In a significant recommendation which may disturb the level playing field between private and public digital gatekeeper platforms, the inter-ministerial panel set up by the Central Government to draft Digital Competition Law is likely to recommend keeping government digital gatekeeper platforms such as IRCTC and UIDAI out of the purview of the Digital Competition Law.
The Digital Competition Law is an ex-ante measure to regulate digital monopolies by imposing special obligations upon systemically important digital intermediaries (SIDIs).
The Committee on Digital Competition Law (CDCL) — set up by the Ministry of Corporate Affairs (MCA) on February 6 —is in the last stage of shaping the draft digital competition law and is likely to submit its report next month, sources said.
In its report, the CDCL is expected to lay down a formula where they will identify gatekeeper firms and impose certain obligations that they have to observe ex-ante, they added.
A Parliamentary panel headed by Jayant Sinha last year examined the anti-competitive practices of big tech firms. It recommended a separate digital competition law to impose special obligations upon gatekeeper firms relating to data usage, portability, inter-operability , anti-steering etc.
In its 53rd report titled ‘Anti- competitive practices by big tech companies’, the
Jayant Sinha headed the Panel had, recommended that India must identify the small number of leading players of market winners that can negatively influence competitive conduct in the digital ecosystem, as ‘Systemically Important Digital Intermediaries’ (SIDI) and adopt definitions to ex-ante regulate their behaviour.
The competitive behaviour needs to be evaluated ex-ante before markets end up monopolised instead of the ex-post evaluation being carried out , which the Panel had recommended in December last year.
The Standing Committee noted that a Digital Competition Act was needed to ensure a fair, transparent and contestable digital system, which will be a boon to the country and its nascent startup economy and the entire world.
Experts’ take
Nisha Kaur Uberoi, Partner & National Head Competition, Trilegal, said “For a level playing field, it is critical that state -owned digital platforms are not given a special status and made exempt from the applicability of the proposed Digital Competition Act”.
She highlighted that the existing competition framework (under the Competition Act) only exempts government acting in sovereign function in relation to atomic energy, defence and currency and is not a blanket exemption when a government entity is undertaking an economic function - the CCI’s jurisdiction over Coal India and Railways is a classic example of how the CCI does have the jurisdiction over government companies who have an economic function.
Samir Gandhi, Co-founder, Axiom5 Law Chambers, a law firm, said that the proposal to exclude Government owned digital gatekeepers from the proposed Digital Competition Act is based on sound competition principles. The key motivations for the proposed Digital Competition Act are lack of contestability, transparency and fairness and conflict of interest.
The Government owned digital platforms are built on open source protocols, allow interoperability and by design do not present any possiblity for conflict of interest, Gandhi said.
Second, the Government owned digital platforms are being offered as digital public goods- while they may have some commercial element, the Government control ensures that they do not operate as profit maximising private firms, he added.
What Big Tech want
The CDCL, it is learnt, has endorsed the need for India to have an ex-ante framework, which the Big Tech have been opposed to.
Top Big Techs including Google, Meta, Uber and Amazon have already made elaborate presentations to the MCA-appointed CDCL on how the proposed Digital Competition Act (DCA) should be fashioned.
Flipkart, Zomato, Uber and National Restaurant Association of India (NRAI) were among the others who made submissions to the Panel.
One of the significant feature of the proposed draft Digital Competition Bill will be the penalty provision. The Panel has decided to introduce stringent penalty of upto 10 percent of global turnover of enterprise that is found to have violated the ex ante regulations.