Digital economy giants such as Amazon, Google and Facebook may have to contend with a new Indian law to check anticompetitive practices. An experts’ committee set up by the corporate affairs ministry to explore the need for such a law is set to give its report, two people aware about the development said, proposing a new legislation as well as a draft bill.
Once the report is submitted, the ministry will seek public feedback on the matter, one of the two people cited above said. The bill—aimed to ensure that search engines, marketplaces and social media platforms act in a fair manner—is expected to make its way to Parliament after the national polls.
The bill is unlikely to be tabled before the elections because the last Parliament session of the current Lok Sabha—the budget session from 31 January to 9 February—is a short one that would focus on issues of wider public interest rather than complex, niche economic legislation.
Experts are not convinced about the need for a new law, and advise a cautious approach given that the Competition Act has already been amended recently to make it more sophisticated.
“It would be a good idea to have more discussions with stakeholders on how to address the concerns around dominance and anticompetitive behaviour in the digital markets and come up with solutions such as industry standards or a code of conduct,” said Amol Kulkarni, director of research at CUTS International, a non-profit, non-governmental organization working on public interest issues.
India’s fair-play watchdog, the Competition Commission of India (CCI), has a digital markets unit, but enhancing its technical and manpower capacity to deal with the emerging challenges is important, Kulkarni added.
Neelambera Sandeepan, a partner at law firm Lakshmikumaran & Sridharan, said India’s own ex-ante (forward-looking) law is likely to have similarities with the European Union’s Digital Markets Act (DMA) and such legislations in other jurisdictions. She, too, advised caution.
“Given the level of maturity of the digital market in a given jurisdiction, the extent and nature of regulations will have to be customized. Also, given that the Indian Competition Act has given sufficiently wide powers to CCI to regulate competition harm in the digital markets, it is important to assess the need for a specialized regulation,” said Sandeepan, adding that it must also be ensured that an ex-ante regulation does not lead to disincentivizing innovation as a result of overregulation.
Queries emailed to the spokesperson for the ministry of corporate affairs and to CCI on Monday seeking comments remained unanswered till press time.
In December 2022, the parliamentary standing committee on finance led by the BJP’s Jayant Sinha had proposed an ex-ante regulatory framework involving a set of do’s and don’ts for systemically important digital economy firms, as opposed to the existing approach of taking action after a violation is committed.
The panel recommended that the handful of Big Tech firms to be identified as digital market gatekeepers must play by certain rules and file annual compliance reports. For example, e-commerce platforms refraining from pushing their own private labels over third-party brands sold on their platforms, or bundling different goods and services together.
Following the panel’s recommendations, the expert committee was formed in February 2023 and given the mandate to decide whether existing competition law and regulations were sufficient to deal with competition-related challenges in the digital economy or whether a separate regime was needed. The idea was that any new regulatory framework should have robust justification and economic rationale given the likely additional compliance requirements.
Two other bills the ministry has been working on—amendments to the Bankruptcy Code and the Companies Act—may also make it to Parliament only after the national polls, even though a lot of work has gone into them.
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Published: 19 Jan 2024, 06:30 AM IST