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This article is written by Muskan Jain, student of National Law University, Visakhapatnam.


Block chain technology is the new-age, digital technology that is bringing paradigm shift in business models across sectors over the world. This distributed ledger technology is inherently neither pro- nor anticompetitive in nature. It does have the potential to be both. Given the significance of this emerging technology, the competition law impacts of block chain are worthy of exploration. 

Firstly, it is the risk of collusion. In order to add a block of transaction to the chain it has to be verified through the consensus Mechanism. It is again manipulated in order to prioritise the verification of transactions by favouring certain members of a consortium only. Secondly, all the potentially commercially sensitive information in block chain by competing companies is either available for everyone or is permission based. This may lead to price fixing, tact collusion and can also reduce competition if the competitors getting access to the information are from same field. But all information sharing may not be risky. If it is shared between the regulators and the agencies then it may drastically cut down the monitoring costs. It may promote competition and innovation in the market. Thirdly, there can be abuse of dominance. If any new entity seeking entry in the industry requires access to the block chain in order to be a competitive force. The entity can be refused by the dominating ones thereby indulging themselves in anti-competitive behaviour and liming the choice of consumers with the dominant ones only.

Fourthly, the standard setting for the use of block chain technology and review by competition authorities in Public block chains can detect anti competitive practices as the authorities can review previous transactions also. Whereas when it comes to private block chain the authorities cannot check the anti competitive conduct by themselves alone. Therefore there is a need that all the authorities and agencies should have access to all block chain networks including the permission based ones in order to detect and investigate cartels. And the competition law perspective is emphasised with its various legal, social, political and economic implications the block chain technology is warmed up with caution. 


Block chain was first introduced from Satoshi Nakamoto’s white papers on bitcoins in 2009. Being one of the most innovative information technologies which have the ability to convert the way business is carried out in the world. This decentralised and transparent distributed ledger technology records both transactional and non-transactional data. This efficiency enhancing technology is not only used for cryptocurrency transfers but is also used for purpose of recording votes, education, and healthcare, insurance and finance and asset registry. It combats the problem of uncertainty which in turn creates a user control portable identity, which brings transparency and promotes the functioning of markets because you don’t know who you are dealing with. Hence, eliminates the need and intervention of intermediaries.

Competition Law perspective

Whereas, Competition Law on the other hand aims to promote competition and ensure freedom of trade in the markets. The law governing in this aspect is The Competition Act, 2002 which primarily seeks to prohibit the activities which creates an impact on competition within the market.

However, the ancient potential competition law challenges cannot be deprived even by adopting block chain technology. Various important issues arose with this technology and it uses such as the enforceability of smart contracts, anti money laundering issues, securities regulations, privacy issues. A significant question that received very much minimal attention is that can the use of this contemporary technology raise any competition law related issues. The same was discussed by Organisation for Economic Co-operation and Development (OECD) on 26 April 2018.

For the efficient functioning of block chains it will always be set up in peer networks. And all the competing companies have access to potentially commercially sensitive information which puts block chain firmly into the crosshairs of competition law.

The fundamental competition law issues that block chain raises are regarding the membership rules, Sharing Information standardisation and the rules which are applicable to JVs such as merger control. Viewed from a competition policy perspective this features can be both an opportunity to promote competition and risk of anticompetitive conduct. 

There is a difference between competition in market and competition for market. Theoretically, competition gives good outcomes when there are various entities competing in the market. But, any single entity dominating the block chain in that particular sector can be constrained by competition law from challenging pricing and offering other terms because it would also affect the smaller or potential competitors of that particular sector.

However the competition rules in general does not prevent companies from being dominant because that is the reward of the process of competition in a market. Due to the development of technologies and various other merger control rules which restricts business combining because this would lead to anti competitive market structures.

The underlying intent of the Competition Act, 2002 is neither by making easy ways for the smaller competitors nor by requiring the more profitable business to give up their market share. The act aims to compete on merits and not with any anti competitive agreements or conducts. This Indian statute clearly prohibits any activity which amounts to abuse of dominance which in turn will have an adverse effect on competition in any market in India.

The Act provides the definition of “dominant position” as following: “position of strength, enjoyed by an enterprise, in the relevant market in India, which enables it to: operate independently of competitive forces prevailing in the relevant market; or affect its competitors or consumers or the relevant market in its favour.” 

Block chain users are not the only one whose conduct can breach competition law but others block chain miners or entire block chain can be brought under the purview of violating competition law. 

Standard setting which is a part of this innovative information technology can have pro-competitive effects and promote efficiencies. It is important to comply with competition law when new standards are being set up between competitors. The standards must be transparent and access should be fair, reasonable and non-discriminatory. If any restrictions it should be shown that they reasonably required to allow the block chain users to achieve their objectives.

Presently, the International Standards Organisation have 8 standard settings regarding block chain technology which interoperability. If the block chain is permission based then access to standards arises when it is for commercialisation of block chain. This gating effect in participating should comply with competition law and the gatekeepers (users) should consider where refusing access cannot be objectively justified. 

The most important issue is regarding the exchange of sensitive information. Information like trading volumes, part names, terms of contract and pricing data is reduced to writing and included and can be accessed by any nodes then it can be used by any competitors can raise competition concerns depending upon the quality of information exchanged and the structure of that particular market. 

The transparent nature of block chain might be used as a mode to facilitate collusion which can create both positive and negative effects on competition. Accordingly the block chain users are required to restrict the exchange of certain commercial sensitive information which leads to price fixing and other anti competitive practices. An extra encrypted layer of privacy can be added to protect the information by putting it outside the block chain and only store data in the block chain. 

Also the jurisprudential aspect as mindful of Adam Smith’s famous suspicion that “people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the pubic, or in so contrivance to raise prices. Anti-competitive agreements between rivals could be algorithmically controlled, and pseudonymous participants would be harder to trace.”

The positive effect of this is that data is important to provide trust among market participants. Mostly the data stored is the historic transaction data which only proves the ownership of assets the collusion risks are low. This distributive ledger technology competes with other traditional ways when it is used for completing transactions like smart contracts. 

The following are situations where there is a potential abuse of dominance. For example, a company deliberately try to delay or prevent adoption of similar block chain technology which could enhance competition in India. Also, the existing private block chain can exclude companies from using or raising costs for further participation is also abusing use of dominance. 

For example, if a well established bank wants to join in a existing block chain for interbank payments and is denied on discriminating and unreasonable grounds. Hence creating harm by lowering the participation are all examples of conduct trying to prevent alternative block chains from operating in the same particular competition market. 

Proving of dominance in the block chain area is difficult. The early adopters of that particular technology do not automatically be the most dominant players. Block chain is a distributed ledger technology and not a market. Any block chain used by any entity has to compete other cryptocurrencies and various electronic modes of payments. Moreover, smart contracts face competition against the traditional means of agreeing transactions. So, the relevant market cannot be decided too narrowly at this early stage of development of market 

According to European Commission’s guidelines on horizontal cooperation agreements, Adopting common standards of operations by participants in a market promotes economic interoperability…increases competition and lower output and sales costs, benefiting economies as a whole. 

Even though there is abuse of dominance the only requirement is to ensure compliance with the standard of fair, reasonable and non discriminatory terms. 

The major question as to whether competition authorities should be given permission to access all the data available in a block chain. If the authorities are given access then they can monitor the trading prices and spot suspicious trade which in turn means complying with the norms of competition law. This can also be an alternative for burdening the requests of information on parties. But giving access to all data would raise the concerns regarding principle of proportionality. So if there is rarest of rare case then the request to that transactional and non transactional data can be provided that to for only investigation purposes. This would be only for permission based non public block chains because as far as non permission based block chains are concerned everyone can access the data publicly. 

Also, each company must determine their policies which they intend to adopt on markets and rules or requirements which they intend to offer its customers respectively. The competition law prohibits any direct or indirect contact between competitors of a particular field which creates these conditions of competition and do not comply with normal competitive conditions or else the result should pro competitive in nature. 

Present scenario

Over these contemporary years both market operators and competition law enforcers are venturing off the beaten competition paths. The market operators are embracing the new technologies in their market strategies whereas the completion law enforcers are ready to challenge those new strategies. This new ledger technology is likely to trigger there technology driven journey. 

There is going to be a shift from Lawrence Lessig’s famous ‘code is law’ notion in which the system developers use to play a vital role in forming of conditions by which the system runs.

Because the technology in itself is neither anti-competitive nor pro-competitive in nature, so the technologies like block chain and other digital technologies should prevent potential harm to competition and should antitrust by design. Also the data available in block chain cannot be tampered by individual participants. It is open source software and contributes to its reliability whenever any user is able to check the underlying code for security issues. Both up to date and traceable decentralised data of block chain forms a perfect audit trail. The data is automatically modified and updated on block chains by smart contracts that are digital protocols. This involves minimal human intervention. 


There are various potential opportunities and benefits that block chain technology presents in terms of competition law.  

  1. Firstly, the enforcement of competition may be improved (i) by reducing information asymmetry. This would increase the capacity to collect evidence and improve reliability of information collected. It contributes towards more informed based decision making. (ii) By reducing the cost transaction to parties in case of merger. Merging participants can ask the authorities to review relevant parts of block chain by providing access. By this way there is no need to show all the sensitive information and can conserve the resources of the merging arties also. (iii) By improved monitoring and effectiveness of commitments. Authorities would understand how commitments are honoured when all transactions are recorded through smart contracts. 
  2. Secondly, the compliance functions of companies will also benefit. There are various instances where the ability of block chain’s compliance is being questioned. Various commentators are proposing that prohibiting exchange of information within the horizontal cooperation inter alia, trade associations, also in pricing to ensure central compliance show more probabilities to avoid predatory pricing. The compliance can be gained in technologically less complex ways. This being an innovative technology there could be many possible ways for the same. One should keep their innovative minds open. 
  3. Thirdly, this technology has the ability to allow for significant efficiency gains. This is the most important and transformative approach to lower boundaries for new competitors entering old markets, which in turn can stimulate the markets completely. However, completely new markets can be formed. The similar efficiency gains can be observed in traditional horizontal cooperation like research and development.
  4. Lastly, the most significant question as to whether there is any scope for the competition authorities to use block chain within the remedy packages they have applied. The clear preference is given to structural remedies like divestitures of businesses by the competition authorities in past. Due to more tech companies it became extremely difficult for the parties or authorites to determine the most relevant assets are digital. Therefore, the neutral transparent and decentralised nature of block chain technology may make it a suitable preference for upcoming remedies. 


The result of non compliance with the competition law can be severe in nature. These include lengthy and costly investigations which lead to heavy fines. Generally these fines are more than 10% of a company’s worldwide annual turnover. Also, the director can be held personally liable. That is he can be prohibited from being a director of company and also to be involved in the promotion, formation or management of one for up to fifteen years. In the most serious circumstances, can go to prison for a period of five years.

It is not yet clear how competition agencies around the entire world will deal with the regulations. However it is better to comply with competition law norms when deciding to collaborate. In addition, ensure that the exchange of information and standard setting for new technologies are within the completion rules. There are various technical risks involved and a high probability of uncertainty involved until we are sure with the concept of how these innovative technologies are being used. Wherever, there is a setting up of block chain there is of course either direct or indirect involvement between competitors.

Computer code prohibits conduct in much the same way legal code does which is quiet similar with the case of smart contracts such as block chain. During the establishment of these permission based block chain itself the parties must ensure that they successfully avoid any competition law concerns.

Any technology like block chain which holds the sensitive information including prices, quantities, costs and demand on the face of it shows how much transparency it brings to a competitive market. Hence, as a promoter of more competition and at the same time giving access to unavailable data that may hinder the competitive market and infringe the competition rules. 


Concluding by saying that the implication of competition law and regulations is never static it keeps on changing. As the growing technology and the evolving factual situation of a block chain the impact of it will also be changing. 

Given the burgeoning market and technological potential, the world should strike a balancing approach between the growing innovative technologies and the respective competition law norms. In the Indian scenario it will be interesting to witness how the government recognises such new technologies either by providing regulations like those of United States or Singapore governments or in contrary choose to nip this technology in the bud like the china was the big question. The Indian government is ready to explore use of block chain technology proactively for ushering in digital economy and also in competition law paradigm. 

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