Government Panel Finalizes Draft Digital Competition Act, Set to Regulate Big Tech Practices

A high-powered inter-ministerial panel appointed by the Indian government is nearing completion of a draft digital competition law aimed at regulating anti-competitive practices of major technology companies. Sources familiar with the matter have revealed that the panel, led by the Secretary of the Ministry of Corporate Affairs, is expected to add the finishing touches to the draft during its 10th meeting on June 1.

Upon finalization, the draft legislation will be recommended to the Ministry of Corporate Affairs for consideration. Following consultations with stakeholders, the proposed law may be presented to the Parliament during the winter session later this year.

The recommendation for a standalone ex-ante law to oversee the conduct of big tech companies was put forth by the parliamentary committee on finance, drawing inspiration from the European Union’s regulatory framework. In response to these suggestions, the central government assembled a 16-member panel on February 6, 2023, to examine the necessity of a separate competition law for digital markets.

Sources indicate that the committee is contemplating the establishment of criteria to identify “gatekeepers” within digital markets. These gatekeepers would encompass large technology corporations operating in sectors such as e-commerce, food delivery platforms, ride-hailing services, and search engines, capable of distorting market competition. The committee is likely to propose a set of criteria based on the number of active users and global turnover to identify these gatekeepers effectively.

Furthermore, it is expected that the committee will recommend ten obligations that identified gatekeepers must adhere to. These obligations include ensuring interoperability between platforms, implementing measures against steering users toward specific products or services, promoting data portability, and regulating data usage.

According to an anonymous source, the committee strongly believes that big tech companies should not exploit the data they collect to eliminate competition or hinder the entry of new players into the market.

In the event of non-compliance with the obligations outlined in the digital competition law, the committee is considering imposing penalties amounting to 10% of a company’s global turnover.

Experts anticipate that the introduction of a digital competition law could have significant ramifications for major technology players operating within India’s digital markets. Among its objectives, the committee aims to create a level playing field for Indian startups and bolster their competitive advantage.

The forthcoming law is set to introduce regulatory mechanisms to curb anti-competitive practices, ensuring fair competition and fostering innovation in India’s rapidly expanding digital ecosystem.

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