By Vaibhav Choukse
Blockchain technologies, typically dubbed as next key digital revolution started to achieve traction immediately after the dramatic rise of Bitcoin in 2017. The technologies is now at the forefront of innovation in numerous industries, ranging from monetary services, retail, and actual estate to healthcare. It is hence no surprise that providers searching to stay relevant in the worldwide economy are examining and testing prospective makes use of for Blockchain.
Looking at its meteoric rise, legal commentators have raised inquiries on a myriad problem, ranging from competitors, and privacy issues to inquiries of liability and jurisdiction in the occasion of a dispute or fraud. Antitrust authorities on each sides of the Atlantic are also increasingly displaying interest in this subject. To preserve pace with the new trend, the Competition Commission of India (CCI), in collaboration with Ernst & Young, last week issued a discussion paper on the interplay in between Blockchain technologies and competitors law.
Blockchains are decentralized and distributed databases or ledgers exactly where information of transactions in between various men and women (identified as ‘nodes’) are recorded and stored in ‘blocks’ in chronological order in a chain which can be traced back to the 1st block of the Blockchain. The ‘blocks’ can retailer information such as sales records, payment transactions, obtain orders, pricing history, and account particulars. The technologies differs from an ordinary ledger by creating the stored details unalterable, secured, and decentralized, i.e., every single member of the network has access to it as opposed to a single authority. It is like a scoreboard of a sports game at a playground exactly where absolutely everyone knows the score simply because it on the scoreboard, visible to all on the field and can’t be altered with no a player’s action.
While it is believed that most Blockchains are efficiency-enhancing and pro-competitive, issues arise with regard to accessibility of details on the Blockchain to everyone alike inside the peer-to-peer network, regardless of regardless of whether it is open for all or permission-based. The unfettered access or denial to sensitive/crucial details by competing providers puts Blockchains firmly into the crosshairs of competitors law enforcement.
The paper (CCI and EY) focuses on the numerous types of doable anti-competitive practices, which can be implemented by applying Blockchain technologies. These consist of details exchange, restrictions placed on accessing Blockchains and sector requirements, and the imposition of unfair and discriminatory situations in make contact with for use of this technologies.
The 1st and important problem with Blockchain technologies is its details-sharing aspect. In basic, the present or future rates or other competitively sensitive details should really not be shared in between competitors as this may well minimize competitors or even facilitate a price tag-fixing cartel. A ledger can quickly record a sizeable quantity of transactional details which is accessible (to a higher or lesser degree) to every single member of a Blockchain network. Where competitors are present on the similar network, this could potentially give unprecedented, virtually actual-time access to details in respect of their competitors’ activities which could be viewed as an unlawful exchange of details in specific situations.
The second problem is with regard to a normal-setting workout that creates compatibility in between competing technologies platforms, which are typically deemed to be pro-competitive. As the prospective makes use of for Blockchain technologies expand, sector agreements on frequent technical requirements will develop into increasingly essential. The Blockchain members will have to guarantee that participation in the consortium is not unduly restricted that the process for setting a relevant normal is transparent and that access to the adopted normal should really be on fair, affordable, and non-discriminatory (FRAND) terms.
The third problem relates to access to Blockchain technologies itself. While access to Blockchain applications may well be restricted for a selection of financial and technical motives, this restriction may well raise competitors concerns in the occasion the Blockchain itself is deemed to be an crucial facility and the refusal to access is unjustified. If access to the network is a requirement for activity on the marketplace, participants who abuse their dominant position by attempting to exclude specific competitors from accessing the distributed ledger should really think about regardless of whether such a deterrent may well violate competitors laws.
The CCI’s move to delve deeper into the intricacies of this technologies is in line with its peers like the European Commission, US Federal Trade Commission and Japan Fair Trade Commission which are also actively studying comparable concerns involving this technologies. The Courts in Australia and the United States have currently investigated allegations of cartel and leveraging in the Blockchain arena.
Given that Blockchain applications are at the moment on the proof-of-notion stage, it is essential for providers searching to be early beneficiaries of this technologies to be conscious of the prospective competitors dangers. After all, if any transactions breach the law, the Blockchain itself will keep an immutable record of these breaches. It is also advisable for the CCI to proactively engage with Blockchain stakeholders (miners, developers, customers, and so on.) at an early stage though the technologies is nonetheless getting created, creating them conscious of the law.
(Vaibhav Choukse is a Partner at J Sagar Associates. The views expressed are the author’s personal)