Identifying and defining leading digital market firms, revamping India’s competition watchdog and introducing a competition act for digital businesses—these are some of the top recommendations put forth by the Standing Committee on Finance in the Parliament on December 22 to regulate Big Tech firms in India.
Elaborating on the differences between a traditional and a digital market, the panel emphasised the need for ex-ante regulation—based on market forecasts and behaviour—of big tech companies, rather than ex-post evaluation as is the case with the current system, which mainly focuses on the actual results rather than market predictions.
For such evaluation and regulation based on behaviour analysis, the parliament broadly suggested three major recommendations to cover the dynamics of an online market, wherein businesses tip quickly and expand further often by affecting fair competitive practices.
Why does it matter?
India’s Competition Commission of India (CCI) has ordered an investigation into unfair and monopolistic business practices by Big Tech companies such as Google, Apple, Amazon, and Swiggy and Zomato among other online platforms. The Parliament panel has previously observed the need to keep a check on anti-competitive practices in the digital ecosystem. This report further indicates the government’s plan to expand the scope of CCI and also elaborates on the ways in which it is planning to regulate Big Tech firms in India in the near future.
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Here are the three major recommendations for regulation:
1. Identifying Systematically Important Digital Media Intermediaries (SIDI)
- The Committee recommends that India must identify leading players or those market winners who may negatively influence competition in a digital ecosystem as “Systemically Important Digital Intermediaries (SIDI)”.
- These SIDIs must be identified on the basis of their revenues, the number of active business and end users, and their market capitalisation.
- The CCI and the central government must, in collaboration with stakeholders, deliberate on a reasonable definition of SIDIs for ex-ante regulation of their behaviour.
- Within certain fixed months of being designated as a SIDI, a platform must annually submit a report to the Commission regarding its compliance with its mandatory obligations. It must also publish a non-confidential summary of the report on its website.
2. Digital Competition Act
The Committee recommends that the Indian government should consider introducing a Digital Competition Act to ensure a “fair, transparent and contestable digital ecosystem” in sync with the country’s evolving start-up ecosystem and global policies.
3. Revamping of the Competition Commission of India (CCI)
- Establishing a specialised Digital Markets Unit within the CCI.
- The staff must include skilled experts, academics and attorneys enabling the Commission to closely monitor SIDIs and emerging SIDIs, review SIDI compliance, adjudicate on digital market cases and conduct efficient and effective monitoring of digital markets.
- The unit must also keep a check and track of similar unfair practices of other digital players, even though not specifically designated as SIDIs.
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