-ups from their platforms last November.
Flipkart and Amazon are so big in books, mobile phones and fashion that they can potentially influence prices in these categories. Ditto for Ola and Uber in cab bookings.
The point is not that webcompanies have engaged in unfair practices. On the contrary, in the race for acquiring customers, they have slashed prices to an extent that consumers have never had it so good. Still, the digital business as a whole and some Internet companies have become big enough and important enough to warrant the CCI’s attention. Particularly, if there are more M&As, as is likely.
“The argument that online business is still nascent and can therefore be ignored may not hold water in every sector. It’s growing very fast and many sectors are touched by it. So, at some point, the CCI may soon look at Internet businesses closely," said Avimukt Dar, partner, IndusLaw, a law firm.
To be sure, the regulator has already investigated Google for unfair trade practices.
In September 2015, CCI said it will take “quite some time" before making a final decision on whether Google abused its position of power in online search and advertising. A decision is still pending.