Digital competition bill not before November. Here’s why

The winter session usually begins at the end of November or in early December, a window considered necessary to complete inter-ministerial consultations. 

The government wants to have extensive consultations on the bill so that adequate public and inter-ministerial consultations go into finalizing the provisions governing big tech firms, including search engines, social media networks and online retail firms. 

Some of the provisions impose certain “behavioural norms" on digital economy firms, taking the cue from similar laws in other markets, especially the EU, and these are of concern to big tech firms as they place curbs on the way they operate, said the person cited above. 

The proposed law aims to prevent what is seen as anti-competitive behaviour.

These include lack of neutrality of online retailing platforms that also sell their own products, limiting of consumer choice by bundling products and services, predatory pricing, preventing users of digital platforms from accessing third part applications and exclusive tie-ups that limit market access for business users of digital platforms. 

The government intends to conduct extensive consultations on framing regulations on this even after framing the draft law. A senior executive with a multinational digital economy firm said it is too early for India to adopt an ex-ante or ‘forward looking’ law prescribing the dos and don’ts for digital economy firms given that only about 5% of all retail transactions in India is online, unlike about 20% in the EU. 

The executive said that for the world’s most populous country with a strong internet penetration, the threshold of 10 million users on a digital platform for designating a digital economy firm to be ‘systemically significant’ was too low. 

As per the expert panel report on digital competition law, a firm should be covered by the proposed law if it meets the twin criteria of financial strength and market spread.

These have been set at Indian revenue of ₹ 4,000 crore or global revenue of $30 billion, or ₹ 16,000 crore of gross merchandise value on e-commerce platforms, or $75 billion of global market capitalization, along with 10 million end-users or 10,000 business users.

“Digital economy firms first invest heavily to build their customer base and try to start making profits subsequently. The proposed Bill seems to discourage this business model," said the executive cited above, who spoke on condition of anonymity.

An email sent to the ministry of corporate affairs on 12 April and on Wednesday seeking comments for the story remained unanswered at the time of publishing.