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Digital Competition Bill Update

(Vikram Jeet Singh and Prashant Daga)


India’s efforts to overhaul their technology laws continues apace, with a proposed addition to its antitrust laws focusing on digital businesses.

 

On March 12, 2024, the Indian Government released a draft Digital Competition Bill, 2024 (Bill). The Bill was accompanied by an expert committee report on digital competition (Report), that examines the need for a bespoke regulatory mechanism for digital markets in India. The Report and the Bill can be accessed here.

 

In February 2023, the Committee was tasked with reviewing the current provisions of India’s Competition Act, 2002, and assessing whether they are sufficient to deal with digital economy challenges. Their Report makes a case for the need for a separate legislation to regulate digital markets. The Report makes for an interesting reading, with the committee making detailed examination of a plethora of digital laws, including those related to foreign investments, data protection, consumer protection, and e-commerce. The Report also touches upon international best practice, with particular focus on EU’s Digital Markets Act, 2022,  along with draft and extant regulations from the UK, Japan, Australia, and South Korea to name a few. 

 

The Report goes on to conclude that an ex ante (before the fact) regulation would best suit India’s regulatory needs, and that a ‘Digital Competition Act’ should be introduced to ensure a fair, transparent, and contestable digital ecosystem. The draft Bill proposed by the committee proposes the following, among other matters:

  1. Regulation of Systemically Significant Digital Enterprises: The Bill primarily calls for the regulation of such ‘SSDEs’; these are the entities who provide core digital services in India and have a significant presence and significant financial strength in the country. Financial threshold and other criteria are prescribed in the Bill (based on domestic turnover, global turnover, market cap, merchandise value, etc.). (This is not-so-different from the EU’s Digital Markets Act’s conception of ‘gatekeepers’).

  2. The Competition Commission of India can enquire into non compliances, and order remediations: The Competition Commission of India (“CCI”) (viz., existing Indian antitrust regulator) can make such enquiries on its own volition, or when in receipt of a complaint, or if required by the Government. Remediation orders of the CCI may range from prohibitions on a particular type of activity or contract, imposing a monetary penalty, or issuing other directions to modify the conduct of an enterprise. Further, CCI may also prescribe conduct requirements for SSDEs on the basis of various factors (such as economic viability of operations, cybersecurity, IPR infringement, etc.).

  3. Penalties for non-compliance: Entities found to be in breach of digital competition compliances can be fined as much as 10% of their global turnover. Fines are also prescribed for  providing false information (up to 1% of global turnover) and failure to notify the commission of non-compliances (up to 1% of global turnover). ("Global turnover" includes revenue of the enterprise derived from the sale of all goods and provision of all services, whether digital or otherwise, and when an enterprise is part of a group, shall include the revenue derived from the sale of all goods and provision of all services, whether digital or otherwise, of such group.)

 

In addition to the Bill, the Report provides context on the background which led to the need to determine the need for regulating seemingly anti-competitive practices of tech platforms, and formulation of the draft law. It is a valuable snapshot of the ‘State of Play’ in India’s digital markets, while also looking to other jurisdictions that have forayed into regulating digital markets. Feedback on this Bill has to be submitted by April 15, 2024 on the e-consultation module at mca.gov.in.

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