[Draft] iamai submission to Committee on Digital Competition Law

2. Whether we need an ex ante digital competition law in India?
India’s policy objective is to allow Indian start-ups to unlock their full potential and to allow end users and business users alike to reap the full benefits of the platform economy and the digital economy at large. Achieving India’s digital economy’s full potential to the benefit of business and end users requires platforms to engage in vigorous competition on the merits, continuous investments in business model and technical innovation, and certainty that these efforts can be rewarded by being successful in the marketplace. Regulating any anticipated issues runs the risk of chilling innovation - especially in a rapidly increasing digitization atmosphere - through over-regulation. Regulatory interventions should not stifle such meritorious and socially beneficial competition but ensure it takes place without resorting to anti-competitive means.
At present, while at least two expert bodies in India have touched upon digital competition issues in India, there is still a lack of clarity on the policy objective of having a place for a digital competition law in India.
The Competition Law Review Committee (CLRC) in 2018-2019 reviewed various digital competition issues and recommended a slew of changes to the Competition Act 2002, a few of those are mentioned below:

1. 
   Express provisions to identify ‘hub and spoke’ agreements as well as agreements that do not fit within typical horizontal or vertical anti-competitive agreements. In this regard, the CLRC found that this amendment would be a significant step towards covering varied business structures and models synonymous with new age markets such as digital markets.
   
2. 
   Introduction of additional thresholds to review combinations of business that are not structured traditionally– especially where they form part of digital markets. In this regard the CLRC found that even if the traditional asset and turnover thresholds are not met, where the transaction value or the deal value of a combination exceeds a certain limit, then it could be brought within the ambit of merger review. According to the CLRC, this was a forward-looking recommendation that sought to take into account new age indicators of business activity.
   
3. 
   Amendment to Section 19(3) of the Competition Act to make it inclusive with a view to allowing newer considerations and factors for assessing appreciable adverse effect on competition (AAEC) through regulations. Section 19(3) lays down an exhaustive list of factors to assess AAEC.
   
4. 
   Amendments to Section 19(6) and 19(7) of the Competition Act, dealing with defining relevant markets, to make it more inclusive by allowing the incorporation of any other factors as may be specified in the regulations. This was considered necessary by the CLRC based on the need identified by CLRC to make the factors for determination of relevant geographic market more inclusive and comprehensive, and also to accommodate factors that may apply to new age and digital markets.
   

Importantly, the CLRC found it necessary to conduct a study of the digital markets before specific intervention. The CLRC held that “a balanced approach is essential in this context. It was noted that a number of countries are conducting studies for greater insights into regulation of digital markets. The Committee noted that any proposed change to the law would have wide implications and requires deeper analysis. Therefore, the Committee felt that a study of Indian digital markets may be undertaken to understand if there is presently any enforcement gap, and if provisions prohibiting unilateral conduct by enterprises attempting to monopolise will resolve this gap.” Unfortunately, the recommendation of the CLRC cautioning against regulation of digital markets without studying them in detail has remained unimplemented.
As regards the Big Tech Report, it focuses on what it terms as “10 Anti-competitive Practices” (ACPs). The Report seeks to impose additional regulation on certain players in the digital sector by way of introducing the so-called Digital Competition Act (DCA) to address the ACPs. Manifestly, however, the ACPs are regulated by the Competition Act, 2002 (Competition Act). In fact, the ACPs are regulated not just by Competition Act but even other regulations (See, Appendix). However, the Report does not discuss or examine, the necessity of ex-ante regulation for the digital sector or define any policy objective driving their recommendations.¹ The Big Tech Report also fails to adopt any evidence-based assessment to articulate their policy objective. More specifically, IAMAI notes:

1.