CCI suggests companies to perform self-audits of AI-based systems

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To curb AI-triggered unfair business practices, a CCI market study has suggested that enterprises need to conduct self-audits of their artificial intelligence systems to address potential competition concerns and also that the watchdog strengthen its technical capabilities as well as infrastructure.

The study titled 'Market Study on Artificial Intelligence and Competition' released by the Competition Commission of India (CCI) on Monday also mooted the idea of setting up a "think tank to draw upon expertise on matters related to digital markets with special focus on AI" and undertake steps to promote inter-regulatory coordination.

Apart from emphasising the need to strengthen CCI's technical capabilities and infrastructure, the study has also suggested that the regulator should engage with international competition authorities and multilateral competition platforms.

The study also comes at a time when there are concerns about algorithmic collusion and AI-driven pricing strategies that may lead to price discrimination.

"The legal and regulatory frameworks worldwide and in India are evolving to keep pace with AI's rapid advancement and its implications for competition. The study found that regulatory approaches in other jurisdictions are increasingly focusing on AI governance, algorithmic transparency and accountability measures," it said.

The regulator will also organise a conference on 'AI and Regulatory issues' in association with relevant stakeholders, as well as conduct advocacy workshops on 'AI and competition compliance'.

Highlighting the need to ensure responsible autonomy while protecting markets from distortions, the study urged enterprises to "include self-audits of AI systems for competition compliance that will allow businesses to proactively identify and address potential competition concerns".

Lack of transparency with respect to the deployment of AI in decision-making can harm competition and consumers. The enterprises are thus encouraged to adopt transparency measures to reduce information asymmetry, the study noted.

AI can have pro-competitive as well as anti-competitive impact on competition. Possible concentration in the AI value chain, ecosystem lock-in, risk of algorithmic collusion, price discrimination, exclusive partnerships and opaque nature of algorithms could be among the challenges that can be posed by AI.

"Based on the perception survey of AI startups, the possibility of AI facilitated collusion, price discrimination and predatory pricing, was expressed by 37 per cent, 32 per cent and 22 per cent of respondents, respectively," it said.

Going by estimates, the global AI market is projected to grow from USD 244.22 billion in 2025 to USD 1 trillion in 2031, and in India, it is expected to expand from USD 7.84 billion in 2025 to USD 31.94 billion in 2031.

The study, conducted by the Management Development Institute Society (MDIS), Gurugram, was aimed at understanding AI markets and ecosystems, identifying emerging and potential competition issues, and reviewing existing and evolving regulatory frameworks governing AI systems.

It relied on primary and secondary research methodologies as well as semi-structured interviews with stakeholders such as AI startups, technology firms, user sectors, AI development platforms, investors, domain experts (in AI and competition law), and industry associations.

"Competition law remains a key instrument for addressing AI-driven anti-competitive practices. Global regulatory responses to AI-driven competition issues are also evolving to address the emerging and potential challenges. Competition law, being sector and technology-agnostic, can address several AI-driven anti-competitive practices," it said.