Artificial Intelligence may lead to discriminatory pricing, facilitate subtle anti-competitiveness: CCI chief

"As a competition agency, CCI needs to be vigilant and stay ahead of the curve and, accordingly, there is a need for a thorough market study on AI to understand these changes, anticipate potential anti-competitive behaviour and develop appropriate regulatory frameworks. It is crucial to ensure a level-playing field for all market participants, that fosters an environment where innovation thrives without compromising market fairness," said Kaur.

The chairperson said regulations on commitment and settlement, leniency plus regimes, introduced through the new Competition Act, will significantly improve the ease of doing business by reducing litigation. In the same way, the Green Channel route will speed up approvals for certain categories of M&As.

The CCI is carrying out a market study on the cement sector in India to improve enforcement and remedies. "Given the criticality of cement for many vital sectors, a well-functioning and competitive cement market is of utmost importance. Considering this and given the structural features of the cement market that make it susceptible to collusion, the market study will be a fact-finding exercise to develop a comprehensive understanding of the functioning of the cement market across regions in India, and the state of competition."

CNBC-TV18 had earlier reported that the government-appointed committee on Digital Competition Law is yet to come to a consensus on regulating digital markets and how work on the proposed digital competition may be deferred till after the 2024 general elections. The CCI did not comment on the working of the committee of Digital Competition Law nor did it give a timeline for a decision on the proposed law.

The introduction of the ‘settlement & commitment’ and ‘leniency plus’ regime, apart from other reforms introduced under the Competition Amendment Act 2023, is a path-breaking step aimed at making the competition law regime in India in alignment with the best global frameworks.

The CCI is committed to inclusive and transparent governance, particularly in the formulation of our regulations. To ensure that our regulations reflect the needs and insights of a diverse range of stakeholders, the CCI recently conducted a comprehensive public consultation process on a diverse set of regulations. This initiative was designed to gather valuable feedback from the public. This approach not only enhances the legitimacy of our regulatory framework but also ensures that it is robust, well-informed and adaptable to the dynamic economic landscape of India.

Public consultations with stakeholders have been undertaken on the drafts of settlement & commitment, leniency plus and combination regulations. Now, the CCI is in the process of considering the feedback received from the stakeholders. Once the internal deliberations and processes are completed, we will notify the regulations. You may expect the notification of regulations soon.

Regulations on commitment & settlement processes and leniency plus regimes, as introduced through the Competition Amendment Act 2023, will give significant impetus to ease of doing business by reducing litigation through self-reporting and self-correction by enterprises.

The Competition Amendment Act 2023 has also introduced the Green Channel route in the Statute Book for automatic approval of certain categories of mergers and acquisitions. Presently, this mechanism is available through our regulations. This will expedite the approval process for transactions that are unlikely to harm competition in India.

Market studies play a crucial role for us as these studies enable comprehensive examination of particular sectors, designed to understand how markets operate and to identify any potential issues related to competition. This will facilitate CCI in tailoring our approach to regulation and enforcement so that the remedies are appropriate and effective.

Enforcement actions and market study are tools in the arsenal of the regulator that serve different purposes.

Given the criticality of cement for many vital sectors, a well-functioning and competitive cement market is of utmost importance. Considering this and given the structural features of the cement market that make it susceptible to collusion, the market study will be a fact-finding exercise to develop a comprehensive understanding of the functioning of the cement market across regions in India, and the state of competition therein.

The market studies are independent of any enforcement actions. On the same lines, the study on the cement sector would also be independent of any proceedings before the Commission.

Digital markets have unique characteristics that make them susceptible to anti-competitive practices. Network effects, economies of scale, and the importance of data can lead to the emergence of dominant players, who can then abuse their market power to the detriment of competition and consumers.

It is against this backdrop that we need to evaluate and, if necessary, recalibrate our approach to competition regulation in the digital economy. We also need to draw on the experiences and best practices of other jurisdictions, while also considering the unique characteristics of our economy.

Recognising these challenges and to address the same, the Government of India set up a Committee on Digital Competition Law in February this year, with a mandate to review and address the challenges posed by the digital economy.

The Committee is headed by the Secretary, Ministry of Corporate Affairs and, as such, it is not appropriate for me to say anything about the time which the Committee may take to finalise its report and submit recommendations to the Government.

It would not be appropriate to share details of the internal deliberations of the Committee at this stage.

The imperative for market study on artificial intelligence (AI) is rooted in the rapidly evolving nature of AI technologies and their profound impact on markets. As AI continues to advance, it increasingly influences various sectors, altering competitive dynamics and market structures. Such technological shifts can lead to anti-competitive practices. As a competition agency, with its focus on ensuring fair and competitive markets, CCI needs to be vigilant and stay ahead of the curve accordingly, there is a need for a thorough market study on AI to understand these changes, anticipate potential anti-competitive behaviour and develop appropriate regulatory frameworks. It is crucial to ensure a level playing field for all market participants, that fosters an environment where innovation thrives without compromising market fairness. By staying ahead of these developments, CCI can better adapt to the digital age, ensuring that AI serves as a tool for enhancing market efficiency and consumer welfare. We are presently incubating the contours of the proposed study.

It is pertinent to note that the Competition Act 2002 is technology agnostic and is sufficient to address challenges arising out of the new age economy. It, however, cannot be gainsaid that the statutory framework needs to respond to technological developments and advancements. It is also imperative that regulatory toolkits are constantly reviewed and updated to address the unique aspects of new technologies including AI.

As regards challenges posed by AI, it can facilitate subtle forms of anti-competitive behaviour that may be hard to detect through traditional tools. AI-driven markets may tend towards natural monopolies due to network effects and access to data. In the AI sector, large amounts of data can give companies a significant competitive edge. This might lead to situations where a few companies control vast datasets, making it difficult for new entrants to compete. AI can enable dynamic pricing and personalized pricing strategies, which could be used to discriminate against certain groups of customers.

The fast-paced evolution of AI technology requires a flexible and adaptive regulatory approach. Going forward, there's a growing need for competition authorities to evolve and adapt their tools and methodologies.

Presently, our focus is on completing public consultations with stakeholders so that we can notify regulations which are necessary to operationalise the framework introduced through the Competition (Amendment) Act 2023.

Apart from our enforcement actions, we are also taking advocacy initiatives with the stakeholders. Additionally, we are reaching out to our global counterparts by way of international cooperation and collaboration. We are also using the instruments of market studies for a better understanding of markets and potential competition concerns in such markets.

We, at CCI, have accorded in-principle approval for setting up a Digital Markets and Data Unit in CCI, that will act as a specialised interdisciplinary centre of expertise for Digital Markets. The Unit will connect with experts; engage with industry, academia, other regulators/ departments, and international agencies; provide inputs on policy issues; support data analytics/management; and undertake any other task assigned to it in the context of digital markets.

These are some of the priority areas for the next few years and CCI will continue to evolve and adapt to market dynamics.

Apart from enforcement actions across various sectors, we are focussing on new-age markets including AI to understand their dynamics and potential competition concerns.