• Notification Date: 02-07-2023
• Notification No: N/A

Group of Organisations write to MCA over Concerns around Impact of Digital Competition Bill

A total of 58 organisations and individuals representing different stakeholders communities from across the country including the Cyber Cafe Association of India (CCAOI), Internet Society Chapters of India, India Internet Foundation (IFF) and Consumer Unity & Trust Society (CUTS International) have written to the Secretary of the Ministry of Corporate Affairs (MCA) Dr Manoj Govil urging them MCA to hold an "open consultative public engagement process" while drafting the Digital Competition Bill and take into consideration the concerns around the impact of the bill on end consumers and small businesses which rely on ICT tools. 

Experts told ET that a digital competition law could have far-reaching consequences, especially for big tech players operating in India's digital markets. Among the top objectives of this move is to benefit Indian startups and provide them with a level playing field. However, the signatories of the letter expressed their concerns over the far-reaching consequences of such a move. 
"We are concerned that the proposed Digital Competition Act would impact a wide range of subjects, such as digital inclusivity, user experience, data protection and security, foreign investment, cost of doing digital business for MSMEs, indirect impact on cost for consumers, etc," the letter, which has been reviewed by ET said. 

It added that the current discourse around this is informed by only a few stakeholders even though the proposed law directly and indirectly affects a much wider range of stakeholders. The signatories of the letter said that only two-three legal systems have adopted ex ante laws globally and warned that if India also introduces a prescriptive ex ante law, then India may no longer be the “first market” for newer technologies as an equivalent of Digital Competition Act does not exist in most of the other jurisdictions. 

"An ex-ante law which limits data will naturally drive costs for advertising and digital marketing as particularly the larger brands will continue to spend even without precise targeting. Hence, the ex-ante laws could inadvertently increase customer acquisition costs for small businesses and it would eventually decrease their global market footprint. Small businesses do not have the runway to undergo this type of change," the letter said. 

Another aspect that the letter highlighted was that MCA should publish comments received by them as part of the public consultation on the Draft Digital Competition Bill and provide an opportunity to all stakeholders to submit counter-comments, as is the norm in other government consultations on policies of public interest. 

The stakeholders alleged that various Civil Society Organisations (CSOs) including the signatories of the letter were not invited by the Finance Committee to present their views. It claimed that in 2022, the Parliamentary Standing Committee on Finance (Finance Committee) held oral evidence and meetings with industry stakeholders and government departments on the issue of “Anti-competitive practices by Big Tech companies” and tabled their report in the Parliament in December 2022. In its report, the Committee recommended that India should have a Digital Competition Act consisting of set rules based on recent and ongoing antitrust cases in relation to the digital markets. 
 
Further, the stakeholders said that in February 2023, the Ministry of Corporate Affairs (MCA) formed the Committee on Digital Competition Law (CDCL) to evaluate the proposal for a digital competition law in India and recommend a draft Digital Competition Bill. It is now reported that the CDCL is finalizing the proposed Digital Competition Act and is likely to recommend “ten obligations that the identified gatekeepers” would have to meet. 
 
'Gatekeepers' would mean big tech companies, including e-commerce, food delivery platforms, cab aggregators and search engines capable of distorting the competition in the market. The committee is likely to recommend a criterion based on the number of active users and global turnover to identify these gatekeepers. The obligations include those on interoperability between platforms, anti-steering, portability and data usage. 
 
"The CDCL reportedly held consultations with various industry stakeholders but once again various CSOs including the signatories of this letter were not invited by the CDCL to present their views," the letter read.