Introduction
The Competition Commission of India has primarily assessed the competitive harm via consumer welfare lens, particularly in cases which involves platform conduct and pricing practices, while its mandate under the Competition Act, 2002 is not confined to consumer harm and extends to broader market distortions, enforcement practice has largely prioritised downstream effects on consumers over upstream market dynamics.
This downstream focus has led to a significant upstream concern in relation to the working conditions of gig workers, who are backbone of the rapidly expanding sector of quick commerce. While consumers benefit from faster deliveries, workers associated with platforms such as Blinkit, Zepto, and Swiggy Instamart often operate under conditions marked by income volatility, algorithmic management, and limited bargaining power.
These features raise another credible concern regarding the exercise of monopsony power in localised labour markets, an issue that remain insufficiently explored till date in Indian competition jurisprudence. Against this backdrop, this article first examines the concept of labour monopsony in platform labour markets, followed by an analysis of the relevant market and the market structure of the quick commerce sector. It then assesses buyer-side dominance under the Competition Act, examines the role of algorithmic management, switching constraints, and worker classification, and finally concludes with policy recommendations
Conceptualising Monopsony in Platform Labour Markets
Although the Competition Act 2002 is formally neutral and does not distinguish between buyer and seller power, the enforcement practices are largely concentrated on a seller-side dominance and the consumer-facing harms. However, as conceptualised by Joan Robinson, a monopsony arises when a dominant buyer gains control over the terms of an input market. In the context of quick commerce, the labour itself constitutes this input; gig workers are suppliers of delivery services, and the platforms act as a dominant purchaser of this labour.
Internationally, the authorities like The United States Department of Justice have scrutinised labour market restraints including no-poach agreements, while the Organisation for Economic Co-operation and Development has published analytical work highlighting the potential wage-suppressing effects of labour market concentration. The Indian Jurisprudence continues to predominantly emphasise consumer harm, with limited direct engagement with labour market effects.
Defining the Relevant Market: The Case for Micro-Geographic Analysis
Under the Competition act of 2002, the determination of dominance in market is contingent upon accurately defining the relevant market. From the eye of quick commerce, the product-based market could potentially be treated as a market for on-demand delivery services, the labour of this market forms a critical input within the ecosystem. But the real and complex issue lies in defining the relevant geographic market. This is different from ride-hailing services that typically operates across the entire city, whereas quick commerce platforms rely on “dark stores” and does its operation within a highly restricted delivery radius, that is limited to a few kilometres. This operational model results in creation of a fragmented and localised market instead of a unified city-wide market.
This kind of constraints eventually results into a significant reduction in the worker’s mobility across few geographic zones only, particularly within those areas where only a small number of platforms operates. This may lead to a limited number of alternative employments for gig workers that too in narrowly defined local market, which strengthen the potential for monopsony power.
The courts in India have consistently paid emphasis over the significance of definition of accurate relevant market in order to assess the dominance including in case such as Fast Track Call Cab Pvt Ltd v. CCI, where the analysis in relation to competitive constraint were tied closely with delineation of market. The conventional definition of city-wide market may not help in fully recovering the competitive dynamics of quick commerce, this suggests that there is a need to examine the current conditions of local market.
Market Structure and Entry Barriers in Quick Commerce
In hyperlocal markets, we can see the demand for delivery labour is deeply concentrated to a relatively small number of major platforms such as Blinkit, Zepto, and Swiggy. The structure of quick commerce sector relies over a dense logistic network and dark store-based infrastructure with an aim of high capital, this results into significant entry barrier to the new firms to enter the market.
Assessing Monopsony Power Under the Competition Act
This structural context becomes relevant under the Competition Act of 2002, as per section 19(4), it is the duty of Competition Commission of India to assess dominance on the basis of factors such as market share, economic powers, and barriers to entry. There is no detailed empirical data available on labour market concentration in the quick commerce sector in public domain, the observable market structure shows that these limited number of forums may exercise a degree of buyer power within the delivery zones that are narrowly defined. Any such conclusion, would ultimately dependent over a rigorous market analysis grounded in evidence.
If any such buyer-side power is once established, the effects may not be immediately visible in consumer pricing. Instead, it will be in the upstream labour market, particularly resulting in a form of constrained earnings or restricted bargaining powers for delivery workers. It remains an open empirical question that till what extent the wage outcomes in the sector are shaped via market concentration instead of other operation or contractual factors.
Algorithmic Management and Potential Coordination Risks
All such platforms use the algorithmic system to determine delivery payouts, these systems typically rely over factors such as distance, time, and demand conditions, and are independently designed by each platform. From theoretical aspect the use of similar data inputs across firms may result in comparable pricing outcomes.
It has been noted by the OECD that algorithm-driven markets may, under certain conditions may facilitate forms of tacit coordination. Though there is currently no clear evidence of such coordination in the Indian quick commerce sector, and the requirement under section 3 of the Act, for any assessment would require establishing of an agreement or concerted practice which creates a high evidentiary threshold.
Incentive Structures and Switching Constraints
Other than the pricing mechanism, these platforms rely on incentive-based structures, such as daily targets, bonuses, and tiered rewards to manage labour supply. This mechanism may result into encouraging workers to stick with a single platform for a defined period. Although gig workers retain the power to work across multiple platforms, these incentive-based systems may to an extent reduce the practical attractiveness of switching frequently, particularly when the earnings are directly linked to platform-specific performance thresholds. Though such effects results to a significant switching cost in an antitrust sense, this would still require a further detailed empirical examination.
Worker Classification and Legal Complexity
At last, from the purview of competition law, the classification of gig workers as independent contractors becomes very complex. By treating the workers as an independent service provider than as an employee, platforms structure these relationships as a market-based transactions. This again raises the possibility of such arrangements getting examined within the framework of competition law, where we view the workers as suppliers of services.
In principle, this would invite scrutiny under the section 4 of the Act, in cases that involves dominant buyers, or under section 3 where the restrictive contractual conditions are imposed. At the same time, this interaction between labour classification and competition law remains unsettled in India and its precise contours are still at evolution stage.
Policy Suggestions
To address labour monopsony in India’s quick commerce sector, there’s no need for a legislative amendment because the Competition Act, 2002, is sufficiently broad to examine buyer-side market power. However, the Competition Commission of India (CCI) should focus on the evolution of its enforcement framework to better account for labour market dynamics. Firstly, the CCI should expressly recognise labour markets as relevant markets under Sections 4 and 19 in all such cases where workers constitute the relevant input and platforms operate as dominant purchasers of labour. Secondly, in the quick commerce sector, the market definition should consider a micro-geographic approach to assess competition within the limited delivery radius of dark stores rather than at the city level, thereby reflecting the actual mobility constraints of workers. Thirdly, when examining abuse of dominance, the CCI should take into consideration whether algorithmic management systems, platform-specific incentives, or other operational practices reinforce buyer power or significantly restrict worker’s ability to switch platforms. Finally, the CCI in collaboration with labour authorities and academic institutions, should undertake empirical studies on labour concentration, earnings, worker mobility, and platform switching. This kind of evidence-based framework will enable competition law to address distortion in labour markets more effectively, while being consistent with the existing statutory framework and evolving international practice.
Conclusion: Bridging the Gap in Competition Law Enforcement
Despite of all such concerns the enforcement approach followed by the CCI in practice is mostly looked via consumer welfare lens, even though the Competition Act 2002 act is framed with a very broader view. This results into a limited direct attention in competition law enforcement, when it comes to any kind of potential distortion in the upstream labour markets, this creates a gap in how the gig workers still remain unaddressed in quick commerce sector.
On one hand these gig workers are typically classified as independent contractors which implies that they won’t get full range of protections available under tradition labour law frameworks, despite some degree of recognition under Code on Social Security 2020. On other hand, competition law has not yet made clear framework for assessing their position as a participant in a labour market where the buyer power remains relevant. This may result in a situation, where the buyer power may be still remains relevant.
From this context, the key concern is related concentration in labour market, such as possible downward pressure over earnings or constraint on worker’s mobility, this has not been examined in a systematic manner by the Competition authorities. At the same time, it should be acknowledged that platform-based work also provide flexibility as well as relatively low barriers to entry for workers, which complicates a purely competition-based assessment of harm.