Digital Competition Bill: Nasscom calls for further discussions, strengthening current framework

IT industry body Nasscom has called for further discussions on the report of the Committee on Digital Competition Law as well as ex ante regulations and has suggested strengthening the current regulatory framework.
 
“Based on our analysis below, it may be desirable to strengthen the existing regulatory framework before deciding on enactment of one more legislation,” Nasscom said in its submission to the ministry of corporate affairs on the proposed digital competition bill as well as the report of the committee on Digital Competition Law (CDCL).
 
It has also called for more thinking and analysis for the need for ex-ante regulations in the proposed Digital Competition Bill that would work as pre-emptive measures for identified systematically significant digital enterprises (SSDEs) or Big Tech firms.
 
“We appreciate the intention of the CDCL that it wants to address specific harms which are not being adequately remedied under the ex-post regime. However, the CDCL has also acknowledged that ex-ante regulations are known to have high error costs,” it noted.
 
Given this situation, coupled with the lack of prior global experience of implementing ex-ante competition law in digital markets, we submit that these types of regulations require more careful and in-depth examination of market realities, especially while dealing with complex and heterogeneous markets like India, it further said.
 
Before adopting ex-ante regulations, it has suggested that the government undertake focused studies and consultations based on which it can further strengthen and review provisions of the DCB. It has also called for capacity building of the Competition Commission of India as implementing a new ex-ante framework is likely to put additional burden on the regulator.
 
“The Digital Markets Unit being set-up by the CCI would need persons with technical expertise of digital markets. For this, the CCI should consider lateral hiring from the industry and academia,” it has suggested.
 
It has also recommended capacity building of the National Company Law Appellate Tribunal with dedicated benches to hear competition matters.  
 
Given that an ex-ante approach in competition law regime would be a novel exercise, CCI should consider creating an informal guidance scheme to give SSDEs non-binding advice and clarifications with respect to their conduct requirements. The Securities and Exchange Board of India had previously in 2003 created such an informal guidance scheme, it noted.
 
After nearly a year of consultations, the ministry of corporate affairs had in March this year put out the report of the CDCL and the draft DCB for public consultations. The last date for submitting comments was April 15 initially, which was later extended to May 15.
Ashish Aggarwal, Vice President and Head of Public Policy, Nasscom said, “Any proposal for ex ante regulations should to rooted in Indian markets and behaviour. The proposals should also make a case for how they are expected to impact innovation in the sector. We believe that the proposal for one more law in the form of a digital competition bill needs a stronger case than is made out in the report.”
 
Since the committee was set up in February 2023, many developments in the Indian regulatory space have taken place. These include the strengthening of the Competition Act, enactment of the DPDP Act, strengthening of consumer protection and discussions on bringing in a Digital India Act, he noted, adding that the regulatory space is not stagnant and some of issues highlighted in the report can get addressed without resorting to a new law.
 
“With regard to an enforcement gap in the competition law, we need to assess whether it would be fulfilled by ex ante regulations as even an ex-ante framework would require new enforcement capacity. These enforcement measures can be brought in the current Competition Act,” he further said, adding that Nasscom has attempted to provide constructive suggestions to the government to strengthen competition, that may be prioritised over a new law.