India's Digital Competition Law - A Work In Progress

Recognizing that digitalization is increasingly becoming the way of life for Indians and realizing that digital markets are in many ways different from traditional markets, the Government of India (GoI), in February 2023, set up¹ a Committee On Digital Competition Law (CDCL) to review and examine (i) whether the existing provisions of the Competition Act, 2002 (Competition Act) are sufficient to deal with the challenges that have emerged or likely to emerge from the digital markets, (ii) the need for a separate legislation adopting an ex-ante approach to digital markets, (iii) international best practices, and regulatory regimes in other jurisdictions that deal with competition issues emanating from digital markets, (iv) the business practices of tech giants/intermediaries which possess the potential to cause harm and hamper fair competition and (v) draft a model Digital Competition Bill for consultation among the different stakeholders including the GoI.

Before setting up of the CDCL, the Parliamentary Standing Committee on Finance (Standing Committee) had presented its Report on 'Anti-Competitive Practices by Big Tech Companies' (Standing Committee Report) before the Lok Sabha in December, 2022.² The Standing Committee Report inter-alia observed that large digital enterprises and their unique business models have prompted a variety of anti- competitive concerns that have been brought forth before the Competition Commission of India (CCI). These include unilateral and opaque policies such as search ranking preferences and anti-competitive usage of data collected amongst others.

The Standing Committee also identified ten pre-dominant anti-competitive practices that large digital enterprises usually engage in. These included (i) anti-steering, (ii) self- preferencing, (iii) bundling and tying, (iv) mergers and acquisitions, (v) data usage, (vi) deep discounting, (vii) exclusive tie-ups, (viii) search and ranking preference, (ix) restricting third parties' applications and, (x) unfair edge in advertising. It acknowledged that the dynamics of digital markets are characterized with network effects and increasing returns to scale. This often leads to a "winner takes all" outcome where a leading player adopts strategies that curtail market contestability, which reinforces its strength in the marketplace. As such, digital markets bear the risk of becoming irreversibly polarized in favour of the incumbent. The Standing Committee further went on to emphasize that an ex-post approach might not be sufficient to deal with the fast-paced digital markets and suggested that they need to adopt an ex-ante approach to prevent the occurrence of anti-competitive conducts in the digital marketplace.

Apart from taking note of the recommendations/observations of the Standing Committee, the CDCL extensively looked at (i) design and framework of the existing Competition Act (ii) the enforcement practice of the CCI and the lessons learnt in its enforcement journey of over the past decade, (iii) Indian regulatory landscape for large digital enterprises-efficacy and gaps, (iv) emerging International practices, and (v) a 'Fit For Purpose' competition regime curated to the needs of the Indian digital economy. After taking into account the diverse points of view of the relevant stakeholders i.e., industry chambers, government departments, experts of law, policy, economics and others, CDCL unanimously gave the following key recommendations:

1. That the existing Competition Act needs to be complemented with and supplemented by a separate Digital Competition Act which shall be enforced ex-ante, exclusively applicable to large digital enterprises in relation to pre-identified Core Digital Services susceptible to abuse/ anticompetitive;
2. That the enforcement of the proposed Digital Competition Act shall also be entrusted upon the CCI;
3. That digital enterprises which have significant presence (in terms of quantitative and qualitative thresholds) shall be subject to the applicable law and will be designated as Systemically Significant Digital Enterprises (SSDE);
4. That there shall be an agile and principle-based framework of ex-ante obligations to be complied with by SSDEs and the details/specificities shall be provided in the Regulations which will be formulated through consultative process;
5. That the grounds for exemption from complying with the obligations shall be provided in the Act itself; and
6. That the law will provide for monetary penalties and there shall be separate penalties for non-reporting, contraventions and liability of key managerial persons for which the CCI will issue guidelines.

The CDCL also penciled a draft – model of Digital Competition Bill and its objectives are clearly enshrined in its preamble which envisages "An Act to identify systemically significant digital enterprises and their associate digital enterprises and to regulated their practices in the provision of core digital services keeping in view the principles of contestability, fairness and transparency with an objective to foster innovation, promote competition, protect the interest of users of such services in India and for matters connected herewith and incidental thereto".

The three major dimensions of antitrust law in India and in most matured jurisdictions are– (i) prohibition of anti-competitive agreements, (ii) prohibition of abuse of dominance and (iii) regulation of acquisition/merger/amalgamation between or amongst business enterprises.

Pursuant to the policy of liberalization and deregulation, the first two dimensions of the Competition Act follow an ex-post model of enforcement and these came into force on 20^th May, 2009. There is no statutory time limit for the disposal of matters under inquiry, and an order of the CCI is subject to appeal before the National Company Law Appellate Tribunal (NCLAT) and thereafter, before the Supreme Court of India (SC).

While the CCI has imposed substantial monetary penalties in numerous cases, the recovery rate has been abysmally low. There is no reported case where compensation has been awarded to a person who has suffered loss due to an anti-competitive practice. Thus, the extent of disgorgement of unfair gain garnered through such practices, has been far from satisfactory.

In the wake of ex-post mandate, the CCI also endeavored to discipline several high-tech giants, and had initiated numerous enquiries whereby in addition to adverse sanction of cease-and-desist direction also imposed heavy penalties.

The third dimension– merger control– is being regulated ex-ante since 1^st June, 2011. In her keynote address, the Hon'ble Chairperson noted that, out of a total of 1,285 merger/acquisition notices filed since 2011, the CCI has approved 1,269 transactions. Not a single transaction has been blocked since the enforcement of this component of the law. This clearly reflects that the ex-ante approach in relation to corporate restructuring has remained effective and efficient, and the CCI has made a significant contribution to the growth narrative of Viksit Bharat.

Traditionally, the CCI has relied on an ex-post approach, meaning it intervenes after anti-competitive behavior has occurred. This method involves investigating complaints, imposing penalties, and enforcing corrective measures.

In October 2022, the CCI found Google guilty of violating Section 4 of the Competition Act³, by imposing unfair conditions on app developers. More recently, in March 2025, the NCLAT upheld CCI's ruling that Google's Play Store payment system was anti-competitive, forcing Google to allow alternative payment systems and reducing its penalty to ₹216.69 crore. The CCI has also issued ex-post prohibitory orders against WhatsApp and MakeMyTrip for anti-competitive practices. In November 2024, the CCI imposed a ₹2.13 billion penalty on Meta for abusing its dominant position through WhatsApp's 2021 Privacy Policy, which forced users into mandatory data-sharing.⁴

The CCI ruled against MakeMyTrip and Goibibo⁵, finding them guilty of unfair business practices in the online travel sector, impacting market competition. However, digital markets evolve rapidly, and by the time an investigation and inquiry conclude, the damage or loss is already caused to consumers or competition.

It is also important to note that the NCLAT in the Google Android case has explicitly held that an effects-based analysis is to be mandatorily conducted before any enterprise is held guilty of abuse of dominance.⁶ The same has been recently reiterated by the SC.⁷ An effects-based analysis is a condition precedent before condemning a business practice of dominant enterprise. Effect based analysis not only enhances the burden of the CCI, it also allows continued damage/loss to the aggrieved person also.

Recognizing this limitation, CDCL recommended an ex-ante framework, which focuses on preventing anti-competitive practices before they occur. This proactive approach aims to regulate SSDEs large digital platforms with significant market influence. Under ex-ante regulations, SSDEs would be subject to predefined rules to prevent anti-competitive practices like self-preferencing, deep discounting, and data exploitation to occur.

By blending ex-post regulation of traditional markets and ex-ante regulation of digital markets, the CCI will be able to create a balanced competition framework. While ex-post enforcement ensures accountability, ex-ante measures provide preventive safeguards, fostering a fair, transparent, and contestable digital ecosystem in India.

The digital economy contributed 7.83% to India's Gross Value Added (GVA) in FY 2022-23, highlighting the growing importance of digital markets. Considering this, the CCI has already established a Digital Markets and Data Unit (DMDU) to address competition concerns in digital markets. This specialized unit is designed to handle the complexities of the digital sector by leveraging expertise from law, economics, finance, data science, and algorithm analysis. DMDU serves as a nodal point for stakeholder engagement, facilitates cross-divisional discussions, and supports data analytics and enforcement in digital markets. Its creation aligns with global best practices, ensuring that India's competition framework remains robust in the face of evolving digital challenges. To re-map up its capacity, the CCI has also undertaken several market studies in areas related to digital economy.

The Digital Markets Act (DMA)⁸ is an EU regulation designed to ensure fair competition in digital markets. It was introduced on November 1, 2022, and became fully applicable on May 2, 2023. The DMA targets large digital platforms, known as gatekeepers, which dominate online services like search engines, app stores, and messaging platforms. It imposes strict rules to prevent self-preferencing, data exploitation, and unfair competition. Non-compliance can result in fines of up to 10% of a company's global revenue.

The European Commission's 2023 Annual Report on the DMA⁹ details its first year of implementation, focusing on regulatory actions, gatekeeper designations, compliance monitoring, and cooperation with national authorities. The report outlines the procedural steps taken, including the adoption of an Implementing Regulation to ensure effective enforcement. It highlights the designation of major tech firms—Alphabet, Amazon, Apple, Byte Dance, Meta, and Microsoft—as gatekeepers for various core platform services, such as search engines, app stores, advertising services, and social networking platforms. It also covers market investigations into services like iMessage and Bing. Additionally, the report discusses gatekeepers' compliance requirements, and internal compliance structures. The report also describes the establishment of the High-Level Group for the DMA. Overall, the 2023 report emphasizes the Commission's efforts to maintain fair and contestable digital markets by regulating powerful online platforms, addressing potential market abuses. The DMA's implementation marks a significant step in shaping the digital economy, ensuring that dominant firms abide by fair competition rules while promoting innovation and consumer choice.

The European Commission's 2024 Annual Report on the DMA¹⁰ designates Booking.com and Apple's iPad OS as additional gatekeeper, increasing the number of designated gatekeepers to seven. It also concluded market investigations, deciding not to designate Microsoft's Bing, Edge, and Advertising services or Apple's iMessage as gatekeepers. The Commission engaged in regulatory dialogue, initiated six non-compliance investigations against Alphabet, Apple, and Meta, and issued preliminary findings against Meta's "pay or consent" model and Apple's App Store policies. Investigations were also launched into Apple's interoperability obligations and Alphabet's self-preferencing in search results. Efforts to ensure fair and contestable digital markets continues through compliance workshops, stakeholder meetings, and the work of the High-Level Group for the DMA. The report also highlights the ongoing legal challenges, market investigations, and coordination with national authorities to ensure effective implementation of the DMA across the European Union.

TAKEAWAYS:

India's growing digital economy requires strong regulatory mechanisms to ensure fair competition and prevent monopolistic practices by dominant digital players. While the CDCL has advocated for an ex-ante regulatory framework, India's current competition laws under the Competition Act primarily rely on ex-post enforcement, which addresses anti-competitive behavior only after the harm has occurred.

However, digital markets evolve rapidly, making preventive regulations crucial. The European Union's DMA acts as a valuable model by imposing strict pre-emptive obligations on large tech firms, preventing unfair practices such as self-preferencing and data exploitation. India's need for a similar legislation stems from increasing concerns over market concentration, data-driven competition, and platform dominance. By introducing a comprehensive digital competition law, India can create a transparent, accountable, and innovation-friendly digital ecosystem. A well-crafted Digital Competition Act for India would empower regulators, help establish clear guidelines for digital enterprises, and ensure consumer choice and business fairness, solidifying India's position as a global leader in the digital world. However, the successful implementation of the Digital Competition Act would also depend largely upon the contemplated regulations which will inter alia spell out the exact scope of the obligations of the SSDE's. It is imperative, therefore, that due deliberation and public consultation is conducted by the MCA/CCI on these Regulations as well.

Footnotes

1 Notification dated 06.02.2023 of the Ministry of Corporate Affairs, Government of India.

2 Parliamentary Standing Committee on Finance's Report on Anti-Competitive Practices by Big Tech Companies available at - https://www.mca.gov.in/bin/dms/getdocument?mds=gzGtvSkE3zIVhAuBe2pbow%253D%253D&type=open

3 XYZ v. Alphabet Inc., Case Nos. 07 of 2020, 14 of 2021 and 35 of 2021, order dated 25 October 2022.

4 In Re: Updated Terms of Service and Privacy Policy for WhatsApp users, Suo Moto Case no. 1 of 2021, order dated 18 October 2024.

5 Federation of Hotel & Restaurant Associations of India (FHRAI) v. MakeMyTrip India Pvt. Ltd., Case Nos. 14 of 2019 & 01 of 2020, order dated 19 October 2022.

6 Google v. CCI, NCLAT Competition Appeal (AT) (ND) No.01 of 2023, NCLAT order dated 29 March 2023.

7 CCI v. Schott Glass India Pvt. Ltd. & Anr., Civil Appeal no. 5843 of 2014, SC order dated 13 May 2025.

8 Regulation 2022/1925 of the European Parliament and of the Council of 14 September 2022 on contestable and fair markets in the digital sector (Digital Markets Act), 2022 O.J. (L 265) 1 (EU).

9 European Commission's Annual Report on the Digital Markets Act – 2023, available at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM:2024:106:FIN