Abuse Of Dominance And Predatory Pricing In Online Platform Markets - CCI’s Evolving Jurisprudence And The Significance Of Network Effects
Thrisha Rai, Jindal Global Law School
Introduction
The Indian Competition Law, and its statutory framing of ‘Abuse of Dominance’ and ‘Predatory Pricing’ largely suits the traditional concept of one-sided businesses which generate revenue through selling goods and services to consumers. Therefore, sellers target customers to whom they can sell the product at a higher price compared to the cost. If they sell it at a price less than the cost then they will incur losses. To earn a profit a business must sell above the marginal cost price. The traditional understanding of predatory price is rooted in this understanding of market dynamics.
New age business models have demonstrated an increasing dependency, and advancements of digital markets. Many of these businesses operate in the form of a multi-sided online platforms. Platform markets are in essence those businesses where firms perform the function of selling goods and services to customers, by connecting the buyers and the sellers, thereby establishing a network of buyers and sellers through their platform. These markets exhibit a unique characteristic where one group’s demand is dependent on the other group. One of the major advantages of such a platform is transactional coordination between the buyers and the sellers is facilitated by the platform. This is credited to the sharing of information and data and hence create, “feedback externality”. This is different from traditional brick and mortar and markets where the coordination is done by the suppliers. Transaction platforms, are leveraging prices on two sides of the market as opposed to traditional business who largely have a unidirectional revenue.
