The standing committee on finance has recommended a shift from the current reactive (ex-post) approach under the Competition Act 2002 to a proactive (ex-ante) framework through the Digital Competition Bill (DCB). In a report issued on Monday, the committee noted that the ex-ante regulations aim to prevent anti-competitive conduct before it harms consumer interests by targeting Systemically Significant Digital Enterprises (SSDEs) based on quantitative and qualitative criteria.\
A Shift from Reactive to Proactive Regulation
The panel has also suggested that the ministry of corporate affairs (MCA) should re-define the DCB’s thresholds and designation mechanisms. This is aimed at preventing the domestic start-ups to fall under the ambit of the proposed law.
Further, the committee recommended the introduction of a rebuttal mechanism that will allow companies designated as SSDEs to challenge their designation despite meeting the quantitative thresholds.
In March 2024, the government released a report featuring the draft Digital Competition Bill 2024, and invited public comments. After facing stiff opposition from different stakeholders, including Big Tech and domestic digital firms, the draft bill was kept in abeyance.
Refining the Rules for “Systemically Significant Digital Enterprises”
Just last month, the minister of state for corporate affairs Harsh Malhotra told Parliament that based on the inputs from key stakeholders, the government is considering market studies on DCB to look into all relevant aspects of ex-ante regulations.
In addition, the parliamentary panel has said that out of a total penalty imposed by CII (Rs 20,350.46 crore), a massive amount (Rs 18,512.28 crore) has been either stayed or dismissed by appellate court. Hence, it recommended that MCA and CCI should explore measures to reduce litigation delays and ensure the effective enforcement of its orders, especially in the complex digital market cases.
The committee also emphasised on increasing the sanctioned strength of the CCI, particularly for specialised roles in the Digital Markets Division (DMD). “Efforts should be made to attract and retain top talent, including data scientists, technologists, and market analysts, by exploring flexible engagement models,” the report said.