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The Report of the Committee on Digital Competition Law has evoked much interest. The committee’s recommendation for ex-ante regulation before instances of anti-competitive conduct transpires is laudable and should be welcomed. Similarly, the recommendations regarding strengthening the capabilities of the Competition Commission of India (CCI) to tackle digital markets deserve early acceptance and implementation by the government.
However, the committee’s recommendation to enact another law, namely, the Digital Competition Act, the draft of which is part of the report, requires a re-think. Because of its similarity with the extant Competition Act, 2002, the proposed law may not only create confusion and but also lead to uncertainty regarding compliance requirements for the various digital enterprises operating in India. Such legal uncertainty does not augur well for an economy which is seeking to grow at a fast pace.
The committee has recommended that the proposed new law should be enforced by the CCI. The draft law mandates the CCI to frame regulations specifying the conduct of large digital enterprises.
The proposed law has borrowed significantly from Competition Act, 2002. For instance, section 3(3) of the draft law, which provides the criteria for designating an enterprise as ‘Systemically Significant Digital Enterprise’ (essentially a large digital enterprise) borrows heavily from section 19(4) of the extant law, which gives the factors to be considered for treating an enterprise as a dominant enterprise. The designation of Associate Digital Enterprise under the draft law relies on the definition of ‘group’ under the extant law.
Prohibited conduct
Even some of the prohibited conduct under the proposed law are already covered by the extant law. Again, obligation of ‘fair and transparent dealing’ under the proposed law stands covered under the extant competition law. Similarly, the settlement and commitment provisions are identical to those introduced recently in the competition law. The powers of the CCI and procedure for inquiry and investigation under the proposed law are also identical.
In view of the similarities in the provisions in the proposed law and extant competition law, it may be simpler to just amend and incorporate the additional provisions of ex-ante regulation in the competition law. Further, any new law has its own gestation period before it stabilises. It takes time for: (i) courts to settle various questions regarding interpretation of law and evidentiary thresholds; and (ii) practices and procedures to develop and achieve a certain amount of certainty.
While no one can deny credit to the CCI for implementing such a dynamic law successfully, competition law in India is yet to achieve the desired stability and legal certainty. With limited judgments from the Supreme Court, many questions of law are yet to be settled. Practice and procedures are still evolving. In this scenario, introducing the proposed law may add to the confusion and lead to potential conflict in interpretation and implementation of the two statutes, thereby undermining the legal certainty regarding the competition law that has been achieved till date in India.
It is also worth noting that CCI has already successfully prosecuted anti-competitive conduct by various digital enterprises including Google, MakeMyTrip, Goibibo and Oyo. These cases show that the CCI can successfully prosecute anti-competitive conduct in the digital markets, even in the absence of a new law.
No doubt that ex-ante regulations, if implemented properly, can give CCI the tools to be more effective via-a-vis the digital markets. The government may also consider following the European Commission and empower the CCI to issue informal guidance to enterprises in India on legal issues pertaining to competition law. This will improve legal certainty and compliances in the Indian market.
Hence, the proposed law may be a case of unnecessary legislation because its objectives can be achieved by amending the extant competition law.
Gautam is Partner, Dua Associates, and Vishwanath is Founding Member and DG, Public Affairs Forum of India. Views are personal
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