Center sets up committee to prepare draft digital competition law

The Center has ordered setting up a committee that will review whether existing antitrust laws in the country are equipped to deal with the challenges that have emerged from the digital economy, and submit to the government a draft Digital Competition Act within three months.

The move comes amid increased regulatory antitrust-related scrutiny over big tech companies like Google, which last year was fined by the Competition Commission of India in two separate instances for allegedly abusing its market dominance in the Android mobile device ecosystem, and the app store market . Apart from that, a Parliamentary panel has, in a report released last year, also proposed to frame ‘ex-ante’ regulations to curb the market dominance of large tech companies.

The committee will be headed by the Secretary of the Ministry of Corporate Affairs (MCA), and will include eight other members including the Chairperson of the Competition Commission of India. The joint secretary for competition at the MCA will join the committee as a member secretary.

The remaining seven members of the committee are from the private sector and various law firms such as Saurabh Srivastava, co-founder of the industry body Nascomm; Pallavi Shardul Shroff of Shardul Amarchand Mangaldas; Haigreve Khaitan of Khaitan & Co.; Anand Pathak of P&A Law Offices; Rahul Rai of Axiom5 Law Chamber; Aditya Bhattacharjea, former professor at the Delhi School of Economics; and Harsha Vardhana Singh of IKDHVAJ Advisers.

The Ministry of Electronics and IT (MeitY), Niti Aayog, Department of Commerce, Department of Economic Affairs, Department of Consumer Affairs, and the Department for Promotion of Industry and Internal Trade (DPIIT) will also have to nominate representatives to the committee.

As per the order, the committee will “review whether existing provisions in the Competition Act, 2000 and rules and regulations, framed thereunder are sufficient to deal with the challenges that have emerged from the digital economy”. It will also examine the need for an ex-ante regulatory mechanism for digital markets through a separate legislation and study the practices of “systemically important digital intermediaries” which “limit or have the potential to cause harm in digital markets”.

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

The Competition Commission of India, late last year, slapped two penalties on Google in separate cases. One of the fines, worth over? 1,300 crore, has been imposed on the company for allegedly “abusing its dominant market position” in multiple categories related to the Android mobile device ecosystem in the country.

Aside from the monetary fines, the watchdog has also ordered Google not to deny access to its Play Services plugins to “disadvantaged” original equipment manufacturers (OEMs), and the licensing of the Play Store to OEMs should not be linked to the requirement of pre -installing Google search, Chrome browser, YouTube, Google Maps, Gmail or any other Google application. It has also asked Google not to restrict the ability of app developers to distribute their apps through side-loading – offering their apps outside of Google’s Play Store.

Google has said that the order will result in devices getting more expensive in India and leading to the proliferation of unchecked apps that will pose threats to individuals and national security.

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