Digital Antitrust Law May Be Just for Big Tech – Industry News

The Government is likely to significantly raise the thresholds for companies and businesses to fall under the scope of the proposed Digital Competition Law, compared to the levels set out in the draft bill.

The proposed separate ex-ante regulation for the digital market could be limited to companies like Amazon, Meta, Apple, Google, Facebook and Microsoft. Startups and other relatively smaller companies would be outside its scope.

The move is aimed at ensuring that the proposed rules do not stifle innovation and dilute consumer benefits, sources said. The review of the thresholds set out in the draft Digital Competition Bill (DCB) is also an acknowledgment of the fact that, in addition to the European Union (EU) and the United Kingdom, several jurisdictions have ventured to introduce separate antitrust laws for the digital sector.

Many experts believe that the EU law goes too far, as simple ex post antitrust regulations may be enough to cover the digital sector as well.

The EU may have a case for a separate law on ex-ante regulation of competition in the digital sector, given the dominance of US-based companies in the global market. However, experts say India would do well not to extend ex-ante control to smaller companies, given that the benefits of digitalisation are still unfolding in the country and are expected to boost startups and the innovation ecosystem.

According to Aditya Bhattacharjea, a member of the 10-member committee that drafted the bill, there is a strong case for raising the thresholds in the bill because “the current thresholds could affect many companies that are not large enough to have an impact on competition.”

“The purpose of the law is to catch very large companies. In the case of the EU, for example, (only) seven companies have been identified to be subject to its Digital Markets Act,” he said.

CUTS International, a think tank that frequently participates in deliberations on competition regulation, has estimated that around 40 domestic and international companies would meet the thresholds set out in the DCB Act and would be covered by the proposed ex ante regulation.

In its current form, the DCB project has two types of thresholds: quantitative and qualitative. As per the quantitative threshold, companies with gross merchandise value in India exceeding `16,000 crore or turnover in India exceeding `4,000 crore or global turnover exceeding $30 billion or global market capitalization exceeding $75 billion will be covered by the DCB.

Companies meeting any of these criteria will be deemed Systemically Important Digital Enterprises (SSDEs) and will be required to operate in a fair, non-discriminatory and transparent manner towards end users and businesses.

According to the draft, DCBs will not directly or indirectly favor their own products, services, or business lines. They will also not restrict end users and businesses from downloading, operating, or using third-party applications or other software in their core digital services.

“These thresholds were set over a year ago.

The first meeting of the committee was held in early 2023 and the meetings concluded in June 2023. It will take more than two years for the bill to be passed. Therefore, these thresholds will be revised every 2-3 years as per the rules,” Bhattacharjea said.

Experts say there could still be a long way to go before the DCB becomes law. The winter session of parliament is a possible window for the bill to be introduced. Given the mixed opinions on the bill, it could be referred to a standing committee, which typically takes six months to a year to consider and make recommendations on the bill.

“The government seems to be in no hurry as there is resistance from the industry. Also, the Ministry of Electronics and Information Technology (MeitY) has its own issues with the Act. The delay will require a change in the threshold values,” said a competition lawyer, requesting anonymity.

Meanwhile, Bhattacharjea said the delay would be a blessing in disguise for Indian authorities as they could use the transition period to learn from the experiences of the EU and the UK, which have been pioneers on the issue. For example, EU law requires “designated platforms” to file compliance reports with the authorities.

Although the “designated platforms” submitted their reports in March this year, the EU rejected most of their arguments.

“The same companies (covered by EU law) are likely to be covered by Indian law as well. An EU body would give the Indian authorities a taste of the disputes that these ‘designated platforms’ are likely to trigger in India. Also, if these large companies have genuine issues, the government can take note and fine-tune the law,” Bhattacharjea said.