Digital Competition Bill

July 28, 2023

GS Paper III Indian Economy

Context:

The parliamentary committee on Finance urges the government to finalize the digital competition bill to address anti-competitive practices in digital markets.

More on News:

Committee emphasizes the need to fill vacant positions at the Competition Commission of India (CCI) to ensure effective regulation.
In December, the Committee recommended formation of Digital Competition Law, and defining Big Tech companies as Systemically Important Digital Intermediaries (SIDIs) on the basis of revenues, market capitalisation and end users.

Recommendations of Standing Committee on Finance:

Introduction of Digital Competition Act: The government should introduce a Digital Competition Act to address the specific needs of the digital market and ensure a fair and transparent digital ecosystem.
Strengthening the Role of CCI: The Competition Commission of India (CCI) should be empowered to address anti-competitive behavior in digital markets.
Establishment of Specialized Digital Markets Unit: A specialized unit within CCI should be established to focus on digital markets.
- Monitoring of SIDIs: The unit would monitor established and emerging Systemically Important Digital Intermediaries (SIDIs).
- Recommendations on Designation: The unit would provide recommendations to the central government on designating SIDIs.
- Reviewing Compliance: The unit would review compliance with digital market regulations.
- Adjudication on Cases: The unit would adjudicate on cases related to digital markets.

About Big Tech Companies:

Big Tech refers to a group of major technology companies like Google, Facebook, Amazon, Apple, and Microsoft.
It is a dynamic concept, with new companies entering and existing ones potentially leaving this category over time.

Anti-competitive practices by Big Tech:

Acquisitions and Mergers: Large firms buying highly valued start-ups without being subject to merger control rules. The lack of capturing certain mergers and acquisitions due to thresholds not being met is a concern.
Platform Neutrality/Self-preferencing: Big Tech favoring their own services or subsidiaries on their platforms, providing unfair advantages and negatively affecting downstream markets.
Data Usage: Big Tech companies collecting massive amounts of customer data, potentially misusing it for tracking and profiling customers, creating barriers for smaller competitors.
Restricting Third-Party Applications: Preventing the installation or operation of third-party applications, limiting user choice and competition.
Adjacency/Bundling and Tying: Forcing consumers to buy related services by linking them to the main product, making it challenging for developers to establish fair fees and reducing competition.
Anti-steering: Using provisions to prevent business users from using alternatives, stifling choice and leading to anti-competitive practices.
- For example, application stores mandating the use of their own payment systems for application purchases.