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Business News/ Economy / Need to see if new law is needed to rein in Big Tech: Jayant Sinha
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Need to see if new law is needed to rein in Big Tech: Jayant Sinha

The parliamentary panel chair said monopolistic outcomes in digital economy happen within three to five years

Sinha’s case for the new approach to competition regulation is significant given tech firms have become the most valuable firms in the world. mintPremium
Sinha’s case for the new approach to competition regulation is significant given tech firms have become the most valuable firms in the world. mint

NEW DELHI : The ruling party lawmaker heading the powerful parliamentary committee on finance has argued for strengthening the law to allow India’s competition watchdog to anticipate anti-competitive behaviour by digital companies and stop them tipping the markets.

Former Union minister Jayant Sinha’s comments favouring what’s called an ‘ex-ante’ approach to regulation come ahead of the panel submitting its report on anti-competitive practices of Big Tech later this month to the Lok Sabha Speaker. 

“The whole idea of ex-ante regulation is to ensure that even if you have a monopolistic outcome, by setting the rules upfront and saying that if indeed, you become the monopolistic ‘winner- takes-all’ entity, then you have to behave yourself competitively in certain ways. Whether it is use of data, acquisitions, pricing, self-preferencing, in all of these instances, the entity’s competitive behaviour should be fair and should enable high quality competition," Sinha said in an interview. 

“We cannot choke off competition and we cannot result in situations where suppliers or consumers have no choice. We have to protect choice as well as competition," he added.

The MP said policymakers have to examine whether India should get a new law to deal with the anti-competitive behaviour of Big Tech or whether it should be through amendments to the competition law. 

“That still has to be evaluated. But I think there is no doubt that we will have to evolve our competition law framework." 

In April, the Competition Commission of India (CCI) ordered a probe into allegations of anti-competitive practices against food delivery apps Zomato Ltd and Bundl Technologies Pvt. Ltd which runs Swiggy. It was based on an application filed by the National Restaurant Association of India which charged the online platforms with levying unilaterally decided commissions on restaurants, creating entry barriers for new players and bundling food ordering and delivery services without giving an option to restaurants to use their own delivery systems persons and failing to share customer details with restaurants. 

It is not known yet if the Speaker will make the report public but it could have a far-reaching impact on the way Big Tech is regulated in India, including a potential separate law synced with global best practices.

Sinha, for instance, pointed out that competition watchdogs are globally embracing a new model of regulating tech giants by setting the ‘dos and don’ts’ upfront rather than investigating their conduct after the markets tip.

Sinha said the regulatory trend worldwide is to adopt a set of ‘dos and don’t’s’ or an ‘ex-ante’ approach to regulation seeking to pre-empt anti-competitive behaviour. 

This contrasts with the current ‘ex-post’ approach of investigating corporate conduct after a market has tipped. Market tipping happens when a product or service with very high user adoption skews the market in favour of the monopoly player, in turn affecting consumer interest. 

Sinha’s case for the new approach to competition regulation is significant given tech firms have become the most valuable firms in the world and most of them have a large user base in India. 

Sinha said monopolistic outcomes in digital economy do not happen over 10 or 20 years. 

“They happen within three to five years. Because of the behaviour of the digital markets, competition law has to evolve to think very differently about ensuring fairness and contestability in a digital market."

He said that in the case of digital markets, speedy regulatory action was of the essence. 

“If you do not act quickly enough, the market will very quickly tip to a monopolistic outcome. Therefore, the role of the competition regulator also changes. Instead of an ex-post role, competition regulators also have to start to very carefully understanding what is happening ex-ante. That is before the market has tipped, not after the market has tipped." 

He explained that if one market tips, then an entity can use its advantages in one market to strengthen its advantages in other markets. 

“For example, the success in social media can make a player very quickly successful in a digital communication platform and really start to become a major player in that market."

“You have all these markets falling like dominos, if you will, with a very strong player in one market resorting to what’s called ‘bundling’ and ‘tying’ (of services) to become the leader in the other market," said Sinha.

We want India to be number one as far as the digital economy is concerned and for the digital economy to flourish, India needs the best competition law. That is what we are working towards," said Sinha.

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ABOUT THE AUTHOR
Gireesh Chandra Prasad
Gireesh has over 22 years of experience in business journalism covering diverse aspects of the economy, including finance, taxation, energy, aviation, corporate and bankruptcy laws, accounting and auditing.
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Published: 07 Sep 2022, 12:32 AM IST
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