House panel favours phased adoption of proposed digital competition law to regulate Big Tech

The Parliamentary Standing Committee on Finance has pitched for a “nuanced, phased, and evidence-based” approach in the implementation of a proposed digital competition law with an ex-ante framework to regulate the Big Tech companies, taking into account capacity constraints of the antitrust watchdog.

In its report submitted with the Lok Sabha on Monday, the panel headed by senior BJP leader Bhartruhari Mahtab also favoured the inclusion of new provisions in the Digital Competition Bill (DCB), aligning with global standards.

Changes in threshold
The panel has suggested that the corporate affairs ministry refine the DCB's thresholds and designation mechanisms—which would be used to identify systemically significant digital enterprises (SSDEs) for ex-ante regulations—to “prevent inadvertent capturing of fast-growing domestic firms”.


The panel has also recommended the introduction of a “rebuttal mechanism” in exceptional cases, similar to the one adopted by the EU, to enable companies to contest their SSDE designation by the government.

MCA, CCI on ex-ante framework
The ministry of corporate affairs (MCA), in its submission with the house panel in April, said quick adaptation to new digital trends, “ensuring a timely response to emerging anti-competitive practices and ex-ante evaluation of competitive behaviour in digital markets to pre-empt and prevent the emergence of monopolistic structures is the need of the hour”.

The ministry has also shared various concerns expressed by stakeholders about select provisions of the draft bill.

For its part, the Competition Commission of India has told the panel that the ex-ante regulatory framework “should reflect a balanced approach so as to achieve the objective of competitive digital markets without stifling innovation”.

“Only the largest of the technology behemoths with systemic significance should come within its ambit and the ex-ante obligations should target/prevent only such conduct that are unambiguously anti-competitive,” it said.

Last month, minister of state for corporate affairs Harsh Malhotra told the Lok Sabha that the government would undertake market studies to build "an evidence-based foundation" to introduce an ex-ante framework.

Last year, a high-level official panel led by then corporate affairs secretary Manoj Govil had suggested a new antitrust law with an ex-ante framework to regulate only the SSDEs.

It had submitted with the MCA a draft digital competition bill, along with its report, for consideration. The government was supposed to assess the draft bill and the report before firming up its own bill after due process of consultations.