As India contemplates adopting its Digital Competition Bill, Amber Darr and Madhavi Singh examine lessons from the European Union’s and United Kingdom’s legislative forays into digital markets. They argue that India must rethink its reliance on formal long-form enforcement and invest in regulatory capacity if it hopes to deliver an ex ante regime for a fair and contestable digital economy.
In early 2024, when India published the Draft Digital Competition Bill (DCB) for public comment, it seemed poised to become the first Asian country to adopt a standalone legislation for regulating digital platforms. The DCB is modelled on the European Union’s Digital Markets Act 2022 (DMA). Like the DMA, it proposes an ex ante regime for regulating digital platforms and reflects the view that it is better to pre-empt anti-competitive harm than to rely exclusively on ex post enforcement which commences after the harm has occurred.As in the EU, where the DMA operates alongside Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU), the DCB complements the ex post competition regime provided in India’s Competition Act 2002 (Competition Act).
More than a year later, it is not clear when, if at all, the DCB will be enacted. In the meantime, the EU has made considerable progress in enforcing the DMA: it has designated Big Tech “gatekeepers” to the digital economy, initiated investigations against practices that may hinder fair and contestable markets, and provided guidance and support in designing compliance measures. Most recently, it has issued its first non-compliance orders against Apple and Meta. This article argues that India can learn from the first phase of DMA enforcement for developing a more effective regime for digital regulation. To this end, the article recaps the parallels and divergences between the DCB and the DMA; highlights the key challenges of enforcing the DCB, and offers suggestions for overcoming them.
DCB and the DMA: parallels and divergences
As Vikas Kathuria notes in ProMarket, there are considerable parallels between the DCB and the DMA. The DCB’s systematically significant digital enterprises (SSDEs) and core digital services (CDS) mirror the DMA’s gatekeepers and core platform services, respectively. The DCB, like the DMA, enables the relevant authority to impose on SSDEs a range of positive and negative ex-ante obligations (such as requiring them to have fair and transparent dealings with end users and business users and to refrain from engaging in self-preferencing, entering into anti-steering agreements, and using non-public data). Also like the DMA, the DCB authorizes the authority to conduct investigations and proceedings against SSDEs and to sanction them for non-compliance.
However, the DCB also departs from the DMA in important ways. For instance, while the DMA entrusts enforcement to a joint team comprising officers from the EU’s Directorates-General for Competition (DG-COMP) and Communications Networks, Content and Technology (DG-CONNECT), the DCB vests it exclusively in India’s incumbent Competition Commission (CCI). It also replicates the enforcement pathway prescribed for competition enforcement in the Competition Act and entrusts investigation for digital regulation to the same director general, who is responsible for competition investigations. Also, while the DMA requires gatekeepers to inform the EU of an intended merger that may have implications for the digital economy (in addition to notification requirements under the EU Merger Regulation), the DCB imposes no such requirement on SSDEs. The DCB also introduces a settlement regime for non-complying SSDEs, although there is no comparable provision in the DMA.
While departures on substantive issues raise questions about the adequacy of the DCB, its institutional design and preferred enforcement pathway create enforcement challenges. For instance, will CCI be able to deliver both digital regulation and competition enforcement? Does it have the capacity to understand the values and aims of the DCB? And is the enforcement pathway prescribed in the DCB appropriate for the Indian legal landscape?
DCB’s enforcement challenges
1. CCI’s institutional competence
CCI’s mandate for the purposes of competition enforcement is to ensure market efficiency and analyze the impact on competition and consumers of market behavior that has already occurred. However, in carrying out digital regulation under the DCB, the CCI would be tasked with anticipating the effect of digital technologies on fairness and contestability in digital markets. The EU has addressed the different stages at which competition enforcement and digital regulation occur, as well as the different values they seek to uphold, by mandating DG-CONNECT to lead on DMA enforcement (albeit in consultation with DG-COMP). Similarly, the United Kingdom (UK) has separated the enforcement and regulation function by establishing a distinct Digital Markets Unit (DMU) within the Competition and Markets Authority (CMA), for the enforcement of the Digital Markets Competition and Consumers Act 2024 (DMCCA). The DCB does not demarcate CCI’s digital regulation and enforcement functions and thereby risks undermining the quality of enforcement.
2. CCI’s institutional capacity
There was a seven-year gap between India adopting the Competition Act and operationalizing the CCI. During this period, the CCI hired and trained staff to undertake market analysis and interpret provisions of the Act. Despite this, CCI continues to face capacity issues at both managerial and operational levels. To carry out digital regulation, CCI will need to induct members with expertise in digital technologies and hire sufficient staff that can understand technical developments. The EU has benefited from the expertise of DG-CONNECT, which has been leading on the Digital Services Act, the AI Act and data governance rules. Meanwhile, the UK DMU had started recruiting and training data scientists, engineers and behavioral experts, a year before the DMCCA was enacted. Without these advantages, India risks significantly delaying the enforcement of the DCB.
3. Long-form enforcement and the Indian legal landscape
EU decisions under the DMA can be challenged before the General Court and the Court of Justice of the EU. The DCB adopts the DMA’s court-intensive enforcement strategy and further complicates it by replicating, without any adjustments, the enforcement pathway stipulated in the Competition Act. This means that for all enforcement actions under the DCB, the CCI would have to issue show cause notices (notices calling upon an enterprise to provide reasons as to why it should not be proceeded against) and conduct court-style hearings. Parties aggrieved by CCI’s orders would also be able to challenge them in appeal before the National Company Law Appellate Tribunal (NCLAT) and the Indian Supreme Court and through writ petitions before the High Courts. The CCI’s difficulty in pushing its competition enforcement decisions through the delay-ridden Indian legal system suggests that it may be years before matters under the DCB are finally decided. Therefore, in relying primarily on long-form enforcement, the DCB risks subverting its ex ante ethos.
Suggestions for Effective Enforcement
To prepare itself for enforcing the DCB, the CCI may consider establishing an independent department dedicated to digital regulation. It should also appoint appropriate persons at managerial and operational levels and train them in DCB’s regulatory values, digital technologies and mechanisms of ex-ante regulation. Building the requisite acumen is especially important because the DCB delegates regulation-making powers to the CCI in at least 22 matters. These include formulating internal procedures, specifying conduct requirements for each CDS, notifying new CDS—all topics that must be addressed before CCI can commence digital regulation.
To reduce its reliance on long-form enforcement CCI can focus on market studies in exercise of its powers under Section 21 of the DCB. It may also establish a Digital Compliance Committee (Committee) with the mandate of testing, evaluating, and recommending to the CCI for approval, compliance measures proposed by SSDEs. Market studies will enable CCI to informally engage with designated or potential SSDEs. If CCI and the SSDE can reach an understanding about CDS, they may avoid long-form enforcement altogether. CCI may also put designated or potential SSDEs on notice for regulatory issues likely to arise from their operations and provide them an opportunity for addressing these without initiating formal proceedings against them. The Committee will act as a forum for consulting independent experts and end and small business-users to understand the market impact of proposed compliance measures before recommending them to the CCI for approval. It may also provide a mechanism for continuous monitoring of SSDEs and to signal to the CCI early indications of non-compliance, or malicious compliance, through expedited internal processes. Both measures will ensure more efficient allocation of CCI’s limited resources and may reduce instances of non-compliance without compromising CCI’s ability to initiate formal enforcement should the need arise.
CCI may also consider forming a supra-regulatory body, such as the UK Digital Regulation Cooperation Forum (DRCF) jointly established by the CMA, the Information Commissioner’s Office, the Financial Conduct Authority, and the Office of Communications. This will allow CCI to develop a coherent and collaborative approach for the complex, cross-economy digital ecosystem, a task which the EU automatically achieves by taking decisions through a collegium with political and specialist representation.
Conclusion
In the last year, even as India awaits the DCB, it has progressed in enforcing the Competition Act against digital platforms. Most notably, the CCI has issued orders against WhatsApp and settled with Google in the Android TV case while the NCLAT has upheld the CCI’s order penalizing Google in the Play store case. It may be that India is considering a German-style enhancement of its ex post powers under the Competition Act instead of enacting the DCB. However, if ex ante regulation is still the goal, then India must take steps to equip the CCI for the task. Failure to do so would be detrimental to innovation and the interests of the very users and businesses that the DCB seeks to safeguard.
Author Disclosure: The authors report no conflicts of interest. You can read our disclosure policy here.
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