Digital competition law needed but discussion are necessary on best practices, says minister Malhotra

New Delhi: The government is keen to bring in a new law to ensure fair competition in digital markets but further discussions are needed to ensure that global best practices are adapted to Indian market requirements, minister of state for corporate affairs Harsh Malhotra said on Sunday.

Speaking at the national conference on economics and competition law organised by the Competition Commission of India (CCI) in the capital, the minister said that the government has received about 100 suggestions on a draft Digital Competition Bill released for public feedback. 

The minister said that although the Competition Act was amended in 2023 to promote fair competition, there's a need for a separate law on digital competition so that Indian players do not suffer on account of anti-competitive practices by global players, that small Indian players are not dominated by large Indian players and that market competition remains fair.

Also read |  Digital competition law to honour IPRs of Big Tech firms

“Such discussions are constantly on. Ministry of electronics has also held discussions on this subject. A report is awaited from them. We have to study the best practices in markets like Japan, Australia and the EU on digital competition, how they fit into our digital markets and what improvements can be brought in. We are not in a hurry, but after a due process, the government wants to bring in a Bill to the extent required,” the minister said.

The bill proposes ex-ante or forward-looking regulations which essentially give effect to a set of ‘dos and donts’ for large digital economy firms so that markets are not distorted. Its need is felt because the current system of penalizing companies after an anti-competitive practice is proved, is seen to be inadequate for a digital economy. 

Network effects

That is because its network effects—products or services becoming more valuable when more people using it and the positive feedback rapidly creating market dominance for successful businesses—could stifle fair competition unless effective oversight is maintained. 

CCI Chairperson Ravneet Kaur said that rapid adoption of artificial intelligence poses the threat of collusion in the market place. AI has become a driving force in modern markets, Kaur said. 

“Through the use of AI, we are also seeing there could be potential ways of collusion—collusion without human intervention, price coordination without explicit agreements and algorithmic discrimination under the garb of dynamic pricing. All these things are making us very aware of the fact that the regulators need to be up to date, need to be abreast of and be ahead of this adoption of technology and its implications for competition. Therefore the regulators need to adopt a forward looking approach and one of the mechanisms we use for that is market studies,” said Kaur.

Also read |  Breaking digital competition law may cost up to 10% of global turnover

In a little more than 15 years, CCI has looked at 1,300 anti-trust cases, out of which 1,180 have been disposed of, Kaur said. 

“In calendar year 2024, 42 anti-trust cases came before the Commission and prima-facie violations were found and detailed investigations were ordered in eight cases and all the cases received by the Commission last year have been placed before the Commission once. So, either a view has already been taken or additional information has been sought wherever we did not have enough information to form a prima facie opinion,” the CCI Chairperson said. 

Also read |  Govt to ensure digital competition law doesn't over-regulate