Ex-ante norms have taken into account India's startup ecosystem: CCI chief

The draft Digital Competition Bill has proposed ex-ante (preventative) regulations requiring digital companies to notify the CCI that they fulfil the criteria to qualify as SSDEs

At the time of framing ex-ante (preventative) regulations for digital markets, the government was very conscious of the fact that India is a hub of innovation and entrepreneurship with a large number of startups, unlike the European Union (EU), which has brought such laws, Competition Commission of India (CCI) Chairperson Ravneet Kaur said at the CII Global Economic Policy Forum on Wednesday.

 

“We have the third-largest startup ecosystem in the world. We use what’s done outside as a guide… We should work within the Indian economy, because our role is to provide a level playing field to promote sustained competition in Indian markets,” Kaur said.

   

The draft Digital Competition Bill has proposed ex-ante regulations, which require digital companies to notify the CCI that they fulfil the criteria to qualify as Systemically Significant Digital Enterprises (SSDEs) based on certain qualitative and quantitative parameters.

 

The CCI chief said that poaching of staff from startups and smaller companies has become a concern, especially in markets such as the US and the EU, where digital platforms with a first-mover advantage are indulging in such practices in technology sectors. “We have so far not looked at anything of that sort here in India. But, of course, if there is a requirement (after noticing) that they are trying to escape notification before the Commission and doing this kind of a thing, then, maybe, that conduct will also be looked at,” Kaur said.

 

Speaking on balancing regulation and innovation, the CCI chairperson talked about how the Commission has brought in tighter timelines for approval of mergers and acquisitions (M&As), and the concept of deemed approval.

 

She said that a challenge for CCI was to balance consumer welfare interest with that of startups and entrepreneurs in a particular sector. She further said that CCI's role is to provide a level playing field and ensure that the Industry gets timely decisions, and M&As do not get held up. “Mergers and acquisitions are looked at as facilitative and the competition panel is not there to obstruct it,” Kaur said.

 

She added that the anti-trust regulator is looking at the deal value in the zero-priced digital model to keep a check if such transactions are "killer or creeping acquisitions”.

   

Regulators should be more accountable, transparent: CEA

 

Calling for more information-sharing by regulators, Chief Economic Advisor (CEA) V Anantha Nageswaran said on Wednesday that the principles of transparency and social costs and benefits applied to regulated entities should also apply to the regulators themselves. He was addressing the CII Global Economic Policy Forum.

 

He said that regulators have to be conscious of the limits of their unelected power. “By definition, unelected powers are normally not held as accountable as elected powers are. So, they have to impose it upon themselves. Responsibility to wield power consciously is also something that we should demand of regulators,” the CEA said.

 

Nageswaran said that there is a need to differentiate between regulation of financial and non-financial sectors as competition in the financial sector can lead to excessive risk-taking and bring instability.

 

Speaking on "Future of Regulation: Balancing Innovation and Risk”, the CEA said: “In the financial sector, the only reason regulators have a natural tendency to lean towards, what you may consider as excessive regulation, is that the effects are systemic and not sectoral. And when things go wrong, it is the state that is expected to bail out the overall economy.”

 

He said that in the non-financial sector, except in the case of natural utilities where one needs a regulator to protect customer interest, competition or market forces will take care of what the regulators do.