Digital India Bill to prescribe guardrails for digital competition; separate competition law to enforce specific rules

On Tuesday, Finance Minister Nirmala Sitharaman held a meeting with Rajeev Chandrasekhar, Minister of State for Electronics and IT where they discussed various issues on the digital competition laws and “agreed that a ‘whole of Government approach’ should be adopted in the framing of provisions in this regard,” as per a tweet by the Finance Ministry.

“PM Narendra Modi’s vision and goal of a $1 trillion and vibrant and rapidly growing digital and innovation economy requires global standard cyber laws – a framework that is future-ready and can adapt to new challenges, rapid changes and disruptions,” Chandrasekhar said. “Today, I had a good meeting to understand the Ministry of Corporate Affairs’ thoughts on digital competition and discussed how it can be harmonised with the Digital India Act – successor to the IT Act (2000).”

Under the upcoming draft of the Digital India Bill that the IT Ministry is in the process of finalising, an entire chapter – tentatively titled ‘openness’ – is expected to deal with various competition issues in the digital space and establish broad-based principles related to the sector, including defining market power, and market imbalances, a senior government official said.

The move comes as India has identified antitrust as a key area to check the dominance of big technology companies, an area where the European Union has taken a lead with its Digital Markets Act (DMA) which came into force last November.

In December 2022, the Standing Committee on Finance had proposed ex-ante regulations, category of systemically important digital intermediaries (SIDIs) and a new digital competition law to curb anti-competitive practices in digital markets. These digital intermediaries, according to the panel, should be classified based on their revenue, market capitalisation and number of active business and end users.

India’s current regulatory structure for competition issues follows the ‘ex-post’ approach, meaning that the regulator, the Competition Commission of India can only take action against an entity once anti competitive practice has been established. However, under the ‘ex-ante’ framework, companies will have to put in place mechanisms to prevent any abusive anti-competitive practices.

The Internet and Mobile Association of India (IAMAI) – whose members include companies like Google, Meta, and Microsoft – earlier sent a note to the committee set up by the MCA, opposing ex-ante regulations for the sector, saying it will disincentivise companies from scaling beyond a particular limit.

The organisation’s submission faced flak from some of the most prominent start-ups in the country, who labelled the IAMAI’s views as “propaganda” for big technology companies.