Industry Bodies, Associations Seek Extension for Digital Competition Bill Feedback

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The Digital Competition Bill proposes a preemptive regulatory framework for overseeing digital markets in India, drawing inspiration from the Digital Markets Act of the European Union. Industry stakeholders are opposed to ex ante regulation fearing limits to market growth and stifling innovation.

Several important stakeholders who would probably be impacted by the Digital Competition Bill have asked for an extension of two to six months to submit their feedback on the law, as the deadline for doing so ends on May 15, 2024.

The bill proposes a preemptive regulatory framework for overseeing digital markets in India, drawing inspiration from the Digital Markets Act (DMA) of the European Union (EU). (The DMA came into force from November 1, 2022 and became applicable, for the most part, on May 2, 2023.)

The timeline for submitting final comments on India’s Digital Competition Bill, formulated by the Ministry of Corporate Affairs, was deemed too restrictive by several industry associations and advocacy groups. Over eight industry bodies and 21 organizations, including the Broadband India Forum, the Indian Electronics Cellular and Association (ICEA), the US-India Business Council, the American Chamber of Commerce in India (AMCHAM), and the Federation of Indian Chambers of Commerce and Industry (FICCI), among various others, have penned letters to the government urging an extension.

As per media reports, think tanks and organizations, such as the India SME Forum, Consumer Unity and Trust Society, and Internet Freedom Foundation, have also joined the appeal for an extension of the deadline. 

India’s aim to protect digital data

In March 2024, a report prepared by the Committee on Digital Competition Law (CDCL), was released in public by India’s Ministry of Corporate Affairs. One of the committee’s recommendations in the draft is the introduction of an ex ante legislation specifically applicable to large digital enterprises to supplement the Competition Act, 2002 (as amended) (“Competition Act”) (“CDCL Report”).

The Digital Competition Bill states:

  • an ex-ante approach to monitor large digital enterprises and prevent any form of abuse; and
  • self-regulation by Systemically Significant Digital Enterprises (SSDEs) and potential intervention by the Competition Commission of India (CCI) before any form of abuse—these are to be defined by way of both qualitative and qualitative criteria in core digital services provided by SSDEs.

Simply put, each enterprise engaged in the business of Core Digital Services (CDS) and meeting the following financial and user thresholds in each of the preceding three financial years would be considered a Systemically Significant Digital Enterprise (“SSDE”).

Concerns raised by leading e-commerce companies

Given the dynamic nature of digital marketplaces, a number of significant digital stakeholders, including Amazon, Google, Meta, Flipkart, and Uber, are opposed to the implementation of ex-ante rules in India. Additionally, there is concern that the implementation of these rules would stifle technical innovation and growth in the industry.

It has proven to be challenging to come to an agreement on the draft bill’s provisions, even with the CDCL’s concentrated efforts. Long-term discussions and several expansions of the committee’s mandate have resulted from the complexity of the regulatory environment and the wide range of interests and viewpoints of stakeholders.

Another suggestion made by the CDCL in its 2024 report was the call for stricter rules aimed at Systemically Important Digital Intermediaries (SIDIs) within the Competition Commission Bill. The objective of this suggestion is to highlight growing worries about anti-competitive activities and market concentration in the digital space. However, the definition of qualitative standards for SIDI classification, the extent of regulatory actions, and striking a balance between goals for innovation and competition are among the main points of disagreement.

Our take

The Digital Commission Bill appears to signal proactive enforcement by the central government, aiming to introduce preemptive measures ensuring accountability among major tech corporations in the digital realm. Yet, before finalizing industry consultation, it’s crucial for the central government to carefully consider concerns voiced by companies and allied associations to mitigate potential unrest. Crafting a comprehensive definition for SSDEs will be essential for effective self-regulation, should they receive approval. Moreover, the central government must safeguard against inhibiting national investment and innovation, balancing the need for stringent measures with potential opposition and the threat of sanctions.

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