E-Paper
Govt panel may seek more time to extend deliberations on digital competition law
The panel, which met on May 10 to discuss a way forward, has found that it is likely to take time to finalise its report, which will likely be a foundation for a new law to regulate digital markets by laying down what are known as ex-ante regulations, or harder than usual guardrails on how the sector must function.
A 16-member committee under the secretary, ministry of corporate affairs, to outline the contours of a digital competition law is likely to seek more time in order to extend deliberations on issues of deep discounting, monopolisation, and anti-competitive practices by big tech companies, people familiar with the matter said.
“The deliberations are ongoing,” a ministry of corporate affairs official familiar with the matter said. “The committee met today. The committee will also meet next week.”
The panel, which met on May 10 to discuss a way forward, has found that it is likely to take time to finalise its report, which will likely be a foundation for a new law to regulate digital markets by laying down what are known as ex-ante regulations, or harder than usual guardrails on how the sector must function.
The approach, people aware of the matter said, is meant to curb malpractices at the outset. “So far, the government’s approach has been reactionary, the panel is considering introducing provisions wherein a list prohibited practices are outlined beforehand to prevent them. It is a pre-emptive measure,” one such person said on the condition of anonymity.
The panel was constituted on February 6, and was given three months to submit a draft of a digital competition bill.
“The stakeholder conversations are over, but there is a long time before the panel can arrive at a consensus over the bill,” the person mentioned above added. “All these practices that the panel is analysing also come with pros. Take for example deep discounting, it is a pro for the customer, wherein it can help save money. But it is a con in that it can help a company monopolise the market.There needs to be a balance.”
According to a second person aware of the matter, there is urgency in the approach to law. “The text of law will take time to come on paper, right now the focus is on what kind of structuring there should be,” the person said. “Meetings are being held every week. There has to be rough discussion on what should be part of the law. The panel is also looking at global best practices.”
Parliament, during the Budget session this year, cleared some amendments to the Competition Act to allow regulators to expand the scope of penalties by taking into account an offending enterprise’s global turnover, a rule that will allow harsher fines on multinational companies, including tech behemoths such Apple, Amazon and Google.
At present, the government is grappling with the issue of monopolies and duopolies in the technology space – the Competition Commission of India, for instance, has hauled up firms such as Google for misusing their dominance in the mobile operating system domain.
“The country is currently ill-equipped to handle the question of digital competition. The idea is to have ex-ante legislations like SEBI and RBI do,” the person added.
A report submitted by the parliamentary standing committee on finance too noted the need to address anti-competitive practices done by leading technology players, or big tech, and recommended a digital competition act last year.
“It is abundantly clear that the underlying economic drivers of digital markets inevitably lead to the rise of a relatively few leading players. These leading players are collectively referred to as Big Tech companies. The rise of Big Tech is due to the fundamental difference in the way digital markets operate, as compared to traditional markets,” the panel submitted in its report.
According to Rajya Sabha member Amar Patnaik, who was part of the finance panel that finalised the report, India needs to push the digital competition law because it would “create a level playing field for small players and will not allow Big Tech to use its market power to continue anti-trust business operations by delaying the dispensation of justice by the CCI- NCLAT- SC system”.
NASSCOM public policy chief Ashish Aggarwal said that the deadline set for the panel was fairly ambitious. “We are hoping that the committee takes adequate time to understand all the nuances attached to the law,” he said. “There is a lack of studies on the harms from a competition and jurisprudence perspective. It is important that an India-centric approach is adopted for the same.”
