After completing wide-ranging stakeholders’ consultations, the MCA-appointed ten-member Committee on Digital Competition Law (CDCL) will begin deliberations on the contours of the proposed Digital Competition Act this Friday.

So far, in its three meetings since its constitution on February 6, the panel has heard the representatives from various Big Tech companies, industry associations including Digital News Publishers and digital start-ups.

The upcoming meeting of the CDCL will be the first after Standing Committee of Finance Chairman Jayant Sinha declared his intent to move in the Lok Sabha a private member’s Bill on Digital Competition law. Although Sinha is yet to introduce this bill, it has however now cast a shadow on the working of the panel, which has to submit its report within three months.

It maybe recalled that CDCL has been tasked to examine the need for an ex-ante regulatory mechanism for digital markets through a separate legislation. It has also been tasked to prepare a draft Digital Competition Act.

The panel will also have to review whether existing provisions in the Competition Act and the Rules and Regulations framed under it are sufficient to deal with the challenges that have emerged from the digital economy.

India is contemplating the enactment of a Digital Competition Act at a time when there is growing concern among policymakers about the power and dominance of tech giants in the digital economy, and the need to ensure a level playing field for all players in the market.

The proposed new digital competition law is expected to promote competition, innovation, and consumer protection in India’s rapidly evolving digital economy, which is expected to touch $1 trillion by the year 2025-26.

Enactment in developed countries

Even as India plans enactment of a Digital Competition law, the enactment of such laws in developed countries has been a mixed bag. Some countries have made significant progress in this area, while others have been slower to act.

For example, the European Union has been at the forefront of digital competition law with its General Data Protection Regulation (GDPR) and its antitrust investigations and fines against tech giants like Google and Facebook. Additionally, the EU has proposed new regulations such as the Digital Markets Act and the Digital Services Act, which seek to create a more level playing field for businesses operating online.

The United States has also taken some steps towards digital competition law with the ongoing antitrust investigations and lawsuits against companies like Google and Facebook. However, progress has been slower due to political and ideological divides.

In contrast, countries like Japan and South Korea have been slower to enact digital competition laws, although they have started to take steps towards regulation in recent years.

Overall, the enactment of digital competition laws in developed countries has been driven by a recognition of the increasing importance of the digital economy and the need to protect consumers and businesses from the negative effects of monopolistic practices in the digital space.

Meanwhile, in the Indian context, the Big Tech companies have taken a position that ex-ante regulatory mechanism for digital markets may not be necessary, while the homegrown digital start-ups are all in favor of it’s (ex-ante regulatory mechanism) introduction. .

Ex-ante framework

The Standing Committee on Finance had in its 53rd report titled ‘Anti-competitive practices by big tech companies’ suggested an ex-ante framework to regulate ‘Systemically Important Digital Intermediaries’ (SIDIs) under a new Digital Competition Act.

This signals a new era of ex-ante frameworks, meant to cover only SIDIs in digital markets, marking a significant exit from the existing sector-agnostic framework which covers all market players, said competition law experts.

Experts also stressed the need to ensure that ex-ante frameworks do not overlap or conflict with other areas of policy, for instance, the proposed Digital India Act and the Digital Personal Data Protection Bill, 2022.

The significance of achieving a balance between regulating anti-competitive conduct in digital markets and preventing overregulation and harm to innovation and consumer interests was also emphasized.

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