The rapid expansion of digital markets has forced regulators globally to re-evaluate their traditional competition tools. Some jurisdictions have already introduced ex-ante rules and others are considering them. With the proposed Digital Competition Bill, 2024 (DCB) and the recent parliamentary panel report, India faces a dilemma. The correct approach is to start with market realities, ensuring any ex-ante rules suit local conditions.
Bharat Budholia
Senior partner
AZB & Partners
With more than 750 million internet users, a thriving startup ecosystem and participation by global and domestic platforms, India is one of the world’s largest and most vibrant digital markets. Flagship programmes such as Digital India, Make in India and Startup India support this development and encourage the global spread of the country’s digital infrastructure. This progress has come through market dynamism, innovation and ex-post enforcement by the Competition Commission of India (CCI). The CCI has conducted investigations, spanning e-commerce and app stores to online advertising, including those undertaken of its own initiative. This shows the responsiveness of the regulator and the efficacy of the existing framework.
Regulatory reform must identify a problem. In India, however, the urgency of an ex-ante regime is not obvious. Markets, such as OTT streaming, food delivery, ride-hailing and fintech, remain competitive, with new entrants challenging incumbents. Most of the Big tech companies such as Apple, Meta, Amazon and Google have already been scrutinised, sometimes even without formal complaints or without inviting responses from target companies.
Mohith Gauri
Senior associate
AZB & Partners
Most digital market cases, into allegations such as self-preferencing, bundling, exclusive dealing and leveraging, ended with no infringement findings. This suggests strong market contestability and concerns about entrenched dominance may be overstated. Recent amendments strengthen the CCI’s toolkit by introducing settlement and commitment mechanisms as well as deal-value thresholds.It is, therefore, unclear what enforcement gap the DCB seeks to fill. Unless the perceived lack is identified and backed by evidence, the need for ex-ante regulation must be reconsidered.
In dynamic digital markets, a disruptive app may quickly fade. Introducing ex-ante rules without substantive evidence of market failure risks false positives and reduce competition. A major concern is stifling innovation. The onerous DCB compliance regime may deter startups from innovating and scaling, and discourage investment. Given the DCB’s low thresholds, even small but fast-growing domestic companies will face burdensome compliance. Higher or activity-based thresholds, SME safe harbours, phased or sunset obligations and due-process-driven rebuttals may mitigate these risks.
Ojasvi Mishra
Associate
AZB & Partners
The EU’s Digital Market Act (DMA) represents a bold experiment in addressing concerns. A recent survey of 5,000 European consumers’ DMA experience by the Nextrade Group revealed worse online user experience and reduced personalisation in online services. India should test ex-ante mechanisms against its own conditions rather than import them without verification.
The CCI already has wide powers under the Competition Act 2002, and any additional obligations under the DCB may cause friction with other regulators. Ex-ante tools may be useful, but they depend on timing, scope and design. India should adopt an evidence-based approach following Australia’s example of multi-year digital market studies prior to its reforms. The parliamentary panel’s report acknowledged the draft DCB requires refinement in services covered, designation thresholds, and a rebuttal mechanism against designation. The Corporate Affairs Ministry told parliament of plans to conduct market studies before bringing in the DCB. Ex-ante rules must be assessed in the context of wider competition policy. What works for Europe may not work in India, which aspires to create its own global champions.
India should conduct empirical, evidence-based market studies, evaluating the effect of existing enforcement tools. That will find the balance between developing future-proof regulations without stifling innovation and growth. If ex-ante regulations are necessary, they should harmonise with economic realities and wider competition policy. If evidence shows persistent harm in defined services, a phased, narrowly scoped ex-ante toolkit could be introduced. In regulation, as on the road, it is not which vehicle we choose but where we want to go and whether the chosen path will get us there.
Bharat Budholia is a senior partner, Mohith Gauri is a senior associate, and Ojasvi Mishra is an associate at AZB & Partners
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