ARTICLE
11 April 2024

Digital Competition Bill, 2024 | Is Ex-Ante Regulation The Next Best Thing Since Sliced Bread Or A Frankenstein In The Making?

I
IndusLaw

Contributor

INDUSLAW is a multi-speciality Indian law firm, advising a wide range of international and domestic clients from Fortune 500 companies to start-ups, and government and regulatory bodies.
On March 12, 2024, the Ministry of Corporate Affairs released a report prepared by the Committee on Digital Competition Law ("CDCL") which, among other things...
India Antitrust/Competition Law
To print this article, all you need is to be registered or login on Mondaq.com.
1. INTRODUCTION
1.1. On March 12, 2024, the Ministry of Corporate Affairs released a report prepared by the Committee on Digital Competition Law ("CDCL") which, among other things, recommended an introduction of an exante legislation specifically applicable to large digital enterprises, to supplement the Competition Act, 2002 (as amended) ("Competition Act") ("CDCL Report"). In this regard, the CDCL Report comprised a draft Digital Competition Bill, 2024 1 ("DCB"), inviting public comments until April 15, 2024.
 1.2.  The origin behind the drafting of the DCB can be traced back to the 53rd (fifty three) report presented by the Parliamentary Standing Committee on Finance on 'Anti-Competitive Practices by Big Tech Companies' before the Lok Sabha on December 22, 2022 ("PSC Report"). The PSC Report identified ten predominant anti-competitive practices2 by large digital enterprises and recommended that the behaviour of these digital enterprises be monitored ex-ante, with an emphasis on prevention before cure.3
 1.3.

 The recommendations of the PSC Report led to the constitution of CDCL, which was tasked to:

  1. review whether existing provisions in the Competition Act and the rules and regulations framed thereunder were sufficient to deal with the challenges emerging from the digital economy;
  2. examine the need for an ex-ante regulatory mechanism for digital markets through a separate legislation;
  3. study the international best practices on regulation in the field of digital markets;
  4. study other regulatory regimes/institutional mechanisms/government policies regarding competition in digital markets;
  5. study the practices of leading players/intermediaries which limit or have the potential to cause harm in digital markets; and
  6. study any other relevant matters related to competition in digital markets.
 1.4.  Based on its detailed assessment, the CDCL concluded that the current ex-post framework under the Competition Act was not suitable to facilitate timely and speedy redressal of anti-competitive conduct by digital enterprises given the extensive fact-finding and a tiered adjudicatory process involved in ex-post enforcement proceedings. For instance, despite the Competition Commission of India ("CCI") passing several orders since 2019 wherein prima facie evidence of anti-competitive behaviour in digital markets was inferred and an investigation was directed to be conducted4 , final orders by the CCI have only been passed in three instances. 5 Of these cases that were decided by the CCI, one case is pending adjudication before the Supreme Court of India6 and the remaining before the National Company Law Appellate Tribunal ("NCLAT"). 7
 1.5.  Additionally, the complexity of delineating the 'relevant market' and assessing the dominance of digital enterprises added substantially to the time taken for redressal of grievances against such enterprises. 
1.6. According to the CDCL, by the time the authorities investigate and decide on the anti-competitive practices undertaken in the digital markets, the market conditions 'tip' irreversibly in favour of the dominant enterprises. Given this, the CDCL concluded that the ex-ante framework under the DCB would act as the new tool to strengthen and supplement the CCI's existing ex-post powers in the digital markets. Although the ex-ante framework would still likely be subjected to judicial interventions, it would be a much more efficient market correction mechanism compared to the existing ex-post interventions. Further, given that this framework is an extension of the existing competition laws in India, it would be regulated by the existing Indian competition law authority, i.e., the CCI.
1.7. Unsurprisingly, many large digital stakeholders such as Amazon, Google, Meta, Flipkart, Uber, are not in favour of the introduction of ex-ante regulations in India, especially considering the dynamic nature of digital markets. There is also a fear that the introduction of such regulations may cast a chilling effect on innovation and technological advancement in the market.
1.8. Set out below are the key features of the DCB to help us arrive at our own conclusions on whether the DCB as it stands today is a boon or a bane.


To view the full article click here

Footnotes

1. The CDCL Report along with the draft Digital Competition Bill, 2024, is available at: https://www.mca.gov.in/bin/dms/getdocument?mds=gzGtvSkE3zIVhAuBe2pbow%253D%253D&type=open.

2. The anti-competitive practices identified were: (i) anti-steering provisions; (ii) platform neutrality/self-preferencing; (iii) adjacency/bundling and tying; (iv) data usage (use of non-public data); (v) pricing/deep discounting; (vi) exclusive tie-ups; (vii) search and ranking preferencing; (viii) restricting third-party applications; (ix) advertising policies; and (x) acquisitions and mergers.

3. An ex-post regulatory approach envisages intervention in a market after the occurrence of an anti-competitive conduct. Such an approach is fact-specific and relies on available market information for evidence of abuse. An ex-ante regulation, on the other hand, aims to identify and regulate specific areas/issues in a market before the occurrence of any anti-competitive conduct. They may specify codes of conduct for market participants and seek to guide stakeholder behaviour through regulatory intervention.

4. In Re: Updated Terms of Service and Privacy Policy for WhatsApp Users, CCI order dated 24 March 2021 in Suo Moto Case No. 01 of 2021; Kshitiz Arya v. Google LLC, CCI order dated 22 June 2021 in Case No. 19 of 2020; Together We Fight Society v. Apple Inc. & Ors., CCI order dated 31 December 2021 in Case No. 24 of 2021; Digital News Publishers v. Alphabet Inc., CCI order dated 7 January 2022 in Case No. 41 of 2021; National Restaurant Association of India v. Zomato Limited, CCI order dated 4 April 2022 in Case No. 16 of 2021; and Vijay Gopal v. Big Tree Entertainment Pvt. Ltd. (BookMyShow), CCI order dated 16 June 2022 in Case No. 46 of 2021.

5. XYZ v. Alphabet Inc. & Ors., CCI order dated 25 October 2022 in Case No. 07 of 2020; Mr. Umar Javeed v. Google LLC, CCI order dated 20 October 2022 in Case No. 39 of 2018; and Federation of Hotel & Restaurant Associations of India v. MakeMyTrip India Pvt. Ltd., CCI order dated 19 October 2022 in Case No. 14 of 2019.

6. Google LLC v. CCI, Civil Appeal No. 4098 / 2023.

7. Alphabet Inc v. CCI, NCLAT, Competition Appeal (AT) No. 4 of 2023 and Oravel Stays v. CCI, NCLAT, Competition App. (AT) No. 55 of 2022.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

ARTICLE
11 April 2024

Digital Competition Bill, 2024 | Is Ex-Ante Regulation The Next Best Thing Since Sliced Bread Or A Frankenstein In The Making?

India Antitrust/Competition Law

Contributor

INDUSLAW is a multi-speciality Indian law firm, advising a wide range of international and domestic clients from Fortune 500 companies to start-ups, and government and regulatory bodies.
See More Popular Content From

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More