The Government has extended the deadline for submitting stakeholder comments on the draft digital competition bill to May 15. It has also extended the deadline for submission of comments by stakeholders on the report of Committee on Digital Competition Law (CDCL). The initial deadline is to end on April 15.
Earlier, the Ministry of Corporate Affairs (MCA) had invited comments of stakeholders on the report of CDCL as well as draft digital competition bill under e-consultation module by April 15.
However, in a notice on Tuesday the ministry said it had considered “the requests received from various stakeholders, and the last date of submitting the comments/ suggestions is extended till 15th May, 2024.”
Committee on Digital Competition Law
The Committee on Digital Competition Law, formed by the Ministry of Corporate Affairs in February 2023, recommended a new law and legislation to regulate the market power of Big Tech companies like Meta and Google.
The Committee on Digital Competition Law was set up on 6th February 2023 to examine the need for an ex-ante regulatory mechanism for digital markets in India. The Committee was tasked with the responsibility of reviewing the current provisions of the Competition Act, 2002; assessing whether they are sufficient to deal with challenges that have emerged from the digital economy; and evaluating whether a separate legislation to regulate digital markets is needed.
It examined the need for a separate digital competition law, bearing in mind the inherent peculiarities of digital markets vis-à-vis traditional markets as well as a wide range of stakeholder concerns.
The Competition Act of 2002 “intervenes after the occurrence of an anti-competitive conduct,” the committee said. “Such a framework was designed at a time when the extent and pace of digitalisation as is witnessed today could not be foreseen.” The recommendations, if implemented, would better equip the Competition Commission of India (CCI) to rule on competition matters for tech firms.
The report
The Standing Committee Report stated that it recognised that digital markets, in comparison with traditional markets, are driven by strong network effects and tend to ‘tip’ in a swift manner, often leading to a ‘winner-takes-most’ outcome. The leading players in a digital ecosystem are more prone to resort to practices which foreclose competition, reduce market contestability, and raise barriers for new entrants in the market.
Given the pace at which such markets evolve, an ex-post regime may not be effective to remedy the irreversible tipping of markets in favour of large digital enterprises. The Standing Committee Report acknowledged the need for a comprehensive ex-ante competition law to ensure a competitive structure for Indian digital markets.
The report said “…digital markets bear the risk of becoming irreversibly polarised in favour of the incumbent.”
The report recommends the creation of a new law, the Digital Competition Act, to ‘introduce an ex-ante legislation specifically applicable to large digital enterprises, to supplement the Competition Act.’ A draft prepared by the committee targets firms with a ‘significant presence’ in the market for a ‘Core Digital Service,’ terming these Systemically Significant Digital Enterprises, or SSDEs.
The Committee observed that the current ex-post framework under the Competition Act, 2002 needs to be supplemented to better address concerns related to alleged anticompetitive practices of large digital enterprises. It recommends that ex-ante measures be introduced to complement the current ex-post framework by identifying large digital enterprises with a ‘significant presence’ in India in selected ‘core digital services’ and setting pre-determined rules for their conduct.
Since digital markets are dynamic in nature, timely intervention is necessary to prevent anticompetitive conduct, the report stated. A set of appropriately designed ex-ante measures can help the CCI in making a timely and effective intervention before the market irremediably tips, the committee said.
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