The Ministry of Corporate Affairs (MCA) has received over 100 suggestions on the draft Digital Competition Bill (DCB) during the public consultation period from March 12 to May 15, 2024. The Ministry is currently reviewing the stakeholder feedback to refine the Bill. Additionally, the Ministry of Electronics and Information Technology (MeitY) conducted its own consultations in June last year and is awaiting further inputs, particularly concerning the inclusion of ex-ante provisions aimed at pre-emptively regulating dominant digital platforms.
Experts tell Storyboard18 that given the complexity of regulating large digital entities without hindering innovation, extensive inter-ministerial consultations are planned and hence the delay. The finalisation of the DCB is likely in the latter half of the FY26. The draft is currently under review after industry consultations.
Read more: Industry endorses withdrawal of draft Digital Competition Bill
Recently, the Minister of State for Corporate Affairs, Harsh Malhotra, told the media that DCB would be brought out after the due process. Malhotra also hinted that the report from the MeitY on the bill is awaited. “…we are not in a hurry, and will follow due process”, he said.
DCB has proposed ex-ante provisions to ensure proactive monitoring of the behaviour of large digital enterprises and curb possible competitive practices. At present, the Competition Act primarily envisages an ‘ex-post’ framework of intervention, wherein the Competition Commission of India (CCI) intervenes in anti-competitive conduct.
The Delay Sparks Concerns
The prolonged period of uncertainty, with no clear updates on the Bill’s status, experts said that such ambiguity allows dominant digital gatekeepers to continue their anti-competitive practices.
Highlighting the delay in finalising DCB, Hitesh Uppal, CFO, MagicBricks, said that following the introduction of the DCB in March last year, significant pushback from large tech corporations has been observed.
Read more: Indian start-ups back Digital Competition Bill, while Big Tech continues to oppose
Given the current unclear status of the Bill, the government might consider narrowing the broad definition of ‘Core Digital Services’ to focus specifically on gatekeeper services, such as app stores.
“Implementing narrowly focused regulation akin to South Korea’s app store regulation, which mandates app store operators to permit alternative in-app payment systems, could be beneficial. This would help resolve several significant issues that startups are currently facing,” he shared.
The government in Parliament recently said that comments received from stakeholders on the DCB are currently being examined (as of December 2024). Given the large number of comments it received on the Bill, some believe, the incorporation of these comments might be taking time.
“The stakeholder consultation organised by MeitY lacked representation from civil society groups in favour of an ex-ante form of regulation,” pointed out Isha Suri, Center for Internet Security (CIS).
Read more: India’s Draft Digital Competition Bill 2024 may impact smartphone security
According to Suri, the longer the bill is delayed the more entrenched the position of digital gatekeepers will get in the digital markets, making enforcement of any future law difficult and making smaller players vulnerable to exploitative practices by the Big Tech.
“It is in the interest of consumers, Indian start-ups and the overall ecosystem in digital markets to have ex-ante regulation in place, sooner rather than later.”
While the Competition Act, 2002, already grants the CCI powers to regulate anti-competitive conduct under Sections 3 and 4, this Bill introduces preventive measures that could be seen as overreaching. The reluctance to push forward without further deliberation stems from concerns that it may inadvertently hinder investment and innovation, particularly for MSMEs that rely on digital platforms for visibility and scale.
Consultations are ongoing, but the government is cautious. The last round of discussions saw significant resistance, especially from stakeholders who feel the definitions of “Systemically Significant Digital Enterprises” (SSDEs) and “self-preferencing” are vague and arbitrarily restrictive.
Section 4 of the Competition Act, which already deals with the abuse of dominance, is seen as sufficient by many in the industry. However, the Bill takes a more aggressive stance by preemptively banning certain behaviors, such as preferential treatment of in-house products and data consolidation practices, which some argue are essential to platform efficiency.
“Stakeholders have raised concerns that this level of intervention would put India at odds with global competition laws, where jurisdictions like the EU under the Digital Markets Act (DMA) have implemented similar but more clearly defined measures,” explained Sonam Chandwani, Managing Partner at KS Legal & Associates.
Unlike the EU model, which allows case-by-case assessments, the DCB risks stifling businesses before they even reach a dominant position. Critics argue that instead of broad prohibitions, the Bill should adopt a more flexible approach, allowing CCI to intervene only when demonstrable harm is proven, rather than assuming all large digital enterprises are inherently problematic.
To make the Bill more effective, Chandwani suggested that exemptions should be considered for startups and MSMEs that collaborate with larger tech firms, as blanket prohibitions on self-preferencing could disrupt existing business models.
Furthermore, there needs to be greater clarity on what constitutes an SSDE. The threshold criteria should not be solely revenue-based but should consider user dependency, market impact, and competitive dynamics. Section 19(4) of the Competition Act, which already provides a framework for determining market power, should guide these assessments rather than introducing rigid new definitions.
Additionally, enforcement mechanisms under the Bill should integrate more with the existing CCI framework rather than creating parallel regulatory structures, said experts.
The investigative powers proposed could lead to conflicts with existing enforcement under the Information Technology Act, 2000, particularly where data-sharing obligations are concerned.
“The government should also ensure that penalties align with global norms, avoiding excessive fines that could deter foreign investment,” added Chandwani.
If the Bill is pushed through in its current form without adequate modifications, it is unlikely to survive judicial scrutiny. Given past Supreme Court rulings that emphasise proportionality in regulatory action, a blanket application of restrictions under the Bill may be seen as arbitrary and excessive, potentially violating Article 14 of the Constitution.
A more balanced approach, as [er experts, incorporating due process safeguards and a phased implementation strategy, would enhance its legitimacy and effectiveness.