Syllabus
GS 2 – Important aspects of governance; Transparency and accountability (institutional and other measures); Citizens Charter.
GS 3 – Probity in governance: Information sharing and transparency in government | Right to Information.
Applications where to apply?
When asked about
– Digital competition law
– Fair market practices
– Competition commission
Context
India proposes a new digital competition law inspired by the European regulatory framework to regulate tech giants like Google, Facebook, and Amazon.
Source
The Indian Express | Editorial dated 16th May 2024
What the draft Digital Competition Bill proposes, why Big Tech opposes it
India is poised to introduce a new digital competition law inspired by the European regulatory framework, aiming to address anti-competitive practices by tech giants like Google, Facebook, and Amazon. The proposed Digital Competition Bill, 2024, seeks to establish stringent regulations to prevent self-preferencing and data exploitation by large technology companies.
Need for Digital Competition
- Instances of anti-competitive conduct by big tech companies underscore the importance of fostering digital competition.
- High market barriers hinder innovation and competition, limiting opportunities for new entrants and startups.
- Addressing the dominance of a few companies is essential to promote market diversity, innovation, and consumer welfare in the digital economy.
Key Provisions of the Digital Competition Bill, 2024
- Predictive Regulation:
- This provision marks a shift from the traditional reactive approach (ex post framework) to a proactive approach (ex ante framework) in regulating digital markets.
- Instead of waiting for anti-competitive practices to occur and then taking action, the law aims to identify potential harms in advance and prevent them from happening.
- By addressing delays in regulating market abuse, it seeks to enhance the effectiveness of competition law enforcement under the existing Competition Act, 2002 .
- Designation of Systematically Significant Digital Enterprises (SSDEs):
- Under this provision, certain digital service providers such as search engines and social media sites can be designated as SSDEs based on specific criteria.
- Criteria for designation include factors like turnover, user base, market influence, and other quantitative and qualitative parameters.
- SSDEs are prohibited from engaging in practices such as self-preferencing (promoting their own products over competitors’), anti-steering (manipulating user choices), and restricting third-party applications.
- Heavy penalties of up to 10% of global turnover can be imposed on SSDEs for violations, serving as a deterrent against anti-competitive behavior.
- Associate Digital Enterprises (ADEs):
- This provision addresses the interrelationship between companies within a group and their use of data.
- ADEs are companies affiliated with SSDEs and are subject to similar obligations depending on their involvement with core digital services.
- It aims to prevent the misuse of data collected by one company to benefit other group companies, ensuring fair competition and preventing market distortions.
Criticism of the Draft
- Compliance Burden for Tech Giants:
- The stringent regulatory framework proposed by the bill could impose significant compliance burdens on tech giants.
- This may divert their focus from innovation and research towards ensuring compliance with regulatory requirements.
- Concerns about Arbitrariness:
- The broad definition of significant platforms and the discretionary powers given to regulatory authorities could lead to arbitrary decision-making.
- There are apprehensions that smaller businesses and start-ups could be adversely affected by unpredictable regulatory actions and changes to platform policies.
- Impact on Competition and Innovation:
- Concerns are raised about potential adverse effects on research and development activities, which are crucial for technological advancement
Conclusion
The Digital Competition Bill, 2024, represents India’s proactive approach to regulating the digital ecosystem and ensuring fair competition. While facing criticism from industry stakeholders, the proposed law underscores the government’s commitment to promoting innovation, protecting consumer interests, and fostering a level playing field in the digital economy.
Related Topics
Competition Commission of India
- Act – Competition Act, 2002
- Status –Quasi-judicial body
- Aim –
- Consumer welfare
- Ensure fair and healthy competition in economic activities
- Implement competition policies for the most efficient utilization of economic resources.
- Ensure smooth alignment of sectoral regulatory laws in tandem with the competition law.
- Effectively carry out competition advocacy
- Composition – 1 Chairperson and 6 Members
- Eligibility – Person of ability, integrity and standing and who, has been, or is qualified to be a judge of a High Court, or, has special knowledge and professional experience of not less than 15 years in international trade, economics, business, commerce, law, finance etc.
- Functions –
- To eliminate practices having adverse effect on competition
- To give opinion on competition issues on a reference received from a statutory authority established under any law
Related PYQ
Discuss the role of the Competition Commission of India in containing the abuse of dominant position by the Multi-National Corporations in India. Refer to the recent decisions. [ UPSC Civil Services Exam – Mains 2023]
Practice Question
Critically analyze the provisions of the Digital Competition Bill, 2024, and assess its potential impact on the Indian digital ecosystem. [250 words]