I. INTRODUCTION
As the ascent of digital markets is witnessed in the landscape of competition law, the presence of complexities and roadblocks has also presented themselves for Anti-trust regulators across the world. The remedies against antitrust distortions are to be assessed usually by its capability in output expansion, price compression, spurring innovation or enhancing the product quality. Anti-trust regulators have kept their focus on two kinds of remedies (i.e., structural and behavioral) in order to address the anti-competitive practices, the feasibility of which might be questionable in a highly competitive landscape.
Thus, this paper discusses a much-underappreciated concept and remedy of interoperability which has amassed some popularity in developed antitrust jurisdictions, yet to be implemented in Indian jurisprudence explicitly. The negative appreciation of interoperability in the case of Google LLC[1], in the National Company Law Appellate Tribunal (‘NCLAT’) in the backdrop of several legislative and judicial steps taken around the world and its infancy in India calls for the benefits and usage to be addressed via this paper, holistically.
II. ARE TRADITIONAL REMEDIES ADEQUATE?
Behavioral remedies are commitments made by companies to change their future behavior in order to address competition concerns. This includes commitment related to change in pricing, to allow access to essential facilities, or to refrain from certain anticompetitive practices. Instances are:
- exclusivity provisions being rendered nugatory;[2]
- Initiate and comply with new schemes related to pricing conditions;[3]
- Adhere to certain compliance programs or institute training programs in competition law;[4]
However, despite their frequent use to address competition concerns, its effectiveness becomes questionable because behavioral remedies do not particularly target upon that firm’s capacity and impetus to involve in and promote such abusive conduct, which points out[5] that they do not target such firm’s underlying issue of market power directly. Another catch of behavioral remedies is that the firms are coerced to act in contravention of their own interest.
Structural remedies are those remedies which require firms to “divest, release or carve-out certain tangible or intangible assets they own.” They are considered as more effective than behavioral remedies because they permanently change the market structure, making it more arduous for the companies to exercise their market power.
However, these tend to be extravagant, non-administrable, and lengthy, as was also seen in the case of American Telephone and Telegraph Company[6] which involved judicial oversight spanning for over a decade. Added to these, structural remedies modify firms’ property rights and thus are also at a greater risk of being disproportionate. Additionally, social costs might be aggravated here, leading to post breakup inefficiencies.
This is where the need of an enhanced and an effective remedy, compliant with the goal of antitrust pops up.
III. INTEROPERABILITY AS A VIABLE REMEDY
Interoperability is the ability of different systems or software to work together effectively. It can be defined as “the ability to transfer and render useful data and other information across systems, applications, or components. It is the information exchanged and mutually to use the information which has been exchanged.”[7]t becomes important because it can help to promote competition by allowing different companies to compete on the virtues of their products and services, rather than on their ability to lock in customers. It can empower the entry and existence of providers who compete to offer different options and choices to consumers, instead of users being coerced to choose among those “exclusive, self-contained silos”[8] that can’t interact amongst each other.
Enhanced Horizontal Interoperability allows users of a company to seamlessly connect and engage with users from other firms which offer such interoperable goods or service. For instance, a user enjoying a particular app for the purpose of messaging could effortlessly exchange messages with users of various other messaging apps. As a result, healthy market competition can arise among suppliers of interoperable products and services, even in the presence of network effects. Thus, for platforms like Facebook or Google, which handles vast volumes of data, instead of resorting to platform dismantling, courts promote interoperability by mandating these platforms to share the data they gather with competitors, while still respecting user rights to control their data. Thus, this enables enhanced consumer benefits and level playing field to competitors by eliminating the advantage of size enjoyed by the dominant players, while also diminishing entry barriers. It also minimizes the requirement of “collective switching costs” that could otherwise hinder consumers from transitioning between platforms.
IV. INTEROPERABILITY IN MATURE JURISDICTIONS
In the European Competition jurisdiction, enforcement enables interoperability to serve dual purposes: Within the merger control dimension, the European Commission has the authority to accept commitments from companies to make their combinations synergetic with the common market. Secondly, the act of denying competitors access to interoperability information could be seen as an abuse of dominance.[9]
In the landmark case of Microsoft[10], the Microsoft Corporation was held to infringe “Article 82 of the Treaty of the Functioning of European Union” when it refused to supply the interoperability information. The remedy imposed here was the disclosure of the information which it had refused to supply. This was to ensure that interoperability along with its requisite features which prescribe to a typical work group network is complied with.
Further, in the case of Intel / McAfee, in the merger between Intel and McAfee, a commitment ensured that McAfee’s rivals would still be able to operate in the same way as McAfee on computers that incorporate Intel’s chips.[11]The case of Google / Fitbit[12] another one on the same lines wherein interoperability remedies were important part of the remedy in the judgment where the Commission’s primary concern revolved around the potential consequences of Google downgrading the interoperability between Fitbit’s devices and smartphones running on the Android operating system, thus disadvantaging Fitbit’s competitors. To mitigate this concern, Google committed to granting free licenses of the relevant Android Application Programming Interfaces (‘API’) to smartphone makers. Moreover, Google also assured to uphold access to Fitbit’s Web API.
The United Kingdom Competition and Markets Authority, in its “Online Platforms and Digital Advertising market study” suggested empowering the Digital Markets Unit[13] with the authority to enforce interoperability for digital platforms.
Digital Markets Act itself encompasses[14] various sections that address interoperability and data portability matters, specifically concerning operating systems and third-party software applications or stores, of ancillary services, access of business user to own and to end user.
V. INTEROPERABILITY IN INDIA: AN ANALYSIS
India, though a developing competition law propeller, is not oblivious to the need of interoperability in the competition law regime. For instance, in the case of Consumer Online Foundation v. Tata Sky Ltd. & Ors,[15]it was realized that this ruling’s epicenter was the requirement to enhance competition through the principle of sharing facilities, which holds relevance in the Indian jurisprudential evolution despite the absence of the firm’s dominance. In the order, the Direct-to-home (‘DTH’) operators were directed to adapt their model of business in such a way that customers are not forced to buy hardware exclusively from them, alongside ensuring that other DTH providing hardware markets develop independently to make interoperability a possibility.
More Recently, in the PayU Payments Pvt. Ltd case[16], the Commission established the importance of interoperability in the Indian regime while observing that, the clarification provided with respect to the application of interoperability assured the Commission that the presence of the combined entity in this segment post combination would most probably not cause any denial of access or create any barrier of entry/expansion.
The CCI order of the Umar Javeed[17] also directed Google to enable access to its Play Services APIs to guarantee interoperability of apps across Android Operating System versions that meet Google’s compatibility requirements. However, the NCLAT order[18] scrapped this direction and held that Google restricts access to its proprietary items, namely APIs and Google Play Services, preventing app developers, OEMs, and existing/potential competitors from having unhindered entry.
This order was given without dwelling on the importance of ‘interoperability’ as a measure for promoting competition in the market, or without providing any rationale for such a decision.
This decision neglected India’s assent on the importance of interoperability whereby it was introduced in the Parliamentary Standing Committee Report on “Anti-Competitive Practices by Big Tech Companies.”[19]The observation was made that a “Systematically Important Digital Intermediary” (‘SIDI’) must facilitate the insertion and effectual usage of third-party software apps or application stores that interoperate seamlessly with its operating system. Furthermore, the SIDI should ensure access to these software applications or stores through channels other than the ‘relevant core services’ of the platform.
VI. CONCLUSION
The interoperability discussed above is basic, which means that the application of this concept is reserved for functionalities that have attained sufficient maturity, facilitating the creation of effective and widely embraced standards. Simplifying interoperability empowers social networks to concentrate their innovation efforts on aspects of their service they believe will be enticing to users. Thus, interoperability as a remedy in competition law cases needs to be strengthened to bring the Indian competition law jurisprudence at par with the best, developed international practices followed in foreign jurisdictions. However, it’s worth noting that the effectiveness of interoperability as a remedy in competition law depends on how it is implemented and enforced. If not done correctly, it may fail to achieve its intended goals and may even create new challenges. Therefore, competition authorities need to carefully design and monitor the application of interoperability remedies to ensure their success.
[1]Google LLC & Anr v. Competition Commission Of India and Ors., Competition Appeal (AT) No.01 of 2023 (National Company Law Tribunal, 29/03/2023).
[2]Coca-Cola(Case COMP/A.39.116/B2) Commission Decision (OJ 2005/670/EC).
[3]Aspen European Commission (Case AT.40394), Commission Decision (OJ 2021/ C 435/04).
[4]Decision No. 20-D-06 French Conseil de la Concurrence (2020), relating to practices implemented in the parcel delivery sector.
[5]OECD, ‘Remedies and commitments in abuse cases’(OECD Competition Policy Roundtable Background Note, 2022)<www.oecd.org/daf/competition/remedies-and-commitments-in-abuse-cases2022.pdf> Accessed 13 December 2023.
[6] American Telephone & Telegraph Co. v. Central Office Telephone, Inc. [1998] 524 U.S. 214.
[7] Palfrey J & Gasser U, ‘Interop: The promise and perils of highly interconnected systems’, Basic Books, (2012) 5.
[8]George Slover, ‘Interoperability is Important for Competition, Consumers, & the Economy’ (2023) (Centre for Democracy and Technology)<https://cdt.org/insights/interoperability-is-important-for-competition-consumers-the-economy/>accessed 24 December 2023.
[9] Treaty on the Functioning of the European Union (adopted 1 December, 2009), art 102.
[10]Sun Microsystems/ Microsoft Corporation (Case COMP/C-3/37.792) Commission Decision (OJ 2009/C 166/08).
[11]Intel /Mcafee (Case No COMP/M.5984) Commission Decision (OJ 2011/C 98/01).
[12]Google/Fitbit, (Case M.9660), Commission Decision (OJ 2021/C 194/05).
[13]UK in a Changing Europe, ‘UK-EU Regulatory Divergence Tracker’ (2022) (4th edition) <https://committees.parliament.uk/publications/23011/documents/168574/default/> accessed 23 December 2023.
[14]Marc Bourreau Jan Krämer Miriam Buiten , INTEROPERABILITY IN DIGITAL MARKETS (Centre on Regulation in Europe Report, March 2022) <https://cerre.eu/wpcontent/uploads/2022/03/220321_CERRE_Report_Interoperability-in-Digital-Markets_FINAL.pdf> accessed 25 December 2023.
[15]Consumer Online Foundation v. Tata Sky Limited and Ors. Case No. 2/2009 (Competition Commission of India, 24/03/2011).
[16]PayU Payments Private Limited, Combination Registration No. C-2022/04/920 (Competition Commission of India, 05/09/2022).
[17]Mr. Umar Javeed and Others v. Google LLC &Anr. Case No.39 of 2018 (Competition Commission Of India, 20/10/2022).
[18]Google LLC & Anr v. Competition Commission of India and Ors. Competition Appeal (AT) No.01 of 2023 (National Company Law Tribunal, 29/03/2023).
[19]Standing Committee on Finance (2022-2023), Fifty Third Report on Anti-Competitive Practices By Big Tech Companies, Ministry of Corporate Affairs (LS 2022-23).