A high-level panel set up last year under corporate affairs secretary Manoj Govil is firming up its report and may include this suggestion among other recommendations. The report will form the basis of the new digital competition law, they said.
Deliberations are also on to bring those digital firms that have a turnover of more than Rs 2,000 crore in India under the law even if they don’t meet the other criteria, ET has learnt. However, smaller digital firms will be kept outside the new regime so that innovation isn’t stifled.
These large entities, both foreign and domestic, will have to abide by a set of “commandments” or dos and don’ts that will be prescribed under an ex-ante framework of the law to address potential abuse of dominance or other antitrust concerns in the digital technology space, said the people cited above.
It could include stipulations to ensure platform neutrality, no search engine bias, and interoperability for users, they added.
Some large technology players such as Google, Apple and Facebook already face probes by the competition regulator for possible abuse of fair-trade rules. “A key factor in selecting the digital entities that will be covered under the new law will be their substantial business operations,” one of the people cited earlier said.
The panel could suggest that if 10% of a digital entity’s global user/customer/subscriber base or gross merchandise value (business transactions) or turnover in the past 12 months or last financial year is in India, it will be deemed to have substantial business operations here, he said. “The whole framework of the new law would be ex-ante because the extant Competition Act already has an ex-post framework to address competition concerns,” he added. Ex-ante regulations aim to disallow particular practices from being pursued. Ex-post refers to entities being investigated for wrongdoing after it’s taken place.
WAY FORWARD
The panel’s report will include suggestions and a draft bill, said the people cited above. It will be submitted to the finance and corporate affairs ministry soon, they said.
The Ministry of Corporate Affairs (MCA) will finalise its own bill, factoring in inputs from the relevant departments on the panel’s recommendations and the bill.
The Govil panel was set up last year to examine the need for any ex-ante regulatory mechanism for digital markets through a separate law after a parliamentary committee, headed by former minister of state for finance Jayant Sinha, recommended a separate digital competition law. The Govil panel held stakeholder consultations with local startups and big global players such as Apple, Amazon, Google, Meta and X (formerly Twitter) and factored in the parliamentary committee’s recommendations.
