Draft Digital Competition Bill

Context: The draft law, called the Digital Competition Bill, 2024, has been proposed by India.

In March this year, the Committee on Digital Competition Law (CDCL) released a report detailing the challenges posed by anti-competitive practices of digital enterprises in India. These practices include antisteering, self-preferencing, tying, and bundling in digital markets. The committee proposed the Digital Competition Bill in its report, advocating for ex-ante regulations to curb these anti competitive behaviors.

About:

• Provisions of the Digital Competition Bill, 2024:
o Sets presumptive norms to curb anti-competitive practices before they occur.
o Promises heavy penalties for violations.

• Impact on Tech Giants:
o Aims to prevent companies like Google, Facebook, and Amazon from self-preferencing their own services.
o Restricts the use of data gathered from one company to benefit another group company.

• Comparison to EU\'s Digital Markets Act (DMA):
o Similar to the EU’s DMA, which requires large tech firms like Alphabet, Amazon, and Apple to open their services and avoid favoring their own services over rivals.

• Rationale for the Law:
o Introduced due to a long history of anti-competitive practices by major tech companies

Key Highlights

Predictive Regulation	- Proposes a forward-looking, preventive, and presumptive law (an ex ante framework) to foresee potential antitrust harms and prescribe pre-determined no-go areas. - Currently, India follows an ex post antitrust framework under the Competition Act, 2002. - Criticism: Regulating after market abuse causes delays, often too late to benefit smaller competitors.
Significant Entities (SSDEs)	- For “core digital services” like search engines and social media sites, the Competition Commission of India (CCI) should designate companies as “Systematically Significant Digital Enterprise (SSDE)” based on turnover, user base, market influence, etc. - Entities not meeting these parameters can still be designated as SSDEs if the CCI believes they have significant presence in core digital services. - SSDEs are prohibited from self-preferencing, anti-steering, and restricting thirdparty applications. - Violations can result in fines up to 10% of global turnover.
Associate Digital Enterprises (ADEs)	- For “core digital services” like search engines and social media sites, the Competition Commission of India (CCI) should designate companies as “Systematically Significant Digital Enterprise (SSDE)” based on turnover, user base, market influence, etc. - Entities not meeting these parameters can still be designated as SSDEs if the CCI believes they have significant presence in core digital services. - SSDEs are prohibited from self-preferencing, anti-steering, and restricting thirdparty applications. - Violations can result in fines up to 10% of global turnover.
Associate Digital Enterprises (ADEs)	- Designates associate digital enterprises (ADEs) based on the role that data collected by one company of a major technology group can play in benefiting other group companies. - ADEs have the same obligations as SSDEs depending on their involvement with core digital services offered by the main company
Enforcement of Provisions	- The draft Bill empowers the Director General, appointed under the 2002 Act, to investigate contraventions when directed by the CCI.

Need for the Bill:

• History of Anti-Competitive Practices:
o Big tech companies have a history of engaging in anti-competitive practices.
o A presumptive framework is considered more effective in addressing these issues.

• Recent Penalties:
o Last year, Google was fined Rs 1.337 crore by the CCI for anti-competitive conduct in the Android ecosystem.

• Innovation Concerns:
o Over the past decade, most innovation has been confined to a few big tech companies, primarily from the US.
o High market barriers in the online market have made it difficult for new entrants to compete, contributing to the concentration of innovation within these established firms.

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