Artificial intelligence (AI) has evolved from a mere productivity tool to a transformative force shaping how companies price products, target consumers, and allocate resources. AI-driven decision-making is reshaping market dynamics and competition law ought to keep up with the pace at which AI is developing.
In October 2025, the Competition Commission of India (CCI) released a Market Study on Artificial Intelligence and Competition (Study) aimed at understanding India’s growing AI ecosystem and its implications on competition.
Competition Concerns in the AI market
The Study highlights AI facilitated algorithmic collusion as a major issue. When firms deploy self-learning software that adjusts to competitors’ pricing, the algorithms may “learn” to avoid price wars and instead sustain higher prices, effectively forming a cartel. Hence, even without human intervention, such AI-facilitated conduct can amount to tacit collusion under Section 3 of the Competition Act, 2002 (Act).
Further, companies may deploy AI to track individual consumer behaviour and set prices based on a buyer’s willingness to pay, potentially charging discriminatory prices for the same product. This occurs without the consumer’s awareness and raises fairness and transparency issues. Lack of transparency in AI pricing could distort consumer choice and favor firms with access to superior data, potentially leading to abuse.
The Study also identified a trend of large players acquiring AI startups or entering into exclusive partnerships to dominate the emerging “AI stack” which is the layered AI ecosystem encompassing collection of technologies, and infrastructure. The consolidation of AI market power could raise entry barriers, particularly where access to data and infrastructure is unequally distributed; consequently, paving way for practices such as self-preferencing, wherein dominant firms unfairly favour it’s own products over rivals’ products. In Matrimony.com v. Google (2018), CCI held Google liable for self-preferencing by manipulating search results, recognizing that even “algorithmically driven placements” can amount to abuse of dominance. AI could amplify such concerns.
In this respect, the Study notes that UK’s newly enacted Digital Markets, Competition and Consumers Act 2024 allows the Competition and Markets Authority (CMA) to scrutinise algorithms of dominant firms with a “Strategic Market Status”. Similarly, the European Union’s AI Act empowers national competition authorities to access information about AI systems. In addition to emulating this, CCI may consider adopting a regulatory sandbox where companies’ novel AI systems can be tested under controlled environments. By doing so, CCI can move beyond traditional ex-post enforcement towards a more experimental, preventive approach suited for fast-evolving AI markets.
Adopting AI in Competition Law Enforcement
One of CCI Study’s key recommendations was capacity-building to deal with AI-led market distortions. In line with global trends, CCI mentioned it will focus on strengthening its technical expertise by setting up a think tank with special focus on AI. This could involve recruiting data analysts or collaborating with academic institutions to develop AI tools suitable for Indian market data.
In 2019, the CMA established a Data, Technology and Analytics unit comprising data scientists, technologists etc. who apply machine learning in the CMA’s cases. Recently, the CMA unveiled a new AI-powered screening tool designed to detect bid-rigging in public procurement markets. This tool analyses large volumes of bidding data from government tenders, flagging suspicious patterns that could indicate collusion. During its pilot in one government department, the AI system successfully identified signs of collusive bidding, pursuant to which the CMA opened an investigation. Given that India heavily depends on public-private partnerships, and consequently on multitudes of government tenders, AI tools that can indicate collusion would be an apt mechanism for CCI to wield.
The European Commission’s Director General for Competition has also begun to use AI-assisted screening tools to analyse large volumes of data as part of investigations and evidence-gathering. Using AI in competition law enforcement can help regulators manoeuvre through massive datasets like pricing records, bidding histories etc. to spot patterns that suggest collusion or abuse of dominance, thereby saving time and improving accuracy. However, AI tools may potentially generate false positives or overlook subtle misconduct, especially if poorly trained. For example, in the United States, an automated algorithm, MIDAS, that was employed to identify potentially fraudulent insurance claims, erroneously accused nearly 48,000 individuals of fraud. Other jurisdictions have reported similar incidents, suggesting that the potential of such risks cannot be eliminated. Hence, human intervention and review may be necessary.
The Study also contemplates inter-regulatory coordination. While section 21A of the Act empowers CCI to seek views from other regulators on overlapping legal issues, a combined approach against AI issues could lead to more coordinated and effective action against anti-competitive conduct.
SEBI has already made strides in adopting AI for efficient regulation of the public markets. Given data privacy concerns, the Data Protection Board will also need to follow suit. The Reserve Bank of India has begun integrating AI into its supervisory approach, notably through its FREE-AI framework for responsible enablement of AI in finance and tools like “MuleHunter.AI” to detect fraudulent digital transactions. Similar to UK’s “Digital Regulation Cooperation Forum” which brings together multiple regulators to understand the benefits, and regulatory implications of emerging technologies, a multi-regulator forum involving the CCI, SEBI, RBI etc., may be implemented.
Way Forward
CCI’s decision to build internal AI expertise is a necessary first step, but it must be paired with clearer standards for how AI-related market behaviour will be assessed under the Act. Clear guidance on what constitutes responsible AI use will help enterprises understand the boundaries of lawful conduct. The approach of adopting and adapting to AI is a step in the right direction.
As AI technologies continue to evolve, CCI may consider a forward-looking regulatory regime that addresses AI’s competition concerns while safeguarding industry and consumer welfare.
