New digital competition law proposed to regulate big tech

A high-level official panel under corporate affairs secretary Manoj Govil has proposed a new digital competition law with a set of dos and don'ts under an ex-ante framework to address potential abuse of dominance or other antitrust concerns involving big tech companies.

The new law, the panel says, would apply only to "systemically significant digital enterprises" (SSDE) that have "significant presence" in India, leaving small firms out of its ambit to not stifle innovation. The penalty for violations of the law could be as high as 10% of the relevant entity's global turnover, it suggests.

The Ministry of Corporate Affairs released on Tuesday the panel's report and a draft bill, seeking public comments by April 15.


ET had on August 12, 2023 reported that, on the basis of the panel's report, the MCA could recommend a separate digital competition Act, instead of tweaking the existing anti-trust law, with an ex-ante framework to regulate big tech.

The panel's report said: "Such an ex-ante law should ensure that behaviours of large digital enterprises are proactively monitored, and that the CCI intervenes before instances of anticompetitive conduct transpire." The panel recommends a base value of ₹4,000 crore for Indian turnover annually for such enterprises, while there global turnover threshold is set at $30 billion. The government, however, will retain power to exempt certain enterprises or classes of enterprises from the purview of the law, if it so wants, the panel suggests.

The committee proposes that the new law should apply to a pre-identified list of core digital services that are susceptible to concentration. This list, however, will be periodically updated to capture latest realities, given the fast-paced evolution in the digital space. The report said an enterprise is deemed an SSDE if it passes a twin test demonstrating 'significant presence'. First, it will go through the 'significant financial strength' test which comprises quantitative proxies of economic power, which is India-specific turnover, global turnover, global market capitalisation, and gross merchandise value. Second, it must qualify the 'significant spread' test which evaluates the extent to which an enterprise has been present in the provision of a core digital service in India on the basis of the number of end-users and business users.

The draft bill obligates enterprises to self-assess their fulfilment of these thresholds and report the same to the Competition Commission of India.