The Committee on Digital Competition Law (CDCL), set up on February 6, 2023, was tasked with the responsibility of evaluating whether a separate ex-ante legislation to regulate digital markets India is necessitated or if the current legal framework -- the Competition Act, 2002 (CA) -- is sufficient to deal with the emerging antitrust and merger control issues in the digital economy. The committee on March 14 submitted its report containing recommendations, along with a Draft Digital Competition Bill. The draft bill has been at the centre of controversy over the past week as far as tech policy is concerned.
While it relies heavily on the Digital Markets Act of 2022 (a European Union regulation) as a frame of reference, significant thought must be given to the manner of its application to the Indian economy - which is much more fragmented and caters to a much larger target market as a whole. In this regard, it is relevant to note that merger control aspects have been left out of the draft bill, as the provisions of the CA were deemed adequate. Aside from an evidence-based evaluation and market impact assessment of whether an ex-ante framework is required, how Systemically Significant Digital Enterprises (SSDEs) are defined will also become critical.
Particularly, whether broad qualitative parameters ought to be applied subjectively for this determination, or if something of this nature may be left to the better judgment of quantitative or more objective parameters. On the quantitative thresholds as well, if parallels are being drawn to laws of other developed jurisdictions, appropriate indices may need to be applied for mapping volumes, user base, etc. in the Indian context.
The Ministry of Corporate Affairs has sought comments from the public on the draft within the very ambitious timeline of April 15, 2024. However, the industry and economic impact of such an ex-ante framework will have to be studied in detail, across all stakeholder segments, before concluding on the exact parameters and contours of how the conduct of the identified SSDEs must be shaped through regulation.
The industry appears divided on the need for such legislation. That said, if such a piece of legislation was to be introduced in India, significant streamlining would need to be carried out in order to ensure there are no overlaps with existing laws. It will also be pertinent to see what kind of consumer and other benefits a law like this could bring to the Indian market, and if it will help in levelling the playing field for start-ups and MSMEs. (The author is partner, INDUSLAW. Views expressed are personal)