Big is target

Scale, supposed to be a competitive advantage, is not an unalloyed gift as voices against dominance rise across industries

For months now, small vendors under the aegis of one or the other local and/or national traders association had been complaining that they have been edged out by the big boys of the $55-60 billion Indian ecommerce world — Walmart-controlled Flipkart and Amazon — who prefer dealing with large vendors directly or indirectly controlled by them.
 
Millions of consumers were getting better price, quality and delivery from these big-brand platforms, so no one really thought anything would change despite the growing cacophony of the Davids. But just then, the government changed the rules for foreign-owned ecommerce firms and made life more difficult for Goliaths to the extent that they are seeking extension of the February 1 deadline just to ensure business continuity. Clearly, a sub-optimal solution to a valid problem of ensuring a level-playing field.

 
Look around and you will find sundry voices warning against the risk of dominance growing across sectors. This newspaper reported a proposal by the country’s aviation ministry to limit landing slots an airline can hold in congested airports such as Delhi and Mumbai ostensibly directed at market leader IndiGo at the behest of smaller rivals and new entrants. There are some who are already saying that telecom, now dominated by the troika — Reliance Jio, Vodafone Idea and Bharti Airtel — is past the welcome “creative destruction” phase and that its oligopolistic structure may rapidly move towards a duopoly, and could eventually become a monopoly!

 

State after state is drawing up new rules to limit the number of cabs that big aggregators such as Uber and Ola can keep in their network, with Gujarat reportedly looking to cap it at 20,000 per aggregator. And though there has been unease across many states over growing dominance of hotel aggregators at the expense of small mom-and-pop hotels, Sikkim is the first where small hoteliers have stopped booking through big platforms such as Oyo and MakeMyTrip. And sooner or later these firms’ scale will put their other issues such as worker rights vis-à-vis the laissez-faire of a gig economy under the spotlight here too much like the United Kingdom and Europe where Uber has been challenged for lack of “employment contracts”.

 
Though still far from being dominant, people have started noticing the growing heft of organised retail. For instance, Kishore Biyani-led Future Group’s hypermarket chain Big Bazaar accounts for almost a fifth of all modern trade fast-moving-consumer-goods sales. And Maruti Suzuki still sells one in every second car sold in the country. Big ad platforms such as Google and Facebook are at the centre of a media ire for creaming off almost three-fourths of all online advertising leaving crumbs for all others. Why, the emergence of Reliance Industries with a dominant telecom footprint into an integrated telecom-retail-ecommerce entity is raising fears of cross-industry dominance that may need a new regulation paradigm. Equally, some, such as Infosys CFO Mohandas Pai say that the entry of an Indian player such as Reliance will assuage fears of “data colonisation” in the ecommerce sector!

 
One may argue that the decade-old competition regulator, the Competition Commission of India (CCI), has cleared most of these big entities of any abuse of dominance, and in cases where the CCI did haul them up, they have been able to prove innocence in either appellate bodies or higher judiciary. So where is the case for hemming them in? Then, there is another view that holds that much has changed in the economy in the last 10-15 years when the Competition Act was enacted, and that many of its precepts may need complete overhaul. Definition of a “market” and “firm” for instance. The government’s ongoing review of the competition law and the regulators ambit has not come a day early, given the rising complexities of the businesses and the economy and the need to herald genuine competition.