Background
The rapid growth of the digital economy has highlighted limitations in traditional competition law frameworks. The proposed Digital Competition Act aims to address these limitations and foster a fair, transparent, and competitive digital ecosystem in India.
Key Recommendations
1. Shift from Ex-Post to Ex-Ante Regulation:
o The current system investigates anti-competitive practices after they occur (ex-post).
o The Act proposes a proactive approach (ex-ante) to identify and prevent potential harm before it happens.
o This might involve assessing mergers and acquisitions with a stricter lens for digital markets.
2. Focus on Core Digital Services:
o The Act wouldn’t apply to all businesses but rather specific digital services prone to market concentration.
o Examples could include online marketplaces, search engines, social media platforms, and key digital infrastructure providers.
3. Regulation of Large Players:
o Companies with a “significant presence” in the market would face specific regulations.
o Criteria for determining “significant presence” could include market share, user base, and data control.
4. Systemically Important Digital Enterprises (SIDEs):
o The Act proposes identifying a category of SIDEs – dominant players with the potential to significantly influence the digital market.
o Thresholds and criteria would be established for designating SIDEs. These might include:
Revenue
Market capitalization
Number of active businesses and users
o SIDEs would face stricter regulations compared to other large players.
This could involve mandatory data portability requirements, restrictions on self-preferencing, and interoperability mandates.