House Panel recommends enacting Digital Competition Act

House Panel recommends enacting Digital Competition Act

Subject : Economy

• 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.
• The committee, in its report titled ‘Anti competitive practices by Big Tech companies’ tabled in Parliament.

About the recommendations

• It listed a set of undesirable practices observed in the digital economy and said that a code of conduct-based approach (ex-ante approach) was needed for digital market winners called digital market gatekeepers.
• Some of them are e-commerce platforms pushing their own private labels over third-party brands sold in the platform, using customers’ personal data to get ahead of competition and bundling different products and services.
• The panel said systemically important digital market gate keepers, who can negatively influence competitive conduct in the digital ecosystem needs to be identified.
• The Committee strongly recommends that a systematically important digital intermediary (SIDI) must not favour its own offers over the offers of its competitors when mediating access to supply and sales markets.
• The Committee also recommended that digital market gatekeepers should not exploit the personal data of end users of the platform in certain ways for advertising to ensure level playing field.
• Also, digital market gate keepers must inform Competition Commission of India (CCI) of any intended mergers and acquisitions in certain cases even if the deal does not meet the asset-sale threshold for seeking CCI clearance.
• Ex ante Approach : Ex-ante approach is forward-looking regulation in contrast to initiating an investigation after an anti-competitive act has been committed–the ex-post approach.

Recommended amendments to the Competition Act 2002

• The Parliamentary Standing Committee on Commerce recommended that

1. a) The Act should prescribe norms for the identification of gatekeeper platforms for stricter oversight,
2. b) The CCI should formulate a mandatory code of conduct that comprises a set of core principles, as well as a list of hardwired dos and don’ts for gatekeepers.

Digital Markets Act of the EU and India

• The Digital Markets Act of the European Union adopts ex-ante regulations to make digital markets fairer and more contestable.
• For example, it a) Defines gatekeepers as entities that have significant market influence as well as the threshold of turnover or users, b) Places a set of negative and positive obligations on such entities, and c) Bars targeted advertising and the use of personal data gathered from one platform to offer services on another.