Transfer of key MCA Secretary could delay Digital Competition Bill

The finalisation of the much-anticipated Digital Competition Bill (DCB) may encounter delays following the Centre’s decision on Friday to transfer MCA Secretary Manoj Govil to the role of Expenditure Secretary in the Finance Ministry, say economy watchers. 

This is because Govil, a key votary of DCB, was at the helm of a crucial legislative initiative — the framing of the DCB — that was seen to be a fundamental step towards establishing a vibrant, competitive, and equitable digital market in India. 

The team working on the DCB now finds itself in a precarious situation, as Govil’s departure has created a leadership vacuum on this front. 

Delays expected

The new appointee as MCA Secretary — Deepti Gaur Mukerjee, a Madhya Pradesh cadre IAS officer, who was CEO of National Health Authority — would need time to familiarise herself with the intricacies of the Bill, delaying its finalisation, said economy watchers. The DCB has been in the works for more than 18 months.

The government as part of vision for Digital India expects the digital economy of the country to touch $ 1 trillion by 2025-26. This proposed legislation (DCB) was intended to address the complex challenges posed by the growing dominance of tech giants in India’s digital market.

As Chairman of the sixteen-member inter-ministerial Committee on Digital Competition Law (CDCL), set up in February 2023, Govil had brought together various stakeholders, from industry experts to legal professionals,  to frame the DCB.

He played a leading role in completing the CDCL report, drafting the Bill, and securing the CCI’s approval for the report’s recommendations and the Bill’s proposals.

The change of guard at MCA could now impact pace of MCA work, most notably the finalisation of a Bill that would have ushered in an ex-ante framework to address the anti-competitive conduct of Big Tech, said competition law experts. 

Govil’s transfer could have far-reaching consequences for India’s digital economy, underscoring the delicate balance between governance and administrative changes. The unexpected move has sent ripples through the corridors of the MCA and beyond. 

16-member panel

In March this year, the Centre appointed 16-member CDCL headed by Govil had (after several extensions of its tenure) submitted its report to Finance and Corporate Affairs Minister Nirmala Sitharaman. A draft DCB was also submitted along with the report.

After a month-long extension, MCA had set May 15 this year as deadline for submission of stakeholder feedback on the CDCL report and draft Bill.

Post the end of this deadline, MCA Secretary Govil and his team was working on the feedback before finalising the DCB to send it for Cabinet approval. Infact, MeitY had separately, in June this year, heard out industry associations’ concerns on digital competition Bill. The MeitY views were to be conveyed separately to MCA. 

The CDCL was born out of a recommendation by the Parliamentary Standing Committee on Finance headed by Bharatiya Janata Party MP Jayant Sinha that recommended that competitive behaviour of certain large digital/internet companies needs to be assessed before the markets are monopolised by a handful of players. 

This is called an ex-ante regulation/ framework where the law defines what conduct is illegal versus the regulator adjudicating whether certain acts are illegal after they have been committed (ex-post regulation).

Despite the stiff resistance from Big Tech notwithstanding , the Centre appointed 16-member CDCL had recommended that a separate Digital Competition Act that enables the Competition Commission of India (CCI) to selectively regulate large digital enterprises in an ex-ante manner be enacted. 

The proposed law should complement and  strengthen the existing competition framework governing large digital enterprises by ensuring timely detection, enforcement, and disposal of proceedings in digital markets, the 236-pages report of digital panel had recommended.

Big Tech companies such as Amazon, Apple, Google, Meta and e-commerce biggie Flipkart had conveyed to the panel that they were not in favour of introduction of an ex-ante framework to regulate large digital companies.