CUTS International, in partnership with CUTS Institute for Regulation and Competition, organised its 6th Biennial Conference on Competition, Regulation and Development, from 1-2 December in New Delhi, India.
The Conference was organised on the theme of Making Competition and Regulatory Regimes Matter in Increasingly Online Developing World. While the issue of interface between competition and regulatory regimes and online economy is increasingly gaining global prominence, hitherto, little conversation has taken place on possible approach by regimes in developing countries to deal with these issues.
The Conference aimed to fill this gap. It witnessed participation from policy influencers, regulatory and competition agencies, practitioners, experts, academia, think tanks, civil society, and media, from advanced as well as emerging economies, such as Malawi, Kenya, Lusaka, Latvia, Fiji, India, Thailand, Vietnam, Hong Kong, Singapore, Japan, United States, Australia, COMESA and ASEAN group of countries, among others. It thus provided a unique opportunity to deliberate, in a developing country setting, benefits as well as risks posed by online economy to emerging economies, most of which are undergoing massive transformation, while also dealing with equitable growth and sustainable development related challenges. The Conference resulted in emergence of broad contours of an action agenda for stakeholders in developing countries to deal with online economy.
Day-1 (December 01, 2019)
The opening session on Sunday, 1 December, discussed the role of competition and regulation in fostering development and reducing inequalities. The discussion happened in the backdrop that more than half of the world is online today, and the trend is likely to continue. Baijayant ‘Jay’ Panda, National Vice President, Bharatiya Janata Party and Former Member of Parliament, India, highlighted that digital economy can contribute substantially to economic growth in developing economies, particularly India. However, for this to happen, competition and regulatory regimes will need a fresh perspective. For instance, large online platforms, particularly those turning into utilities, must be subject to stringent regulation and seek active and informed consent from consumers for use and sharing of data. Their smaller counterparts, including start-ups, however, need not be subject to such severe regulation. A balance needs to be struck to foster innovation while addressing privacy and cyber safety risks posed by online economy.
Sangeeta Verma, Member, Competition Commission of India, also pointed out that competition regulation cannot be seen in isolation from development goals. To effectively deliver on their objectives, the standards to evaluate actions of firms in digital economy need to evolve continuously. For instance, data driven acquisitions could be analysed on deal value thresholds in place of mere asset value thresholds. However, in order to efficiently understand and examine developments in online economy, competition authorities need to be capacitated. As George K. Lipimile, Director General and Chief Executive Officer, Competition Commission of Common Market for Eastern and Southern Africa, a regional competition authority, noted, competition authorities in emerging countries have limited resources and lack requisite capacity.
Pradeep S Mehta, Secretary General, CUTS International noted that emerging economies will need to tailor competition and regulation regimes for their requirements and cannot solely rely on experiences of advanced economies. He suggested institutionalisation of National Competition Policy to ensure better coordination between competition authority and sector regulators, both at the level of centre and states. An emphasis was also laid on evidence-based bottom-up approach to better understand benefits and risks of online economy and inform competition and regulatory agencies.
Dr. Arvind Mayaram, Chairman, CIRC delivered the closing remarks. He stressed on the importance of definitions in assessing competition related issues. He also highlighted interlinkages between different sectors in the economy, especially telecom, energy and finance and pointed out how sub-optimal competition and regulation can lead to economic stress.
Day-2 (December 02, 2019)
The second day of the Conference began with a discussion on honest assessment of fears posed by online economy and responses thereto by advanced economies. Professor Caron Beaton-Wells from University of Melbourne highlighted that lack of competition in digital economy is an area of concern. Top five tech companies generate nearly 90 percent of total value in the digital economy. Such concentration of wealth may have been a result of narrow interpretation of ‘consumer welfare’ concept by competition authorities in advanced economies.
Digital markets are different from traditional markets as they exhibit network effects, offer connectivity and economies of scale to small enterprises, while also posing new age risks for consumer welfare. Dealing with such developments could be difficult, particularly for developing countries. This was the theme in the second session which focused on possible responses by developing countries to online economy, on the basis of lessons learnt in developed economies.
It was pointed out that owing to the access to and control over data, big tech companies are increasingly turning into horizontal and vertical conglomerates, by entering into new and unrelated sectors. This trend needs to be taken into account during determination of market power in online economy. The need to include non-price elements in antitrust analysis of dominance and provide room for political values was also highlighted. The authorities, thus, need to be flexible. An increasingly noticeable trend of acquisition of start-ups by big techs adversely impacting innovation, including access to venture capital funds for start-ups, was pointed out by Payal Malik, Advisor to the Competition Commission of India. Concerns with respect to misinformation and political influence by digital platforms were also discussed.
It is for this reason that firms in digital economy need to move towards responsible and ethical business practices, noted Jonathan Wong, Chief of Technology and Innovation, UNESCO – Asia Pacific. This includes pursuit of goals beyond profits, such as societal and communal well-being. However, doubts were raised if this could happen voluntarily or would require significant push from consumers, regulators and other stakeholders.
It was also pointed out that disproportional regulation of digital economy may disincentivise innovation and prevent emerging economies from benefitting from such technologies. Consumers in countries like Fiji now have access to affordable mobile data, which is positively impacting uptake not only of digital services, but is promoting e-governance well, mentioned Joel Abraham, CEO, Fijian Competition and Consumer Commission.
However, developing countries, owing to their small size and capacity constraints, are technology and standards takers, thus running the risk of being exploited by large digital companies backed by nations. Thus, developing countries are increasingly looking to foster national champions to benefit their respective economies, noted Perter Mwencha from Kenyatta University. In order to better deal with digital economy, increasingly global in nature, it will be important for competition authorities in emerging economies to share information among each other, and avoid reinventing the wheel, highlighted, Kusha Haraksingh, former Chairman of Caricom Competition Commission. Moreover, there was a need to build capacity among regulators in emerging economies, particularly in technical areas. During the third session on interface between sector and competition agencies, it was pointed out that technical regulation could become a standalone function of sector regulators, whereas economic regulation could be dealt by general competition law.
The Conference concluded with a discussion on action agenda for developing countries to preserve welfare gains from online economy while efficiently dealing with risks it poses.
Dr. Arvind Mayaram chaired the session. He pointed towards the paradox of inclusion and exclusion that has been brought about due to the rise of digital economy. Additionally, possibility of influencing human behaviour and will by big tech giants, the need to move towards regulated exchange of data among various enterprises, was also discussed.
Appropriate tests of regulatory impact analysis would need to be institutionalised to take into account different perspectives while designing regulation. Amit Kapur from JSA highlighted the need to empower consumers, enhance interaction and engagement amongst stakeholders, particularly users, civil society, and regulators for designing better regulation and competition for digital economy in the interest of citizens.