Stakeholder positions 'misrepresented' in CDCL report on Big Tech regulation

The report of the Committee on Digital Competition Law which also include the draft digital competition bill was released on March 12 for consultation.

The views of industry body Nasscom and law firm AZB and Partners on the need for a separate regulation aimed at unfair trade practices by Big Tech companies were not represented accurately in the March 2024 report of the Committee for Digital Competition Act (CDCL), Moneycontrol has learnt.

The report also included the Draft Digital Competition Bill, which brings in additional obligations for bigger companies, including hefty penalties and imprisonment, in cases of non-compliance and violation. The ministry is inviting comments on the Bill by May 15.

In the report, IT industry body Nasscom and AZB and Partners were said to be "in favour of ex-ante regulation" for digital markets, which refers to regulatory measures that are implemented in anticipation of potential issues or problems.

Multiple sources told the publication that Nasscom has written to the Ministry of Corporate Affairs (MCA) clarifying its position, and relayed that the nuances of its view were not present in the report. It is not clear if AZB and Partners too have written to the government on the same. Moneycontrol has reached out to both bodies with queries in this regard but there was no response till the time of filing this story.

"When the report came out, it was surprising to see organisation such as Nasscom supporting the need for an ex-ante regulation, especially since they have diverse membership. Many felt that the report did not capture the nuances of their viewpoint," said a source close to the developments.

For insiders, the stance of AZB and Partners in the report too came as a surprise since it reportedly represents a Big Tech company.

The CDCL report, which included the Draft Digital Competition Bill, provided a summary of the consultations that it had held regarding the need for a separate law to tackle Big Tech.

Nascomm's submission in the report details out various recommendations, for instance, it urges CCI to conduct market studies and so on. However, the 'observation' segment of the report, with regard to Nascomm's viewpoint, reads as "in favour of ex-ante regulation".

Another source aware of the developments said that the summary of the report was prepared by the committee's support staff and urged aggrieved bodies to send their submissions to MCA before May 15 (the deadline for the consultation on digital competition bill)

"The draft report was circulated more than six months after the stakeholder presentations, so the members were not in a position to accurately recall each one's comments," said another source close to the developments.

"The summary was prepared by the committee's support staff, who presumably took notes. If some companies feel they have been misreported, they should send their representation to the MCA on the address given for comments by the 15th," the person said.

In 2022, a parliamentary panel recommended setting up a separate digital competition law to address Big Tech’s anti-competitive practices.

A committee was set up the next year to study the need for such a law.

The draft Digital Competition Bill was a part of the 235-page report submitted to the government on February 27, 2024. It essentially proposes additional compliance requirements for Big Tech.

However, representatives of India Inc, lawyers and experts have been quick to point out that the provisions of the digital competition bill may also impact Indian startups.

According to PhonePe CEO Sameer Nigam, the Bill has opted for a grab-all characterisation of what constitutes a systemically important tech company.  And such "open-ended" definitions and phrases in the draft bill is creating a "chilling effect" on the startup ecosystem, the PhonePe CEO said.