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Topic : Draft Digital Competition Bill, India (2024)

GS-2 Mains : Polity

Revision Notes

Aim: Curb anti-competitive practices by big tech companies.

Background:

  • Committee on Digital Competition Law (CDCL) report (March 2024) highlighted issues like self-preferencing and data sharing within tech groups.
  • Inspired by EU’s Digital Markets Act (DMA).

Key Features:

  • Ex-ante framework: Proactive approach to prevent issues before they happen. (Currently, India follows a reactive ex-post system under the Competition Act, 2002).
  • Systematically Significant Digital Enterprises (SSDEs): A designated category with stricter regulations.
    • Defined by the Competition Commission of India (CCI) based on factors like turnover, user base, and market influence.
    • Prohibited from self-preferencing, anti-steering, and restricting third-party applications.
    • Violation penalty: Up to 10% of global turnover.
  • Associate Digital Enterprises (ADEs): Companies within a tech group can be designated ADEs if they benefit from data collected by the main SSDE.
    • ADEs inherit SSDE obligations depending on their involvement with the core digital service.

Enforcement:

  • Director General (appointed under 2002 Act) investigates contraventions under CCI direction.

Current Status:

  • Draft Bill stage, open for feedback (as of May 17, 2024).

Need for the Draft Digital Competition Bill

  • Anti-competitive Practices: Big tech companies like Google (fined Rs 1.337 crore in 2023 by CCI) have a history of such practices.
  • Lack of Innovation: Competition is stifled, with most innovation happening within a few big tech companies (mostly US-based).
  • High Barriers to Entry: New entrants face challenges entering the online market dominated by big tech.

Criticism of the Bill

  • Compliance Burden: Strict ex-ante rules might burden big tech companies, hindering innovation and research.
  • Broad Definition of SSDEs: The lack of a clear definition (unlike EU’s DMA) for “significant platforms” could lead to arbitrary decisions by CCI, potentially harming startups.
  • Duplication of Regulation: The new ex-ante regime might overlap with existing competition law, creating unnecessary compliance steps.

Conclusion

The draft Digital Competition Bill proposes a switch from a reactive (ex-post) approach to a proactive (ex-ante) one. This means companies will be told in advance what practices are off-limits, potentially creating extra compliance burdens.

Source : https://indianexpress.com/article/explained/explained-law/draft-digital-competition-bill-big-tech-opposes-9330370/

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