Introduction:
The Committee for Digital Competition Law (CDCL) has introduced the draft for Digital Competition Bill (Bill) on March 12, 2024. In its findings, the committee supports preemptive regulations to maintain fair competition within India’s digital markets. These preemptive and proactive regulations establish guidelines beforehand to deter monopolistic practices and market dominance. This Bill, similar to the laws of EU pertaining to Digital Markets, targets big online platforms and sets rules to stop unfair competition. The Bill stops major online platforms, known as Systemically Significant Digital Enterprises, from favoring themselves, blocking other apps, using unfair pricing tactics, misusing business data, and selling bundled products and services.
Need for Ex-Ante measures in India:
As per the CDCL report published by Ministry of Corporate Affairs, ex-post investigations, conducted under the Competition Act, are both time-consuming and resource-intensive, making them less effective in the fast-paced and quickly evolving digital market. These investigations start only after a violation has occurred, which means that by the time a case is resolved, the market may have already shifted irreversibly in favor of a dominant player. Additionally, these investigations often have a narrow scope, focusing only on specific claims and failing to address consistent and recurring violations of competitive practices effectively. However, according to the committee, ex-ante regulations complement ex-post regulations to improve consumer welfare. In India, digital enterprises are not governed by a single statute; instead, different parts of the industry are regulated by various ministries and departments.
As India contemplates implementing proactive and preemptive measures for competition regulations for digital markets, it would be beneficial to examine their effectiveness in various global jurisdictions.
The main reference of the following analysis of global jurisdictions is Report of the Committee on Digital Competition Law published by Ministry of Corporate Affairs.[1]
| S. No. | Jurisdiction | Relevant ex-ante legislative instruments and policy reforms | Status |
| 1.
|
European Union (EU) | Legislative instrument
The Digital Markets Act (DMA) was introduced through the Digital Services Act Package in December 2020. It is the most significant ex-ante instrument introduced in the EU to address anti-competitive conduct by large digital undertakings designated as ‘Gatekeepers’ providing ‘core platform services’. Gatekeepers are subject to both restrictive and compulsory proactive obligations under the DMA.[2]
|
The DMA came into force on 1st November 2022. |
| 2.
|
UK | Legislative instrument
After the report of the Digital Competition Expert Panel constituted by the Government of the and the report of the Competition and Markets Authority (“CMA”) on its market study on Online Platforms and Digital Advertising, a need was felt to institute a robust ex-ante regime to regulate digital markets in the UK and establish a Digital Markets Unit within the CMA, respectively. The Draft DMCC which was introduced before the UK Parliament on 25th April 2023, focuses on large undertakings engaged in digital activities having a UK nexus. Undertakings fulfilling certain criteria may receive a ‘Strategic Market Status’ (“SMS”) in respect of a digital activity from the CMA. The Draft Digital Markets, Competition and Consumers Bill (“DMCC”) imposes obligatory and preventive conduct requirements on SMS entities which are ex-ante in nature.[3] |
The Draft DMCC is currently at the draft stage and is awaiting passage in the UK Parliament. |
| 3.
|
USA | Legislative instruments
Apart from the central antitrust laws in the US, namely, the Sherman Act, 1890 (“Sherman Act”), the Clayton Act, 1914 (“Clayton Act”), and the Federal Trade Commission Act, 1914 (“FTCA”), twelve Bills have been proposed specifically for regulating competition in digital markets before the US Congress, viz. (a) The American Innovation and Choice Online Act AICO; (b) The Ending Platform Monopolies Act EPM; (c) The Open App Markets Act OAM; (d) Augmenting Compatibility and Competition by Enabling Service Switching Bill (ACCESS); (e) Competition and Antitrust Law Enforcement Reform Bill; (f) Competition and Transparency in Digital Advertising Bill; (g) Consolidation Prevention and Competition Promotion Bill; (h) Digital Platform Commission Bill; (i) Merger Filing Fee Modernization Bill; (j) Platform Competition and Opportunity Bill; (k) Prohibiting Anticompetitive Mergers Bill; and (l) Trust-Busting for the Twenty-First Century Bill.[4]
|
All twelve Bills are pending passage . |
| 4.
|
Australia | Legislative instrument
Ex-post competition enforcement in Australia is undertaken under the Competition and Consumer Act, 2010 (“CCA”). The Bargaining Code has amended the CCA and imposed ex-ante standards on Designated / Responsible Digital Platform Corporations carrying content by Australian news media businesses, in respect of Designated Digital Platform Services provided by them.[5] Policy Reforms The Australian Government directed the Australian Competition and Consumer Commission (“ACCC”) in 2020 to conduct the Digital Platform Services Inquiry (“DPSI”) into the concentration of power and market trends in the supply of digital platform services. The fifth interim report under the DPSI (“5th DPSI Report”) proposes, inter alia, service-specific codes of conduct for Designated Digital Platforms with ex-ante obligations and measures.[6] |
The Bargaining Code came into force on 3rd March 2021. |
| 5.
|
China | Legislative instruments
China’s main antitrust enforcement legislation: the Anti-Monopoly Law (“AML”)– follows an ex-post approach and was amended in 2022 to address anti-competitive practices arising in digital markets. The Platform Guidelines specifically focus on China’s platform economy and aim to curb anti-monopolistic practices. In addition, ex-ante measures have been sought to be introduced through the Draft Classification Guidelines and Draft Responsibility Guidelines. The former provides for different categories of markets along with the thresholds for classification of internet platforms and the latter provides for obligations by platform entities.[7] |
The amendment to the AML is in force. The Platform Guidelines came into force on 7th February 2021.
The Draft Classification Guidelines and Draft Responsibility Guidelines are still at the stage of public consultation. |
Conclusion
India’s oversight of digital markets should ensure that regulations do not hinder the impressive growth demonstrated by Digital India. The expansion of digital markets has significantly contributed to the Indian economy, fostering remarkable growth in Indian businesses and enhancing consumer convenience. Currently, the Indian digital market is experiencing intense competition as startups and established companies increasingly venture and expand into the digital sector. The efficiency and effectiveness of the regulation should be based on: (i) feedback from the relevant stakeholders (ii) ground research and case study (iii) thorough empirical analysis; and (iv) an impact-focused assessment, all these points certainly require stakeholder and public consultation. Due to the broad implications of ex-ante regulation, it should be implemented with caution and keeping in mind that the regulatory structure should align with the growth of the country.
[1] Report of the Committee on Digital Competition Law https://www.mca.gov.in/bin/dms/getdocument?mds=gzGtvSkE3zIVhAuBe2pbow%253D%253D&type=open
[2] Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14 September 2022 on contestable and fair markets in the digital sector and amending Directives (EU) 2019/1937 and (EU) 2020/1828 (Digital Markets Act) Publications Office (europa.eu)
[3] The Digital Competition Expert Panel, ‘Unlocking Digital Competition: Report of the Digital Competition Expert Panel’ (March 2019)
[4] Key Developments in the United States, https://globalcompetitionreview.com/guide/digital-markets-guide/second-edition/article/key-developments-in-the-united-states
[5] Treasury Laws Amendment (News Media And Digital Platforms Mandatory Bargaining Code) Bill 2021 201126_EM_Digital Codes (accc.gov.au)
[6] ACCC, Interim Report No. 5 – Regulatory reform <Digital platform services inquiry – September 2022 interim report.pdf (accc.gov.au)
[7] China: Pivotal reform to Anti-monopoly Law coincides with increased antitrust enforcement <https://globalcompetitionreview.com/review/the-asia-pacific-antitrust-review/2023/article/china-pivotal-reform-anti-monopoly-law-coincides-increased-antitrust-enforcement