NEW DELHI: Facing strong opposition from several quarters, the government is likely to withdraw the Digital Competition Bill (DCB), the draft of which was released in March. Sources said that a fresh Bill may be drafted after taking inputs from other ministries, MeitY for instance, as well as industry stakeholders.
Official sources say that the major criticism against the present draft, after inter-ministerial consultations as well as industry inputs, is that it’s vague, subjective at places and too omnibus in nature.
Officials said that the current draft takes into account turnover as well as market power of the digital firms, whereas focus should only be on market power. Secondly, in cases where market power has been considered, the threshold is too low.
For instance, according to the DCB, an enterprise can be declared systematically significant digital enterprise (SSDE), if its India turnover is not less than Rs 4,000 crore or its global turnover is not below $30 billion. It has been pointed out that the turnover has no meaning. Apple, for instance, may have a high turnover in India because of the high average selling price of its phones, but its market share at 6% is too low.
Similarly, a company can also be deemed an SSDE if its gross merchandise value (GMV) in India is not less than Rs 16,000 crore or if its global market capitalisation is not below $75 billion. Officials pointed out that taking into account global market capitalisation does not make sense.
Further, an enterprise can also be treated as an SSDE if it has had 10 million Indian users of its digital service in the three immediately preceding financial years, or if it has at least 10,000 business users. Officials said that during discussions, these numbers have been seen as too low. “In a country with 1.2 billion mobile subscribers, having some 10 million users cannot be considered for any ex-ante regulation,” an official said.
The aim of the DCB is to put in place an ex-ante regulatory framework to prevent any anti-competitive conduct by large digital enterprises. The current ex-post approach, where intervention by the Competition Commission of India takes place after the practices come to the fore, is seen to be not a sufficient remedy in fast-paced digital markets.
To put in place ex-ante provisions, the corporate affairs ministry-led committee, which has drafted the Bill, has proposed a set of provisions which would flag anti-competitive behaviour and has fixed penalties. This has led to several firms, both domestic as well as global, flagging risks to their operations as they would be seen as risks even before committing a crime.
Apart from laying down such quantitative thresholds, the Bill has also proposed certain qualitative criteria – subjective factors indicative of an entity’s ability to influence the market. Here, metrics such as resources of the enterprise, volumes of data aggregated, direct and indirect network effects at play, and the entity’s bargaining position vis-à-vis its business users and consumers, would be considered. The view of some of the ministries is that this is too wide, vague and subjective in nature.
Further, the Bill has proposed that the CCI will be empowered with residuary powers, which would include areas or platforms that today may not fall in any of the categories but later may be seen to influence the market. This has also been opposed by several ministries as well as industry stakeholders.
Sources said that this is perhaps why even large domestic platforms like Zomato, Swiggy, Oyo, etc, have joined hands with Big Tech firms like Google, Meta, Amazon, etc, in opposing the Bill.
Source: The Financial Express
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