Panel to weigh competition law for digital companies

The government set up a special committee on Monday to examine the need for a separate competition law for digital companies.

The move follows a recommendation by the parliamentary standing committee on finance on acting against anti-competitive behaviour in digital markets to prevent the formation of monopolies. The panel had also suggested digital competition legislation to ensure a fair, transparent and contestable digital ecosystem in the country and identification of systemically important digital intermediaries (SIDIs).

The report identified 10 key competition issues, including deep discounting, steering, exclusive tie-ups, search and rank preferencing, advertising policies and third-party applications, while proposing appropriate measures for SIDIs.

According to an order issued by the corporate affairs ministry, the 16-member committee will be headed by the secretary and include the chairperson of the Competition Commission of India (CCI) along with other industry participants. The committee will also have invitees from other ministries, NITI Aayog, Department of Commerce and Department of Economic Affairs, among others.

According to the ministry document, the terms of reference of the committee will include “whether existing provisions in the Competition Act, 2002 and the rules & regulations framed thereunder are sufficient to deal with challenges that have emerged from the digital economy”. It will also “examine the need for an ex-ante regulatory mechanism for digital markets through a separate legislation”.

Ex-ante regulatory mechanism is where the regulator has powers to take preventive action to safeguard markets from potential anti-competitive practices. Currently, the powers of the CCI are designed to be ex-post in nature, meaning the action is initiated after a potential violation.The committee has also been mandated to study systematically important digital intermediaries which have the potential to harm digital markets. It will also study the best practices around the world with respect to competition laws to regulate digital companies.

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