Artificial Intelligence (AI) aims to develop machines that possess human-like intelligence. While AI offers numerous benefits, it also presents complexities for traditional competition regulations and fair competition.

This article delves into the legal ramifications arising from the impact of AI on competition. It also discusses the situation that presents challenges in regulating fair practices within this context.

AI technology has the potential to drastically impact competition and raise new policy challenges.  A few of the challenges that AI may create are:

1.      Market Consolidation: The concentration of data and AI technologies among a few companies can lead to market consolidation.

2.      Collusion and Price Fixing: Without any human intervention, algorithms can independently adjust prices in response to competitors’ pricing actions, leading to tacit collusion. In such a situation it becomes difficult for the Authority to tackle anti-competitive behavior facilitated by AI.

3.      Intellectual Property and Standardization: Issues related to patents and access to data can intersect with competition law. It may lead to hindering innovation and fair competition.

Traditional competition law in India:

The Competition Act of 2002, which governs market competition in India, has certain aims to achieve by regulating the market. The Act prohibits anti-competitive activities, abuse of dominant market positions, and business-to-business agreements that restrict competition. In simpler terms, it aims to maintain an even playing field for all market participants.

Currently, the Competition Act of 2002 in India does not explicitly address AI, which can lead to difficulties in interpreting and applying competition regulations to AI-related practices. This creates a potential challenge in resolving cases arising from AI-related competition issues.

A recent example of unfair competition is the Google search bias case [Google LLC v Competition Commission of India, Competition Appeal (Appellate Tribunal) No. 1 of 2023, decided on 29-03-2023].

In a competition appeal filed by Google LLC and Google India Private Limited, the National Company Law Tribunal in New Delhi addressed the order passed by the Competition Commission of India (CCI). The CCI had found Google guilty of abusing its dominant position and imposed a penalty of INR 1337.76 crore (approximately $182 million) under the provisions of the Competition Act, 2002.

The division bench of Justice Ashok Bhushan and Dr. Alok Srivastava (technical member) upheld the fine imposed by the CCI but set aside certain key directions. Google had argued that the CCI’s order suffered from confirmation bias and was based on a similar order by the European Commission in 2018. Google claimed that its agreements did not prevent equipment manufacturers from pre-installing competing apps and that dominance in the market did not necessarily imply abuse of dominance.

On the other hand, the CCI argued that Google abused its dominant position in a particular relevant market to enter into other relevant markets through obligations under the MADA and AFA/ACC. The CCI contended that Google, as a dominant entity in the market, had a special responsibility and that abuse of its dominant position constituted an offense under Section 4(1) of the Competition Act.

The CCI’s directions to Google included: Original Equipment Manufacturers (OEMs) should not be forced to pre-install a bundle of applications, the licensing of Play Store should not be linked to pre-installing Google search services or other apps, Google must not deny access to Play Services APIs to disadvantage OEMs, app developers, and competitors, Google should not offer incentives to ensure exclusivity for its search services, and users should have the flexibility to easily set their default search engine.

The Tribunal concluded that Google had abused its dominant position by imposing unfair conditions on OEMs and by leveraging its dominance in the online search market and the app store market for Android OS. It upheld the majority of the CCI’s directions while setting aside a few. The Tribunal also affirmed the calculation of penalties based on Google India’s revenue.

Consequently, Google was directed to deposit the penalty amount (after adjusting the 10% amount of penalty as deposited under the order dated 04.01.2023) within 30 days.

Conclusion: The existing Competition Act, 2002 in India does not explicitly address AI and thus creates new policy challenges. The Google v Competition Commission of India case serves as an example, where Google was found guilty of abusing its dominant position. The National Company Law Tribunal upheld the penalty imposed by the CCI but modified certain directions. The case emphasizes the need to incorporate AI-specific provisions within competition laws to effectively regulate the impact of AI on competition and ensure a level playing field in the evolving technological landscape.

References:

1.      https://indiankanoon.org/doc/54000789/

2.      https://blogscconline.azurewebsites.net/blog/post/2023/03/29/penalty-on-google-nclat-sets-aside-certain-directions-by-cci-but-upholds-inr-1337-crore-penalty-on-google-for-abuse-of-dominant-position-in-android-mobile-device-ecosystem-legal-news-legal-researc-up/

4.      https://blog.ipleaders.in/big-data-ai-challenges-competition-law/

5.      https://yjolt.org/ai-antitrust-reconciling-tensions-between-competition-law-and-cooperative-ai-development

6.      https://oecd.org/daf/competition/Algorithms-and-colllusion-competition-policy-in-the-digital-age.pdf

Image credit: Freepik

Practice Head - Patent - Mechanical & Automotive

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