India to gain from ex-ante regulation of digital markets: MCA

India will “benefit from ex-ante regulation of digital markets,” the corporate affairs ministry has said, as it seeks proposals from agencies to undertake a market study on various aspects of the draft competition bill that was firmed up by an official panel last year to regulate Big Tech firms.

Ex-ante regulations usually stipulate certain dos and don'ts for businesses and aim to keep them from engaging in problematic behaviour rather than punishing them after such an event.

Several large digital companies, such as Apple, Google, Meta, Amazon, and Flipkart, had opposed ex-ante regulations in their submissions last year before the panel headed by then corporate affairs secretary Manoj Govil and included the chief of the antitrust regulator, among others.


The panel still recommended a new antitrust law with the ex-ante framework to regulate only systemically significant digital enterprises (SSDEs), leaving out smaller players. It had submitted the draft digital competition bill to the ministry of corporate affairs (MCA), along with its report. The government was supposed to assess the draft bill and the report before firming up its own bill after due consultations.

Objectives of the market study



The ministry’s latest request for proposal (RFP) seeks to gather “empirical evidence through market studies/impact assessments” in two areas—financial and user thresholds to determine the companies that would be under the law’s ambit, and the core digital services that would be covered by it. This would give “us a better understanding of the likely benefits/impact of the implementation of ex-ante regulation,” the ministry said.

Moreover, the market study would capture the implications of the draft Digital Competition Bill on these services and their stakeholders, including the potential impact on competition and market entry. It would also cover the likely impact of the proposed ex-ante framework on smaller players, including start-ups and micro, small, and medium enterprises (MSMEs).

During consultations with the government on the panel’s draft bill, several large players sought a review of the thresholds, even as they maintained their opposition to the ex-ante framework. The government had, in July, said it could commission a market study before preparing the final bill.

As per the Govil panel’s draft bill, a digital firm is systemically significant if it satisfies any of these financial thresholds: domestic turnover of more than Rs 4,000 crore; global turnover above $30 billion; gross merchandise value in excess of Rs 16,000 crore in India; or global market capitalisation above $75 billion. Moreover, those having 10 million end-users or 10,000 business users in India will also be treated as SSDEs.

For their part, the ministry and the Competition Commission of India (CCI) aim to use the new law to prevent anti-competitive practices in the rapidly evolving digital sector without stifling innovation or harming small players, ET had earlier reported.