Markets in Pieces

**Disha Joshi and Soham Gupta

Debates on arbitration and public policy typically focus on illegality, morality, or judicial review. This article advances a different claim. In competition law, public policy concerns market coherence rather than individual correctness. While arbitration does not regulate markets, it shapes incentives by validating contractual arrangements that affect competitive conditions. When competition harms are adjudicated across uncoordinated institutions, fragmented outcomes can stabilise exclusionary conduct and delay market correction. Using the Indian dual-jurisdiction model as a case study, the article argues that the core public policy challenge lies not in arbitrability, but in the absence of institutional coordination capable of sustaining coherent market governance.

Section I: Reframing Public Policy in Arbitration

Debates on arbitration and public policy usually return to a small set of concerns. Writers focus on illegality, morality, and judicial review. While these concerns are significant, they do not adequately engage with the core issue examined in this analysis.

In competition law, public policy does not focus on condemning conduct after harm occurs but  on governing markets as institutional systems. Competition law shapes incentives faced by firms. It coordinates behaviour across markets. It keeps markets legible over time. Arbitration takes part in this process, even when framed as inter partes. Arbitral decisions influence enforcement choices. They affect information flows. They shape deterrence. Through these effects, arbitration shapes markets. 

The problem does not arise because arbitration sometimes conflicts with public policy. The problem is structural. Competition harms affect entire markets. Arbitration resolves disputes in fragments. Private and isolated resolution changes the nature of the inquiry. The issue stops being whether one award reaches a correct result. The issue becomes whether dispersed adjudication sustains institutional consistency. Public policy, in this setting, concerns coherence. It concerns whether regulators and market actors still understand the market as a whole. 

This approach does not require arbitrators to function as competition regulators. It does not reject party autonomy. The question is narrower and more demanding. The question asks whether governance of market-wide harms remains coherent when adjudication occurs across uncoordinated fora. Arbitration takes a bilateral form. The effects extend beyond the parties. Each award reshapes incentives. Firms adjust how they invoke competition law. Firms adjust how they avoid or internalise enforcement risk. 

The public policy issue does not involve arbitrability as such. The issue concerns governance. Markets lose coherence when competition harms receive fragmented treatment. 

Section II: Competition Law as Public Policy, Market Coherence as a Public Good

Competition law often appears as a moral regulation. Writers describe it as the condemnation of unfairness. This description simplifies the role of competition law, yet, using such a description leaves much unsaid. 

Competition law does not focus only on judging conduct. Competition law organises markets. It stabilises expectations, structures incentives, and shapes business strategies over time. Public policy here refers to institutional design. Moral judgment plays a limited role. 

Market coherence functions as a public good. Firms plan pricing, investment, and entry based on enforcement signals. Regulators rely on earlier decisions when assessing markets. Consumers respond to stable market structures. Competition law supplies the background conditions for these interactions. Fragmentation weakens these conditions. Markets become harder to govern. Regulators face reduced visibility in extreme cases. 

Competition adjudication, therefore, never stays private. One decision upholding exclusivity reshapes incentives for non-parties. One finding normalising a pricing practice validates broader business models. Uncertainty produces opposite effects. Firms delay action. Firms benefit from opacity. Entry and exit conditions shift. Enforcement signals blur. Bilateral resolution produces wider effects. 

Fragmentation intensifies these problems. Different fora describe the same market in diverse ways. Firms detect these differences quickly through forums of shops, sequencing of disputes, and exploitation of informational gaps. Market correction slows. Harm persists longer than expected. In some situations, correction never occurs. This outcome reflects structural distortion rather than weak enforcement. 

Each decision might appear reasonable on its own. Collectively, the decisions fail to cohere. Governance occurs in pieces. No institution sees the whole market. No forum ensures consistency. Public policy enters because competition law presupposes coordination. Enforcement loses orientation without coordination. 

Once competition law operates as market governance, dispute resolution design becomes a public policy issue. The architecture of adjudication shapes market coherence.

Section III: Arbitration as Market Infrastructure

Arbitration does not control markets in the usual sense because it does not fix prices, rein in conduct or create straitjackets. When, however, competition problems are enfolded within commercial issues, arbitral decisions have a significant consequence on market inducements. Indirect and anarchic these impacts may be, yet real, nonetheless. Ignoring these impacts by boxing arbitration as a purely private avenue obscures how contractual dispute resolution can often unknowingly stabilise market structures, something competition law also seeks to control.

Arbitral tribunals commonly endorse contractual frameworks that influence business behaviour on the market. Long-term supply contracts, exclusivity arrangements, access rights to online platforms, and pricing algorithms are commonly adjudicated, upheld, or set aside in arbitration. In the context of highly competitive markets, the implications of these decisions are not limited to the litigants. They redistribute risk, consolidate presumptions of behaviour, and establish the viability of market schemes ex post. As evident in scholarship, adjudicated market behaviour is often validated ex post without the requirement of a regulatory purpose.

This impact is even more significant when competition concerns arise indirectly, for example, in the defence of abuse of dominance claims related to contract enforcement defence or in the assertion of exclusionary conduct in the context of counterclaims. To the extent arbitrators purport to lack jurisdiction over competition law infringement, their findings in the contract disputes may have the effect of ensuring the stability of such conduct in cases where it becomes hard to remove in the public enforcement process. Analysts from European and American perspectives alike have acknowledged how arbitral decisions can shape conditions of competition through standardizing certain business practices.

The recognition that arbitration is market relevant does not raise arbitration awards to the level of regulation. It recognizes an indirect but noteworthy influence on incentives by proxy. The difference here is significant. The notion is not that arbitrators are setting market power or corrective action, but that their decisions can inform the underlying facts and economics on which competition regulators will act. This is an effect of the structural isolation in which arbitrators often operate, separate from other parallel proceedings, but not an overextension of their authority.

In this regard, arbitration plays an infrastructural role in the market and not a regulatory role. Infrastructures are behaviour-shaping but not commandingly so. Roads do not regulate the policy of traffic flow. They only organize the manner in which the flow should take place. In the same manner, arbitral awards organize the manner in which business will be conducted by recognizing valid allocations of rights and risks. This becomes a public policy issue when competition law matters are in contention.

Arbitration thus viewed, as being conceptually unrelated to market phenomena, underestimates its systemic importance. With regard to competition disputes, arbitration is never a regulator, but an institutional point whose influence has a resonance effect, which has to be grappled with if market integrity is to be maintained.

Section IV: India’s Dual Jurisdiction Approach

India’s response to the intricacies involved in arbitration and competition laws is one that is both liberal in spirit but split in practice. While commercial disputes are admissible under the provisions of the Arbitration and Conciliation Act of 1996, cases involving competition laws are subject to the jurisdiction of the Competition Commission of India, and the courts exercise oversight on various levels of all these proceedings. The most conspicuous omission in all of this is the lack of harmony or logic that can coordinate all these processes in favour of a unified market.

Jurisprudence clearly establishes that the presence of competition laws by itself is not sufficient to derogate arbitral jurisdiction per se. For instance, in Booz Allen and Hamilton Inc v SBI Home Finance Ltd and Vidya Drolia v Durga Trading Corporation, a wide support base is available in favour of arbitration, subject to limited heads of non-arbitrable disputes. Nevertheless, under The Competition Act, 2002, exclusive jurisdiction is reserved with the Commission to quantify anti-competitive practices and provide a market remedy. These two concepts exist side by side, in a way that there is no coordination of jurisdiction in practice by courts.

This parallel existence has predictable effects on the system. The same behaviour could be judged from different institutional perspective, resulting in inconsistent factual premises. An arbitral tribunal could find that a contractual limitation has passed the test for commercial justification, whereas the Commission finds that the self-same limitation is exclusionary. Each determination can be equally plausible within its institutional role, but the lack of harmonisation opens the possibility for contradictory messages influencing market outcomes. 

Significant entities can seize this opportunity for sequencing their behaviour, where they first rely on arbitration for suitable contractual validation even prior to Commission oversight. A reluctance to address this fragmentation by the judiciary is also not insignificant. There has been an ongoing approach by Indian courts to the principles of party autonomy and the doctrine of kompetenz-kompetenz, while at the same time, the assessments of competition and other matters are left to the regulatory body. This was seen in the case of CCI vs. Bharti Airtel Ltd, where the court held the jurisdiction of the Commission while focussing on sequencing in the sector.

However, where there is a problem, it is not one of inconsistent doctrine or judicial confusion. Rather, it is one of a lack of institutional infrastructure able to deliver consistent outcomes in markets. Competition policy applies in markets, which exist as systems, while arbitration applies in disputes, which exist in a transactional context. Where there is parallelism in both, there will be issues with delayed, diluted, or inconsistent correction in markets. This is because certain judicial determinations may stabilize what public enforcement seeks to later unwind, while findings may be late, thus not correcting deeply rooted contractual arrangements in markets.

On the policy-planning side, the fragmentation fiasco is a system failure. This is because a market system wants to work under foreseeable conditions and authenticate standards on permissible behaviour. This becomes an obstacle to competitive discipline as decision-making bodies softly work in diverging directions. It would be permissible to jeopardize a system toward autonomy and access to relief but it cannot provide the gap solutions. This gap and not the arbitrability on competition matters itself is the public policy issue.

Section V: Public Policy as Coordination: The Case for Cooperative Jurisdiction

A common response to competition concerns in arbitration calls for exclusion. The proposal seeks to bar arbitration from competition disputes. This response appears simple. The response also creates new problems. A blanket bar over-centralises enforcement inside competition authorities. Such concentration slows resolution and limits access to private remedies. Parties lose timely relief. While the Courts review rewards, smaller disputes wait behind public priorities and fragmentation survives. The regulators still act later. Separation does not disappear. Separation shifts. 

A prohibition also misunderstands the source of harm. Fragmentation flows from uncoordinated decision-making, not from arbitration itself. Removing one forum leaves others untouched. Multiple institutions still shape incentives. Market signals still diverge. Delay increases. Enforcement loses rhythm. The system grows heavier, not clearer. 

Public policy should focus on coordination rather than hierarchy. Market order depends on institutional coherence. Monopoly over adjudication does not achieve coherence. Structured cooperation does. 

Three principles guide such cooperation. 

First, functional allocation. Arbitrators should resolve inter-partes contractual consequences. Arbitrators already assess facts, incentives, and commercial context. Competition authorities should address market-wide correction. Authorities hold investigative powers and remedial tools. Each institution works within its competence. 

Second, consistency safeguards. Institutions should avoid contradictory factual and economic baselines. Findings on market definition, dominance, or effects should not drift across fora. Coordination protocols, reference points, and information sharing reduce divergence. Predictability follows. 

Third, courts function as coherence checkpoints. Courts should not rehear merits. Courts should intervene when fragmented outcomes threaten market order. Judicial review then targets inconsistency rather than correctness. This role preserves restraint and coherence. 

The objective is not to constitutionalise arbitration or regulate arbitrators, but to preserve market coherence as a core public policy value. 

Coordination offers practical gains. Private parties receive timely relief. Authorities retain market oversight. Courts protect systemic order. You gain a framework that respects institutional strengths. You avoid delay and duplication. Public policy then performs a stabilising role. 

Public policy faces no threat from arbitration. Public policy faces risk from uncoordinated institutions shaping markets in isolation. Coordination answers that risk.

**Disha Joshi is a B.A. LL.B. student at Gujarat National Law University, Gandhinagar. Her academic interests lie in arbitration, international law, and commercial litigation. 

**Soham Gupta is a B.Com LL.B. (Hons.) student at Gujarat National Law University, Gandhinagar. His academic interests lie in technology regulation, competition law, and public law. 

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