Digital Competition Bill may reach the House in the monsoon session

It will bring in a new layer of regulatory framework to ensure fair and competitive practices in the digital economy, in addition to the existing competition law. It seeks to prevent the emergence and development of alternative platforms by prescribing a set of dos and don’ts to large digital-economy firms such as search engine providers, e-commerce platforms and social networking sites.

Last month, a new Digital Competition Act was proposed by the Parliamentary Standing Committee on Finance, led by BJP’s Jayant Sinha, and the Standing Committee on Commerce, led by YSR Congress Party leader Vijayasai Reddy. The idea is to have a law similar to the Digital Markets Act that the EU introduced last year, given that traditional anti-trust rules are insufficient for highly dynamic online marketplaces.

While the Standing Committee on Finance expects the bill to be ready by the budget session, the deliberations within the government and the drafting of the bill may take a little longer.

“The Digital Competition Bill is a new concept. The standing committee report came just a fortnight ago. The government has to study it, and work has begun. It may take a little more time. Probably the monsoon session,” the person cited above said on condition of anonymity.

The proposed new law will apply only to large digital firms identified on the basis of parameters such as core services, market size, number of business users, consumer traffic and transaction volume on their platforms. EU law specifies that a set of core service providers, including certain messaging services, video-sharing platforms, cloud computing services and operating systems, that meet market- and user-based thresholds can be classified as digital gatekeepers. will be nominated.

An email sent to a spokesperson for the Ministry of Corporate Affairs on Thursday remained unanswered till press time.

In a January 2 interview, Jayant Sinha, chairman of the standing committee, said the proposed law would work by identifying systemically important digital intermediaries that have a dominant role in certain markets. They will be told that they will have to comply with the rules and file a compliance report annually to ensure that these ex-ante or forward-looking rules are being followed.

It is expected that there will be fines for breaches of rules that prohibit certain practices seen by the committee as anti-competitive.

These include e-commerce platforms that favor their private labels sold on the platform over other business users, using customers’ personal data in certain ways to gain an unfair advantage over other business users of the platform and prevent business users from running their own clients. For offers other than those provided by the platform.

While the digital economy, including the fintech segment, is growing rapidly, the government does not want established players to stifle the emergence of startups. Increase in adoption of digital services during and after the pandemic and increased use of internet data and smartphones have also contributed to the growth of the sector.

In a report in April last year, EY quoted industry estimates that India’s consumer digital economy is expected to be a $800 billion market by 2030, registering 10x growth from the level seen in 2020.