This publication was produced under Carnegie India’s Technology and Society Program. Research for this paper was made possible in part by support from Google India Private Limited and Amazon Seller Services Private Limited. For details on the program’s funding, please visit the Carnegie India website. The views expressed in this piece are solely those of the author.
In December 2022, the Indian Parliamentary Standing Committee on Finance released a significant report expressing concerns about the “underlying economic drivers of digital markets.” It stated that these drivers “inevitably lead” to the rise of a few players and deemed certain practices as anti-competitive when enacted in digital markets. It closed with a recommendation for a new digital competition law to “ensure a fair, transparent, and contestable digital ecosystem.” It also suggested that Indian authorities identify “Systemically Important Digital Intermediaries” (SIDIs) based on thresholds like revenues, market capitalization, and active users and them from carrying out the aforementioned practices. Earlier in 2023, India set up a Committee on Digital Competition Law (CDCL) to examine the merits of a similar ex-ante regulatory mechanism for digital markets in India. This was subsequently followed up by the release of the Report of the CDCL in March 2024.
We, at Carnegie India, will be publishing a series of articles that will discuss some of the themes and proposals that are being considered for an ex-ante framework in India under the CDCL. The idea behind these articles is to examine the efficacy of these policy prescriptions in light of contemporary enforcement practices and the current regulatory regime in India.
The report and the formation of the CDCL have come at a time when there has been an increasing focus on ex-ante-style competition regulation of digital platforms across some markets. The European Union (EU) remains the only jurisdiction to have fully implemented these. To a considerably lesser extent, the United States also saw some attempts to pursue similar regulation in the form of an American Innovation and Choice Online (AICO) bill. This was introduced in 2021 to propose a regulatory framework for digital markets similar to that proposed by the Indian Parliamentary Standing Committee in December 2022. However, the proposed American legislation did not make it through. The reasons for discarding the legislative proposal ranged from hurting American competitiveness to possible cybersecurity issues arising from mandatory access obligations for third-party software developers provided in the AICO bill—much like a recommendation made in the December 2022 Indian Parliamentary Committee Report.
In other jurisdictions such as the EU, a Digital Markets Act (DMA) has been introduced which proposes ex-ante regulation of certain firms that are labelled as “gatekeepers”—a categorization that hinges upon certain criteria being fulfilled by such firms under the DMA. At the same time, several other jurisdictions ranging from Australia, South Korea, Japan, the United Kingdom, and Brazil have also come out with their approaches to antitrust regulation of digital markets.
There is clearly a growing focus across these markets on potentially introducing new antitrust legislation specifically for digital markets. However, it would be apt to flesh out how the implementation of such laws may take place. Accordingly, it is necessary to assess the workability of any digital competition law that may be enacted in the Indian context. In this regard, the recent Report of the Committee on Digital Competition Law merits a closer look. This report is a major document in the Indian context that, thus far, provides a glimpse into how policymakers may view legislation for digital markets.
The first article in this series will address the “why”—the need for a new digital competition law in India. It will look into whether the situations across jurisdictions are comparable—the United States and the EU on one hand, and India on the other.
The second article will probe the “what”—an assessment of the nine practices highlighted in the Report of the CDCL, which it treats as anti-competitive when practiced by SIDIs or SSDEs (Systemically Significant Digital Enterprises). The piece will probe the assumption of whether these practices are inherently anti-competitive or whether they also have a pro-competitive rationale behind them. The logical scaffolding behind treating some practices as inherently anti-competitive will be examined. The first five practices in the CDCL report—those dealing with anti-steering provisions, platform neutrality, bundling and tying, data usage, and deep-discounting (including price-parity clauses) will be examined.
The last article will continue to look at the “what” by focusing on the remaining four practices—exclusive tie-ups, search and ranking preferencing, restricting third-party applications, and advertising policies. It will conclude by examining whether the goals of antitrust—as espoused by the key legislation on the issue, the Competition Act 2002, are met by the recent proposals of the CDCL. How do the goals of “contestability” and “fairness,” which are said to drive the recent proposals, serve the goal of “consumer welfare,” the guiding philosophy of India’s competition legislation?
The recent revival of competition law that seeks to explore alternative models of regulation is a welcome change. Digital markets have a propensity to demonstrate strong network effects, which usually leads to “tipping”—the point at which the digital market in question sees only a few players. The proposed series of articles will take a closer look at practices that have been highlighted as problematic in digital markets and assess whether they have countervailing and redeeming features. These papers are, therefore, a modest effort to look into how the current approach to antitrust regulation of digital markets may play out.
