A quick glimpse of timelines from a control regime and to regulation and market-oriented regime that roughly covered the period 1950 to 1991 is useful. In terms of industrial policy the Industrial Policy Resolution of 1948 (as amended in 1973 and 1980), played a key role in drawing the boundaries of markets and involvement of private parties under the Industrial Development and Regulation Act 1956 (IDRA). As explained, all manufacturing units had to be registered with the authorities and required a license. Permission from the government was required for starting a new industry by the private sector. The license was given only for the product to be manufactured, the technology that will be used and the location at which the unit was to take place as per the application made by the firms. The Five Year Plans formalized by the Government detailed the requirements and capacity in each sector. Markets had no role to play in these decisions, nor was competition considered important. The financial sector was also subject to licenses issued by the Reserve Bank of India whether for starting a bank, stock exchange or non-banking financial companies (NBFC). The real sector and the financial sector reflected each other.

The Government in 1964 constituted the Monopolies Enquiry Commission, headed by Justice K. C. Dasgupta, in response to concern about the growing concentration of economic power in private hands and prevalence of monopolistic practices of the extant industrial strategy. The Committee submitted its reports in 1965 affirming the possibility of concentration of economic power in the present structure of licensing. Thereafter, in 1966, the Planning Commission of India set up a Committee under the Chairmanship of R. K. Hazari to review the industrial licensing system under IDRA. The report was submitted in 1967 which confirmed that licenses were cornered by a few industrial houses by applying for multiple licenses and in different sectors. This had the effect of foreclosing entry by new firms. The report reiterated the apprehensions formulated by the Dasgupta Committee Report and raised the first set of concerns on the efficacy of licensing and tight controls on industrialization and investment in terms of balanced industrial development. The Hazari Committee was followed by the S. Dutt Committee in 1969 to enquire into the working of the licensing system in the country. The Committee found the industrial licensing policy very restrictive, resulting in the growing concentration of firms in 20 Larger Business Houses, 53 Large Industrial Houses and 60 large independent concerns. It expressed reservations about the expansion of the scope of state controls. The recommendations of the Dutt Committee Report led to the enactment of the Monopolies and Restrictive Trade Practices Act, 1965, and the establishment of the Monopoly Control Authority as the first market regulator.

The objective of MRTP Act was a law to handle economic power arising out of its concentration. Its main thrust was the prevention of such concentration to the common detriment; control of monopolies; prohibition of monopolistic trade practices; and prohibition of unfair trade practices (Mehta, 2006). Subsequent committees² focused on the effects of restrictive trade policies, financial policies that accompanied the regulation of industries by licensing and restricting entry of private sector in some sectors. This raised public concerns regarding the monopolization of economic power.

In 1991, there was a shift in policy. The New Economic Policy (NEP) was introduced with liberalization of trade policy and industrial policy, fiscal policy and monetary policy, the main tools of an open economy. Referred to as economic liberalization, it was a paradigm shift re-defining the role of the government in economic activities as investor and entrepreneur across sectors to only those related to sovereign functions of the state. Section 2(h) in the Act captures the new role of the government in terms of defining an enterprise. This refers to “but does not include any activity of the Government relatable to the sovereign functions of the Government including all activities carried on by the departments of the Central Government dealing with atomic energy, currency, defence and space.” The government’s emphasis at this stage was on involving the private sector in almost all economic activities except sovereign functions and on the removal of all controls by de-licensing, deregulation and opening areas of investments to the private sector. Trade policy, industrial, fiscal and monetary policies were the macro policies that heralded reductions in controls in the respective areas; liberalization of trade policy consists of two parts, liberalization of capital account and liberalization of current account. Controls are with regard to tariffs and import duties. In the case of industrial policies the main emphasis was on deregulation and removal of licensing requirements. This was mainly through the removal of reservations for public sector in Schedule I and II industries permitting private sector participation. Announcements on tariffs, subsidies and tax concessions are contained in the Annual Budget (Gouri, 1995).

Two sets of debates dominated this stage. The first one focused on assessing the costs and benefits of changes in trade policies, fiscal and monetary policies in terms of their impact on growth and employment. Structural policy changes in industrial policy, fiscal policy, and in liberalization of current account versus capital account were at the center of the debate with each set of reforms preceded by discussions and analysis of high powered committees. The second set of debates focused on privatization of the public sector or state-owned units and on private participation in infrastructure and public utilities, particularly power and telecom.

Debates regarding competition were muted largely on account of misgivings regarding competition and markets in India. Discussions on the market tend to raise the specter of distributive justice and equity associated with market failures, ignoring the fact that state failures were the primary force behind the shift in economic policies (Venugopal Reddy, 1989). There was a large debate in India on the subject of state failures, especially for privatization of public sector enterprises. Low productivity and inefficiencies in the public sector quantified state failures (see Chakravarthy, 2006a). Moreover, in the Indian federal structure, which is the Union of States where state governments often do not belong to the same party as the central government and are divided by ideologies and voter base, it is difficult to arrive at a policy consensus. This leads to a preference for policies that are politically neutral and non-controversial. It also explains the government’s approach of establishing committees and of building broad consensus before introducing and implementing new policies.

Conversion of accepted and implemented policies into legal structures and to the creation of institutions by the government appropriate to a market-oriented economy therefore took place in phases: for instance, legislation for the creation of the Securities and Exchange Board of India, the Securities and Exchange Board of India Act, was introduced in 1992; the Telecom Regulatory Authority Act was introduced in 1997; the Insurance Regulatory and Development Authority Act was enacted in 1999; the Competition Act was first enacted in 2002, however, it was only implemented after a major amendment in 2007; the Electricity Act enacted in 2003 led to the establishment of Electricity Regulatory Commissions in the Center and in each state; and the Petroleum and Natural Gas Regulatory Board Act was enacted in 2006. In terms of sequencing in the real sector, regulatory intervention of autonomous commissions was initially in the public utilities of telecom and electricity.

Discussions for a modern competition law started with the World Trade Organization meeting at Singapore in 1996 where clearly the emphasis was on trade liberalization in a globalized world (Chakravarty, 2006a, 2006b). The Minister of Finance in his Budget Speech of 1999 announced the formation of a High Level Committee on Competition Policy and Law (popularly known as the Raghavan Committee) in 2000. This Committee drafted the Competition Act which was first put to Parliament as a Bill for discussion in 2001 and enacted in 2002. Subsequent to a petition and the decision of the Supreme Court in Brahm Dutt v. Union of India (January 20, 2005) the Act was amended and Parliament passed the Amended Act in 2007. Several amendments to the Act were suggested and incorporated by the Parliamentary Committee following the Supreme Court decision based on the doctrine of separation of powers between the advisory and the regulatory and the adjudicatory functions in keeping with the Constitution of India. The amendments to the Act included several modifications to substantive issues pertaining to the functioning of CCI and in implementation of the Act. The amended act divided the competition authority into (a) CCI as an administrative expert body and (b) Competition Appellate Tribunal (COMPAT) to carry out adjudicatory functions. Decisions of the Commission can be appealed only to COMPAT and thereafter to the Supreme Court. The CCI, however, retains its quasi-judicial powers given the right to levy fines and adjudicate on cases filed with it.

The difficulty encountered in framing the Competition Act, and in subsequently implementing the law, can be traced to the meshed legacy of intertwined policies and institutions of the previous regime. The policies of control and restriction had created stakeholders in the existing structure averse to change. Large industrial houses played a dominant role in influencing shifts in industrial strategy, opposing any move towards open markets, and the competitiveness that displaced their comfortable position (Jha, 2002; Venugopal Reddy, 2003). Surprisingly, the left-wing intelligentsia tended to support large houses but argued from the perspective of organized labor who constitutes less than 20% of the working force. CCI had to resort to considerable advocacy and persuasion for implementing the section pertaining to Mergers & Acquisitions which had been put on hold by the Ministry of Commerce. Therefore, in order to establish their writ, new regulatory institutions such as CCI had to contend with the mélange of institutions and policies already pre-existing in India. The situation was rendered complicated because some of these institutions and policies were yet to be aligned with shifts in industrial policies. More significantly, it saw the beginnings of the need for a competition law and for maintaining convergence between competition law and public interest.

The Act, unlike the MRTP, was envisaged not only as a market regulator but also as a facilitator of markets with focus on the objective — as the Preamble clarifies — to “sustain and promote competition in markets, to protect the interests of consumers and to protect freedom of trade.” The mandate of the competition authority was multiple; the preamble emphasizes consumer interest and freedom of trade. There is no clear enunciation of the objective of competition policy and of competition law and in keeping abreast of rapid technological developments associated with digital markets. “Consumer” in the Act is defined broadly to include producers and end-consumers. To quote:

“Section 2(f) consumer means and includes any person who —

• (i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised… when such use is made with the approval of such person, whether such purchase of goods is for resale or for any commercial purpose or for personal use;
• (ii) hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised… are availed of with the approval of the first-mentioned person whether such hiring or availing of services is for any commercial purpose or for personal use.”

The Indian Competition Act 2002 seeks to prevent anti-competitive agreements, both horizontal and vertical (Section 3), prevent abuse of dominant position (Section 4) and regulate mergers and acquisitions above a threshold (Sections 5&6).

There is also a separate chapter on competition advocacy (Chapter VII in the Act titled Competition Advocacy). No other regulatory commission in India has advocacy as a mandated activity. The Section deals with two issues. Firstly, Central Government or state governments in formulating policy on competition or any other matter related to competition will refer the matter to CCI for its opinion. This is similar to Section 21 mentioned earlier. Secondly, to inform stakeholders and the public on the importance of competition and the powers of CCI, advocacy encourages access to information on antitrust activities from the public, say of cartels from executives in bidding auctions etc. or apprehension on abuse of dominance. This is useful information that CCI follows up through suo moto investigations. Interestingly, the Act does not define “Competition,” neither does the phrase “appreciable adverse effect on competition (AAEC)” which, in my view, may allow for spaces required for an economics based law where every assertion must be contextually based and assessed in terms of competitiveness of the market structure. The Act stayed within the economics of competition referred to as the product market framework where competition is in binaries of competition versus monopoly. In terms of public interest implementation of the law looked at consumer benefits in the broader definition of consumers which, as mentioned, includes both producers and consumers and of equating welfare with consumer surplus and producer surplus (Bishop and Walker, 2009). In the absence of a competition policy there have been divergent views on the welfare standard to be adopted while implementing the law. The underlying assumption of the Act is that a monopolist can fix a higher price while restricting output to where marginal revenue (MR) equals marginal costs (MC), thus P > MR = MC rather than the competitive condition of P = MR = MC. Competition authorities concerned about consumer harm in emergent markets could take a different approach when assessing P > MR = MC. The consequent increase in producer’s surplus in the above pricing mechanism resulting in a decrease or shift in consumer surplus raises the peculiar anomaly of defining public interest in competition policy.

Similarly, restrictions of competition refer to AAEC in relation to degrees of perception as regards “appreciable adverse effect” of monopolistic competition which gets translated into identifying the consumer whose welfare is maximized with competition.

The domain impact of competition law on business and on economic activity welfare was assessed through the lens of maximization of producers’ welfare. In evaluating anti-competitive effects, the focus on producer surplus rests on the understanding that more producers in monopolistic markets where there is one dominant firm ensures that public interest is enhanced. Section 4(1) of the Act states that “No enterprise or group shall abuse its dominant position” with the use of the definitive verb “shall” as opposed to “may” — a quasi per se approach rather than an effects-based one towards monopolistic markets. In implementation of the law a quasi per se approach was applied rather than mere per se. The move towards full effects analysis was a slow process even in matured competition jurisdictions of the EU and the US. The use of economics and effects analysis took several years of antitrust experience. In Europe, the ordo-liberal approach emphasized a softer approach than in the US. The objective of competition law in both jurisdictions is to safeguard “effective competition.”

In the product market text book on economics the introduction of more producers into the market would definitely enhance competition. Defining welfare is more complex in the case of platform markets with competition among platforms with a wide list of beneficiaries, producers and consumers, as we shall see later. The approach can no longer be per se.

The “relevant market” has to be first defined for abuse to be established. This includes both the relevant product market and the relevant geographic market. On the face of it defining a market appears to be an easy and simple exercise. Going by the definition of the relevant market the exercise lies in finding substitutes among products and among firms and is an established mechanism. As per the Act “substitutability between products is the defining factor by reasons of characteristics of the products or services, their price and intended use.” Using substitutability among products in drawing the boundaries of the relevant market runs into difficulties in defining the relevant market in platform markets. The Small but Significant Nontransitory Increase in Prices (SSNIP) test used in drawing the boundaries of the relevant market for assessment of antitrust abuse may lose relevance in these markets. CCI to date has not applied the SSNIP test for defining the relevant market. What is debated in CCI is the market definition as filed by the informant and weighed against any counter definition given by the opposite party. Several cases including those discussed in the next section point to the complexities of market definition.

In the economic toolkit, enshrined in the Competition Act 2002, identifying the relevant market and the dominant player in platform markets is not a simple or straightforward exercise. Network effects, direct and indirect, tip the market in favor of monopolistic platforms connecting several markets, leading to interrelatedness between platform markets. Defining the relevant market is difficult as is assessing the benefits of platform markets. Platforms on the Internet are intermediaries of exchange. Who asserts power that was so well defined in the prevailing competition law (Act) becomes evasive as does the concept of geographical markets. As a result, as virtual markets of platforms redefine competition, so does public interest. Currently, government policy towards foreign investment in e-commerce platforms has been more protective towards domestic investors. Spillovers of competition policy on competition law are discernible in cases filed with CCI on “abuse of dominance” of platform markets (2-sided and multi-sided) and on license fee (royalty) to technology firms.

Among CCI’s early cases the case of MCX-Stock Exchange v. National Stock Exchange & Ors particularly stands out for presenting a unique challenge to CCI (Case No. 13 of 2009. Order dated: 23.06.2011). The National Stock Exchange operates in the equity market whilst the MCX-Stock Exchange largely deals with the commodity market. In this case, MCX-Stock Exchange lodged a complaint against the National Stock Exchange for engaging in predatory pricing by charging a zero transaction cost for traders in the newly permitted currency derivative (CD) market and hence of leveraging in the newly licensed market. Exposure to the complexity of platforms and network economics was new to antitrust authorities, more so for CCI, a young competition authority. The case was not analyzed in the context of platforms and network economics but only from the point of view of abuse of dominant position (paragraphs 10.19, 10.20 and 10.21 of the Order).

The relevant market was defined as “the stock exchange services in respect of the CD segment in India.” The dissenting Order considered the stock exchange as a platform and the CD segment a vertical on the platform (paragraphs 10.26 to 10. 38 of the Order). The majority Order established dominance of the National Stock Exchange in stock-market services and not in the Commodity Derivative segment by reference to Section [19(4)] of the Act.

In arriving at its decision, CCI concurred with MCX-Stock Exchange that the pricing scheme employed by the National Stock Exchange was predatory (unfair) because the transaction cost (at zero) was lower than the marginal cost. The rationale that zero pricing is an appropriate strategy for deepening the market to enable consumers to share the benefits of network economies was not considered given the definition of the relevant market. Platforms such as NSE are characterized by high capital expenditure (CAPEX) and low operating expenditure (OPEX) which permits innovative pricing schemes. Marginal cost calculated on operating costs can be negligible or even zero and cannot be considered as predatory as per the Act set out in the regulations of the Commission.

In terms of the Act predatory (unfair) pricing is a restraint on new entrants where the incumbent is abusing its dominance. Within the Act the CCI decision was correct but was it correct in terms of public interest? As a platform that linked debt, equity and currency derivative markets, it was important for providing a variety of hedging instruments in the foreign exchange currency market, especially for traders and small firms in the export business. The license to set up a CD vertical in the stock-exchange was a decision of the Reserve Bank of India. The intent was to encourage small businesses to export their products. Existing provision for coverage of foreign exchange risk provided by banks is not designed for the requirements of individual firms. Apart from this, it is also more expensive than a CD platform where there are a number of players on either side of the platform. The decision of CCI, while well within the framework of the Act, was oblivious to the economics of platform market users. End users are consumers of currency derivatives, as is also the export sector.

For virtual markets national boundaries of a geographic market as notified in the Act have no meaning. CCI faced the issue of defining markets in an online scenario for the first time in the case of Prints India v. Springer (Case No. 16 of 2010. Order dated: 03.07. 2012). Prints India, a bricks and mortar publishing company, alleged that Springer, an international publishing firm in the Scientific, Technology and Medicine (STM) journal segment in India, was engaging in unfair conditions (practices). However, geographic markets of an online publishing house do not fall within the confines of boundaries of a nation state, raising the issue of jurisdiction of the relevant anti-trust authority. Publishing is now an online business and each business house is an online platform that seamlessly connects authors and readers world-wide. The case defined the market in terms of the relevant product market as permitted under Section 2(r) of the Act.

In a globalized world inter-country jurisdictional sanctions from their respective antitrust authorities are required. Mergers at present have to be cleared by competition authorities where the merging firms have business in that country. In the case of abuse of dominance, advice is sought voluntarily as the antitrust allegation pertains to the domestic market. Exchange of information among competition authorities helps in identifying the anti-competitive abuses and settlement of the case. BRICS has emerged as a major forum for the exchange of information among the competition authorities on a regular basis and during the annual meetings. A larger forum of exchange is the International Competition Network (ICN). CCI has separate agreements for information sharing with FTC (the US).

The case against Google filed by Matrimony.com and by Consumer Unity & Trusts Society CUTS in a replica of the case on sponsored shopping sites in the EU was the first full-fledged case related to platform markets. As a search engine, Google was alleged to have been manipulating its search and advertising business, so favoring its own verticals (discriminatory) and eventually causing consumer harm. In the Google case (Cases No. 07 and 30 of 2012. Order dated: 02.08.2018) identification of the relevant market took an interesting twist when CCI established abuse in the market for website portals of travel-services as one of the two relevant markets identified in the order, namely online general search market and online advertisement market. This decision once again drew attention to the fundamental question of what constitutes a relevant market for antitrust abuse. Abuse was with reference to the travel verticals in which case the definition of the market in the main order defuses the concept of relevant market. Within the definition of relevant market provided in the Act, the underlying intent is of a market where an enterprise operates or intends to extend its business referred to as “leveraging” in the Act (Section 4(2)(e)). In the case of verticals of platforms, does a search engine have a preference in ranking some websites or is their business as a search engine determined by other factors such as wider coverage, easy accessibility to consumers who surf the network, and prompt and clear website information?

The Google case in the EU decision was in considering abuse in terms of influence over consumer behavior, referring to the “heat map” test of Microsoft. The majority Order of CCI followed suit. They found abuse in the sponsored search catalogue of Google Flight where preference was observed for a few selected firms by way of placement in the search catalogue. The argument was that consumer decisions are prompted in the case of sponsored search catalogues. The “heat map” test measured by stray eye movements of consumers influenced the majority decisions. There was, however, no substantive proof in terms of conversion of eye movements to sales volumes. A recent study undertaken by CCI on e-commerce platform markets estimated a conversion rate of 10% on the “double click” in internet-based e-commerce platform markets (CCI, 2020). The dissent Order did not find enough evidence of Google favoring a few travel firms to accept the allegation of anti-competitive behavior in terms of creating entry barriers.

The complexity of platform markets first encountered in the MCX-SX v. NSE case, and later in Google, indicates that the one-size fits all approach may be inadequate in protecting public interest. The Google case further pointed to the limitation of borrowed antitrust analysis. Platform markets are intermediaries between markets on either side, and can be 2-sided or multi-sided. This poses a considerable challenge for competition authorities in defining the relevant market and in identifying the relevant consumer. As markets are interlinked, three categories of beneficiaries are clearly identifiable. They are: (i) producers /sellers on the platform; (ii) consumers of goods and services; (iii) citizens, if consumer benefits are restricted to consumers of a country. Caution is warranted in pronouncing something anti-competitive on the grounds of dominance of a platform. The economics of a platform which depends on generating direct and indirect network effects tends towards monopolistic structures strengthened by technology (algorithm) and consumer preference. In these markets welfare has been defined by the major competition authorities (the US and the EU) as maximization of consumer surplus and not maximization of producer and consumer surplus as defined by economists as total welfare (Bishop and Walker, 2009). The emphasis is on consumer harm. In the Indian competition scenario reference is still to maximization of producer and consumer surplus which takes us to the central issue of defining public interest in terms of competition among platforms. Retaining maximization of producer and consumer surplus, it can be argued, has its merits as producers are one of two or three groups of platform users. In the absence, however, of a clear-cut competition policy defining public interest in terms of national economic development there has been a reversion to protectionist policies of the pre economic liberalization days discussed in Section 2, resulting in obfuscation of public interest in terms of national economic development and of public interest in terms of consumer surplus of competitive markets. Restrictions imposed on Amazon and Flipkart e-commerce platforms are defining public interest in terms of national economic development. As per Government notification³ a distinction is drawn between foreign direct investment (FDI) in e-commerce activities and domestic investment by demarcation of e-commerce activities into (a) inventory-based model and (b) market-based model. FDI is allowed only in the market-based model where Flipkart and Amazon can act as a facilitator between buyers and sellers with restrictions on ownership of inventory including restriction of sale by group companies. This restricts the benefit of e-commerce platforms to consumers and their access to a wide variety of goods and services. At the same time, protection to consumers takes away the sting of competing in innovation again, so depriving consumers of the gains of competition. This is a divergence of competition policy, competition law and public interest.

CCI has adopted a cautionary approach with regard to e-commerce platforms. A recent case still under investigation concerns allegations by the Delhi Vyapar Mahasangh regarding steep discounts offered on prices of select vendors indulged by Flipkart and Amazon (Case No. 40 of 2019). The Commission notes “that Flipkart marketplace and Amazon marketplace are e-commerce entities, following a marketplace based model of e-commerce. They essentially provide online intermediation services to sellers on one side and consumers on the other. These platforms/marketplaces and the sellers selling on these platforms operate at different stages of the vertical/supply chain. Thus any agreement between the platforms and sellers selling through these platforms can be examined under Section 3(4) of the Act, which deals with agreements amongst enterprises or persons at different stages or levels of the production chain in different markets.”

Both firms engage in e-commerce and both are big foreign players in B2B segments. B2B refers to Business to Business that is only wholesale trade, while B2C refers to retail trade of Business to Consumers. The recent notifications issued by the Central Government permitting 100% FDI into platforms have several caveats that restrict the domain of business of FDIs e-commerce to B2B business only and not permitting B2C business. The relevant market was not defined as the case was taken under contracts between sellers on the platform markets under Section 3(4) of the Act. This section on vertical agreements deals with vertical restraints where the requirement of defining the market does not arise. Rather the investigation will proceed on vertical restraints in agreements of market players with intent of creating entry barriers. The prima facie Order, however, notes the opportunity given to new entrepreneurs to sell — in this case — smart phones on the platforms, thereby increasing the choice opportunities to consumers of goods and service.

Unlike in its antitrust aspect, CCI’s approach with respect to mergers and acquisitions (referred to in the Act as “combinations”), is non-adversarial. CCI specifically noted this in its Order on Wal-Mart’s acquisition of Flipkart, stating that “Unlike anti-competitive agreements and abuse of dominance conduct, that are prohibited, combinations (i.e. mergers, amalgamations and acquisitions) are only regulated under the Act” (Combination Registration No. C-2018/05/571. Order dated: 08.08.2018). However, as in antitrust cases, CCI has engaged in limited economic analysis of proposed mergers and acquisitions, focusing only on determining market shares of the merging entities and exploring whether the prevailing market structure makes it easier for market players to assert competitive constraints by creating entry barriers or otherwise. CCI’s approach has been more expansive and less concerned about the size of the merged entity. The relevant market was defined as B2B sales through e-commerce. In evaluating the proposed merger CCI was concerned whether horizontal and vertical overlaps between the two firms could generate anti-competitive outcomes. The combined market share of B2B would be less than 5% of wholesale trade which in turn constitutes about 30–40% of the retail trade segment. The share of Walmart was less than 0.5%. The market share of Walmart or Flipkart did not raise any red flags.

The prima facie Order on Ericson and Micromax raises the uneasy antitrust concern: how does one assess the anticompetitive behavior of firms who are trading in patents? (Case No. 50 of 2013, Case No. 76 of 2013, Case No. 04 of 2015) These firms are new entrants into the market and are classified as non-performing entity (NPE) or just patent firms. These firms are involved in developing new technologies which are then pooled with patents of other firms or a research organization to be licensed as a package. In the information communication technology (ICT) sector several patents need to be pooled together, meeting required standards for interoperability and compatibility of instruments such as smart phones. Standard Essential Patents (SEP) stand for the pooled package of patents for which standards have been granted by standard setting organizations (SSOs). SEPs have created a separate market, the market for ideas as these firms trade in patents and are between manufacturers and consumers. As forbearers of technology in networks, Artificial Intelligence (AI) and internet of things (IoT), public interest is of high priority when assessing SEP firms for possible antitrust violations.

The number of SEP firms is limited, and to date there are 10 well established firms. Several cases filed with CCI by phone manufacturers against SEP firms have alleged abuse of dominant position (Section 4) in the licensing of GSM, 2G, 3G by imposing exorbitant royalty rates, violating FRAND commitments, discriminatory tariffs and requirement of signing Non-Disclosure Agreement (NDA). A prima facie Order was passed by CCI and an investigation into the possibility of abuse of dominance in term of creating entry barriers under Section 4(2)(c) and Leveraging Section 4(2)(e) was initiated.

A patent is a legally created monopoly for encouraging research and technological development. Investment in R&D is heavy and risky as there are no assurances of returns. In the case of SEP standards convert the patents into non-exclusive and non-rival. Standards, once set, can be used by any producer (non-exclusivity) and the use of a particular standard by one producer does not preclude other producers from using the same standard (non-rival). There are therefore no entry barriers for firms to enter the SEP market.

Even if there are few firms the primary question is whether the monopolistic market structures raise antitrust concerns or whether public interest of enhancing network systems and digital technology are considerations that need to be examined. The importance of convergence between competition policy and public interest in the system of wireless communication comes to the forefront. The weight of public interest in forging links between investment in R&D and patent development by phone manufacturers is critical to India where a large proportion of the population of over 350 million, both urban and rural, are dependent on smart phones and the Internet. Antitrust analysis provokes a rethink on the economic analysis of the market for ideas and how they impact consumer welfare.