Dissecting the new digital competition bill

On March 12, 2024, the Ministry of Corporate Affairs (MCA) released the draft digital competition bill for public consultation. The aim of the proposed bill is to grapple with anti-competitive practices by Big Tech firms by introducing ex-ante regulations. Apart from this, the policies of the law aim to safeguard customer’s data and privacy.

The regulations aim to scrutinise and regulate big firms before any anti-competitive conducts crop up. The monitoring will be based on keeping factors like turnover, global market capitalisation, number of users, and gross merchandise values at the threshold.

The released draft has proposed the incorporation of a new digital competition law and introduced an ex-ante framework, ensuring the prevention of unethical practices by big tech firms. Under this ex ante framework of law, set rules would be laid down to meet the purpose of the bill.

Furthermore, to regulate swiftly, the committee suggested that the enterprises that hold a crucial place in rendering core digital services should be designated as 'systematically significant digital enterprises (SSDEs)’7 to ensure that only big and significant tech firms are subjected to the act. This fragmentation will be factors of turnover, global market capitalisation, number of users etc. It will be of supreme importance for big tech firms operating in India to meet the guidelines of the bill.

Moreover, the bill suggests a penalty of 10% of the global turnover of the SSDEs in case of failure of mandatory policies under the law. Companies failing to meet the mandatory guidelines of the Competition Commission of India may be fined up to Rs. 10 crores with additional penalties of  Rs .1 lakh per day for violations of compliance.

The committee on digital competition law was set up on February 6, 2024, to inspect the need for an ex-ante regulation in India to regulate the digital market. The committee was set with the objective of reviewing the existing provisions of the Competition Act of 2002.

The act has paramount implications not only for the Indian Internet but for global companies as well. For the context of the Indian digital market, the act would lead to the uplifting of monitoring regulation particularly targeting larger enterprises to ensure the prevention of anti-competitive behaviour. Alternatively, global tech giants like Google, Apple, and Meta would encounter stricter regulations.

The digital competition bill closely aligns with the European Union's Digital Markets Act ( DMA). The EU also laid down the ex-ante framework to curb anti-competitive practices.

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