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Digital competition bill proposes various obligations for large digital players

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The draft bill has put several obligations on Systemically Significant Digital Enterprises (SSDEs) in Core Digital Services (CDS) to operate in a fair and non-discriminatory way with end users and business users

New Delhi: The proposed digital competition bill seeks to put in place several obligations for large digital enterprises, including news aggregators, in efforts to ensure a level playing field and fair competition in the digital space.

After being set up in February last year, the Committee on Digital Competition Law came out with its report and a draft bill on Tuesday wherein the focus is on having ex-ante regulations to prevent possible anti-competitive practices.

“The news aggregators with significant market power in the distribution of news content will be subject to regulatory measures aimed at levelling the playing field.

“This includes restrictions on anti-competitive behaviours, such as preferential treatment of their own content or unfair practices that disadvantage smaller publishers or competing aggregators,” Vaibhav Choukse, Partner at JSA Advocates & Solicitors, said on Wednesday.

The draft bill has put several obligations on Systemically Significant Digital Enterprises (SSDEs) in Core Digital Services (CDS) to operate in a fair and non-discriminatory way with end users and business users.

CDS will cover online intermediation services, which will include news aggregators, he said.

For SSDEs, the panel has recommended various thresholds, including a base value of Rs 4,000 crore for Indian turnover, at least 1 crore end users or a minimum of 10,000 business users in India.

Among others, the gross merchandise value (GMV) should be at least Rs 16,000 crore and the global market capitalisation base value of $75 billion.

For unlisted companies, the committee has suggested that a value equivalent to a global market capitalisation that similarly indicates the financial position of unlisted companies is computed in a manner as may be prescribed by the central government.

Also, the panel has recommended that the Competition Commission of India (CCI) should be empowered to frame specific regulations, detailing the manner of determination and calculation of the user-based thresholds.

“…upon designation as an SSDE, such a designation should remain valid for three years, unless there is a significant change in market dynamics,” it has said.

In case of violations, the panel has proposed a penalty of up to 10% of a company’s global turnover.

According to Choukse, news aggregators may need to adapt their business models and practices to comply with the requirements of the draft rules.

This could involve changes in how they monetise content, manage data, and interact with publishers and other stakeholders in the digital ecosystem, he added.

About the draft bill, Avaantika Kakkar, Partner (Head – Competition Law) at Cyril Amarchand Mangaldas, on Wednesday said it will impact all tech companies that meet any of the broad thresholds listed in the bill.

While noting that the stated objective is to ensure that end users are not subject to unfair conditions, Kakkar said, however, the law, as it reads would perhaps ensure that the end users are not subjected to unfair conditions by the designated Systemically Significant Digital Enterprises.

“Whether the end consumer is subject to unfair conditions by other enterprises operating in the digital space, remains an open question,” she added.

The bill has proposed ex-ante competition regulations for big tech players to ensure proactive monitoring of their behaviours and curb any possible unfair business practices.

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