In a move aimed at curbing anti-competitive practices among tech giants like Amazon, Google, and Facebook, the Committee on Digital Competition Law, set up by the Union ministry of corporate affairs, has put forward a new legislation. The proposed law seeks to address concerns over monopolistic behavior and unfair practices in the digital marketplace.
The draft bill suggests the creation of a category called “Systematically Significant Digital Enterprise (SSDE)” for certain core digital services such as search engines, web browsers, and social networking sites. Companies falling under this designation would face restrictions on practices like self-preferencing, anti-steering, and limiting third-party applications. Violations could result in penalties of up to 10% of their global turnover.
This initiative comes amidst increasing scrutiny of the business practices of tech giants, both in India and globally. Recent disputes between Google and Bharatiya app developers have brought attention to concerns of anti-competitive behavior in digital markets.
The genesis of this legislative proposal can be traced back to the recommendations of the Parliamentary Committee on Finance, led by BJP lawmaker Jayant Sinha. The committee emphasized the need for proactive regulation to prevent market monopolization by a few dominant players, rather than reactive measures taken after anti-competitive acts have occurred.
The Committee on Digital Competition Law, headed by corporate affairs secretary Dr. Manoj Govil, was formed in response to these recommendations. Despite initial reservations among some members about the necessity of a separate competition law for the digital economy, the committee ultimately concluded that such regulation was indeed warranted.
The proposed legislation also aligns with discussions around the Digital India Act, envisioned as a successor to the Information Technology Act, 2000. While details of the Digital India Act are yet to be finalized, it aims to ensure fair trade practices and prevent the concentration of market power and gatekeeping in the digital sphere.
Under the new bill, companies engaged in core digital services would be required to report their turnover and user base to the Competition Commission of India (CCI). Failure to comply could result in penalties. The bill also allows for periodic reassessment of the thresholds for SSDE designation every three years.
Furthermore, the legislation empowers the CCI to impose different regulations for different core digital services and designate associate digital enterprises. These entities are prohibited from engaging in behaviors aimed at circumventing regulations and must adhere to strict guidelines regarding data usage and user access to third-party applications.
While the proposed legislation addresses several anti-competitive practices, it focuses specifically on those relevant to the digital competition landscape. It acknowledges that certain issues, such as anti-competitive mergers and acquisitions, are already addressed under existing laws.
Overall, the proposed legislation represents a significant step towards ensuring a fair and competitive digital marketplace in India, where the dominance of tech giants does not stifle innovation or harm consumer interests.
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