Curbing Anti-Competitive Practices in Digital Markets: Recommendations from Parliamentary Panel
Digital markets have become a major part of the modern economy, but they have also been prone to anti-competitive practices that can harm consumers and smaller businesses. In an effort to address this issue, a parliamentary panel in India has proposed a number of measures, including ex-ante regulations, a new category of systemically important digital intermediaries (SIDIs), and a Digital Competition Act. These recommendations are part of a report on “Anti-Competitive Practices by Big Tech Companies” that was tabled in Parliament recently.
Ex-Ante Regulations
One of the key challenges of regulating digital markets is that they can quickly become monopolized, with a small number of dominant players emerging within a few years of the market developing. This means that by the time policies are formulated to address any anti-competitive practices, it may be too late to prevent market tipping in one direction. To address this problem, the parliamentary panel has recommended that competitive behavior be evaluated ex-ante, before markets become monopolized, rather than ex-post, as is currently the case.
Systemically Important Digital Intermediaries
In addition to ex-ante regulations, the panel has called for the creation of a new category of systemically important digital intermediaries (SIDIs). These would be leading entities that have the ability to negatively influence competitive conduct in the digital ecosystem, based on their revenue, market capitalization, and number of active business and end users. The panel recommends that India adopt definitions to ex-ante regulate the behavior of SIDIs, as has already been done by various legislations around the world. To help define SIDIs, the panel recommends that stakeholders, including the Competition Commission of India (CCI) and the central government, collaborate to come up with a reasonable definition.
Digital Competition Act
In addition to ex-ante regulations and the creation of SIDIs, the panel has also recommended that the government consider introducing a Digital Competition Act to ensure a fair and transparent digital ecosystem. This act could provide a framework for addressing anti-competitive practices in digital markets, including “anti-steering,” “deep discounting,” “self preferencing,” “search & ranking preferencing,” and other practices that impact competition.
Revamping the Competition Commission of India
As part of its recommendations, the panel has also called for the revamping of the Competition Commission of India (CCI). To better monitor and regulate digital markets, the panel suggests the creation of a specialized digital markets unit within the CCI, staffed with skilled experts, academics, and attorneys. This unit would closely monitor SIDIs and provide recommendations to the central government on designating SIDIs and other activities related to digital market regulation.
Conclusion:
Overall, the parliamentary panel’s recommendations on anti-competitive practices in digital markets represent a significant step forward in addressing the challenges posed by winner-take-all markets. By introducing ex-ante regulations, creating a new category of systemically important digital intermediaries, and considering a Digital Competition Act, the panel has proposed a comprehensive approach to ensuring a fair and transparent digital ecosystem. By revamping the Competition Commission of India and establishing a specialized digital markets unit, the panel has also recognized the importance of having the necessary expertise and resources to effectively monitor and regulate digital markets.
