Draft Digital Competition Bill

Draft Digital Competition Bill


In February 2023, the Ministry of Corporate Affairs (MCA) established the Committee on Digital Competition Law (CDCL) to explore the necessity of a separate law for competition in digital markets.

  • After a year of deliberation, the CDCL concluded that the existing Competition Act, 2002 needed to be supplemented with an ex-ante framework to better address the unique challenges posed by digital markets.
  • Consequently, the draft Digital Competition Bill was introduced.

GS-02 (Government Policies and interventions)

Dimensions of the Article:

  • What is the Draft Digital Competition Bill?
  • Key Provisions of the Bill
  • About an Ex-Ante Framework
  • The Need for an Ex-Ante Framework

What is the Draft Digital Competition Bill?

  • The draft Digital Competition Bill aims to enhance regulation of large digital enterprises to ensure fair competition and a level playing field in the digital space.
  • Modeled after the European Union’s Digital Markets Act (DMA), the Bill focuses on ex-ante regulation, which involves pre-emptively preventing anti-competitive behavior by dominant digital enterprises.
  • This approach is distinct from the ex-post framework of the Competition Act, 2002, which addresses anti-competitive conduct after it occurs.

Key Provisions of the Bill

  1. Core Digital Services (CDS): The Bill identifies ten core digital services, including online search engines, social networking services, video-sharing platforms, interpersonal communication services, operating systems, web browsers, cloud services, advertising services, and online intermediation services (e.g., e-commerce marketplaces, app stores).
  2. Systemically Significant Digital Enterprises (SSDEs): The Bill proposes to designate certain digital enterprises as SSDEs based on their significant financial strength and user base in India. The criteria for SSDE designation include:
    • A turnover in India of at least Rs 4,000 crore or a global turnover of $30 billion over the last three financial years.
    • A gross merchandise value in India of at least Rs 16,000 crore.
    • A global market capitalization of at least $75 billion.
    • A core digital service with at least 1 crore end users or 10,000 business users.
  3. Obligations on SSDEs: SSDEs must operate in a fair, non-discriminatory, and transparent manner. They are prohibited from:
    • Self-preferencing (favoring their own products over those of third parties).
    • Restricting third-party applications or user settings.
    • Engaging in anti-steering practices (restricting business users from communicating with their end-users).
    • Tying or bundling non-essential services with core services.
    • Cross-utilizing user data from one service to benefit another service within the enterprise.
    • Using non-public user data to gain an unfair advantage.
  4. Associate Digital Enterprises (ADEs): The Bill also proposes to designate ADEs to understand the role of data sharing within major technology groups. ADEs would have similar obligations as SSDEs if their data-sharing practices significantly impact core digital services.
  5. Penalties: SSDEs and ADEs that violate these obligations can be fined up to 10% of their global turnover.

About an Ex-Ante Framework

  • The ex-ante framework proposed by the CDCL is intended to proactively address potential anti-competitive behaviors before they manifest. Unlike the ex-post framework of the Competition Act, 2002, which intervenes after anti-competitive conduct has occurred, the ex-ante framework aims to prevent such conduct from happening in the first place.
  • This approach is deemed necessary due to the rapid and often irreversible tipping of digital markets in favor of incumbents, driven by economies of scale, economies of scope, and network effects.

The Need for an Ex-Ante Framework

Digital markets possess unique characteristics that necessitate an ex-ante approach:

  1. Rapid Growth: Digital enterprises can grow quickly due to economies of scale (reduced cost per unit with increased production) and economies of scope (reduced total costs with increased number of services).
  2. Network Effects: The utility of digital services increases with the number of users, leading to quicker market tipping in favor of dominant players.
  3. Timely Intervention: The ex-post framework is often too slow to address anti-competitive behavior in real-time, allowing offending actors to escape timely scrutiny.

The European Union’s DMA is the only comprehensive ex-ante competition framework currently in force, and the CDCL believes that India should adopt a similar approach to effectively regulate its

digital markets.

Way Forward

  1. Balancing Innovation and Regulation: While regulating digital enterprises is essential, it is crucial to strike a balance that does not stifle innovation. The ex-ante framework should be designed to prevent anti-competitive practices without deterring investment and growth in the digital sector.
  2. Tailoring to Indian Context: The draft Bill must consider the unique characteristics of the Indian digital market. Simply transplanting the EU’s DMA framework may not be effective. The Bill should be adapted to address specific challenges and opportunities within India’s digital ecosystem.
  3. Engagement with Stakeholders: Continuous engagement with stakeholders, including digital enterprises, start-ups, and MSMEs, is essential to ensure the regulations are practical and supportive of business growth. Feedback from these groups can help refine the Bill and address concerns about potential negative impacts.
  4. Monitoring and Adaptation: The regulatory framework should be dynamic, with regular monitoring and updates to address evolving market conditions and technological advancements. This will ensure that the regulations remain relevant and effective in promoting fair competition.
  5. Public Awareness and Education: Increasing public awareness about the provisions of the Bill and the importance of fair competition in digital markets can foster greater compliance and support for the regulatory framework. Educational initiatives can help businesses understand their obligations and rights under the new law.


The draft Digital Competition Bill represents a significant step towards ensuring fair competition and a level playing field in India’s digital markets. By adopting an ex-ante framework, the Bill aims to proactively prevent anti-competitive practices and promote transparency and fairness.