Maitrey Singh, Jindal Global Law School
ABSTRACT
Technological developments are considered a boon to society, with the emergence of digital and online systems, technological advancements have skyrocketed. Prima facie these new technologies add comfort and security to our lives but only on a closer look do we acknowledge their shortcomings. Blockchain technology or digital ledger technology has become an integral part of the digital economy realm. At the outset, it is difficult to imagine putting such a concept in the grabs of a competition regulator given its unregulated and decentralised nature. The paper would firstly bring about an understanding of blockchain technology and try to present the possible negative effects which it might have on competition in the relevant market.
The concept of blockchain technology sprouted out of the requirement of trust in the economy. Trust being a luxurious commodity in the market, new methods were devised to replace trust. This included the introduction of ledgers, record keeping, financial statements, etc. with the evolution of technology and the shift of the market to the digital platforms, the responsibility of trust fell on the shoulders of online intermediaries such as banks, e-commerce websites, and credit card companies. Today, blockchain removes the requirement of these intermediaries. Simply put, a blockchain is a digital chain that is made up of information of transactions in the form of blocks, these blocks are then put together sequentially. This entire chain keeps a record of these transactions in a manner that is secure, decentralised, distributed, and free of errors. The paper will delve further into blockchain technology, its types, and provide a better understanding with illustrations for the readers.
The next portion of the paper will explain how certain characteristics could threaten the competitive nature of the market. For this, the paper will first set out the relevant product and geographical market in which blockchain platforms will fall. Coming to the threats to the competition in the market as a product of the technology, the paper will focus on certain characteristics of the blockchain such as transparency. The items on an open blockchain are visible to everyone, this information can include transactions, patents, sales records, minutes of meetings etc of other members. On the other side of the coin, it is possible that two colluding members can devise smart contracts which can be automatically triggered when one member furnishes the contingencies given in the smart contract, it would make the transaction between two members very opaque and difficult to track in a chain of millions of smart of contracts. Furthermore, the paper will also discuss the involvement of big data in blockchain transactions and its implication in competition law.
Following this discussion, the research will then focus on the application of the Indian Competition Law regime on blockchain technology, its platforms, and users. The paper will first delve into the question, whether blockchain is an enterprise. For this, it would be imperative to lay down the elements of the word “enterprise” as defined under the Competition Act. Following this, the paper will address the question of whether a transaction on a blockchain would entail an agreement for the purposes of Section 3 of the Competition act. Lastly, the most important question that will need answering is the question of jurisdiction. Whether the CCI would have jurisdiction which by definition is almost omnipresent. If we see through the lens of Section 4 of the Competition Act, the question of market power will enter the equation. It is possible that once the relevant market is defined, the number of users, transactions or blocks might be helpful in assessing the market power of a player.
After understanding the Indian take on the issue, the next topic will take into consideration other jurisdictions and their approach towards blockchain. This discussion on this would be restricted to countries with developed economies such as the US, UK, EU, Australia and maybe even China to understand their stance as to why is it so anti-blockchain. The paper will delve briefly into the application of their local anti-trust/competitions on blockchain before considering their developments towards blockchain in the field of competition law. This would include competition law debates on the use of algorithms, reports of their jurisdictions such as the Report of ESMA on Digital Ledger Technology in the EU and case laws such as the Bitmain, Inc. Case of the US which is supposedly the first blockchain-related anti-trust case.
At this stage, we would have reached a point where would be able to identify the loopholes in the current competition law regime and focus on the shortcomings which might arise in a situation where the law cannot keep up with the pace of technology. Here, the paper will try to suggest safeguards and amendments which would make the law more inclusive for blockchain-related anti-competitive activities. The suggestions will aim to delve into ex-ante policy changes to follow the “prevention is better than cure” ideology.
The conclusion of the paper would consist of a summary of the above discussion, remarks, and observations of the author.
