Digital Competition Law unlikely before second half of FY26
Dec 21, 2024
Synopsis
The Indian government is delaying the finalization of a digital competition law until the latter half of the next fiscal year. Extensive inter-ministerial consultations are planned due to the complexity of regulating large digital players without stifling innovation. The focus is on ensuring a balanced approach that prevents market distortion while promoting a healthy digital ecosystem.
A proposed digital competition law to regulate large players is unlikely to be finalised before the second half of the next fiscal, as the government intends to have comprehensive inter-ministerial consultations due to the complexity of the subject matter, people aware of the development said.
The idea is to bring in such a law that would neither stifle innovation nor make compliances onerous but ensure that large players don't take advantage of their dominant positions to distort competition in the market, one of the officials involved with shaping the formal policy ET. "So, it would take some time," the person added.
Also, the corporate affairs ministry is currently focused on amending the insolvency and companies laws first, on top of scaling up the PM Internship Scheme.
A panel led by then corporate affairs secretary Manoj Govil had in March suggested a new antitrust law with an ex-ante framework to regulate large digital players, leaving out small players, including start-ups, from its ambit to ensure innovation by them isn't hampered.
Ex-ante regulations usually aim to disallow certain practices from being pursued. Under the existing ex-post framework, violations of the competition law are investigated after they take place.
The panel had submitted a draft bill, along with its report, for deliberations by various ministries and other stakeholders.
Given the integrated nature of the digital ecosystem, the precise impact of ex-ante regulations for large players on the smaller ones needs to be assessed as well, the people said.
A number of big technology firms, including Apple, Meta, Google, Amazon and Flipkart, had opposed ex-ante regulations before the Govil panel.
"Regulating competition proactively in the fast-evolving digital sector is a very complex issue, which warrants further deliberations, more so when an ex-ante framework is proposed by the panel. Unless it's properly framed, there could be unintended consequences. So, the approach is--better to be safe than sorry," said another person. Apart from the MCA, the inputs of the Ministry of Electronics and Information Technology on the new law are going to be very crucial. The Govil panel had suggested that the new law apply only to "systemically significant digital enterprises" that have a "significant presence" in India. The penalty for violations could be as high as 10% of the entity's global turnover, it had said.
The obligations for large players would be spelt out through subordinate legislation after deliberations with stakeholders, it had suggested.
[The Economic Times]
