Lok Sabha Question No. 965 (UNSTARRED), answered on 2024-07-29
Subject: Anti-Competitive Practices in Indian Digital Market
Ministry: CORPORATE AFFAIRS
Asked by: Shri Anto Antony

## GOVERNMENT OF INDIA

## MINISTRY OF CORPORATE AFFAIRS LOK SABHA

## UNSTARRED QUESTION NO. 965 ANSWERED ON MONDAY THE 29 TH  JULY, 2024/ 7 SHRAVAN , 1946 (SAKA)

Anti-Competitive Practices in Indian Digital Market

## QUESTION

965 Shri Anto Antony: Will the Minister of CORPORATE AFFAIRS be pleased to state:

- (a) the  specific  instances  where  the  current  ex-post  framework  has  proven inadequate in addressing anti-competitive practices in the Indian digital market;
- (b) the rationale behind these thresholds and outline any measures planned to mitigate  potential  negative  impacts  on  domestic  innovation  and  entrepreneurial ventures;
- (c) the way by which the Bill strikes a balance between fostering an environment of  fair  competition  and  enabling  small  businesses  to  leverage  digital  tools  for growth; and
- (d) whether the Bill will be structured to address the specific challenges posed by  big  tech  companies  while  ensuring  a  regulatory  framework  that  fosters  the growth of domestic start-ups?

## ANSWER

MINISTER OF STATE IN THE MINISTRY OF CORPORATE AFFAIRS AND MINISTER OF STATE IN THE MINISTRY OF ROAD TRANSPORT AND HIGHWAYS.

(SHRI HARSH MALHOTRA)

(a) to (d): On the recommendations of Parliamentary Standing Committee on Finance in its 53 rd report on the subject titled 'Anti -Competitive Practices by Big Tech Companies ' ,  a  Committee on Digital Competition Law (CDCL) was constituted vide order dated 06.02.2023 to inter-alia examine the need for a separate law on competition in digital markets. The Committee submitted its report  to  the  Government  in  February  2024,  along  with  a  Draft  Digital Competition Bill (Draft DCB) which was subsequently placed in public domain for stakeholder s' consultation.

The Committee in its report has stated that it deliberated on how the present ex-post framework under the Competition Act, 2002(the Act) is not designed to facilitate timely and speedy redressal of anti-competitive conduct by digital enterprises given the extensive fact-finding and a tiered adjudicatory process involved in ex-post enforcement proceedings.

The  Committee  has  stated  that  an  ex-ante  framework  as  a  more  efficient market correction mechanism compared to current ex-post interventions under Sections 3 and 4 of the Act.

The Committee has recommended quantitative thresholds for identifying and designating  an  enterprise  as  Systemically  Significant  Digital  Enterprises (SSDEs)  under  the  Draft  DCB  based  on  a  dual  test  which  demonstrates significant presence in the context of competition concerns; (a) 'the significant financial  strength'  test  which  comprises  quantitative  thresholds  serving  as proxies  for  economic  power,  and  (b)  the  'significant  spread'  test  which comprises metrics relating to the number of business users and end users of the Core Digital Service(CDS) in India. Additionally, the Draft DCB envisages residuary  powers  for  designation  in  the form  of  'qualitative'  criteria  for designating certain enterprises as SSDEs that do not meet the quantitative thresholds  but  nonetheless  have  the  ability  to  significantly  influence  the market in which they operate.

The Committee has stated that the Draft DCB should apply to a pre-identified list  of  Core  Digital  Services  that  are  susceptible  to  concentration.  Noting India's thriving digital economy, the Committee has emphasised the need to strike a fine balance between increased regulation and enabling innovation.

The  Committee  has  noted  that  the  digital  market  is  increasingly  becoming concentrated with a few large digital enterprises that wield immense control over the market. This gives them an edge over other business users and startups. This ultimately makes smaller digital enterprises and start-ups dependent on large digital enterprises and gives rise to an imbalance in bargaining power and information asymmetry in the digital market.

The Committee has felt that it is important to ensure that policy measures are carefully  crafted  only  to  address  anti-competitive  conduct  by  existing  large digital  enterprises,  and  to  not  throttle  the  growth  of  emerging  digital enterprises that have the capacity to grow into global players.

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