The Indian government on February 6 set up a Committee on Digital Competition Law (CDCL) to examine the need for a separate law on competition in digital markets, as per an order issued by the Ministry of Corporate Affairs reviewed by MediaNama.
The committee is expected to submit a report to the government including a draft Digital Competition Act (DCA) within 3 months.
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What is on the committee’s to-do list?
The committee is tasked with exploring the following:
- Are existing laws enough: Review whether the Competition Act, 2002, and the rules framed under it are sufficient to deal with challenges posed by the digital economy.
- Do we need ex-ante regulations: Examine the need for a separate ex-ante regulation for digital markets. Ex-ante rules look at preemptively preventing large platforms from engaging in certain types of conduct that could result in reducing competition, as opposed to (the current) ex-post regulations, which go after companies by investigating allegations of misconduct after they have occurred. The European Union’s Digital Markets Act (DMA) and Digital Services Act (DSA) are examples of ex-ante regulation because they classify certain large companies as gatekeepers and prescribe measures to monitor and restrain their conduct.
- What are other countries doing: Study the international best practices for regulating digital markets.
- What are other options to promote competition: Study other regulatory regimes, institutional mechanisms, and government policies that can be used to promote competition in digital markets.
- Role of gatekeepers: Study the practices of “leading players or Systemically Important Digital Intermediaries (SIDIs) which limit or have the potential to cause harm in digital markets.”
- Any other competition matter connected to digital markets: “Any other matters related to competition in digital markets as may be considered relevant by the Committee.”
Why does this matter: The 21-year-old Competition Act, 2002, was enacted at a time when digital markets like e-commerce and social media were not that prominent. These new-age markets work in different ways compared to traditional markets, and existing antitrust laws might not be best suited to go after competition concerns in digital markets. For example, traditional competition laws might deem something as anti-competitive if it unfairly raises prices for consumers. If we go by this logic, Amazon’s alleged unfair and discriminatory treatment of sellers on the platform might go unchecked because consumers still get the best prices. Another example is how fast digital markets move. Before an antitrust investigation is complete, the incumbent digital platform might have already done irreversible damage.
For these reasons and more, there have been multiple suggestions for amendments to existing laws or the enactment of new laws to better cover digital markets:
- Parliamentary Standing Committee on Finance report: In December 2022, the Parliamentary Standing Committee on Finance submitted an extensive report advocating for identifying and designating leading digital market firms and introducing a separate competition act for digital businesses. It also stressed on the need for ex-ante regulations.
- Proposed amendments to Competition Act: In August 2022, the Indian government proposed amendments to the Competition Act, 2002, that allows the CCI to better look into issues like “killer acquisitions” by Big Tech companies, expands the scope of what is considered an anti-competitive agreement, requires CCI to have a member experienced in technology, etc. These amendments are yet to go into effect.
- Parliamentary Standing Committee on Commerce report: In June 2022, the Parliamentary Standing Committee on Commerce submitted a report that also called for ex-ante regulations targeted at digital markets and highlighted the urgent need for amendments to the Competition Act, 2002, as recommended by the Competition Law Review Committee (more below).
- CCI Digital Markets Unit: “In view of the growing number of cases and complexity in the digital sector and the increasing need for data and technology skills, we are now planning to set up a dedicated Digital Markets Unit within CCI,” Ashok Kumar Gupta, Chairperson, Competition Commission of India (CCI) announced on June 11, 2022.
- Competition Law Review Committee report: The Competition Law Review Committee (CLRC), which was set up by the Indian government during the year 2018-19 to review and suggest amendments to the Competition Act, 2002, submitted its report in July 2019, recommending a wide range of changes to the Competition Act to better address concerns in digital markets.
Who will be the members of the newly constituted committee:
- Secretary, Ministry of Corporate Affairs – Chairperson
- Chairperson, Competition Commission of India (CCI) – Member
- Dr Saurabh Srivastava, Chairman of Indian Angel Network and Co-founder of NASSCOM – Member
- Dr Aditya Bhattacharjea, Professor of Economics (Retd.), Delhi School of Economics – Member
- Haigreve Khaitan, Khaitan & Co. – Member
- Harsha Vardhana Singh, IKDHVAJ Advisers LLP – Member
- Pallavi Shardul Shroff, Shardul Amarchand Mangaldas & Co. – Member
- Anand S. Pathak, P&A Law Offices – Member
- Rahul Rai, Axiom5 Law Chamber – Member
- Joint Secretary (Competition), Ministry of Corporate Affairs – Member Secretary
- Representative from Niti Aayog (NITI)
- A representative from the Department of Commerce (DoC)
- A representative from the Department of Economic Affairs (DEA)
- A representative from the Department of Consumer Affairs (DoCA)
- A representative from the Department for Promotion of Industry and Internal Trade (DPIIT)
- A representative from the Ministry of Electronics and Information Technology (MEITY)
For 11-16, the representative that can be nominated cannot be an officer below the rank of Joint Secretary.
“The Chairperson of the Committee may co-opt any other person as a member/ special invitee as and when required,” the order stated.
CCI will provide support to the committee: “The Competition Commission of India (CCI) will provide logistic support, secretarial support and research assistance to the Committee, as required,” the order stated.
Will ex-ante regulations address concerns in digital markets: While multiple parliamentary committees support the need for ex-ante regulations, tech companies believe that such regulations are not best suited for India. The Asia Internet Coalition (AIC), which consists of companies like Amazon, Google, and Meta, issued a statement in January this year asking the government to not blindly implement the recommendations made in the Finance Standing Committee’s report. AIC called the report “prescriptive, absolutist and regressive in nature” and added that transplanting regulations meant for other countries onto India “could lead to disproportionate costs to consumers in India and an impact on innovation and investment by businesses in India.” AIC also noted there is no consensus on whether ex-ante regulations actually work.
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