MC EXCLUSIVE Revised Digital Competition Bill may bat for consultative approach by CCI

CCI

The revised draft of the digital competition bill (DCB), currently in the works, might include provisions which allow for a consultative approach while adjudicating cases of competition among tech companies, Moneycontrol has learnt.

According to two sources, the draft may contain provisions which would direct - in some cases - the Competition Commission of India (CCI) to consult other stakeholders, including relevant ministries and departments, such as the Ministry of Electronics and Information Technology (MeitY), before passing any antitrust order.

Sources say this view has come up in discussions as the government doesn’t want to stifle innovation in the sector. "However, this idea may be dropped…CCI is the final authority after all," an official said.

The sources didn’t provide any clarity on which companies, or what thresholds, would be considered by the CCI for the consultation purpose.

A Parliament’s Standing Committee on Finance report, released on August 11, published the Corporate Affairs Secretary's comments on the draft of the DCB, which said, "…we have reached the stage where a draft bill is there, but like I pointed out, and everybody has pointed out, that we have to also encourage the ecosystem of our start-ups and our MSMEs."

"The Bill is right now in the stage where we are trying to harmonise and make sure that whatever is being recommended in terms of the draft Bill does not harm the interests of our start-up industry," the Secretary told the Committee.

The Ministry of Corporate Affairs (MCA) had released the first draft of the DCB in March 2024, which was later withdrawn due to strong opposition from the industry on the ex-ante framework.

Ex-ante regulation, in the context of DCB, is a proactive approach to competition law, designed to prevent anti-competitive behaviour from happening in the first place, rather than punishing it after it has already occurred. This is a significant shift from the current "ex-post" framework under the Competition Act, 2002, which involves investigating and penalising anti-competitive conduct on a case-by-case basis after a complaint has been filed.

Moneycontrol had reported last week that the revised bill may drop the ex-ante rules, after all. But right now, the CCI is commissioning a "market study" to collect information from industry on these rules, and decided what kind of provisions should be kept in the revised draft.

Experts say that although digital competition enforcement will benefit from transparent and inclusive consultations to ensure decisions are proportionate, technically sound, and aligned with broader policy goals; the autonomy of CCI should not be affected.

"While inputs from ministries may be vital, the CCI’s regulatory autonomy and integrity of the enforcement process must be protected through structured protocols that prevent undue influence and inefficiencies," noted Karan Singh Chandhiok, Partner, Chandhiok and Mahajan.

Pranjal Prateek, Partner at Khaitan & Co said that the August 11 Standing Committee report has not necessarily suggested that the CCI should consult with other ministries while passing orders. "It is likely that there may not be a case-specific consultation approach. Rather, the focus appears to be on creating a broader framework within which the CCI can better exchange information with the goal of minimising conflicts with other regulators," he said.

The Committee in its report has recommended that the CCI and the MCA should prioritise enhancing inter-regulatory harmony. "This involves proactively collaborating with other sectoral regulators, such as the Data Protection Authority and MeitY, to identify and address jurisdictional overlaps. To achieve this, they may formalise Memoranda of Understanding (MoUs) and establish clear protocols for information sharing and joint action," the Committee has said.

The report also published the views of CCI, which said that the anti-trust law framework is an important regulatory tool to address the exploitative and exclusionary behaviour arising out of data accumulation by the entities commanding market power. "CCI as such does not look into data protection per se. CCI’s role comes into play when usage of data as a non- price parameter leads to anti-competitive practices. Thus, the role of CCI in this regard is critical in maintaining and ensuring that markets remain competitive and contestable," the report said.