[Draft] iamai submission to Committee on Digital Competition Law

Impact on Consumer Welfare: The impact of ex-ante approaches on investments, innovation and diversity, can directly translate to a decrease in consumer welfare. Not only does the prohibition pro-consumer and pro-competitive behaviour such as discounting, lead to immediate short-term losses to consumer welfare – in the long-run the increased costs of compliance for businesses, can deepen the losses to consumer welfare. The lack of innovation and diversity can also reduce consumer choice, in the long-run. Prioritizing untested approaches for unmeasured and short-term gains to contestability, at the cost of consumer welfare, will go against one of the fundamental objectives of competition policy.

6. Conclusions
It is undeniable that technology impacts all aspects of our lives today. Digital markets and digital players have brought immense benefit to the end users, markets and society. A significant contribution has indeed been made by large digital players who have through their products allowed start-up to flourish. This has led to increased innovation and consumer benefits.
In order to ensure the continued flow of benefits from digital markets, it is critical to adopt a cautious approach in designing regulatory policies for these markets. Any regulatory interference in digital markets must be targeted and proportionate. Even the CCI has recognised the need for a calibrated approach in digital markets which “ensures that intervention remains effective; it does not restrain innovation and helps the market to regulate itself”.²⁷
For reasons noted above, IAMAI is concerned that the recommendations in the Report are neither targeted nor proportionate. Lack of a well-articulated policy objective, failure to adopt an evidence-based approach to identify the need for the regulation, has led to ambiguous, broad recommendations which will stifle innovation, competition and the benefit that accrues to markets and users.
As a representative of the digital sector in India, IAMAI appreciates that antitrust enforcement has a vital role to play in keeping markets competitive. Experience of the CCI for more than a decade indicates that it adequately pursued the policy objective of keeping markets competitive. Under the current ex-post framework of the Competition Act, 2002(“Act”), the CCI is empowered to examine the conduct of all enterprises - digital or otherwise - for any potential anti-competitive concerns conduct and can intervene to correct market distortions. The remedies that the CCI can impose are extremely wide and range from imposition of penalty to division of an enterprise enjoying dominant position. The Act also allows it to pass “such other order or issue directions as it may deem fit”.
The current regulatory framework provides ample room for CCI to intervene swiftly as and when necessary, without over-regulating the sector. The alternate reality of two legislations being concurrently applicable on all digital businesses, without distinction, would increase a company’s regulatory cost without necessarily extinguishing “anti-competitive conduct”. An additional competition regulatory regime, which departs from well tested foundation of competition law, is unnecessary and could lead to significant harm.
The Committee must be cautious of creating a pre-emptive standard under law, since such an is prone to errors given the uncertainty associated with the occurrence and stability of a market “tipping point”. To the contrary, pre-emptive standards coupled with rigid and size-based designation mechanisms risk having an adverse impact on investments, innovation, consumer choice and welfare.
At a time when India, despite economic headwinds, is looking to capitalize on the evolving geopolitical landscape of diversification of global investments away from China and prioritize inbound investments towards a USD 1 trillion digital market –over-regulation can stymie the growth momentum for Indian markets.
We therefore urge the CDCL to undertake a detailed assessment of each of the outlined aspects and conduct wider public consultations and surveys prior to arrive at its recommendations. The CDCL may also consider opening up its recommendations to a brief round of public comment, as is customary with other policy proposals issued by the Government.