Tech Giants Breaking India’s New Digital Market Rules Face Fines

Digital economy giants face a penalty for breaching a set of proposed behavioral norms meant to ensure that digital markets remain competitive and established companies do not abuse their dominance if early discussions in government make it to a planned new law.

Two parliamentary standing committees have looked into the need for such ‘dos and don’ts’ for digital economy firms, and discussions for a Digital Markets Act are on, which would prescribe the behavioral norms, said a person familiar with discussions in government.

These norms, which would prohibit practices like ‘self-preferencing’ by e-commerce platforms (promoting their private labels) and using business user data in the e-commerce platform to compete in the market, are likely to entail penalty for breaching them, the person said, requesting anonymity. The penalty is likely to be linked to the revenue of the company for the years in default.

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Currently, CCI can impose a penalty of up to 10% of the revenue of a business found guilty of anti-competitive agreements or abuse of dominance. The ministries of corporate affairs and electronics and information technology and the Competition Commission of India (CCI) have held talks on the subject, said the person. However, the broad contours of the proposed legislation are yet to be finalized.

The proposed ‘dos and don’ts’ marks a big shift in competition regulation in the country as it would give the regulator an upper hand in market oversight, with forward-looking regulation on Big Tech (the ex-ante approach) rather than initiating an investigation based on anti-competitive behavior that has already been committed.