The Committee on Digital Competition Law (CDCL) has submitted its report along with a draft Bill on the proposed Digital Competition law to Finance and Corporate Affairs Minister Nirmala Sitharaman. The 16-member committee headed by Corporate Affairs Secretary Manoj Govil was formed on February 6, last year. Here are all the details that you need to know.
What was the purpose of the committee?
The Committee on Digital Competition Law was aimed at examining the need for a separate law on competition in digital markets. The terms of reference of the Committee on Digital Competition Act involve a thorough review of the existing provisions of the Competition Act 2002, along with the rules and regulations framed under it.
The purpose of this review is to determine whether these provisions are adequate enough to address the challenges that have cropped up in the digital economy. In addition to this, the committee will also analyse the requirement for a 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.
What are the recommendations of the committee?
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. The panel suggests identifying "Systemically Significant Digital Enterprises" (SSDEs), using both quantitative and qualitative measures, to ensure that only major tech companies with a significant role in primary digital services are included in this oversight.
The panel proposes that within a larger conglomerate offering Core Digital Services, a single entity should not be the only designee. The panel outlines two possible scenarios based on the participation of various entities within the conglomerate in providing these services:
- Initially, the principal entity is recognized as an SSDE, while other entities in the conglomerate engaged in the same services are recognized as Associate Digital Enterprises (ADEs).
- Alternatively, if another entity within the conglomerate is more actively participating in the services, it is recognized as an SSDE, with the parent company and other entities in the conglomerate engaged in the same services acknowledged as ADEs.
The panel suggests that the CCI should have the discretion to determine which entities should be classified as SSDEs and ADEs. To ensure adherence to proactive duties, the panel recommends imposing financial penalties up to 10% of the worldwide revenue of SSDEs, in addition to extra fines for misreporting and indirect liability of executive leaders.
