Thursday, March 4, 2021

Are India's Antitrust laws effective at controlling monopolies?

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Vaishnavi Krishna Mohan

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Are India's Antitrust laws effective at controlling monopolies?

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Global Views 360

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March 4, 2021

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Representative Image for rise of Monopolies

Representative Image for rise of Monopolies

On 15th of July 2020, Reliance Industries Ltd (RIL) held its annual general meeting of the shareholders. The chairman and managing director Mukesh Ambani, announced that global tech giant Google would be investing $4.5 billion in Jio Platforms. Facebook also has acquired a 9.99% stake in Jio Platforms. This is the first time in the world that both the global tech giants have invested in the same entity. These investments have boosted the confidence for Jio Platforms and also for India’s growth but there have been questions and speculations about the potential anti-competitive makeup of these deals.

The objective of this article is to explore the interpretation and the effectuality of Antitrust laws in India.

Anti-competitive practices are those business practices which firms engage in to emerge as the or one of the few dominant firms, who will then be able to restrict inter firm competition in the industry in a bid to preserve their dominant status. The Collins English dictionary defines antitrust laws as those laws that are intended to stop large firms taking over their competitors by fixing prices with their competitors, or interfering with free competition in any way. These laws focus on protecting consumer interests and promoting a competitive market. The word ‘Antitrust’ is derived from the word ‘trust’. A trust was an agreement by which stakeholders in several companies transferred their shares to a single set of trustees.

In present-day India, talking about market dominance Reliance Industries Ltd (RIL), resembles American company—John D Rockefeller's Standard Oil Company—of the early 20th century. Mukesh Ambani holds the highest ability to influence markets and policy in every sector in which RIL is present—petrochemicals, oil, telecom, and retail. Many industry experts and critics suggest that Ambani has used his political clout to twist the regulatory framework in his favor.

Gautam Adani, founder of Adani Group | Source: Twitter

Furthermore, economic power in aviation infrastructure is clustering into a few hands as well. In 2019, the Adani Group bagged the 50-year concession to operate all the six Airports Authority of India-operated airports—Lucknow, Jaipur, Guwahati, Ahmedabad, Trivandrum, and Mangaluru—which were put up for auction. The company also obtained a controlling stake in ‘The Chhatrapati Shivaji Maharaj International Airport, Mumbai’ from GVK Airports. Moreover, Adani Group is now set to construct the Navi Mumbai International Airport. The group is now eyeing Indian Railways while they have already established an alarming monopoly in green energy and sea ports. While Airports are natural monopolies, one private company controlling more than 8 important airports is not good news to airlines.

India has established antitrust laws to promote competition. For 40 years, India followed the Monopolies and Restrictive Trade Practices Act 1969 (MRTP). This act was based on principles of import substitution and a command-and-control economy. However, over time several amendments had to be made to the act. In 2002, the Indian approved a new comprehensive competition legislation. This is called the Competition Act 2002. The act focused on regulating business practices in order to prevent practices having an appreciable adverse effect on competition (AAEC) in India. The act primarily regulates three types of conduct: anti-competitive agreements (vertical and horizontal agreements), abuse of a dominant position, and combinations such as mergers and acquisitions. The act lists out the cartel agreements that it intends to prevent. This list includes price-fixing agreements, agreements between competitors seeking to limit or control production, market-sharing agreements between competitors and bid-rigging agreements. These agreements are called “cartel” arrangements.

The competition Act is enacted by the Competition Commission of India (CCI), which is exclusively responsible for the administration and enforcement of the Act. It comprises a team of 2 to 6 people appointed by the government of India. The CCI has previously handled high-profile cases. In 2018, CCI imposed a fine of Rs135.86 crore on Google on the grounds that Google misused its dominant position and powers to create a search bias. In another important case, the CCI, ordered a probe into Idea, Vodafone and Airtel when Reliance Jio owner Mukesh Ambani lodged a complaint against the three for forming a cartel and denying Jio the POI required for network connection, causing multiple call failures. The Cellular Operator Association of India was also probed for encouraging the same.

In some cases, the Competition Commission has been successful in tackling activities that are against the free competitive market. However, critics and economists believe that the act is now unable to adapt to the changing business environment in e-commerce, telecom, technology and the government’s role in distorting competition. Demonetization and GST drove the formalization of the economy. One consequence of them was that bigger, better organized players gained at the cost of smaller ones with lesser resources. The Insolvency and Bankruptcy Code (IBC) was designed to solve the problem of non-performing assets (NPAs) of banks. But consequentially, it has also led to a consolidation in many sectors.  

However, CCI has expressed inability to consistently adjudicate punitive measures due to obligation in several cases. This points to the loopholes in the very provisions of the Competition Act 2002. In an Economic and Political Weekly (EPW) article, Aditya Bhattacharjea—an Economist—argues that even though the 2002 Act represents an improvement from the MRTP Act which was extremely restrictive, the present act also remains riddled with loopholes and ambiguities. According to Bhattacharjea, this creates unnecessary legal uncertainty, which acts in advantage of lawyers and law firms. For instance, the act allows the CCI to leave some scope of flexibility for “relative advantage, by way of contribution to the economic development.” Bhattacharjea argues that this may allow large firms to justify their anti-competitive practices in the name of development.

Mark Zuckerberg and Mukesh Ambani having online interaction after Facebook invested in Jio Platforms | Source: NDTV

Data portability plays a significant role in determining market power of certain firms. In 2017, the CCI closed cases against both WhatsApp and Jio involving allegations of predatory pricing and privacy violations. In both these decisions, the regulator did not consider the restrictions around data portability as a competitive advantage. The possible data leveraging advantage for the attempted monopolization could be the ‘portfolio effect’. Portfolio effect refers to increasing the range of brands, by bundling of telecom or messaging service and other service offerings or illegal vertical restraints, even predatory pricing. This in turn may lead to greater ability of further leveraging, deterring innovation and results in degradation of quality. Another possible advantage is explained as the theory of leveraging. The best example of leveraging is when Microsoft entered the media-player market by extending its quasi-monopoly on the operating systems market by taking advantage of the indirect network effects. In case of Facebook acquiring 10% of Jio’s shares, it is a concern that both entities could potentially use WhatsApp’s market dominance in telecom and social networking services and establish dominance in e-commerce market through anticompetitive acts.

There was a consensus among Indian policymakers at the time of the 1991 economic reforms that economic liberalization would eliminate the nexus between the business elites and the policymakers. On the contrary, the relationship between these two groups got further strengthened.

On the other hand, few critics and industrialists argue that extreme restrictions on growing companies hampers the progressive growth of the national economy. While RIL’s Jio looks like a cause for concern, the company has also saved Rs. 60,000 crores for annual savings in India. In addition to that, the entry of Jio to the telecom industry has led to a rise in data consumption and improved accessibility and affordability of the internet across the nation.

However, the concern still lingers as the question of whether this growth is a result of actual innovation or crony capitalism remains unsolved.

However, the fact that telecom, organized retail, ports and airports have two or three players controlling the bulk of the sector needs to be addressed. A healthy competition is quintessential for long-term growth and innovation. Harmful trade practices and cartelization does not only affect small manufacturers but also the general public.

The government, CCI and other lawmakers must closely examine the present laws and provisions and need to see if they are required to amend the act.

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April 13, 2021 2:10 PM

Detecting The Ultra-High Energy Cosmic Rays With Smartphones

Smartphones have become the most commonplace objects in our daily lives. The unimaginable power that we hold in our hands is unrealized by most of us and, more importantly, untapped. Its creativity often gets misused but one can only hope that it’s fascinating abilities would be utilized. For example, did you know that the millions of phones around the globe can be connected to form a particle detector? The following article covers the CRAYFIS (Cosmic RAYs Found in Smartphones) phone-based application developed by the physicists from the University of California—Daniel Whiteson, Michael Mulhearn, and their team. CRAYFIS aims to take advantage of the large network of smartphones around the world and detect the cosmic or gamma rays bursts which enter the Earth’s atmosphere almost constantly.

What Are Cosmic Rays?

Cosmic rays are high velocity subatomic particles bombarding the Earth’s upper atmosphere continuously. Cosmic ray bursts have the highest energy compared to all forms of electro-magnetic radiation. When we say ultra-high energy particles (energy more than 1018^eV), we mean two million times more energetic than the ones that can be produced by the particle colliders on Earth.  These rays are thought to be more powerful than typical supernovae and can release trillions of times more energy than the Sun. They are also highly unpredictable as they can enter Earth’s atmosphere from any direction and the bursts can last for any period of time ranging from a few thousand seconds to several minutes.

Despite many theoretical hypotheses, the sources of these ultra-high energy cosmic rays are still a mystery to us even after many decades of their discovery. These rays were initially discovered in the 1960’s by the U.S. military when they were doing background checks for gamma rays after nuclear weapon testing. Cosmologists suggest that these bursts could be the result of super massive stars collapsing - leading to hypernova; or can be retraced to collisions of black holes with other black holes or neutron stars.

How Do We Detect Them?

When the high-energy particles collide with the Earth’s atmosphere, the air and the gas molecules cause them to break apart and create massive showers of relatively low-energy particles. Aurora borealis i.e., the Northern and the Southern lights are the lights that are emitted when these cosmic rays interact with the Earth’s magnetic field. Currently, these particles are hitting the Earth at a rate of about one per square meter per second. The showers get scattered to a radius of one or two kilometers consisting mostly of high-energy photons, electrons, positrons and muons. But the fact that these particles can hit the Earth anytime and anywhere is where the problem arises. Since the Earth has a massive area, it is not possible to place a detector everywhere and catch them at the exact moment.

Energetic charged particles known as cosmic rays hit our atmosphere, where they collide with air molecules to produce a shower of secondary particle | Source: CERN

Detecting such a shower requires a very big telescope, which logically means a network of individual particle detectors distributed over a mile or two-wide radius and connected to each other. The Pierre Auger Observatory in South America is the only such arrangement where 1,600 particle detectors have been scattered on 3,000 square kilometers of land. But the construction cost of the same was about $100 million. Yet, only a few cosmic ray particles could be detected using this arrangement. How do we spread this network around the Earth?

In addition to being cost-effective, such a setup must also be feasible. The Earth’s surface cannot possibly be dotted with particle detectors which cost huge fortunes. This is where smartphones come into the picture.

Detecting The Particles Using Smartphones

Smartphones are the most appropriate devices required to solve the problem. They have planet wide coverage, are affordable by most people and are being actively used by more than 1.5 billion users around the planet. Individually, these devices are low and inefficient; but a considerably dense network of such devices can give us a chance to detect cosmic ray showers belonging to the highest energy range.

Previous research has shown that smartphones have the capability of detecting ionizing radiation. The camera is the most sensitive part of the smartphone and is just the device required to meet our expectations. A CMOS (Complementary Metal Oxide Semiconductor) device is present in the camera- in which silicon photodiode pixels produce electron-hole pairs when struck by visible photons (when photons are detected by the CMOS device, it leaves traces of weakly activated pixels). The incoming rays are also laced with other noises and interference from the surroundings.  Although these devices are made to detect visible light, they still have the capability of detecting higher-energy photons and also low-ionizing particles such as the muons.

A screenshot from the app which shows the exposure time, the events- the number of particles recorded and other properties

To avoid normal light, the CRAYFIS application is to be run during nighttime with the camera facing down. As the phone processor runs the application it collects data from its surroundings using a camera as its detector element. The megapixel images (i.e., the incoming particles) are scanned at a speed of 5 to 15 frames per second, depending on the frame-processing speed of the device. Scientists expect that signals from the cosmic rays would occur rarely, i.e., around one in 500 frames. Also, there is the job of removing background data. An algorithm was created to tune the incoming particle shower by setting a threshold frequency at around 0.1 frames per second. Frames containing pixels above the threshold are stored and passed to the second stage which examines the stored frames, saving only the pixels above a second, lower threshold.

The CRAYFIS app is designed to run when the phone is not being used and when it is connected to a power source. The actual performance would be widely affected by the geometry of the smartphone’s camera and the conditions in which the data is being collected. Further, once the application is installed and is in the operating mode, no participation is required from the user, which is required to achieve wide-scale participation. When a Wifi connection is available the collected data would be uploaded to the central server so that it could be interpreted.

There is much complicated math used to trace back the information collected from the application. The most important parameters for the app are the local density of incoming particles, the detection area of the phone and the particle identification efficiency. These parameters are used to find the mean number of candidates (photons or muons) being detected. Further, the probability that a phone will detect no candidates or the probability that a phone will detect one or more candidates is given by Poisson distribution. The density of the shower is directly proportional to the incident particle energy with a distribution in x and y sensitive to the direction in which the particle came from. An Unbinned Likelihood (it is the probability of obtaining a certain data- in this case the distribution of the cosmic rays including their energy and direction, the obtained data is arranged into bins which are very, very small) analysis is used to determine the incident particle energy and direction. To eliminate background interference, a benchmark requirement has been set that at least 5 phones must detect and register a hit to be considered as a candidate.

It is impossible to express just how mind-blowing this innovation is. As the days pass, Science and Technology around us keep on surprising us and challenge us to rack our brains for more and more unique ways to deal with complex problems. The CRAYFIS app is simply beautiful and it would be a dream-come-true to the scientists if the project works out and we are able to detect these high energy, super intimidating cosmic rays with smartphones from our backyard.

Further Reading

The paper by Daniel Whiteson and team can be found here.

An exciting book “We Have No Idea” by Daniel Whiteson and cartoonist Jorge Cham can be found here.

The CRAYFIS app can be found here.

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