Bridging the Gap

**Kunaal Hemnani and Khushi Vasu

The e-commerce sector in India is grappling with a big challenge, as antitrust regulators have to apply conventional antitrust laws on complex digital markets. This issue is focused on landmark cases like Delhi Vyapar Mahasangh v. Flipkart Internet Private Limited and Amazon Seller Services Private Limited v. Competition Commission of India. These cases highlight the anti-competitive conduct of self-preferencing and preferential listing and brought them to the forefront of Indian competition law. CCI directly responded to these concerns by initiating a Director General’s investigation. This investigation specifically examined whether Amazon and Flipkart violated Sections 3(1) and 3(4) of the Competition Act, 2002, marking a crucial step towards addressing platform bias in e-commerce.

The DG’s investigation revealed findings related to systematic preferential treatment by both platforms towards certain sellers. In addition, search rankings were monopolized by products from these preferred sellers, creating a setting that was biased in favour of the preferred merchants per se. Such conduct by the e-commerce platforms essentially distorts competition in the market by severely hindering other sellers’ capacity to compete freely and fairly on the platforms.

This raises to the forefront a significant regulatory gap in India’s competition law regime that has to be fixed and requires immediate attention: Firstly, India’s dedicated legislative response in the form of the Digital Competition Bill still needs reconsideration since the previous draft stands redacted, leaving a significant void in ex-ante regulation for digital markets. Secondly, in the absence of such legislation, the courts and the CCI are forced to tweak the provisions of the ageing Competition Act, 2002 to address modern issues like self-preferencing as revealed in the Amazon and Flipkart cases. Thirdly, this blog addresses this gap by drawing essential lessons from the EU Digital Markets Act and landmark cases like Google v. Commission (Google Shopping case), Bronner and Google Android Auto and the authors advocate for a precise legislative definition to effectively regulate digital platforms and safeguard market competition in India’s digital economy.

Inadequate provisions for tackling self-preferencing-

The Ministry of Corporate Affairs constituted a Committee on Digital Competition Law which recommended the introduction of a Digital Competition Bill incorporating ex-ante regulations aimed at proactively curbing potential abuse of dominance. Additionally, the redacted draft bill introduced a classified system for digital enterprises, identifying those with a substantial presence in Core Digital Services (CDS) as Systematically Significant Digital Enterprises (SSDEs).

Section 3(3) of the draft bill gave discretionary powers to the CCI in order to designate an enterprise as SSDE. This ambiguity highlights the problem of overreach by the regulator.

Section 11 of the redacted draft bill prohibited an SSDE from engaging in self-preferencing, whether directly or indirectly. This included giving preferential treatment to its own products or services, those of its affiliated entities, or those of third parties with whom it has commercial arrangements for manufacturing, selling, or providing services.

However, this definition remains underdeveloped. It does not elaborate how self-preferencing might occur within digital ecosystems. In contrast, the EU’s Digital Markets Act (DMA) defines self-preferencing far more comprehensively. It states that a gatekeeper must not treat its own products or services more favourably, whether in terms of ranking, indexing, or crawling, than comparable offerings by third parties.

The draft bill omits practices such as crawling which is the process through which new and updated content is discovered and indexing, which involves organising and cataloguing such content. Under the EU’s DMA gatekeepers are expressly prohibited from manipulating these processes to favour their own offerings, since doing so undermines contestability by rigging rankings even before a neutral algorithm is applied. India’s draft bill, however, does not clarify whether such early-stage platform behaviours fall within the ambit of self-preferencing. 

This omission creates ambiguity. Without identifying the specific methods that may constitute self-preferencing, enforcement could become inconsistent and unpredictable, granting excessive discretion to the regulator. Firms may find it difficult to determine whether routine integration of their services, such as recommending their own products to enhance user experience, amounts to a violation. On the other hand, leaving the concept open-ended could allow regulators flexibility to address novel forms of digital self-preferencing as technology evolves.

Furthermore, the draft bill does not make any distinction between permissible self-promotion and prohibited self-preferencing. While the former may be efficiency-enhancing and consumer friendly. The latter distorts market access and competition. The absence of this distinction risks both over-enforcement, which could deter innovation, and under-enforcement, which could entrench gatekeeper dominance. Hence, a more precise articulation drawing from the DMA’s approach would help in striking a balance between regulatory and legal certainty.

Bronner Test

The Bronner test was established in the significant case of Bronner v. MediaPrint. It delineated the criteria for assessing when a dominant firm’s refusal to grant access to a certain essential facility constitutes an abuse of dominance under Article 102 of the Treaty on the Functioning of the European Union. This test sets a stringent threshold which requires 3 specific conditions to be fulfilled before such a refusal to access can be deemed as anti-competitive.

Essentials of the Bronner Test

1. The refusal is likely to eliminate all competition in the market on the part of the person requesting the service. This type of refusals creates an insurmountable barrier that prevents any new entrant from technically competing and effectively allowing the dominant firm to maintain or strengthen its monopoly by controlling an essential gateway to the market which in turn eliminates all competition from the market. 
2. The refusal is incapable of being objectively justified. A dominant firm cannot refuse access to essential facilities without some substantial objective business justification namely practical technical limitations, safety hazards or some reasonable business strategy which could hinder the business of the firm which is giving the essential facility. 
3. The service in itself is indispensable to carrying out that person’s business, i.e., there is no actual or potential substitute for the requested input. If a facility is deemed to be essential then the requesting firm must prove that there is absolutely no viable alternative to access that relevant market, making it virtually impossible for the competitors to operate without it. 

Evolution of Bronner Jurisprudence- 

The actual application of this test in digital markets is a complex task, as seen in the Google Shopping case. The European Commission investigated Google’s self-preferencing practices, where Google purposely favoured its own comparison shopping service over its competitors. The court concluded that Bronner was not applicable in Google’s case, and the commission drew a key distinction between open and closed platforms in this case. 

The court’s rationale was on the key distinction that Bronner pertains to only closed inputs (essential facilities or infrastructure exclusively controlled by the dominant firm), while in the case of Google, its search engine functions as an open platform. The search works by indexing external content, making third-party participation essential for its working and competitive appeal. The transparency of the search engine differentiates it from other essential facilities which operate as closed systems. The distinction between open and closed systems reflects the complex nature of digital markets particularly with reference to e-commerce platforms, which are essentially hybrid entities, as they exhibit characteristics of both open and closed systems simultaneously. These e-commerce platforms display closed-system characteristics as they exercise exclusive control over algorithms, data analytics and rules of platform governance and open characteristics by operating as marketplaces dependent on third-party participation for the functioning of their platform. 

The platforms’ dual nature creates unique regulatory challenges, such as deciding whether to allow external players entry or exercising significant gatekeeping power over the main essential facility. This market’s hybrid structure shows that traditional market classification and regulation techniques might not be sufficient, requiring more complex solutions that take into consideration both closed control mechanisms and open market accessibility.

The application of the Bronner Test continues to evolve through various subsequent cases, one of them being the Google Android Auto case. In this case, Advocate General Medina opined that Bronner should not apply to platforms that are designed for third-party participation.  The platforms’ economic viability depends solely on third-party access, and they were specifically created for external involvement. By focusing on the analysis of functional and commercial objectives rather than just technical analysis, this opinion represents a departure from the conventional Bronner analysis. This approach demands careful calibrations to avoid eliminating the protection offered by Bronner.

This evolving doctrine around the Bronner test emphasizes the need for differentiating access requests by firms according to their alignment with the platform’s intended purpose. It will also show how Bronner can adjust by continuing to have strict standards for closed facilities while acknowledging that transparency is essential to the platform’s business model that depends on openness. This evolution reflects the need for regulatory frameworks that can handle the unique characteristics of the digital markets. 

**Kunaal Hemnani is a third-year student at Rajiv Gandhi National University of Law, Punjab and

**Khushi Vasu is a fourth-year student at Rajiv Gandhi National University of Law.

**Disclaimer: The views expressed in this blog do not necessarily align with the views of the Vidhi Centre for Legal Policy.