digital competition bill: Draft digital competition bill will make business untenable: IAMAI
The ex-ante approach of the government under the proposed Digital Competition Bill is an “unfair imposition on digital companies”, will make business “untenable” for them and can “dry up venture investments in tech startups”, the Internet and Mobile Association of India said.
In its comments on the draft Bill, the IAMAI also cautioned that the criteria for designating companies as systemically significant digital enterprises (SSDE) is “subjective, all-encompassing and self-contradictory”.
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Ex-ante regimes tell businesses precisely how to behave, or what to do. Under the current ex-post regime of the Competition Act, companies are only required to ensure that their conduct in the market is not anti-competitive. An overlapping ex-ante regime proposed under the digital competition Bill will force tech companies to comply with parallel legislation and undertake measures for additional compliance, the IAMAI said.
“This would entail a significant increase in operational costs. Therefore, an additional competition regulatory regime, which departs from the well-tested foundation of competition law, is unnecessary and could lead to significant harm,” it said.
The association, established in 2004, counts global companies Google, Amazon, Apple and Meta and Indian companies such as Airtel, Dream11, Paytm, Swiggy and Cred as its members.
ET has seen a copy of IAMAI’s submission to the Ministry of Corporate Affairs. The deadline for stakeholders to submit their views on the draft Bill was Wednesday.
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The Committee on Digital Competition Law (CDCL) had released the draft of the digital competition Bill in March, seeking stakeholder comments. The initial deadline to submit comments was April 15, which was later extended to May 15.Apart from the impact of an ex-ante regulation on digital businesses as well as startups, the proposed financial and size-based thresholds to classify digital companies as SSDE are also likely to “disincentivise startups from scaling up in order to avoid additional regulations,” the association said.
The policy advocacy group said the compliance burden for companies and startups, notwithstanding the proposed ex-ante regulations under the draft Bill, is also likely to deter venture funds and investors from acquiring stakes in them to avoid additional compliances
“Further, it is pertinent to note that as ex-ante regulations may affect Indian companies even before they can achieve scale to compete globally, it may also impact companies before they achieve profitability,” it said.
The CDCL, set up in February 2023, has in its draft report sought to place several obligations on big tech companies by designating them under a new category of systemically significant digital enterprises in core digital services and adding several commitments.
In its report, the CDCL said an ex-ante law should ensure that the behaviour of large digital enterprises is proactively monitored and that the Competition Commission of India intervenes in the market before instances of anticompetitive conduct transpire.
