Govt plans legislation to pre-empt monopolistic practices of big tech cos
The European Union (EU) has enacted ex-ante regulation to prohibit such practices, and India could consider the same after consulting all stakeholders, the people said, requesting anonymity.
New Delhi The government is considering a proposal to frame laws that will allow regulators to pre-empt anticompetitive practices of large digital platforms, two officials said.
Big Tech often favours their own services or services of their subsidiaries on their platforms, the people added. The European Union (EU) has enacted ex-ante regulation to prohibit such practices, and India could consider the same after consulting all stakeholders, the people said, requesting anonymity.
“Like Europe, we may also have the Digital Markets Act (DMA), which will prevent anticompetitive behaviour of dominant online platforms who act as digital gatekeepers ,” one of them, with direct knowledge of the matter said. The Competition Commission of India (CCI) and the parliamentary Standing Committee on finance have also recommended for such ex-ante regulation, he added.
DMA was enforced in the EU recently to curb unfair practices of Big Tech. “Both CCI and the parliamentary panel are of view that anti-competitive practices needs to be curbed before a dominant few end up monopolising the market,” the second official said.
The ministry of corporate affairs (MCA), CCI and the Indian arms of Google, Amazon and Flipkart did not respond to email queries.
“Some large online platforms act as ‘gatekeepers’ in digital markets. The Digital Markets Act aims to ensure that these platforms behave in a fair way online,” according to the European Commission. Non-compliance would attract a penalty of up to 10% of the company’s total worldwide annual turnover, or up to 20% in the event of repeated infringements, it said.
One executive of a multinational technology company said on condition of anonymity that the Indian digital market is yet to mature, and a DMA-like legislation would kill innovation. Experts, however, have mixed views.
“Ex ante regulations for digital markets are being discussed and debated in several jurisdictions across the world. What is proposed now in India is to set up or establish rules of conduct, so as to ensure that users of large digital platforms are treated fairly and not subjected to anti-competitive behaviour,” said Sanjay Sen, senior advocate in the Supreme Court of India. While this is certainly beneficial in the long run, it is essential that the rules are clear and unambiguous, he added.
According to Sen, CCI needs some teeth to regulate the digital market space. “The competition law in its present form is not really effective in the digital space. Large tech platforms can indulge in self-preferencing, unauthorised utilization of market user’s data, bundling of services etc… that are unfavourable to certain smaller market users who may not have any effective remedies/recourse against such unfair conduct.”
He added: “I see it as a positive, keeping in view the current size and potential growth of the digital market. In my view, ex ante regulations are better equipped to deal with a world of fast-changing technology and innovations that are introduced by large platforms.”
Anisha Chand, partner at Khaitan & Co, said having an ex-ante framework in India may need a rethink particularly since these are early days. “India is a fertile jurisdiction producing many start-ups and unicorns. An ex-ante law which is compliance heavy risks dampening innovation and investments. The best way forward could be – first, have wider stakeholder consultations and second, draw from the experiences of other jurisdictions where the similar legislations have gone live.”
Preventive regulation is the norm worldwide, said GR Bhatia, Partner, Luthra and Luthra Law Offices India. “There is rationale for enacting a Digital Competition Act (similar to the Digital Markets Act in the European Union) and revamping CCI by establishing a dedicated ‘Digital Markets unit’.”