Comments to the Draft Digital Competition Bill, 2024

We would like to thank the Ministry of Corporate Affairs for soliciting public comments on this important legislation and are grateful for this opportunity.

We would like to thank the Ministry of Corporate Affairs for soliciting public comments on this important legislation and are grateful for this opportunity.

At the outset, CIS affirms the Committee’s approach to transition from a predominantly ex-post to an ex-ante approach for regulating competition in digital markets. The Committee’s assessment of the ex-post regime being too time-consuming for the digital domain has been substantiated by frequent and expensive delays in antitrust disputes, a fact that has also recently drawn the attention of the Ministry of Corporate Affairs.  And not just in India, the ex-post regime has been found to be too time-consuming in other jurisdictions as well, as a consequence of which many other countries are also moving towards an ex-post regime for digital markets. This also allows India to be in harmony with both developing and developed countries, which makes regulating global competition more consistent and efficient.  In fact, “international cooperation between competition authorities” and “greater coherence between regulatory frameworks” are key in facilitating global investigations and lowering the cost of doing business.

Moreover, by adopting a principles-based approach to designing the law’s obligations, the draft Bill also addresses the concern that ex-ante regulations, due to their prescriptive nature, tend to be sector-agnostic. The fact that these principles are based on the findings of the Parliamentary Standing Committee’s (PSC) Report on ‘Anti-Competitive Practices by Big Tech Companies’ only lends them more evidence. The draft DCB empowers the Commission to clarify the Obligations for different services, and also provides CCI with the flexibility to undertake independent consultations to accommodate varying contexts and the needs of different core digital services. We do, however, have specific comments regarding implementing some of these provisions, which are elaborated in the accompanying document.

We would also like to emphasise that adequate enforcement of an ex-ante approach requires bolstering and strengthening regulatory capacity. Therefore, to minimise risks relating to underenforcement as well as overenforcement, CCI, its Digital Markets and Data Unit (DMDU), and the Director General’s (DG) office will have to substantially increase their technical capacity. A comparison of CCI’s current strength with its global counterparts that have adopted or are in the process of adopting an ex-ante approach to competition regulation reveals a stark picture. For example, the European Union (EU) had over 870 people in its DG COMP unit in 2022, and its DG CONNECT unit is expected to hire another 100 people in 2024 alone. Similarly, the United Kingdom’s Competition and Markets Authority (CMA) has a permanent staff of 800+, the Japan Fair Trade Commission (JTFC) has about 400 officials just for regulating anti-competitive conduct, and South Korea’s KFTC has about 600 employees. In contrast, CCI and DG, combined, have a sanctioned strength of only 195 posts, out of which 71 remain vacant. Bridging this capacity gap through frequent and high-quality recruitment is, therefore, the need of the hour. Most importantly, there is a need to create a culture of interdisciplinary coordination among legal, technical, and economic domains.

Moreover, as we come to rely on an increasingly digitised economy, most technology companies will work with critical technology components such as key infrastructure, algorithms, and Artificial Intelligence to business models that are based on data collection and processing practices. Consequently, there will be a need to bolster CCI’s capacity in the technical domain by hiring and integrating new roles including technologists, software and hardware engineers, product managers, UX designers, data scientists, investigative researchers, and subject matter experts dealing with new and emerging areas of technology.21 Therefore, we recommend CCI to ensure that the proposed DMDU has the requisite diversity of skills to effectively use existing tools for enforcement and is also able to keep pace with new and emerging technological developments.

Along with this overall observation of CCI's capacity, we have also submitted detailed comments on specific clauses of the draft DCB. These submissions are structured across the following six categories: i) Classification of Core Digital Services; ii) Designation of a Systemically Significant Digital Enterprise (SSDE) and Associate Digital Enterprise (ADE); iii) Obligations on SSDEs and ADEs; iv) Powers of the Commission to Conduct an Inquiry; v) Penalties and Appeals; and vi) Powers of the Central Government. In addition to these suggestions, the detailed comments and their summarised version focus on three important gaps in the draft DCB – limited representation from workers’ groups and MSMEs, exclusion of merger and acquisition (M&A) from the discussions, and lack of a formalised framework for interregulatory coordination.

For our full comments, click here

For a detailed summary of our comments, click here