Digital Panel submits report on Digital Competition Law to Finance Minister

The Centre-appointed 16-member Committee on Digital Competition Law (CDCL) has submitted its report to Finance and Corporate Affairs Minister Nirmala Sitharaman. 

Also read: Digital panel’s Draft Bill to elude relief for news publishers

The CDCL, headed by Corporate Affairs Secretary Manoj Govil, has also submitted a draft Bill on proposed Digital Competition law, sources familiar with the development said.

The Corporate Affairs Ministry (MCA) had, on February 6, last year, constituted a 16-member inter-ministerial committee to examine the need for a separate law on competition in digital markets. The digital panel has been, among other things, tasked with preparing a draft Digital Competition Act and submitting a report in three months.

The Committee on Digital Competition Act’s terms of reference include a review as to whether existing provisions of the Competition Act 2002 and the rules and regulations framed thereunder are sufficient to deal with the challenges that have emerged from the digital economy and to examine the need for an ex-ante regulatory mechanism for digital markets through separate legislation.

The digital panel has recommended that ex-ante measures be introduced to complement the current ex-post framework by identifying large digital enterprises with a ’significant presence’ in India in selected ‘core digital services’ and setting predetermined rules for their conduct, sources added.

The CDCL recommendations are largely modelled on the EU’s Digital Markets Act, with some India specific variations, sources said.

Also read: CCI frames regulations on turnover determination, commitment and settlement mechanisms

The digital panel has also recommended that the CCI’s capacity for technical regulation in digital markets should be strengthened and a mechanism for inter-regulatory consultations be implemented, they added.

Meanwhile, MCA has invited public comments on the CDCL report and draft digital Bill of proposed digital competition law by April 15. 

Reacting to the CDCL report, Vaibhav Choukse, Partner, JSA  Advocates & Solicitors, said “In line with the EU’s DMA, the Committee has recommended the ex ante legislation for pre-identified large  digital enterprise I.e., Big Techs, with significant presence to proactively monitor their behaviour in the market. 

To identify these large digital players, the Committee has recommended two test basis companies significant financial strength and significant spread. Basis these test, the companies need to do a self assessment and report it to the CCI if they fall within the same. Any non compliance with the requirement, may lead to significant fines which can be upto 10% of global turnover”.

This will have a major impact on the big tech enterprises like Google, Apple, Amazon etc., as they will now also be subject to a separate regulatory regime, he added. 

Such ex ante regulation could potentially stifle innovation by imposing burdensome regulations on tech companies. This could lead to unintended consequences, such as reduced consumer choice and higher prices, he added.

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