Every commodity whether it is households, services or any other commodity for our well-being or luxury can be availed at home, office or at any other place by placing order for such things through telephone, internet, e-mail or through any other electronic communication mode and this is a result of Innovative approach of human being. Amazon, e-bay, flipcart etc. are instances of Service provider which have taken us to the new world called. E- commerce.

Changes with regard to technology have far reaching implications for commercial activities global world as well as in India. It has provided significant growth opportunities for the Indian information technology sector and for the development of e-commerce services particularly.

Few imperative changes brought about by e-commerce includes the development of new online businesses to compete against traditional ‘bricks and mortar’ retailers and the development of new allocation channels for traditional products and services including online banking, online airline ticketing services etc. Such changes have the potential to significantly increase competition by increasing traders and consumers’ choice of products. They too allow business to achieve significant efficiencies in their commercial operations as they move from high cost paper-based transactions to faster, lower cost electronic transactions.

Hence E- commerce has appeared in the form of new market area where there fierce competition is growing between various online service providers in a way which is raising various issues with regard to competition.

E-commerce in India is still in growing stage but it offers extensive opportunity in our nation which comes under developing countries. Highly intense urban areas with very high literacy rates, an enormous rural population with fast increasing literacy rate, a rapidly growing internet user base, technology advancement and adoption are few leading factors which makes India a dream destination for e-commerce. Moreover, stumpy cost of personal computers, an emergent installed base for Internet use and a progressively more competitive Internet Service Provider (ISP) market has added fuel to the fire in boosting e-commerce growth in Asia’s second most crowded nation. India’s e-Commerce industry is on the growth curve and experiencing a surge in growth.¹

Now the question comes in our mint that what is relevant market. The notion of relevant market is used in order to identify the products and undertakings which are directly competing in a business. Therefore, the relevant market is the market where the competition takes place. The enforcement of the provisions of competition law would be not possible without referring to the market where competition takes place. The extent to which firms are able to increase their prices above normal competition levels depends on the possibility for consumers to buy substitute goods and the ability for other firms to supply those products. The fewer the substitute products and/or the more difficult it is for other firms to begin to supply those products, the less elastic the demand curve is and the more probable is to find higher prices. For all these reasons it is necessary to define the relevant markets for the different cases which fall under the Law.

The relevant market contains all those substitute products and regions which provide a significant competitive constraint on the products and regions of interest. An interesting guiding principle provided by Bishop and Darcey (1995) states that a relevant market is something worth monopolising, in the sense that the relevant market includes all the substitute products and therefore control of that market would allow the monopoliser to profitably increase the prices of the products to the monopoly level. This can only be possible if the products in this "market" are not subject to significant competitive constraints by products outside that market.

A relevant market comprises a product or group of products and the geographic area in which these products are produced and/or traded. Therefore, the relevant market has two components: the product market and the geographic market²

Assessment of market delineation is essentially an empirical issue. To delineate the relevant geographic and product markets, the Competition authorities will normally have to adopt an analytical framework known as the ‘hypothetical monopolist test’ while determining relevant market for e-commerce. This approach provides whether a hypothetical monopolist of a given set of products in a given geographical area could increase its profits through a small but significant (5-10%) non-transitory increase in prices (also known as ‘SSNIP’ test).

In applying the hypothetical monopolist test, the Competition Authorities will have to examine various sorts of information, depending on the nature of the case. These may include any or all of the following:

· Price elasticities and marginal costs;

· Price levels and changes; and

· The degree of switching and switching costs.

Price elasticities and marginal costs

Rigorous application of the hypothetical monopolist test would require information on both price elasticities and marginal costs. Estimating price elasticities involves the econometric analysis of detailed data on prices and sales, broken out by product and by geographic area. With price elasticity estimates one can calculate how much sales volume a hypothetical monopolist of the ‘test’ market would lose as a result of raising price by 5-10%. With details of marginal costs, one can then assess whether such a price rise, and the consequent loss in sales volume, would on balance be profitable. If the price rise were not profitable, then the relevant market should be widened.³

Price levels and changes

In many cases, estimation of price elasticities will be cost-intensive and difficult. Relevant markets are thus often defined on the basis of other information, such as price levels and the extent to which prices move together.

E-commerce may result in high price transparency, so that data on price levels and changes will often be easy to collect. Such price comparisons will be harder, however, if e-commerce results into discriminatory price charging from different customers.

Evidence on price levels and changes will be particularly useful in defining markets where the nature of the product is essentially identical across two ‘potential’ markets. For example, in the context of e-commerce, such evidence can play a useful role in determining whether traditional and electronic commerce lie within the same market, or in determining the geographical scope of e-commerce markets.

Switching and switching costs:

Data on customers switching between products are often presented as evidence of products being in the same market. In the case of e-commerce, for example, we would expect to see companies presenting data on customers switching away from traditional commerce to e-commerce as evidence that the two sales channels are in the same market.

When analyzing such switching data, it is important to recognize that switching can occur for a variety of reasons, of which price is just one. Switching should only be taken to indicate that two products are in same market if it results from changes in relative prices. In the case of the shift from traditional commerce to e-commerce, it is far from obvious that this is the case. Rather, it may simply be a shift in purchasing patterns or customer preferences, which implies little about the ability of each form of commerce to constrain the pricing decisions of the other.⁴

CONCLUSION:

E-commerce has raised an enormous interest for the Indian Competition authorities. The rapid growth of E- commerce has changed the mode of purchasing of consumers and thereby has brought great change in market economy. E-commerce brings new ways of conducting business and challenges the existing rules for its business. Taking this into consideration it is a challenging job for competition authorities to analyze the competition aspect of e-commerce which is still considered to be at its developing stage in India.

Any assessment of the nature of competition within the Competition law starts from the relevant market definition. The guidelines of the relevant market application are stated under Competition Act, 2002. The role of this concept is crucial since it defines the boundaries where the actual competition takes place in two dimensions: product wise and geographic area wise. The relevant market definition assessment conducted on the basis of the chosen criterion as mentioned under Section 19(6) of the Competition Act, 2002 and the evidence where the evidence supports the market situation. There are three criteria to rely upon: demand-side substitutability, supply-side substitutability and potential competition which are to be determined while looking after anti- competitive aspect of any commerce. On determination of relevant market if commission finds that the product or service falls under the definition of relevant market then commission enquires upon other aspect of competition i.e. whether the concerned market player is indulged in violation of any of the provision mentioned under Section 3, 4, 5 or 6. If yes, then concerned action is taken as per Competition Act, 2002.

E- commerce business whether it deals in business of sell of physical product or services through internet or digital product, the same approach can be applied by Competition Authorities in determination of relevant market as, it does not has any other aspect other than normal market. Hence, Competition Act, 2002 will apply in totality while determining competition aspect of E- Commerce in India. Now, it is the duty of the Competition Authorities to widen the jurisprudence of Competition aspect of E- Commerce, since the mode of doing business in this way is gaining day by day. It can be assumed that E- commerce will gain momentum day by day and competition in this area will obviously grow to the extent that the leader of market will surely try to throw out its competitors from the market. In this situation the jurisprudence developed by the Competition authorities will certainly protect the consumers from any harm caused in this manner.

REFERENCES:

1. "The Work Programme on Electronic Commerce; Background Note by the Secretariat", Council for Trade- Related Aspects of Intellectual Property Rights, WTO.

2. Guidelines on relevant market definition with a view to determining the significant market share. Taken from www.globalcompetitionforum.org.

3. E- Commerce and Its Implication for Competition Policy, Office of Fair Trading, Discussion Paper, 2000.

4. Id.

Received on 25.02.2014 Modified on 11.03.2014

Int. J. Rev. & Res. Social Sci. 2(1): Jan. – Mar. 2014; Page 48-50