CCI Market Study Flags Algorithmic Collusion, Data Control, and Urges AI Self-Audits for Competition
SDG 9: Industry, Innovation, and Infrastructure | SDG 16: Peace, Justice, and Strong Institutions
Institutions: Ministry of Corporate Affairs | Ministry of Electronics & Information Technology
The Competition Commission of India (CCI) has released its Market Study on Artificial Intelligence and Competition, highlighting both the pro-competitive potential and the significant risks posed by the rapidly expanding AI ecosystem in India. It has found several critical areas where AI may lead to anti-competitive practices, warranting proactive measures from both enterprises and the regulator.
Key Competition Concerns and Structural Challenges
The report identifies the entrenchment of market power by major technology firms as a primary structural challenge. These firms possess a significant advantage through their control over vast, proprietary datasets, high-performance computing infrastructure, and cutting-edge AI models (like Foundation Models/Generative AI). This control creates substantial barriers to entry for smaller, innovative AI startups, potentially stifling competition and limiting consumer choice.
A second, more insidious risk is algorithmic collusion. AI-driven systems, particularly in areas like dynamic pricing, can autonomously learn to coordinate their strategic behaviour (e.g., pricing) over time, resulting in outcomes similar to price-fixing even without explicit human agreement. The opaque nature of these algorithms makes such collusion difficult for traditional enforcement methods to detect and prosecute. The study also flags potential issues like exclusionary partnerships and the risk of lock-in for downstream users of AI applications.
Urgent Actions and Policy Recommendations
The report calls for urgent and proactive steps to mitigate these risks and foster a fair, competitive AI ecosystem.
For Enterprises (Immediate Self-Regulation):
Mandatory Self-Audits: Enterprises are urged to include self-audits of their AI systems for competition compliance. This involves proactively documenting algorithmic objectives, data sources, and decision-making processes to identify and prevent inadvertent anti-competitive practices.
Transparency Measures: Companies should adopt transparency standards regarding the use and purpose of AI in decision-making to reduce information asymmetry and ensure responsible autonomy.
For the Regulator (CCI and Government):
Strengthen Technical Capacity: The CCI must strengthen its technical capabilities and infrastructure to effectively investigate and address algorithm-driven anti-competitive conduct, requiring expertise in digital and data-intensive markets.
Establish a Think Tank: A dedicated think tank focused on digital markets and AI should be established to ensure continuous and informed regulatory response.
Inter-Regulatory Coordination: There is an urgent need for coordinated action between the CCI and other sector-specific regulators and government departments to ensure a consistent and innovation-friendly regulatory landscape.
Promote a Level Playing Field: Government support and policy initiatives are necessary to enhance access to AI infrastructure and remove entry barriers, thereby promoting a level playing field for all AI developers and users in India.
The findings mark a shift from reactive enforcement to anticipatory regulation, enabling India to craft an AI-era competition policy grounded in transparency, interoperability, and consumer protection. The study dovetails with the proposed Digital Competition Law and India’s ongoing AI Governance Framework consultations.
What are the Digital Competition Law and AI Governance Strategy? → The Digital Competition Law (DCL) refers to a proposed legal framework for regulating digital markets, originally drafted in 2024 by the Committee on Digital Competition Law, but currently under reconsideration and not yet enacted.
The AI Governance Strategy / guideline framework is under development via IndiaAI and a subcommittee (report published for consultation). It outlines principles, accountability, and governance mechanisms, but is not yet a binding law.
Follow the full study here: https://www.cci.gov.in/economics-research/market-studies/details/47/0