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Ex-Ante framework in the draft Digital Competition Bill

Syllabus - Governance [GS Paper-2]

Context

Recently, the Committee on Digital Competition Law (under the Ministry of Corporate Affairs) concluded that there was a need to supplement the current ex-post framework under the Competition Act, 2002 with an ex-ante framework in the draft Digital Competition Bill.

About Draft Digital Competition Bill

  • It emerges against the backdrop of the Competition Act, 2002, and next amendments and hints aimed toward updating India’s competition framework to deal with the digital economy.

Ex-Post vs. Ex-Ante Framework

  • Ex-Post Framework: The Competition Act, 2002 presently operates on an ex-put up basis, this means that the Competition Commission of India (CCI) can take enforcement moves only after anti-competitive conduct has taken place.
    • In digital markets, this technique may be time-consuming and lets in offending actors to escape timely scrutiny.
  • Ex-Ante Framework: The CDCL advocates for an ex-ante competition law for digital companies. This approach allows the CCI to pre-empt and prevent anti-aggressive conduct before it occurs.
    • Notably, the European Union is the simplest jurisdiction with a complete ex-ante competition framework (Digital Markets Act) currently in force.

Specific Characteristics of Digital Markets

  • Economies of Scale and Scope: Digital enterprises benefit from economies of scale (discount in cost in step with unit as manufacturing will increase) and economies of scope (reduction in general costs with an increase in services).
    • These factors pressure speedy growth in comparison to traditional markets.
  • Network Effects: The utility of digital services increases with the quantity of users (community results).
    • Rapid growth, mixed with network outcomes, can tip markets in preference of incumbents.

Key Features of the Draft Bill

  • Quantitative Standards for Dominance: The draft Bill outlines quantitative criteria for figuring out dominance among digital organizations.
    • It uses the ‘substantial financial power’ test to evaluate dominance.
  • Preventative Obligations: To cope with the unique challenges of digital markets, the CDCL proposes preventative duties.
    • These obligations supplement the ex-submit enforcement framework, permitting well timed intervention.

Concerns and Implications

  • Data Privacy: Stakeholders are worried about the implications for records privacy. Stringent laws could impact how companies manage user facts.
  • Competitive Landscape: The competitive dynamics of digital markets may be affected. Some are concerned that stringent laws could stifle innovation and abate enterprise operations.
  • Compliance Burdens: Companies fear approximately the compliance burdens the bill may additionally region on them.
  • Consumer Choice: There are issues that overly restrictive policies should in the long run affect consumer preference and market dynamics.

Balancing Act

  • While the bill aims to cope with anti-competitive practices, stakeholders emphasize the want for a balanced technique — one which fosters innovation while safeguarding consumer interests.

Conclusion

  • The Draft Digital Competition Bill targets to enhance competition law in digital markets by introducing an ex-ante framework. As India navigates the complexities of the digital economy, this legislation ought to fundamentally alter the landscape of competition law in India.

Source: The Hindu

UPSC Mains Practice Question

Q. Examine the scope of Fundamental Rights in the light of the latest judgement of the Supreme Court on Right to Privacy. (2017)

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