Image source: https://blog.ipleaders.in/indian-economy-competition-law-overview-major-judicial-pronouncements/

This article has been written by Vartika Shakya pursuing the Certificate Course in Competition Law, Practice And Enforcement from LawSikho.

Introduction

The objective of Competition law is to both promote healthy competition for accelerating growth through innovation and economic efficiency and  to regulate and investigate all anti-competitive practices, thus increasing consumer welfare with the aim for companies to provide better products at reasonable prices. The Competition Act has provided us with different ways by which this objective can be achieved, the most prominent being, to avoid decreased competition which may happen when companies undertake and carry out unfair trade practices. One such method is the provision of interim relief given under the Section 33 of the Competition Act, which is used by the Competition Commission of India. Despite being a great tool within the CCI’s power, the use of interim measures have been very limited with just four orders passed in the past. However, the CCI with its renewed interest has used this measure and passed a recent order for the same. This article will analyze the new interest of imposing interim measures and the presence of evidentiary standards for the same in the digital market with the help of this recent order passed by the CCI.

Meaning of Interim Relief in Competition law

In simple terms, interim relief refers to a short term assistance which is provided till the time the final decision is taken. It is filed by the aggrieved party in order to get interim protection before the final decision. The provision under Section 33 of the Competition Act, 2002, basically states that if the commission is satisfied that any act is anti-competitive in nature or is related to abuse of dominant position which could have a considerable adverse effect on the market and if such an act is continued to be committed or is about to happen then CCI can temporarily restrain such party from continuing that act until the inquiry is completed against them. However, due to its wide scope this power is used only when it’s necessary. This is why, it has been observed that interim relief under Section 33 has been granted in very few cases, as again it has only been applied wherever it was really required. The Supreme Court in CCI vs SAIL laid down various conditions in order to grant interim relief:

  • A prima facie case should exist;
  • Order of restraint should be passed as without it the parties will suffer an irreparable; injury or the market shall be adversely affected by the unfair activities.

Since the SAIL Judgment, market dynamics have undergone several changes, one of them being digitalization. The recent order of MMT-GO passed by the CCI is an example of where the CCI has used its power to grant Interim Relief in the digital market. This case is known to be quite instrumental, as it showed a new approach adopted by the CCI in handling the online platforms that function in multi-sided markets, this issue was never as such taken up before, and several competition regulators from different jurisdictions have been struggling with the same. 

Case study of MMT-Go Order

The brief facts of this case are that MakeMyTrip India Pvt. Ltd. (“MMT”) and Go-Ibibo (
“GO” and collectively referred to as “MMT-GO” are an online travel agency providing services like hotel reservations. Fab Hotels, Treebo and OYO are Indian budget hotel chains that operate on franchising. MMT and Go-Ibibo decided to delist Treebo and Fab Hotels pursuant to an exclusive agreement with OYO. In February 2020, the CCI passed an investigation order against MMT-GO and OYO after Treebo filed information alleging absolute exclusion by virtue of an exclusive listing agreement between MMT-GO and OYO.

Herein, CCI granted interim relief to these two hotels Treebo and Fab hotel against the Make my trip India Pvt. ltd and Go-Ibibo and directed them to re-list these hotels on their website. There are two reasons why this interim order has been considered noteworthy- the conflation between the parties and aggregator and the evidentiary standard for interim relief.

The complainants alleged that MMT-GO and OYO rooms had entered into an exclusive agreement due to which the complainants had been delisted from the website leading to a loss of revenue and investors. A prima facie opinion was formed by CCI that MMT-GO is dominant in the market for the booking of hotels in India and OYO also has an influential market power, therefore, investigation was directed to determine if there has been an exclusive agreement between them. Later, after one year the complainants filed an application requesting re-listing which led to this Interim Order.

Evidentiary standards and Interim Relief

It is obvious that with new developments in technology and globalization, the credibility of both direct and circumstantial evidence has changed, mainly, because with time, most important processes have been digitized including transactions. It has been seen that in Competition law cases all over the world, for detection of cartels, the reliance has been taken on both direct and circumstantial evidence and not just solely on circumstantial evidence. In the European Union, the only way, parallel conduct qualifies as circumstantial evidence in order to prove the cartelization is- if there is no other explanation available for the same. As far as the US is concerned, the corroboration of circumstantial evidence with direct evidence is a must.

Further, In India, initially, the CCI was of the belief that cartelization couldn’t be proved without the availability of direct evidence. However, later, after a few cases like In re: Sugar Mills, In Re: Alleged cartelization by steel producers, CCI changed its opinion and also relied on circumstantial evidence purely, in the case of non availability of direct evidence. The CCI observed that just the presence of circumstantial evidence was also enough to indicate the harm to competition in the market, despite the presence of direct evidence and the cognizance of the same could be taken. Therefore, in order to prove the anti-competitiveness of an act, the presence of evidentiary standards matters, be it direct or circumstantial. 

Interim Order in MMT-Go Case

In the MMT-Go Case, the interim order was backed by a valid reasoning i.e., getting delisted from the website leading to loss of investors, revenue and resulting in an exclusive agreement. The CCI was also of the opinion that not re-listing the aggregators and delaying the investigation would lead to the end of their business, thereby leading to a loss of competitors in the market.

By opting for this order, the CCI shifted the burden of proof on MMT-Go and expected them to prove the reasoning of delisting. The CCI also assessed the cost incurred for adding hotel franchisees and the explanation regarding the promotional budget constraints. As per the evidentiary standards, the CCI took notice of the fact that the complainants are dependent for their business on that platform and multiple reports were cited for the same which also highlighted the exclusionary conduct and were considered for the urgent action taken by CCI.

The main goal of being a platform is to provide operation of a service with multiple choices to consumers. Herein, it was also seen that MMT-Go together is also an amalgamation of effective marketing. Further, in order to prove their actions, the evidence is required to show the same. However, the investigation was still not completed. Still it can be seen that in order to grant an interim order, the reliance was taken on the evidence that showed the possibility of causing harm to the market by the time the investigation was complete. Further, having limited choices will harm consumers as it will be a difficult and a mentally grueling process for them in picking a product to end the task. This process also acts as a game-changer in competition analysis.

Analyzing the approach of CCI

The approach of CCI in saving the industry in such hard times is commendable. This interim order has also marked the emergence of a new approach between ex-ante and ex-post regulation where remedies are issued as a pre-emptive measure, pending investigation. However, there is a need to work on the evidentiary standards in order to grant interim reliefs in digital sectors as not every intermediary can be considered on the lines of gatekeepers, even when the denial of market access is happening.

The main reason for granting interim orders has been to maintain status quo and prevent the market or industry from the potential harm. However, as stated above, the presence of evidentiary standards matters in such conducts like in the above given case, factors like drop in revenue, losing investors etc. Furthermore, the reduction in the number of choices making the websites pro-competitive, fueling competition between different aggregators also matters. Moreover, it should always be noticed that it just isn’t the fact that the aggrieved party is seeking a relief of interim measure as they are under harm, interim order is not passed for this very reason. The CCI always looks at the broader picture as to how such an act will affect the market as well as the aggrieved party.

Conclusion

This order has created a huge impact as this was the first time that the CCI used an interim measure in the digital market. The commission paid attention to the importance of regular interventions in the digital markets. Many competition authorities of Brazil, France etc. have taken several measures and imposed interim measures against the tech players. European countries have played a major role in the enforcement of competition laws, especially in digital markets and have also introduced the interim measures that have been used by CCI now. With the growing technology and such dynamic markets, the need to enhance these interim measures should be considered by CCI. Several alternatives to figure out the harm on competition in markets and a check on intermediaries or enterprises acting as gatekeepers that can control the entire platform for the benefit of their products is also required. There is a need to address all these issues and find solutions for the same in the digital sector, which the CCI has been trying to do. However, it needs more efforts and renewed tools for the same. Further, as seen in the MMT-Go case, the degree of satisfaction is much more in interim relief cases as compared to passing an investigation order. Therefore, the presence of evidentiary standards matters a lot as that is what helps in determining whether the market is under harm or not based on the acts of various enterprises. 

References

  1. http://cci.gov.in/sites/default/files/Interim_Order_14-of-2019and01-of-2020.pdf”>http://cci.gov.in/sites/default/files/Interim_Order_14-of-2019and01-of-2020.pdf 
  2. https://www.mondaq.com/india/antitrust-eu-competition-/1050880/indian-competition-authority-issues-interim-order-digital-players-to-watch-out 
  3. https://www.concurrences.com/IMG/pdf/alec_j._burnside_adam_kidane_-_interim_measures__an_overview_of_eu_and_national_case_law.pdf?42067/88ef3e2932cc547cc56d9630b273aca4582c3a7a 
  4. https://www.cci.gov.in/sites/default/files/092008_0.pdf.

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