Digital competition law committee asked to consider MCA's draft bill

Proposes digital entities to ensure interoperability, data sharing, portability

The Ministry of Corporate Affairs (MCA) has for the first time prepared a draft Digital Competition Bill with ex-ante regulations that require digital entities to ensure interoperability, data sharing, and portability, official sources said.

The draft Bill has been circulated among the members of the Committee for Digital Competition Law (CDCL) as the government wants to build a consensus on the proposed law. Among other things, the draft Bill suggests qualitative and quantitative criteria to identify Systemically Important Digital Intermediaries, or SIDIs, sources said.

The draft Bill is largely based on the digital markets law of the European Union.

A report on the draft Bill will soon be finalised by the MCA after consultation with the committee members.  The ex-ante regulations set out criteria to identify gatekeeper platforms in the e-commerce sector. “It is being suggested that apps, such as WhatsApp and Telegram, should share their APIs (application programming interface) with each other to ensure there is interoperability, just as it exists across email services,” a person close to the matter said. 

The Competition Act has ex-post regulations for digital markets, which means action is taken after an entity has flouted a law such as abusing its dominant position.  Ex-ante regulations are precautionary measures designed to keep anti-competitive practices in digital markets in check.

In December 2022, a parliamentary standing committee led by Jayant Sinha had tabled a report that called for a “Digital Competition Act” for a transparent and contestable digital ecosystem.

The panel had said the government needed to come up with a reasonable definition of SIDIs, which need tighter regulations. The classification could be done based on revenue, market capitalisation, and the number of active users, it had suggested.

The panel’s report had come amid rising global scrutiny of big technology companies such as Google, Apple, Facebook, and Amazon for allegedly abusing their market position using chunks of user data.

Thereafter, a committee on digital competition law led by Manoj Govil, secretary, corporate affairs ministry, was formed in February 2023 with an original mandate for three months.

The committee includes the chairperson, Competition Commission of India, and Saurabh Srivastava, chairman, Indian Angel Network and cofounder of industry body NASSCOM. Among representatives of law firms on the panel are Haigreve Khaitan of Khaitan & Co, Pallavi Shardul Shroff of Shardul Amarchand Mangaldas & Co, Anand Pathak of P&A Law Offices, and Rahul Rai of Axiom5 Law Chamber.

Its term ended on December 31 and is up for another extension. The committee has had around six extensions so far and it has not been able to form a consensus yet on the contours of the digital competition law.