Competition Landscape in India: Insights and Future Trends

In this article, Justin Coombs, Jincy Francis, Neha Georgie, Avinash Mehrotra and Kadambari Prasad summarise recent significant regulatory changes in India's competition landscape, spotlight the increased focus on digital markets, reflect on key moments from 2024 and look to the year ahead.

The views expressed are those of the authors only and do not necessarily represent the views of Compass Lexecon, its management, its subsidiaries, its affiliates, its employees, or clients.

Introduction

The past year was one to watch for Indian competition law, with an overhaul of merger enforcement and numerous regulatory changes. The digital sector continued to draw attention, with debates centred around its ex-ante regulation and a new focus on artificial intelligence (“AI”) markets.

In this article, we summarise significant regulatory changes (in Section 2), spotlight developments in the digital sector (in Section 3), and describe key aspects of important competition cases, the Competition Commission of India (the “CCI”) orders and judgements by Indian courts (in Section 4). We also highlight the key takeaways from 2024 that we expect will continue into 2025: the CCI has, and is expected to continue to (i) increase enforcement, following from multiple regulatory changes in the past year (ii) use economic tools, arguments and evidence in its competition assessments, and (iii) prioritise competition assessments in the digital sector.

Regulatory changes expected to increase enforcement and settlements

The most closely-watched development in India’s competition landscape last year was the CCI’s publication of its new regulations. After a busy year implementing several new regulations, we and other observers expect increased enforcement activity.

The main development is the introduction of a deal-value threshold for notification. We expect that this threshold will widen the CCI’s purview over merger matters. In the context of a large and growing economy, where total deal value has been increasing by 66% per year between 2023 and 2024, far exceeding the global growth rate, 10%, we expect to see the CCI reviewing a higher number of high-value global deals with a nexus in India.

We may also see an increase in the number of commitment and settlement decisions in cases involving abuse of dominance and anti-competitive vertical agreements. That is because the changes to the merger regulations should increase the CCI’s caseload. If so, it may look to use commitment and settlement decisions wherever possible to resolve its other cases quickly.

Use of economic tools, arguments and evidence

Last year, the CCI frequently used both economic tools and arguments to inform its competition assessments. In particular:

• It used the Elzinga Hogarty Test, involving catchment area analyses, to determine the relevant geographic market in Ultratech Cement/Kesoram Cement. The CCI found that the merger would not have an adverse impact on competition, noting the parties’ limited combined market shares and the relatively fragmented market.
• It assessed competitive constraints arising from factors like countervailing buyer power, presence of spare capacity and the existence of long-term agreements in DIT/ATC. Our team assisted DIT on this transaction and the CCI concluded that the transaction is unlikely to have an appreciable adverse effect on competition.
• In a bid rigging case involving sugar mills and industry associations for the supply of ethanol to oil marketing companies (India Glycols Ltd. and others vs Indian Sugar Mills Association and others), the CCI noted that price parallelism alone is not sufficient to establish bid rigging. It noted that other ‘plus factors’ will need to be analysed to demonstrate that price parallelism was a result of bid rigging and not driven by other factors, thereby supporting an effects-based (economic) assessment in such cases.

These examples signal the CCI’s greater openness to using and engaging with economic tools. This is consistent with the amendments to the Competition Act passed in 2023 which allow expert economists to appear before the CCI. The CCI is also fairly unique as a regulator in that the only annual conference it organises is an economics conference. In 2024, this included sessions on digital markets, competition and innovation, and AI.

Continued focus on the digital sector

The CCI prioritised the digital sector, a trend we expect to continue in 2025 and beyond.

Discussions continue on whether digital markets should be regulated ex-ante and, if so, in what shape. Following the proposals made by the Committee on Digital Competition Law (“CDCL”), the Ministry of Corporate Affairs invited public comments on a draft law. We submitted comments, arguing for a balanced framework that recognises the heterogeneity of digital markets in India, and identified areas for further consideration. The draft law was widely debated in the Indian competition community, including by us.

The CCI continues investigations into this sector, including in mobile ecosystems (against Apple), e-commerce platforms (against Amazon and Flipkart) and food delivery platforms (against Zomato and Swiggy); and it has opened new investigations against Google. In addition, it has launched a market study on AI and competition to develop an understanding of the emerging competition dynamics in AI systems and their implications on competition, efficiency and innovation in key user industries.

Looking ahead to 2025

In 2025, we expect the CCI’s final decisions in important digital market cases, in particular, the CCI’s investigation into (i) Apple’s conduct in the market for apps stores for iOS in India ; and (ii) Swiggy’s and Zomato’s conduct in online food delivery markets, in particular, the nature of their agreements with restaurant partners. We should also see important court decisions, including in Amazon/Flipkart, where the sellers on Amazon and Flipkart platforms have challenged the CCI’s investigation after their status was changed from neutral ‘third-parties’ to defendants. An updated draft of the proposed digital competition bill on ex ante regulation may also be published, tying in with these developments.

The CCI may also provide its preliminary view on whether there are any concerns in AI markets, based on the findings from its ongoing market study, although we note the CCI does not have the power to impose remedies based on market studies, unlike the UK Competition and Markets Authority.