By Kanika Chaudhary Nayar & Aaditya Ranbir Sehgal
The Competition Commission of India (CCI) has been tasked with guaranteeing cost-free and fair competitors in markets as its mandate beneath the Competition Act, 2002. In light of commerce and technologies becoming increasingly integrated, it wants to comprehend technological developments and how these are employed by marketplace participants in the course of their functions in order to figure out permissibility of marketplace conduct. The CCI lately released a discussion paper on blockchain and the use thereof although complying with the guidelines of cost-free and fair competitors.
Although blockchain has largely been related with cryptocurrencies such as the bitcoin, it has numerous possible utilizes. The improvement of technologies intended to capitalise on the blockchain are anticipated to fundamentally alter the manner in which particular activities are undertaken for instance, provide chain management. In that context, it is crucial to comprehend that blockchain is a virtual chain of time-stamped facts which includes an immutable record of information and is managed by a cluster of customers of a blockchain application as opposed to a single authority. This gives advantages such as the possible to improve efficiency in payments by removing the will need for a centralised intermediary to bear the counterparty’s threat, guarantee transparent provide chains, amongst other commerce-connected functions.
In this context, the CCI noted the possible utilizes of blockchain to give impact to anticompetitive conduct not only amongst competitors, such as sensitive facts exchanges, but also by dominant entities employing a position of strength to prejudice other people. However, the similar throws up particular preliminary challenges of jurisdiction, identifying anonymous blockchain participants, amongst other people. Although it was noted that some challenges such as jurisdiction can be addressed inside the present framework of competitors laws in India, other challenges persist such as variance with requirements of information privacy and enforcement against anonymous entities.
With respect to the interplay of privacy and blockchain, it is pertinent to note that blockchain records are immutable, but the present understanding of privacy requirements consists of the ‘right to be forgotten’ as contained in the draft Personal Data Protection Bill, 2018, in India and the General Data Protection Rules in the EU. Privacy has been noted to be a pertinent non-value issue of competitors that influences customer option, in the marketplace study on the telecom sector and the order directing the initiation of investigation into WhatsApp’s alterations to its privacy policy. Thus, a nascent technologies throwing up numerous quite pertinent concerns of law, which are also beneath improvement, can be observed in the context of blockchain.
Accordingly, the CCI has stated that blockchain applications must be created such that they comply with guidelines of competitors, in addition to becoming sufficiently versatile to incorporate alterations that could be essential in light of any future findings of the regulator. It would be of interest to note that antitrust proceedings relating to this have commenced in the US exactly where alleged collusion by bitcoin ‘miners’ impacting costs is beneath consideration in the District Court for the Southern District of Florida.
Globally, regulators have taken measures to comprehend blockchain and connected technologies, to guarantee no gaps in enforcement arise. In the US, the Federal Trade Commission has set up a ‘FTC Blockchain Working Group’ to comprehend blockchain and cryptocurrency markets to figure out when enforcement actions could be essential. In the EU, the European Commission is adopting a holistic method of funding innovation in the blockchain space, interacting with the private sector, setting up a regulatory sandbox, in addition to working towards making a pro-innovation legal framework. Keeping up with other created jurisdictions, the CCI is searching at blockchain markets, with their disruptive capabilities, in a severe manner.
The discussion paper gives some broad-level suggestions for stakeholders to stick to such as becoming mindful of exchanging facts relating to costs, expense, and so forth avoiding collusive conduct resulting in distortion of competitors or working out undue influence more than the marketplace. It would only be observed with time how powerful and pro-innovation the effects of the Indian competitors regulator are, in blockchain-connected markets as soon as enforcement actions are offered impact to.
Nayar is companion and Sehgal is associate, L&L Partners