Committee on Digital Competition Law (CDCL)

The Committee on Digital Competition Law (CDCL) recently submitted its report and a draft Bill on the proposed Digital Competition Law, to the Ministry of Finance and Corporate Affairs.

Report of the Committee on Digital Competition Law (CDCL):

About the Committee on Digital Competition Law (CDCL):

• The Committee submitted its report along with a draft Bill on the proposed Digital Competition lawto the Ministry of Finance and Corporate Affairs.
• It is a 16-member committee headed by Corporate Affairs Secretary Manoj Govil and formed in 2023.
• It aimed to examine the need for a separate law on competition in digital markets.
• The terms of reference on Digital Competition Act involve a thorough review of existing provisions of Competition Act 2002, along with rules and regulations framed under it.
• The purpose of this review is to determine whether these provisions are adequate to address the challenges that have cropped up in the digital economy.
• The committee also analysed the requirement for separate legislation on ex-ante regulatory mechanisms for digital markets.
• It was also tasked with preparing a draft Digital Competition Act and submitting a report in three months.

Key Recommendations of the Committee:

• The CDCL recommendations are largely modelled on the EU’s Digital Markets Act, with some India-specific variations.
• A panel has proposed a bill to enable active supervision of certain firms by granting the Competition Commission of India (CCI) the power for early intervention.
• It suggests the identification of “Systemically Significant Digital Enterprises” (SSDEs), using both quantitative and qualitative measures.
• This would ensure that major tech companies with a significant role in primary digital services are included in this oversight.
• The CCI’s capacity for technical regulation in digital markets should be strengthened and a mechanism for inter-regulatory consultations be implemented.
• The CCI should have the discretion to determine which entities should be classified as SSDEs and Associate Digital Enterprises (ADEs).
• To identify these large digital players, the Committee has recommended two test basis companies significant financial strength and significant spread.
• The companies need a self-assessment and report it to the CCI.
• Any non-compliance with the requirement, may lead to significant fines which can be up to 10% of global turnover.
• This will have a major impact on the big tech enterprises as they can be subject to a separate regulatory regime.
• This could lead to unintended consequences, such as reduced consumer choice and higher prices.

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