Convergence in ICT Industries: A Challenge for Competition Law Authorities

Posted by Social Science Research Network

Convergence in ICT Industries: A Challenge for Competition Law Authorities Subhashish Gupta (Indian Institute of Management) & Kalpana Tyagi (Max Planck Institute)

Abstract: This paper discusses the problems and opportunities provided by the emergence of convergence in information and communication technology (ICT) industries in terms of competition law. Convergence relates to the process of digitization and amalgamation of previously distinct services. The digitization of music and movies along with cheap communication and storage and sophisticated movie players has revolutionized these two industries. The same process is underway in cable television. In the future it will affect banking and possibly education and health. The new developments lead to easing entry conditions, which is a fundamental ingredient for markets to operate efficiently. At the same time there are opportunities for vertical and horizontal integration leading to bundling. From the perspective of firms, it presents an opportunity to capture these rapidly emerging and transforming markets and be a market leader. For competition and regulatory authorities, the emerging landscape presents the challenge of market foreclosure and refusal to deal by dominant firms. The trade-off between static and dynamic efficiency is even starker in dynamic ICT industries, which merits special attention, while applying Competition Law to the sector.