Big Tech report. House Panel recommends enacting Digital Competition Act

The Parliamentary Standing Committee on Finance headed by Jayant Sinha has in its latest Big Tech report come up with a slew of recommendations on digital markets, including the introduction of a Digital Competition Act to ensure a fair, transparent and contestable digital ecosystem; identification of Systemically Important Digital Intermediaries (SIDI) and adoption of definitions to ‘ex-ante’ regulate their behaviour and framing of regulatory provisions to ensure that ‘news publishers’ are able to establish contracts with SIDIs in a fair and transparent process.

In its report on ‘Anti-competitive Practices by Big Tech tabled in Parliament on Thursday, the Panel said that a Digital Competition Act is needed to ensure a fair, transparent and contestable digital ecosystem,“ which will be a boom not only for the country and its nascent start-ups economy but also for the entire world”. 

The Panel has recommended that India must identify the small number of leading players of market winners that can negatively influence competitive conduct in the digital ecosystem, as ‘Systemically Important Digital Intermediaries’ (SIDI) and adopt definitions to ex-ante regulate their behaviour.

The competitive behaviour needs to be evaluated ex-ante before markets end up monopolised instead of the ex post evaluation being carried out at present, the Panel has said.

News Publishers

The Parliamentary Panel is of the view that regulatory provisions are required to ensure that news publishers are able to establish contracts with SIDIs through a fair and transparent process. 

The Panel also recommended that a SIDI should not process, for the purpose of providing online advertising services, personal data of end users using services of third parties that make use of core services of the platform.

SIDIs should provide advertisers and publishers with access to the performance measuring tools of the gatekeeper and the data necessary for advertisers and publishers to carry out their own independent verification of the advertisements inventory, including aggregated and non aggregated data, the Panel has said.

Mandatory obligation on SIDIs

The Committee stressed on identifying SIDIs based on their revenues, market capitalisation and number of active business & end-users. “India should also adopt definitions to ex ante regulate the behaviour of Systemically Important Digital Intermediaries as has already been done by various legislations across the world” observed the panel in the report. 

SIDIs to report to CCI 

The panel recommended that stakeholders, working with Competition Commission of India (CCI) and the Central Government, must collaborate to arrive at a reasonable definition of SIDIs. Further, the SIDI within certain fixed months of its online platform being designated as ‘Systemically Important Digital Intermediary’, and thereafter annually submit a report to CCI describing in a detailed and transparent manner the measures it has implemented to comply with its mandatory obligations. The SIDI operator should also publish on its website a non-confidential summary of the report. 

Anti-steering provisions 

Putting ex ante obligations on SIDIs, the Committee recommended that SIDI should refrain from imposing anti-steering provisions upon business users of the platform.  

Anti-steering provisions are clauses whereby a platform prevents the business users of the platforms from ‘steering’ its consumers to offers other than those provided by the platform that may be cheaper or otherwise potentially attractive alternative in terms of a better interface. 

Similar obligations have been cast upon SIDIs in respect of self-preferencing/platform neutrality, bundling & tying, data usage, pricing/ deep discounting, exclusive tie-ups, search &ranking preferencing, no installation or operation restrictions on third party applications etc. The panel recommended that SIDI should not process, for the purpose of providing online advertising services, personal data of end-users using services of third parties that make use of or services of the platform. 

Mergers & Acquisitions

Noting certain mergers not being captured under existing threshold of assets and turnover, the panel recommended that SIDI should inform CCI of any intended concentration where the merging entities or the target of concentration provides services in the digital sector or enable collection of data, irrespective of whether it is notifiable to CCI or not.  

Digital Markets Unit to be setup under CCI

The Panel recommended that India’s competition law must be enhanced to meet the requirements of restraining anti-competitive behaviour in the digital markets and hence it is necessary to strengthen CCI to take on the new responsibilities. The panel recommended setting up of a specialised Digital Markets Unit within CCI, staffed with skilled experts, academics and attorneys, enabling CCI to closely monitor SIDIs and emerging SIDIs, provide recommendations to the Central Government on designating SIDIs, review SIDI compliance and adjudicate on digital market cases and conduct for efficient and effective monitoring of digital markets per se. 

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