Some public enterprises may be kept out of digital competition law

"It is an overarching section. Akin to the existing Law, Government has effectively kept room to make exemptions in a number of situations," said Sagardeep Rathi, Partner, Khaitan & Co

The government has proposed safeguards to exempt public-interest entities from the provisions of ex-ante regulations under the proposed Digital Competition Bill.

Section 38 of the proposed Bill has given the Centre the power to exempt enterprises from the application of one or more provisions of the Bill, the rules or regulations framed under it, or any provision in it, for the period it may specify.

The provision says that the government could do so in the interest of security of the State or public interest, in accordance with any obligation assumed by India under a treaty with another country or if it performs a sovereign function on behalf of the central or a state government, only in respect of activities relatable to the discharge of the sovereign functions.

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“It is an overarching section. Akin to the existing Law, the government has effectively kept room to make exemptions in a number of situations,” said Sagardeep Rathi, partner, Khaitan & Co.

Experts said these provisions of the Draft Digital Competition Bill were akin to Section 54 of the Competition Act, under which business-friendly exemptions had been issued. Government operates various digital platforms, such as the Open Network for Digital Commerce, IRCTC, and E-NAM (National Agriculture Market).

“At first blush, inclusion of this provision in the Draft Digital Competition Bill appears to espouse a similar intent. However, it is hoped that it is not invoked to further protectionist sentiments by exempting government enterprises and local Indian enterprises which qualify to be designated as ‘Systemically Significant Digital Enterprise’. Such an exemption has the potential to lead to creation of an ‘un-level’ playing field,” said Unnati Agrawal, partner, IndusLaw.