The Corporate Affairs Ministry (MCA) on Tuesday extended by a monththe timeline for sending public comments on the much talked about draft Digital Competition Bill and the report of the Committee on Digital Competition Law (CDCL). 

The last date for submitting the comments/suggestions is extended till May 15, 2024, according to a notice issued by MCA. Earlier, the last date for sending in the comments was fixed on April 15. This extension comes in the wake of requests received from various stakeholders, the MCA said on Tuesday.

Meanwhile, stakeholders have now been allowed to submit their comments/suggestions via email,too,besides the e-consultation module. 

The CDCL was born out of a recommendation by the Parliamentary Standing Committee on Finance headed by Bharatiya Janata Party MP Jayant Sinha. The Standing Committee had recommended that competitive behaviour of certain large digital/internet companies needs to be assessed before the markets are monopolised by a handful of players. 

Ex-ante regulation

This is known as an ex-ante regulation/framework where the law defines what conduct is illegal versus the regulator adjudicating whether certain acts are illegal after they have been committed (ex-post regulation).

It may be recalled that the stiff resistance from Big Tech notwithstanding, the Centre appointed 16-member CDCL has recommended that a separate Digital Competition Act that enables the Competition Commission of India (CCI) to selectively regulate large digital enterprises in an ex-ante manner be enacted. 

The proposed law should complement and strengthen the existing competition framework governing large digital enterprises by ensuring timely detection, enforcement and disposal of proceedings in digital markets, the 236-pages report of digital panel had recommended.

Big Tech companies such as Amazon, Apple, Google, Meta and e-commerce biggie Flipkart had conveyed to the panel that they were not in favour of introduction of an ex-ante framework to regulate large digital companies.

The CDCL was set up by MCA on February 6 last year with a mandate to submit report along with a draft Bill on Digital Competition Law within three months.  It was tasked to examine whether India needed an ex-ante framework (where conduct of Big Tech is sought to be regulated and specified practices are upfront declared as illegal) or not. India is currently adopting an ex-post framework where a regulator adjudicates whether certain acts of a player is illegal after they have been committed.

Thresholds & criteria

The CDCL had in its report come up with thresholds and criteria to ‘catch’ those entities that have the power to influence digital markets in a manner analogous to dominant entities. 

The Panel has recommended quantitative thresholds for identifying and designating an enterprise as Systemically Significant Digital Enterprise (SSDE), which will be regulated under an ex-ante framework. SSDEs will be regulated for the specified core digital services offered by them and meeting the threshold criteria.

The quantitative threshold has been based on dual test - ‘Significant financial strength’ and the ‘Significant spread test.’ The significant spread test comprises metrics relating to the number of business users and end users of the core digital service in India, which should also be fulfilled consistently for period of three financial years. 

The panel has recommended that an enterprise should be deemed as an SSDE when it fulfils any of the several thresholds of the ‘significant financial strength’ test along with fulfilling either the end or business users’ thresholds under the ‘significant spread’ test. 

The draft Digital Competition Law has said that an entity engaged in “core digital services” will be deemed as an SSDE if it has a turnover in India of at least ₹4,000 crore, or a global turnover of at least $30 billion, or gross merchandise value in India of at least ₹16,000 crore, or a global market capitalisation or fair market value of $75 billion; and if its core digital service had at least 1 crore end users or at least 10,000 business users in India in each of the preceding 3 financial years.