Digital rules? Not EU's way

Economic Times

13 hours ago

Digital Rules? Not EU's Way Madrid: In 2024, Ministry of Corporate Affairs (MCA) released a draft ex-ante digital competition law, following the lead of the EU's Digital Markets Act (DMA). But does India need a new law that is an inspiration from a dubious DMA or is existing competition law enough?India's Competition Act 2002-especially in the wake of significant amendments made in 2023-offers a flexible and comprehensive framework to address anticompetitive conduct in the digital economy. It also includes sections that cover such core digital concerns as deep discounting, bundling, self-preferencing, exclusive tie-ups and the misuse of data by dominant platforms- without automatically prejudging whether such conduct is anti-competitive.
CCI has also demonstrated that it can apply these provisions, as it did when it imposed penalties on Google for anticompetitive conduct in the Android ecosystem and Play Store policies. More recently, Meta and WhatsApp were fined for unfair data-sharing conditions imposed on users. CCI's scrutiny of MakeMyTrip, Flipkart and Uber demonstrates its ability to engage with platform-specific issues under existing legal mandate. While some jurisdictions have opted for 'ex-ante' digital competition laws-such as DMA-India would be wise to avoid this path. Ex-ante regimes often rely on absolute prohibitions and structural presumptions, which may inadvertently suppress innovative or pro-competitive conduct because it involves scale or integration.DMA, the blueprint for many ex-ante digital competition rules, has been criticised by competition experts like OECD's Frederic Jenny for rigidity and potential to hinder innovation in fast-moving markets. Indeed, DMA has produced dubious outcomes in the EU.India has taken note. The draft Digital Competition Bill (DCB) 2024 proposed ex-ante obligations for 'systemically significant digital enterprises', drawing inspiration from foreign frameworks like DMA. But it was met with concern from industry and legal experts, who warned that such sweeping, pre-emptive rules risked stifling innovation and overregulating a still-developing digital economy. That proposal was put on the backburner, a prudent pause that underscores the need to pursue a tailored, evidence-based approach rather than adopt a one-size-fits-all regulatory model.
Indeed, India's experience offers an alternative. In the landmark Matrimony.com v. Google case, CCI displayed regulatory restraint, carefully weighing the need to preserve innovation. That decision reflected a more sophisticated understanding of digital markets, where conduct must be judged in context, rather than employing broad regulatory prohibitions that ignore efficiencies and procompetitive benefits. Furthermore, CCI has shown flexibility in defining relevant markets in digital cases, such as in Snapdeal and Meru v. Uber, where evolving business models required novel interpretations. Despite effectiveness of this legal framework, enforcement delays remain a significant concern. In CCI v. SAIL case, the Supreme Court highlighted the need for time-bound proceedings to ensure meaningful remedies and deterrence. The ability to enforce the law swiftly and decisively is what will ultimately determine the regime's effectiveness.Rather than replicating foreign models, India should prioritise improving how its current system functions. This means faster case resolution, better resources for CCI and development of sector-specific guidelines that retain flexibility while offering clarity. Moreover, continuous training and upskilling of enforcement personnel are essential. That's why the proposed Digital Markets and Data Unit within CCI is a welcome development, as it promises to bring much-needed technical expertise and sector-specific knowledge to bear on increasingly complex cases.The pace of technological change in the digital economy exceeds the ability of prescriptive rules to remain relevant. A principles-based, evidence-driven regulatory approach-such as the one embodied in the Competition Act-is far better suited to this environment.The 2023 amendments bolstered this framework by introducing a deal value threshold for merger scrutiny, a voluntary settlement and commitment mechanism, and significantly higher penalties. Together, these amendments serve to equip CCI with modern tools to regulate proactively without becoming prescriptive.GoI's focus should now shift to building institutional capacity, streamlining procedures and ensuring timely enforcement. These improvements will ensure that Indian markets remain healthy, efficient and competitive.In a global climate of regulatory overreach, India's approach should continue to remain principled and pragmatic: grounded in a refusal to legislate prematurely and a commitment to strengthen an already sound framework rooted in economic analysis that has served it well across sectors as varied as telecom, cement, pharmaceuticals and aviation. It should be no different for digital markets. (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.) Elevate your knowledge and leadership skills at a cost cheaper than your daily tea. Inside TechM CEO's 'baptism by fire' and the blaze he still needs to douse
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