Ex Ante Excesses: Unpacking The Pitfalls of India's Digital Competition Bill

- by Dristant Gautam & Vinayak Rajak, students at National Law University, Delhi. This is the 7th winning entry of the National Article Writing Competition organised by CBLT.

Abstract

This paper argues that the proposed Digital Competition Bill 2024 (DCB), is a regressive step in Indian Competition regime, as it creates a duplicative and ambiguous framework. This paper argues that the existing jurisprudence of the Competition Commission of India (CCI), is adequate to tackle the challenges posed by Digital Markets. The DCB just replicates the existing jurisprudence developed by the CCI, making the standards vague and static in a market which by nature is dynamic. Furthermore, the procedure for investigation under the DCB replicates that under the Competition Act, 2002, thereby rendering the aim of faster enforcement under the Act redundant. Therefore, instead of enhancing Competition in the digital realm, DCB may create parallel regulatory burdens and have a chilling effect on innovation.

I. Introduction

The emergence of the Digital Competition Bill, 2024[1] (“DCB”) marks a significant shift in India’s competition framework, shaped by a series of committee reports over the past five years. The Competition Law Review Committee, 2019 (“CLRC”)[2] initially emphasized fostering a competitive digital market within the existing legal framework. However, the Parliamentary Standing Committee (2022)[3] identified distinct anticompetitive practices in digital markets. Building on these findings, the Committee on Digital Competition Law, 2024 (“CDCL”)[4] proposed a dedicated regulatory framework targeting Systemically Significant Digital Enterprises (“SSDEs”). This evolution reflects India’s recognition of the unique challenges posed by digital markets and the need for tailored regulatory measures.

The Digital Competition Bill has been highly motivated by the European Union Digital Markets Act^[5] (“EU DMA”), and the recommendations of the earlier Committees. An enterprise would be bound by the Bill only when it is covered under the definition of SSDEs providing Core Digital Services (“CDS”). Section 3 of the Bill defines an SSDE to include an enterprise which has a turnover of more than INR 4,000 crores domestically or USD 30 Billion globally or Global Merchandise Value of INR 1,600 crores or market capitalization of not less than USD 70 million.

II. Part I- Ex Ante Regulation in India: Evolution and Basis - A critique 

The Parliamentary Standing Committee on Finance released its 53rd Report[6], titled Anti-competitive Practices by Big Tech Companies, which called for a distinct ex-ante regulatory framework for digital markets. Thereafter, the Ministry of Corporate Affairs (MCA), constituted the Committee on Digital Competition Law (CDCL), to assess the need for an ex-ante regime. The committee later submitted its findings in the form of a report.^[7] This report emphasizing the limitations of ex-post enforcement model, advocated for an ex-ante regime to govern the Digital Economy.^[8] In this section, the authors first outline the rationale presented in the CDCL report in support of a digital competition law and second demonstrate, in the later parts of the paper, why these justifications are unconvincing.

The reasoning of the CDCL in proposing an ex-ante regulatory framework was twofold (i) the unique nature of digital markets characterized by strong economies of scale, negligible marginal cost, powerful network effects driven by a data-driven feedback loop, which has resulted in big platforms assuming the role of gatekeepers.[9] (ii) the CDCL has observed that digital markets have a tendency to tip towards dominance.[10] This phenomenon can be largely attributed to the network effects and lock-in nature of platform markets.[11] Further, the protracted duration of proceedings under the existing framework is identified as a key driver of this inefficacy.

A.) A static solution to the problem of dynamism?

First, the Report observes that due to the dynamic nature of digital markets, tipping can occur suddenly, rendering traditional tools of analysis less effective and enforcement both complex and slow. [12]It further notes that formulating theories of harm in the digital context presents particular challenges.^[13] It further notes that the traditional competition act lacks the measures to provide effective remedies to preserve and restore the benefits of a competitive market to consumers.^[14] The report relying on leading scholars argues that the systems developed to oversee an industrial-age economy are constrained by ill-equipped statutes and entrenched precedent, which leaves them inadequate to cater to the demands of the digital age.[15] They point to the prolonged legal battles between Antitrust authorities and Big Tech Companies in the EU and the US as evidence of the limitations of a purely ex post approach to regulating the digital market. ^[16]

In this piece, the authors will demonstrate that the current framework of the Digital Competition Bill primarily imposes certain obligations on large digital enterprises, like restriction on leveraging data^[17], denying other access to competing businesses through dominant gateways like app stores ( a form of denial of market access),^[18] prohibition on anti-steering provisions (i.e. preventing users or business partners from being directed to alternative offerings)^[19], and prohibition on tying with related parties. The extensive body of jurisprudence developed by the CCI[20], alongside guidance provided by other regulators such as the European Commission (“EC”), Federal Trade Commission (“FTC”) and Department of Justice (“DoJ”) through administrative, regulatory and judicial interventions has already gone a long way in addressing the regulatory gap. ^[21]

The concern lies in the apparent lack of clarity on what the proposed framework truly seeks to achieve by articulating vague and generic obligations that are already embedded within the Competition Act, 2002 by the jurisprudence of CCI^[22] and opinions of leading bodies^[23] and scholars. The procedural mechanism contemplated by the Digital Competition Bill, mirrors the existing enforcement architecture, effectively creating two parallel regimes. The framework envisaged by the Bill, therefore, not only undermines the goal of regulatory efficiency but also risks diluting enforcement by replicating mechanisms under a different statutory label. Furthermore, the obligation to simply “report” compliance is unlikely, in itself to deter the large platforms from engaging in profitable but anti-competitive conduct. More fundamentally, codifying such obligations in static terms appears ill-suited to the fast-evolving nature of digital markets where novel abuses and emerging theories of harm continue to surface. Such complexities have been effectively addressed in a case-by-case basis by the CCI as the authors shall argue in Part III.

B.) Structural Tipping and Enforcement Delays: A Procedural Problem, Not a Legislative One

One of the main critiques of the Competition Act, 2002 by the CDCL,  with regards to its several stages in the enforcement proceedings i.e. formation of prima facie view by the commission[24], investigation into the matter by the DG[25], and the final order by the Commission[26] without specifying the timelines for them.[27] The Committee gives the example of Umar Javed case[28] where the Director General took two years after the CCI passed an order under Section 26(1), directing the DG to investigate. The CCI then took one year, to impose a penalty. The CDCL noted that even after five years the matter was not resolved as it was sub judice in the Supreme Court as of 2022. Further, the CDCL, observed that only in three cases, from the many cases where it passed its prima facie order against Big Tech companies since 2019 till 2022, the CCI had passed a final order under Section 27 of the Act. Even among these cases, one order was pending as of 2022, as it was pending adjudication before the Supreme Court.[29]

Although, the new Bill has been projected by the framers as a proactive forward-looking regime, the DCB in substance mirrors the existing enforcement architecture under the Competition Act, procedurally. For example, as per Section 16(1) of the Bill, the Commission can initiate the proceedings and direct the DG to investigate. It is to be noted that despite the emphasis of the CDCL on the lack of timelines and the consequent procedural delay, Section 16(4) of the Bill, which directs the DG to submit a report, does not stipulate any timeline and is identical to Section 26(3) of the Competition Act. Further, the Bill much like the act, does not mandate any specific timelines for formation of a prima facie by the Commission[30], investigation by the Director General[31], and passing of the final order by the CCI[32]. Therefore, without concrete timelines, the procedure of the Bill is a replica of the Competition Act, making arguments about timely enforcement redundant.

III. Digital Competition BILL: Boon or Bane

A.) Digital Competition Bill: A Step Back by bringing the elements of the MRTP Era. 

The Digital Competition Bill contains provisions that, in effect, mirror certain aspects of the Monopolies and Restrictive Trade Practices Act, 1969 (“MRTP”)^[33]. The MRTP Act was criticized essentially because it penalized entities solely for being dominant, without any indulgence in abuse.^[34] For instance, MRTP Act determined dominance through a rigid quantitative criterion—any enterprise holding 25% or more market share (or control over it) was classified as dominant. However, this approach was flawed. An enterprise with just 24% market share would escape such classification, highlighting the arbitrary nature of the threshold. This rigid distinction was not only unfair but also imposed a significant cost for a marginal difference in market share.

Similarly, reading Section 3 of the DCB, the qualitative and quantitative thresholds paint a similar picture. An enterprise is declared as an SSDE, if it crosses certain user and financial thresholds, it has to comply with the requirements. The CCI cannot go into the positive aspects of the dominant position of the enterprise to set off the restrictions, which could hamper innovation.^[35] 

B.) Digital Competition Bill creates False Positives

The DCB can generate false positives i.e. wrongly classifying certain business enterprises and their practices as anti-competitive, even with no harmful effects.^[36] This misclassification could significantly affect the Bonafide competitive behavior, thereby creating a chilling effect in the marketplace. An ex-ante regulatory framework imposes rule-based restrictions rather than evaluating actual market impact. This negates the possibility of the digital enterprises demonstrating consumer benefits or other positive outcomes to offset competition concerns. Notably, the Competition Commission of India (CCI) has, on several occasions, chosen not to penalise allegedly abusive conduct that fostered competition in digital markets.^[37] As a result, competition may be inadvertently restricted, with systemically significant digital enterprises (SSDEs) opting for a risk-averse approach to avoid regulatory scrutiny.

C.) Ambiguities in the Digital Competition Bill

The DCB does a poor job at balancing the objectives of being dynamic while not being vague. To be effective DCB necessarily has to be dynamic, for it to be relevant in the changing sphere of Digital space.^[38] However, in its endeavor to be dynamic, the bill has done a poor job at being Certain. For instance, for an activity to be CDS, there are nine categories mentioned in Schedule I. Schedule I tries to be specific but is non-exhaustive in nature.^[39] Additionally, one of the activities listed is that of ‘online intermediation services’ whose ambit has been very wide by using the phrase:

“Online intermediation service” includes any other digital service, not expressly covered under clauses (a) to (h) of Schedule I, which on behalf of an end user or a business user, receives, stores or transmits electronic record…

This definition is wide enough to cover even an enterprise which is only providing an ancillary online service and storing electronic record to be covered under the definition. Furthermore, the discretion of the CCI has increased manifold, which makes the situation even graver. If an enterprise has not complied with Self Reporting requirements as mandated in Section 4, because it is apparently not indulging in CDS, the CCI can still call for such record and even bring under it under the ambit of SSDE. Proviso of Section 3 empowers the CCI to designate an enterprise as SSDE if it fails to furnish data on financial or user thresholds, by only checking the data already provided.^[40] A similar issue is being faced in the EU DMA, where the regulator has been granted unprecedented powers to regulate the Digital Enterprises.^[41]

IV. The sufficiency of the Current Regime

The authors believe that the existing Competition Act, 2002 is adequate for regulating digital markets. Firstly, the Act’s substantive provisions (namely Sections 3, 4, and 5) already address concerns like self-preferencing and bundling, with recent amendments enhancing its scope. Secondly, there is no real detection gap as claimed by CDCL, as the CCI has suo moto powers. Thirdly, the Act allows for interim reliefs under Section 33, which, despite being rarely granted due to high thresholds, can be used more effectively to prevent irreversible harm in digital markets.

A.) Substantive Provisions of the Competition Act

The Competition Act, 2002 provides a balanced and adequate framework for regulating digital markets in India. Its core provisions, namely, Sections 3, 4, and 5, are sufficient to address the competition issues posed by the Digital Markets.[42] Concerns such as anti-steering[43], self-preferencing[44], bundling[45], misuse of data[46], deep discounting[47], and search bias[48] are not inherently different to make them go against the specific clauses of the 2002 Act. The CCI has already demonstrated its ability to regulate digital platforms through over 30 investigations, where it has imposed significant penalties on major digital enterprises like Google[49] and MakeMyTrip.[50] Furthermore, the concerns which we might face because of the ex-ante nature of DCB, namely overregulation, excessive interference of the CCI, and others as discussed above will not be an issue with the old regime. This the old act intervenes post the intervention. 

B.) Myth of a Detection Gap

The CDCL had claimed in its report that there is a detection gap in addressing anti-competitive practices in digital markets, as suggested by the CDCL Report.[51] While it is true that most cases related to digital market have come to the CCI through third-party complaints, the Commission already possesses suo moto powers to detect and act on anti-competitive conduct independently. These powers have, however, been rarely used. Only a small percentage of total cases decided between 2014 and 2024 are taken up suo moto, with even fewer concerning digital markets. This limited usage may be due to capacity constraints, with longstanding staffing shortages affecting the CCI’s functioning. Nevertheless, the CCI has shown an ability to act decisively where it chooses, particularly in cartelization cases across legacy sectors such as paper, oil, and railways.[52] The issue, therefore, seems less about the absence of the regulatory tools and more about the enforcement priorities and institutional capacity of the CCI. Little justification remains for introducing an ex ante legal regime when the current legal framework already allows early detection and effective intervention in digital markets, if used optimally.

C.) Timely Reliefs in the Current Regime

The CDCL Report claims that the old regime, was not designed for timely redressal of anti-competitive conduct by digital enterprises, but if one observes closely, delays primarily arise at the appellate stage. The DCB does not reform this, and follows the same appellate structure. This effectively, merely creates a parallel adjudicatory mechanism with no tangible change. The 2002 Act already empowers the CCI to issue interim relief under Section 33, which could be particularly useful in fast-moving digital markets to prevent irreversible market tipping. However, interim relief is rarely granted, possibly due to the high legal threshold set by the Supreme Court in the SAIL case.[53] In this case the interim relief is granted only when strong evidence of ongoing contravention, necessity of restraint, and likelihood of irreparable market harm is produced. Such stellar evidence is next to impossible in anti-trust cases.

Additionally, since interim relief is usually sought at the prima facie stage when the CCI is still in the process of gathering evidence, its reluctance often stems from concerns of overstepping its mandate or acting prematurely.. Demonstrating harm to overall competition, rather than just individual firms, also presents a challenge. Still, given the irreversible nature of harm in digital markets, the CCI has sufficient legal room to invoke interim measures more often, if it clearly records its reasoning.

V. Conclusion

The Digital Competition Bill, 2024, undoubtedly arises from a genuine concern to curb practices which are anti-competitive in nature, in the field of Digital Space. However, such ex-ante regulation risks overregulating by creating parallel proceedings, false positives, and regulatory uncertainty. While the objective of regulating Big Tech and preventing market tipping is commendable given the characteristics of digital markets, the proposed framework may not constitute an appropriate or effective solution.. With its stringent obligations and vague thresholds, it might inadvertently stifle innovation and curb legitimate competition. Our analysis reveals that many of the issues the Bill seeks to address are already covered within the ambit of the existing Competition Act, 2002. Therefore, the real challenge lies not in the inadequacy of the law, but in institutional capacity, procedural delays, and underutilization of existing enforcement tools. Rather than coming up with a parallel yet similar framework, strengthening the existing regime with clearer timelines, better resourcing, and nuanced enforcement would be a more prudent path forward. As India witnesses the future of its evolving digital sphere, the goal must remain  to adopt a more balanced and evidence-based approach that ensures competition without compromising growth, innovation, and procedural fairness.

^[1] Draft Digital Competition Bill, 2024.

^[2] Competition Law Review Committee, Report of Competition Law Review Committee (Ministry of Corporate Affairs, July 2019) https://www.mca.gov.in/Ministry/pdf/ReportCLRC_14082019.pdf accessed 10 March 2025.

^[3] Parliamentary Standing Committee on Finance, Anti-Competitive Practices by Big Tech Companies (53rd Report, December 2022) https://eparlib.nic.in/bitstream/123456789/1464505/1/17_Finance_53.pdf accessed 7 April 2025.

[4] Committee on Digital Competition Law, Report of the Committee on Digital Competition Law (Ministry of Corporate Affairs, 27 February 2024) para 3.2 https://www.mca.gov.in/bin/dms/getdocument?mds=gzGtvSkE3zIVhAuBe2pbow%253D%253D&type=open accessed 15 April 2025.​

^[5] Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14^th October 2022 on Contestable and Fair Markets in the Digital Sector (Digital Markets Act) [2022] OJ L317/1, < https://eur-lex.europa.eu/eli/reg/2022/1925/oj/eng>.

[6] Parliamentary Standing Committee (n3).

^[7] Ibid.

^[8] Competition Law Review Committee (n2) at 10.

[9] Joseph Farrell and Paul Klemperer, Coordination and Lock-In: Competition with Switching Costs and Network Effects (2006) Handbook of Industrial Organisation, 1,10.

[10] The Notorious Case of Digital Substance Abuse (2018) 3 ICLR 125.

[11] 'An Analysis of Legal Framework Related to Anti-Competitive Behavior in Digital Markets' (2021) 1.4 JCLJ 1356; WhatsApp LLC v. CCI, 2022 SCC OnLine Del 2528.

[12] Standing Committee on Finance, 'Fifty-Third Report on the Competition (Amendment) Bill, 2022 (2022).

^[13] Oliver Budzinski and Juliane Mendelsohn, Regulating Big Tech: From Competition Policy to Sector Regulation? (Ilmenau University of Technology, Ilmenau Economics Discussion Papers No 154, October 2021) https://ssrn.com/abstract=3938167 accessed (10th April 2025)

^[14] Ibid., Stigler Committee on Digital Platforms: Final Report (University of Chicago Booth School of Business2019) <https://www.chicagobooth.edu/-/media/research/stigler/pdfs/digital-platforms---committee-report---stigler-center.pdf>, Final Report (University of Chicago Booth School of Business 2019) <https://www.chicagobooth.edu/-/media/research/stigler/pdfs/digital-platforms---committee-report---stigler-center.pdf> accessed [10th April 2025].

[15] Competition Law Review Committee (n2) at 10.

^[16] Shilpa Das, ‘Ex-Ante Regulation: An evolving need in Digital Markets’ (2024) 5(1) CCI Journal on Competition Law and Policy 55 https://doi.org/10.54425/ccijoclp.v5.182.

^[17] Draft Digital Competition Bill 2023, S 12.

^[18] Draft Digital Competition Bill 2023, S 13.

^[19] Draft Digital Competition Bill 2023, S 13.

[20] Vijay Gopal v. Big Tree Entertainment Pvt. Ltd. And Others, 2022 SCC OnLine CCI 36; Delhi Vyapar Mahasangh v. Flipkart, Case No. 20 of 2018.

^[21] FTC v. Facebook Inc Case No. 1:20-cv-03590, Epic Games Inc v Apple Inc 559 F Supp 3d 898 (ND Cal 2021).

^[22]  Matrimony.com Limited Vs. Google LLC & Others (30/2012) Consumer Unity & Trust Society (CUTS) v. Google LLC & Others; Case No. 07 and 30 of 2012.

^[23] European Commission, ‘The Digital Markets Act: Ensuring Fair and Open Digital Markets’ (European Commission, 25 March 2024)https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/europe-fit-digital-age/digital-markets-act-ensuring-fair-and-open-digital-markets_en accessed 10th April 2025.

[24] Competition Act, Section 26.

[25] Ibid.

[26] Competition Act, Section 27.

[27] CLRC Report (2019), p. 40.

[28] Mr. Umar Javeed v. Google LLC, CCI order dated 20 October 2022 in Case No. 39 of 2018.

[29] Matrimony.com Limited v Google LLC and Others, Competition Commission of India, Case Nos 07 and 30 of 2012, Order dated 8 February 2018, para 3.4.

[30] Draft Digital Competition Bill, 2024, Section 4(6), 16.

[31] Ibid, Section 24.

[32] Ibid, Section 28.

^[33] Monopolies and Restrictive Trade Practices Act, 1969.

^[34] ‘Does India Require Ex-Ante Competition Regulation in Digital Markets?’ (Shardul Amarchand Mangaldas & Co) <https://www.amsshardul.com/insight/does-india-require-ex-ante-competition-regulation-in-digital-markets/> accessed 9 April 2025.

^[35] Ibid.

^[36] Ibid.

^[37] ‘Assessing the Need for a New Draft Digital Competition Bill in the Indian Context’ (Carnegie Endowment for International Peace) <https://carnegieendowment.org/research/2025/02/assessing-the-need-for-a-new-draft-digital-competition-bill-in-the-indian-context?lang=en> accessed 3 April 2025.

^[38] Supra 3.

^[39] Supra 1, Schedule I.

^[40] Supra 1, Section 3.

^[41] Andriychuk, O. (2023) ‘EU Digital Competition Law: The Socio-legal Foundations’, Cambridge Yearbook of European Legal Studies, 25, pp. 81–104. doi:10.1017/cel.2023.12.

[42] Does India Require Ex-Ante Competition Regulation in Digital Markets?’ (Shardul Amarchand Mangaldas & Co) <https://www.amsshardul.com/insight/does-india-require-ex-ante-competition-regulation-in-digital-markets/> accessed 9 April 2025.

[43] Together We Fight Society v. Apple Inc., Cse No. 40 of 2021.

[44] All India Online Vendors Association v. Flipkart and Amazon, Case No. 20 of 2018.

[45] Federation of Hotel and Restaurant Associations of India v. MakeMyTrip India Pvt. Ltd., Case No. 14 of 2019.

[46] Harshita Chawla v. WhatsApp Inc. and Facebook Inc., Case No. 15 of 2020.

[47] All India Online Vendors Association v. Flipkart and Amazon, Case No. 20 of 2018.

[48] Matrimony.com Limited & Ors. v Google LLC & Ors. and Consumer Unity Trust Society v Google LLC & Ors, MANU/CO/0008/2018.

[49]Id. .

[50] Federation of Hotel & Restaurant Associations of India v MakeMyTrip India Pvt Ltd, Case No. 14 of 2019;

[51] Supra n4.

[52] In Re: LPG Cylinder Manufacturers v. Indian Oil Corporation Ltd. (Suo Motu) – Suo Motu Case No. 03 of 2011

[53] Competition Commission of India v. Steel Authority of India Ltd., (2010) 10 SCC 744.