Parliamentary panel suggests ex-ante regulations, digital competition law to curb unfair business practices in digital markets

A Parliamentary panel has proposed ex-ante regulations, category of systemically important digital intermediaries and a new digital competition law, to curb anti-competitive practices in digital markets.

Besides, the committee has asked digital market entities to desist from "anti-steering", "deep discounting", "self preferencing", "search and ranking preferencing" and other practices that will impact competition in the market, as per a report by news agency PTI.

The suggestions are part of the Standing Committee on Finance's report on 'Anti-Competitive Practices by Big Tech Companies' tabled in Parliament on Thursday and comes against the backdrop of rising concerns over unfair business practices in digital markets, the news agency reported.

In its report, the panel has mentioned about the peculiar challenge posed by the winner-take-all markets where winners emerge within 3-5 years after the market starts to develop and the market tips in one direction by the time policies are formulated.

"Therefore, the committee recommends that competitive behaviour needs to be evaluated ex-ante before markets end up monopolised instead of ex-post evaluation being carried out at present," it said.

In a significant recommendation, the panel has called for classifying leading entities that can negatively influence competitive conduct in the digital ecosystem as 'Systemically Important Digital Intermediaries' (SIDIs) based on their revenue, market capitalisation and number of active business and end users.

"India should also adopt definitions to ex-ante regulate the behaviour of SIDIs as has already been done by various legislations across the world," the committee said, adding that stakeholders along with CCI and the central government must collaborate for a reasonable definition of SIDIs.

Apart from saying that the government should consider and introduce a Digital Competition Act to ensure a fair and transparent digital ecosystem, the panel has pitched for revamping the Competition Commission of India (CCI).

A specialised digital markets unit should be established within CCI staffed with skilled experts, academics and attorneys. The unit will closely monitor SIDIs and provide recommendations to the central government on designating SIDIs, among other activities, according to the panel.

Further, it said that platform neutrality should be ensured at all costs and a SIDI should not favour its own offers over that of its competitors.

Mentioning about 'anti-steering practices', the committee said a SIDI should not condition access to its platform.

Among others, it said that a SIDI should not process, for the purpose of providing online advertising services, personal data of end users using services of third parties that make use of core services of the platform.

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