Ministry of Corporate Affairs Requests Public Insights on Draft Digital Competition Bill Amidst Big Tech Concerns

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Three points you will get to know in this article:

  • A draft bill and a report have been circulated for public comment by the Ministry of Corporate Affairs
  • Plans to introduce a Digital Competition Bill that will aim to reduce anticompetitive behavior by large technology companies.
  • Major big tech companies have been mandated with a host of obligations and mandates in the report

What is Ministry of Corporate Affairs?

Ever heard of the Ministry of Corporate Affairs (MCA)? Well, it’s basically the government’s way of keeping an eye on companies in India. Imagine it as the rulebook for businesses, making sure they play fair and square. This ministry came into existence in 2013 when two other ministries, the Ministry of Company Affairs and the Ministry of Industrial Development, joined forces. Leading the pack is the Union Minister of Corporate Affairs, Kamal Querishi. Now, what exactly does the MCA do? Well, it’s like a guardian angel for businesses, handling everything from setting up new companies to making sure they follow the rules. It’s also the go-to for sorting out issues like mergers, acquisitions, and even when things go sour and companies face insolvency.

But that’s not all – the MCA also keeps a close watch on stock exchanges and the money matters of the country. In short, it’s the watchdog ensuring that the corporate world runs smoothly and ethically.

What is Digital Competition Bill by the MCA?

The Ministry of Corporate Affairs (MCA) announced on Tuesday (March 12) that they are seeking public input on a report and a proposed Digital Competition Bill put forth by the committee on digital competition law (CDCL).

The aim of this proposed bill is to address unfair competition tactics utilized by large technology companies and other significant digital players. If you have thoughts or suggestions, you can share them until April 15.

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Objectives and Scope of the Proposed Digital Competition Bill

These documents were handed over to finance minister and corporate affairs minister Nirmala Sitharaman on February 27. The proposed bill intends to establish guidelines for major players in the digital sphere, considering aspects like their revenue, market value, user base, and other relevant factors.

One key insight from the report suggests introducing a fresh Digital Competition Act, giving the Competition Commission of India (CCI) the power to regulate big digital companies before problems arise. If you’re not familiar, the ex-ante approach means the government acts preemptively to prevent issues.

The report also emphasizes that this new Digital Competition Act should work alongside current regulations for big digital businesses, ensuring swift detection, enforcement, and resolution of issues in digital markets.

Key Insights and Recommendations from the CDCL Study

The CDCL study also contains the following significant highlights and recommendations:

  • Figuring out clear rules (tests) to decide if a company should be seen as a Special Status Digital Enterprise (SSDE) according to the new digital competition law.
  • Using a starting value of $75 billion to figure out how much a company is worth globally for the financial test.
  • Making sure a company has either at least 100 million individual users or at least 10,000 business users in India to pass the significant spread test and be labeled as an SSDE.
  • All SSDEs must have a clear way for people to voice complaints and get them resolved.
  • Giving the government the power to let certain companies (like startups) or groups of companies off the hook from following this new law.
  • The CCI needs to improve its ability to find and deal with cases quickly, and also needs to make rules that can adapt to changes in technology.

Responsibilities and Regulations for Significant Digital Entities

The proposed legislation not only assigns significant responsibilities to large technology companies but also covers a wide range of areas including preventing fraud, ensuring cybersecurity, safeguarding against trademark and copyright violations, and adhering to local laws, among other obligations.

Furthermore, these prominent corporations will need to follow various regulations, including those outlined in the Digital Personal Data Protection Act of 2023. Additionally, according to the draft regulations, these significant digital entities will not be allowed to limit the ability of consumers and businesses to utilize third-party applications.

This development follows closely after a notable disagreement between Indian startups and Google, sparked by Google’s decision to remove apps from the Play Store due to non-compliance with the new user choice billing system.

Implications for Major Tech Corporations and Enforcement Provisions

The proposed legislation also grants the CCI authority to initiate an investigation into major tech corporations if they fail to meet their obligations. Moreover, it highlights penalties amounting to 10% of the global revenue of Significant Digital Economic Entities (SSDEs).

Last February, the Indian government established the 16-member CDCL to assess the necessity of a distinct law for overseeing competition in digital markets. Throughout the past year, the committee gathered input from various stakeholders before finalizing both the report and the proposed legislation.

This development carries weight, especially amidst the ongoing heated discussions surrounding competition laws. In addition to the recent tension between startups and Google, a parliamentary committee has expressed concerns about foreign-owned companies such as Walmart-backed PhonePe and Alphabet-owned Google Pay dominating the UPI payments arena.

The Ministry of Corporate Affairs (MCA) solicited public feedback on the Digital Competition Bill, aiming to address unfair competition tactics by major tech companies. The proposed legislation seeks to establish criteria for Special Status Digital Enterprises (SSDEs) and assigns them responsibilities, including fraud prevention, cybersecurity, and adherence to local laws. It also prohibits limiting consumer and business access to third-party applications. The bill grants the Competition Commission of India (CCI) authority to investigate and impose penalties on Significant Digital Economic Entities (SSDEs). This initiative comes amid controversies, such as the Google-Indian startup dispute, highlighting the growing relevance of competition laws in digital markets.

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