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Business News/ Opinion / Views/  Business as usual won’t work for post-pandemic times
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Business as usual won’t work for post-pandemic times

Glaring global disparities amid covid-worsened concentrations of market power should make us think afresh

The critical questions facing the world today are vaccination and an economic recovery from the devastating effects of the pandemic (AP)Premium
The critical questions facing the world today are vaccination and an economic recovery from the devastating effects of the pandemic (AP)

The critical questions facing the world today are vaccination and an economic recovery from the devastating effects of the pandemic. Gaps on both these are caught in a quagmire between the global North and South (rich vs poor) and between the West and East (US-China rivalry). What could be the way forward, especially in times when multilateralism is in decline and the scare of climate change looms large in the backdrop? In order to achieve change, we will need to look for out-of-the-box solutions. Business as usual will not work.

Poor countries need not only vaccines and aid, but also green technology to access new opportunities and fresh ways to get out of their rut. However, for resilient economies to emerge, markets must operate fairly and equitably for the benefit and protection of the weak. At the international level, we need robust level-playing-field rules as a sine qua non. And, at the domestic level, these rules should be responsive, accountable and enforceable in regulating the conduct of big market players and also the markets in which they operate.

In the developing world, especially due to the historical dominance of some market players, there have always been deep-rooted suspicions of every regulatory architecture’s skew. Voices of protest are constantly heard demanding comprehensive and effective safeguards for the interests of consumers and other small market participants.

As if in a hurry to rectify those old historical imbalances, developing countries have often looked towards an essentially democratic but largely capitalist West for inspiration and guidance on reforming their political and economic systems. So, it was but natural for them to emulate the competition laws of the West in general and the US in particular.

However, to cope with their own economic situation, competition authorities around the world are taking a liberal approach towards the application of competition law. This will be challenging for several authorities, for the lens through which antitrust problems are viewed may be getting transformed.

The covid pandemic’s mass worldwide onslaught has redefined the very character and complexion of the market place. We can fathom and gauge the sheer import and impact of this singular event on our lives by the fact that modern-day human history is being sought to be divided into pre- and post-covid eras and labelled as such.

This has happened alongside the mass adoption of digital tools, which has become essential for the very existence of modern life and financial survival in particular. This is notwithstanding the internet’s uneven accessibility and constraints in the availability of the requisite hardware, software, etc, to all.

True to the adage that one person’s poison is another’s meat, the recent and unprecedented spurt in e-commerce dictated by the pandemic has enriched digital players hugely. This is especially so in countries where the field of e-commerce is largely dominated by either big multinational players or oligopolistic domestic players operating in collaboration with large multinational companies.

This development has caused three disturbing developments that must be dealt with. Firstly, on account of their cross-border footsteps, together with intricate patterns of ownership—from parent-subsidiary formats to limited-liability partnerships and other exotic forms of equity holding—their operations throw up a relatively unfamiliar task for local regulatory authorities in enforcing the extant competition rules designed to provide level playing fields.

Secondly, the unfair advantages accruing to big players from such circumstances tend to obscure the competition regulatory environment, a phenomenon that’s most noticeable in the e-commerce, telecom and fintech sectors. They have already started rolling in huge profits on thick margins, further widening the already gaping income gulf not only between rich and poor individuals across the world but also between rich and poor countries.

While the common citizenry of the world has been struggling to keep body and soul together, these big players have been having a field day, in a sense. As per reports of the International Monetary Fund, Organisation for Economic Co-operation and Development and other such credible agencies, they have been registering scandalous leaps in their profits, largely driven by the grand misfortune of covid.

The third problem is a reduction in business suffered by brick-and-mortar stores, with some of them forced to shut shop. While some big e-commerce companies are forging partnerships with smaller retailers for last-mile delivery operations, such arrangements are yet to be sufficiently scaled up.

Moreover, the wholesale digitization of financial and other routine mass operations, requiring high-tech software applications and heavy doses of capital investment in digital ventures, etc, has also been taking a heavy toll on employment opportunities for people at large, contributing further to inequalities of income that are already glaring.

Against such a rapidly-forming backdrop of widespread global distress and disparities, marked by mass veiled unemployment and aggravated by runaway growth in the concentration of wealth and market power in a few hands, we can hardly count on conditions conducive to the creation and adoption of an all-inclusive and sustainable model for economic growth. We need innovative solutions.

Aparna Chaudhary, policy analyst at CUTS, contributed to this article.

Pradeep S. Mehta is secretary general of CUTS International

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Published: 16 Nov 2021, 10:36 PM IST
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