CCI worried over tech deals escaping its oversight

Fair trade watchdog CCI feels that deals involving digital companies are escaping regulatory oversight due to issues over size, and termed it as a "big operational challenge", a senior official said on Thursday. Citing instances like Facebook's acquisition of the messenger app Whatsapp, the head of mergers and acquisitions at the Competition Commission, Manish Mohan Govil, said a government-constituted panel has suggested remedial measures.

"A big challenge is that big deals are outside the purview of our scrutiny due to the current notification norms. Data-driven businesses and mergers are asset light and do not need the threshold for our notification," told a CII event.

Stating that the technology sector is the most active on the deals front, he said though smaller in size, some digital players yield substantial market power and pointed out to Amazon, Facebook, Apple and Google as among the most valuable companies in the world due to their sheer access to massive user-base. Referring to Facebook, he said while the social media giant has 12 percent of its users in the country, India contributes only 0.8 percent of its overall profit.

"Thus, the acquisition of Whatsapp by Facebook for USD 19 billion remained outside the purview of our competition laws. This issue has been acknowledged by the competition law review committee," he said. The panel headed by the corporate affairs secretary has recommended an enabling provision in the Competition Act for notification based on deal value to capture merger in the data-driven market, he said.

He affirmed that the CCI's regulatory philosophy has been to adopt a pro-market framework. Govil said the trend of retailers complaining against the big discount-offering multinationals in the e-commerce space is bound to continue even beyond this festive season.

He said the fast paced digitisation of markets have captured the imagination of everybody, including investors, financiers, techies, entertainers and consumers across the world, and also resulted in deals. "This activity has also drawn the attention of our policymakers and regulators and enforces who see this as a threat to the established modes of business and competition," Govil said.

"While efficiency is a positive externality of network markets, monopoly has also become a norm in these tech-driven markets. This has triggered a debate between these platforms and conventional businesses delivering foods and services," he said..