The Digital Competition Bill (DCB), introduced in 2024, is designed to reshape India’s rapidly evolving digital ecosystem. This comprehensive law strives for a delicate balance: fostering growth in the digital realm while addressing potential anti-competitive practices.
Empowering the Competition Commission of India (CCI)
At its core, the DCB empowers the CCI to identify and regulate “systemically significant digital enterprises” (SSDEs) and their associated entities. These SSDEs are major players in the digital space, defined by factors like revenue, user base, and market capitalisation. They are deemed to have a significant presence in the provision of “Core Digital Services.”
Key Provisions: Building a Robust Regulatory Framework
The DCB establishes a multi-pronged approach to regulating SSDEs:
- Identification of SSDEs: The bill mandates the identification of enterprises with a substantial presence in core digital services. Financial thresholds (turnover exceeding INR 4000 crore in India or USD 30 billion globally) and user thresholds (at least one crore end users or ten thousand business users in India) are used for this purpose.
- Regulatory Obligations: Once designated as an SSDE, the enterprise must comply with strict regulations aimed at preventing anti-competitive practices. These obligations include transparency in operations, avoiding unfair trade practices, and ensuring business practices don’t hinder competition.
- Associate Digital Enterprises: Enterprises associated with SSDEs, directly or indirectly involved in providing core digital services, are also subject to regulatory scrutiny. They must adhere to the same obligations as the SSDEs, ensuring a comprehensive framework.
- Anti-Circumvention Measures: The Bill addresses circumvention tactics by enterprises seeking to evade oversight. Enterprises cannot fragment their services to avoid meeting SSDE thresholds.
- Penalties for Non-Compliance: The CCI has the power to impose penalties on SSDEs and their associates for non-compliance. These penalties are designed to deter anti-competitive behaviour and ensure adherence to the framework.
Empowering the Competition Commission of India (CCI)
At its core, the DCB empowers the CCI to identify and regulate “systemically significant digital enterprises” (SSDEs) and their associated entities. These SSDEs are major players in the digital space, defined by factors like revenue, user base, and market capitalisation. They are deemed to have a significant presence in the provision of “Core Digital Services.”
To ensure compliance, the bill grants the CCI extensive powers:
- Conducting inquiries
- Imposing penalties
- Issuing interim orders
Importantly, the CCI’s jurisdiction extends to acts occurring outside India that impact the Indian market, reflecting the borderless nature of digital services.
Core Digital Services
The bill defines Core Digital Services as a broad range of offerings, including:
- Online search engines
- Social networking platforms
- Video-sharing platforms
- Interpersonal communication services
- Operating systems
- Web browsers
- Cloud services
- Advertising services
- Online intermediation services
This comprehensive list reflects the government’s recognition of the pervasiveness of digital services in modern life.
Implications for Digital Enterprises
Promoting Fair Competition: The bill aims to level the playing field by regulating SSDEs, allowing smaller and emerging digital enterprises to compete effectively. This fosters innovation and consumer choice, which are vital for a vibrant digital economy.
- Increased Regulatory Oversight: SSDEs and their associates will be subject to increased scrutiny, requiring them to adopt transparent and fair business practices. This could lead to significant changes in their operations, particularly in data handling, user privacy, and competitive practices.
- Global Impact: Global digital giants operating in India may be classified as SSDEs due to the financial and user thresholds. This brings them under Indian regulatory purview, ensuring their operations adhere to local competition laws.
Ensuring Fair Dealing with Users: Addressing Key Concerns
One of the bill’s key objectives is to ensure fair and transparent dealing between SSDEs and their users (both businesses and individuals). Here’s how it tackles specific concerns:
- Prohibited Practices: The Bill prohibits SSDEs from engaging in practices like self-preferencing, data misuse, restricting third-party applications, anti-steering, tying, and bundling.
- Data Privacy and Portability: It addresses data privacy and portability concerns, mandating SSDEs to obtain explicit user consent for data intermixing or cross-using data across services. Additionally, it requires them to facilitate data portability for users to transfer data to other platforms.
Self-reporting and Dispute Resolution
The bill introduces a self-reporting obligation for enterprises meeting the SSDE criteria. They must notify the CCI within a specified timeframe. Failure to comply or provide incomplete information can attract penalties.
The bill also provides for settlement and commitment mechanisms, allowing enterprises to resolve potential contraventions by offering commitments or reaching settlements with the CCI, subject to certain conditions and procedures.
Recognising the Need for Flexibility
While promoting competition and protecting consumer interests are central, the DCB recognises the need for balance. The CCI can exempt enterprises from certain provisions in cases of:
- Public interest
- Security concerns
- International obligations
Additionally, the bill allows for consideration of factors like economic viability, fraud prevention, cybersecurity, and intellectual property rights when imposing obligations on SSDEs.
Overall, the Digital Competition Bill represents a significant step forward in regulating India’s rapidly evolving digital landscape. By establishing a robust framework for identifying and regulating SSDEs, promoting fair practices, and addressing potential anti-competitive behaviour, the bill seeks to create a level playing field for all stakeholders while fostering innovation and economic growth.
As India continues its digital transformation journey, the successful implementation of this legislation will be crucial in ensuring that the benefits of technological advancements are shared equitably and that consumer interests remain paramount.