The world is transforming invariably with the rapid developments of the digital economy. Digital platforms have evolved several new business models and novel products and services, contributing significantly to technological developments. Different approaches have been taken by competition authorities and policymakers globally to rejuvenate the digital environment.
The European Union has taken a hard approach and enacted the Digital Markets Act (DMA) to regulate online platforms and the role of dominant players acting as gatekeepers of the digital economy. Moreover, Germany amended the law to ensure fair, transparent, and healthy competition in the digital landscape. In contrast, jurisdictions in China, Japan, Brazil, and Australia have taken a soft approach to regulating digital competition issues.
India has also realised the need to regulate the digital ecosystem to gear up the emerging digital sector by implementing an
ex-ante regulation for a fair digital business environment. In this regard, a draft DCB is under consideration.
What is the Digital Competition Bill 2024?
The draft Digital Competition Bill (DCB) 2024 aims to regulate anti-competitive practices in digital markets, specifically applicable to large digital firms that exert significant influence on or control digital ecosystems designated as systemically significant digital enterprises (SSDEs).
Regulating digital enterprises is essential to ensuring free entry for smaller firms and countering the market power of established digital giants. The draft DCB enhances the Competition Act (CA) 2002 to better address today's technological landscape and promote fair competition. It establishes a regulatory framework to prevent anti-competitive practices by large digital firms, ensuring market efficiency. Additionally, the draft DCB aligns India's regulations with international standards and best practices, enabling effective navigation of the global digital landscape.
Key Proposals of the Draft Digital Competition Bill
An enterprise may be designated as SSDE if it substantially impacts the provision of a Core Digital Service (CDS) in India. The proposed bill includes the following specified digital services, such as CDS.
The draft DCB proposes quantitative criteria based on financial and user thresholds and qualitative criteria to identify any enterprises providing CDS as SSDE. Additionally, it recommends that designation may extend beyond one enterprise in the group providing CDS. The enterprise must notify the Competition Commission of India (CCI) of such enterprises within the group directly or indirectly involved with the SSDE as Associate Digital Enterprises (ADEs).
- Obligations on SSDEs and their ADEs
The draft bill mandates that SSDEs establish reporting and compliance mechanisms on certain obligations. SSDEs must report to the CCI about their steps to meet the commitments outlined in the bill and any associated rules and regulations. The CDCL deliberated the following obligations of SSDEs:
The bill empowers CCI to enforce the provisions. Additionally, it grants CCI the authority to conduct inquiries, issue orders, and impose penalties for non-compliance.
CUTS Perspective on the potential impact of draft DCB 2024 on Indian Consumers
When formulating laws and policies, it is crucial to prioritise consumer satisfaction. By safeguarding consumer rights and focusing on consumer welfare, markets can operate efficiently, promoting fair competition and thus building trust in the digital economy. CUTS has conducted a study on the same line to examine the impact of ex-ante regulation on user interface and user experience for Indian consumers. The survey uses a simulation based on three principal aspects: unbundling (of apps or platforms), data use restrictions, and seeking user consent across CDS.
The survey findings are presented in a tabular representation of digital users' opinions on the modified user interface because of the modifications induced by SSDE designation.
Table: Reflections upon Pre and Post-DCB Scenario
Conclusion
Recognising the digital sector's potential for sustainable and inclusive growth, the draft DCB is a step towards navigating market regulations in India's digital economy. Moreover, the SSDE designation is expected to bring changes in various dimensions of the digital landscape, which may make the markets better or worse for digital service providers and users. However, evaluating the upcoming concrete welfare gains of the ex-ante regulations is difficult.
By: Princy Tak
Note: For more information, kindly refer to the complete study at:
https://circ.in/pdf/Digital_competition_bill_2024_and_its_potential_impact_on_consumers_in_india.pdf