NEW DELHI: The Committee for Digital Competition Law has recommended a pre-emptive approach to deal with anti-competitive practices of large digital companies. In the draft report released on Tuesday, the committee has recommended an ex-ante legislation specifically applicable to large digital enterprises, to supplement the Competition Act.
“Such an ex-ante law should ensure that behaviours of large digital enterprises are proactively monitored, and that the CCI intervenes before instances of anti-competitive conduct transpire,” says the draft report.
The committee proposes that the digital competition act should apply to a pre-identified list of Core Digital Services that are prone to concentration. It also recommends that this list is drawn up on the basis of the Competition Commission of India’s enforcement experience, market studies, and emerging global practices.
The Committee recommends that the Digital Competition law should only regulate enterprises which have a ‘significant presence’ in the provision of a Core Digital Service in India and the ability to influence the Indian digital market.
To identify these large digital players, the committee has recommended two tests -- significant financial strength and significant spread. Basis these tests, the companies need to do a self-assessment and report it to the CCI if they fall within the same. Any non-compliance with the requirement, may lead to significant fines which can be up to 10% of global turnover.
Explaining the need for an ex-ante competition law for Digital companies like Google, Apple and Amazon, the committee says the ex-post model of regulation under the Competition Act, by design, involves fact-finding and inquiry processes which are time-consuming. It says that protracted enforcement proceedings hinder early detection and redressal.
It also observed that digital markets have the tendency to tip swiftly in favour of an incumbent, and therefore, there is a need for a regulatory strategy focussed on preventing anti-competitive conducts.