Digitally enabled markets are characterized by structural risks such as network effects and lock-in effects. The creation of walled gardens, as the Report describes, is a result of technological unification and vertical integration in the telecom sector; this tends to lock the consumers within the ecosystem, leaving no incentive for them to switch or cross-visit other TSPs. TSPs also perform platform roles between content providers and subscribers. A vertically integrated firm therefore can hinder competition and indulge in abusive conduct. However, none of the TSPs enjoys a dominant position in the market and therefore they cannot be brought under the purview of S.4 of the Act since it employs a dominance-based assessment. In consideration of the structural risks that sectors such as telecom may be exposed to, an alternative assessment may be considered on lines of Competition and Market Authority’s Market Investigation Regime.
This regime employs a market-structure-based assessment in lieu of dominance-based assessment. This is effective for two reasons; firstly, it does not require the presence of a dominant firm in the relevant market. Secondly, this assessment is useful in markets where none of the players engage in anti-competitive behaviour but the market is not competitive; CMA cannot impose a penalty on the players but can merely propose structural remedies (such as divestments) and/or other behavioural remedies to correct market risks as long as it can justify the consumer welfare associated with the proposed remedies. Stakeholder engagement in the investigation process as opposed to adversarial inquiries aids the authority in addressing the concerns in the sector most effectively. Such sector overhauling remedies may also result in direct qualitative welfare on the consumers and the sector in the form of earlier access to 5G networks and cheaper spectrum availability. It also interesting to note that the European Union is currently exploring the introduction of a market-structure based competition tool in addition to dominance-based assessment as a part of its New Competition Tool
The presence of the sectoral regulator, DoT, and CCI requires robust regulatory coordination. While the Report suggests that the resort to S.21 and 21A of the Act for consultation with other regulators, such consultations are not binding on them. For instance, if one of the TSPs engages in differential treatment with an OTT, it would fall under the jurisdiction of both TRAI and CCI. The Supreme Court’s (SC) verdict in the case of CCI v. Bharti Airtel was an endeavor in pursuit of regulatory convergence between TRAI and CCI. In that case, the SC observed that TRAI would have the preliminary jurisdiction over the dispute and if the dispute merits a detailed investigation by CCI, it may refer it to CCI. However, there is a possibility that the regulators might have contradictory observations on a given dispute. Such instances result in protracted investigations and the resort to courts for resolution.