COMMENTS BY CUTS INTERNATIONAL ON

DRAFT DIGITAL COMPETITION BILL, 2024

Background
Ministry of Corporate Affairs published report of the Committee on Digital Competition Law,
including draft Digital Competition Bill (Bill), in March 2024 and has sought comments from
stakeholders.
CUTS International and CUTS Institute for Regulation and Competition have engaged in issues
related to digital economy regulation on a regular basis. With regard to the Bill, a study on “Digital
Competition Bill 2024 and its Potential Impact on Consumers in India1” was carried.

PART A: OVERALL COMMENTS

1. Digital economy in India is rapidly growing and is expected to account for 20 percent of
India’s GDP by 2026. Indian digital enterprises, startups and MSEs (micro and small
enterprises) are the drivers of this growth. Indian economy is in growth phase, that means
statutory mandate ought to be promotional whereas the Bill proposes to bring in
restrictions on all SSDEs, including Indian digital firms. Therefore, the question of timing
is important. Considering the current digital economic growth in India (specific to Indian
start-ups and Indian digital enterprises), the government may consider if it is the right time
to bring the ex-ante law? It is to be pondered over that if ex-ante guards in the industry
were imposed 5 years ago whether the country would have experienced the UPI
development.

2. Normative basis behind ex-ante law needs to be explained to provide a consistent

explanation to the regulatory prescriptions in the Bill.

3. The proposed Digital Competition Bill is likely to overlap with Information Technology
Act, 2000, Digital Personal Data Protection Act, 2023, Competition Act, 2002, etc. It will
also share some common threads along with the proposed Digital India Act. The Bill
mentions policy overlaps, it does not provide any roadmap to address the regulatory
overlaps with other regulations.

Inter-governmental regulatory mechanism to set guardrails of various regulations can be

initiated to address the challenges arising out of the regulatory overlap.

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 4. Consumers play a crucial role in digital economy and it is important to note the impact of
the Bill on consumers. According to a study conducted by CUTS, the provision of the
proposed Bill may yield adverse impact on the user experience of using the applications2.

5. Potential impact of ex-ante law on start-ups also needs to be evaluated. During the
stakeholder consultations, it was brought out that startups ability to access markets
including export markets rests on digital platforms. Similarly, their ability to have cost-
effective customer acquisition may be adversely impacted due to excessive restrictions.
Start-ups may not have effective alternative avenues to scale in a cost-effective manner
without access to platforms. These challenges need to be factored in before adopting an
ex-ante law.

In a not-so-mature market, these regulatory overlaps coupled with lack of regulatory

capacity may enhance the cost of doing business, reduce the attractiveness of investment
climate at a macro level.

At firm level, a firm’s ability to curate new products or develop a new business model will
be adversely impacted.

6. Potential impact of ex-ante law on investment needs to be evaluated. The investment in

Indian digital enterprises and start-ups demand stability of regulatory and strict regulation
might discourage investors.

7. The Bill is influenced by the EU’s Digital Markets Act. However, India’s initial success of
digital public infrastructure (DPI) has found inadequate consideration. In fact, India’s DPI
or digital public infrastructure is a good example which demonstrates that digital markets
can be made “contestable” without an ex-ante law. Thus, at this stage, greater efforts are
required to realise to gains which could be potentially made through DPIs, rather than
limiting the gains made via platforms.

8. The potential of the recently introduced “Settlement and Commitment” regime by the
government has not been tested and exploited fully. Ultimately, even in the proposed Bill,
remedies or compliance will emerge out of regular interactions between CCI and SSDEs.
Therefore, it is recommended to allow the full play of this new regime during the next 3
years. The funds collected by the regulator under the settlement and commitment
framework should be deposited in a Consumer Welfare Fund, to be used to strengthen
credible civil society and grassroot organisations. These organisations can act as eyes and
ears of the government and aid in early identification of harms and taking corrective
actions.

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 9. The design of ex-ante law is expected to demand considerable enhancement in regulatory
capacity. For the successful implementation of the ex-ante law, proportionate
enhancement in budgetary support to the regulator needs to be ensured.

PART B: SECTION-SPECIFIC COMMENTS

CHAPTER 1 PRELIMINARY COMMENTS

Section 1 Short title/ Commencement -
Extends to whole of India and
extends to acts outside India
having an effect on obligation and
conduct requirements.
Commencement: Came into force
on such date as Central
Government may by notification
appoint.

Section 2 Definitions In this Act, unless the

context otherwise requires: Following definitions can be inserted
(1) “Act” means the Digital preferably aligning the new law with
Competition Act, [2024]; the existing laws.
(2) “Associate digital enterprise” 1. Data
means an enterprise designated as 2. Algorithms
such under sub-section (9) of
Section 4; 152
(3) “Business user” means any
natural or legal person supplying or
providing goods or services,
including through Core Digital
Services;
(4) “Commission” means the
Competition Commission of India
established under sub-section (1)
of Section 7 of the Competition
Act;
(5) “Competition Act” means the
Competition Act, 2002 (12 of
2003) as amended from time to
time;
(6) “Core Digital Service” (look at
DMA, DMCC) means any service
specified in Schedule I of the Act;

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(7) “Director General” shall have
the same meaning assigned to it
under the Competition Act;
(8) “End user” means any natural
or legal person using Core Digital
Services other than as a business
user;
(9) “Enterprise” means a person or
department of the Government,
including units, divisions,
subsidiaries, who or which is, or
has been, engaged in any economic
activity, relating to the production,
storage, supply, distribution,
acquisition or control of articles or
goods, or the provision of services,
of any kind, or in investment, or in
the business of acquiring, holding,
underwriting or dealing with
shares, debentures or other
securities of any other body
corporate, either directly or
through one or more of its units or
divisions or subsidiaries, but does
not include any activity of the
Government relatable to the
sovereign functions of the
Government including all activities
carried on by the departments of
the Central Government dealing
with atomic energy, currency,
defence and space; Explanation.—
For the purposes of this clause, —
(a)“activity” includes profession or
occupation; (b)“article” includes a
new article and “service” includes a
new service; (c) “unit” or
“division”, in relation to an
enterprise, includes (i) a plant or
factory established for the
production, storage, supply,
distribution, acquisition or control
of any article or goods; (ii) any
branch or office established for the

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provision of any service; (iii) any
place of business of the enterprise.
153
(10) “Group” shall have the same
meaning as assigned to it under the
Competition Act;
(11) “Person” shall have the same
meaning as assigned to it under the
Competition Act;
(12) “Prescribed” means
prescribed by rules made under this
Act;
(13) “Regulations” means the
regulations made by the
Commission under Section 49;
(14) “Related party” shall have the
same meaning as assigned to it in
Section 2(76) of the Companies
Act, 2013 (18 of 2013);
(15) “Service” means service of any
description which is or may be
made available to actual or
potential users and includes the
provision of services in connection
with business of any industrial or
commercial matters such as
banking, communication,
education, financing, insurance,
chit funds, real estate, transport,
storage, material treatment,
processing, supply of electrical or
other energy, boarding, lodging,
entertainment, amusement,
construction, repair, conveying of
news or information, and
advertising, for a consideration or
otherwise;
(16) “Specified” means specified by
regulations made under this Act;
(17) “Systemically Significant
Digital Enterprise” means an
enterprise designated as such by
the Commission under Section 4 of
the Act;

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 (18) “Trade” means any trade,
business, industry, profession or
occupation relating to the
production, supply, distribution,
storage or control of goods and
includes the provision of any
services; and
(19) “Users” includes business
users and end users.
(20) Any term not defined
specifically in this Act shall have
the same meaning as assigned to it
in the Competition Act.
CHAPTER II Designation of Systemically
Significant Digital enterprise
“SSDE”:

Section 3 Systemically Significant Digital • Need to relook at the market

enterprises in the Indian context and not
For an enterprise to be designated global context - in terms of
as SSDE following thresholds to market cap, revenue and user
be met for preceding three thresholds.
financial years):
Financial Threshold: Turnover Threshold should capture the
in India: 4000 Crore INR or more enterprise and not the group.
Global turnover: 30 billion USD or It is important to consider
more that any enterprise might be
Gross Merchandise Value: 16000 significant in terms of size,
Crore or more OR Global market but systemically insignificant
capitalisation: USD 75 Billion or and vice versa. Therefore, it
more is recommended to realign
AND the criteria to capture
User Threshold: For core digital systemically significant
services provided by the enterprise: enterprises.
1 crore end users OR 10,000
business users
• A dipstick study carried out by
Power of Commission to CUTS revealed that at least 13
designate an enterprise as SSDE Indian digital firms will be
in respect of core digital service, covered under the existing
even if it does not meet the SSDE thresholds3.
threshold.

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The commission decision will be
based on enterprise presence in
market and following factors:

(i)volume of commerce of the

enterprise; (ii) size and resources of
the enterprise; (iii) number of
business users or end users of the
enterprise; (iv) economic power of
the enterprise; (v) integration or
inter-linkages of the enterprise with
regard to the multiple sides of
market; (vi) dependence of end
users or business users on the
enterprise; (vii) monopoly position
whether acquired as a result of any
statute or by virtue of being a
Government company or a public
sector undertaking or otherwise;
(viii) barriers to entry or expansion
including regulatory barriers,
financial risk, high cost of entry,
marketing costs, technical entry
barriers, barriers related to data
leveraging, economies of scale and
scope, high cost of substitutable
goods or services for end users or
business users; (ix) extent of
business user or end user lock in,
including switching costs and
behavioural bias impacting their
ability to switch or multi-home; (x)
network effects and data driven
advantages; (xi) scale and scope of
the activities of the enterprise; (xii)
countervailing buying power; (xiii)
structural business or service
characteristics; (xiv) social
obligations and social costs; (xv)
market structure and size of the
market; and (xvi) any other factor
which the Commission may
consider relevant for the
assessment.

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 The threshold will be revised after
every three years from the date of
commencement of this Act.

Section 4 Self-reporting obligation and -

designation
• Enterprise has to notify to -
the commission within 90
days of meeting the
threshold that it qualifies as
SSDE in respect of one or
more core digital services.
• The commission can direct
an enterprise to furnish
information to ascertain
whether the said enterprise
qualifies as SSDE at
anytime after the expiry of
90 days from the date of
section 3 coming into
force.
• The commission, upon
receiving of the
information, can designate
the enterprise as SSDE and
direct the enterprise to
show cause as to why
penalties may not be
imposed on it. The
commission can pass such
order if it is of the view that
enterprise meets the
‘financial’ and ‘user’
threshold.
• The commission, upon
receiving of the
information, can designate
the enterprise as SSDE and
direct the enterprise to
show cause as to why
penalties may not be
imposed on it. The
commission can pass such
order if it is of the view that

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 enterprise meets the
factors set out in section
3(3).
• Enterprise to be designated
as SSDE for a period of
three years.
• The commission can
designate an enterprise
which is the part of SSDE
and is providing core
digital services as Associate
Digital enterprise.

Section 5 Anti-circumvention from -

Designation
An enterprise cannot directly or -
indirectly segment, divide, sub-
divide the services through any
means in order to circumvent the
threshold.
Section 6 Revocation of re-designation -
• SSDE may at anytime -
during the last six months
before the expiry of the
period of designation apply
to the Commission that it
no longer meets the
threshold to be designated
as SSDE for one or more
core digital services.
• At anytime after one year
of being designated or re-
designated, the SSDE can
request for revocation of
designation, if there is a
significant change in the
market dynamics.
• The commission within 90
days after receiving the
application have to either
revoke the status or dismiss
the application.
• Time taken by enterprise to
reply to the information

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 sought by commission will
be excluded while
calculating the 90 days
period.
CHAPTER III Obligations of SSDE and their -
ADE
Section 7 • SSSDE shall comply with -
the obligation of this
chapter
• ADE shall comply with the
obligation of this chapter
• Separate conduct for each
core digital services to be
specified separately by
regulation (both for SSDE
and ADE)
• SSDE and ADE: if comply
with the regulation for its
identified core digital
service shall be deemed to
have complied with the
obligation.
• Factors to be considered
by Commission while
framing regulation for
SSDE and ADE
(a) economic viability of
operations; (b) prevention
of fraud; (c) cybersecurity;
(d) prevention of unlawful
infringement of pre-
existing intellectual
property rights; (e)
requirement of any other
law in force; and (f) such
other factors as may be
prescribed.

Section 8 Anti-circumvention from -

obligation
• SSDE shall not engage in -
any behaviour that
undermines effective
compliance with

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 obligations and regulations
framed thereunder.
• SSDE cannot prevent
business users or end users
from raising any issue of
non-compliance with
SSDE’s obligations
Section 9 Reporting and compliance -
• SSDE to establish -
transparent and effective
complaint handling
mechanism
• SSDE to report to the
commission the measures
it took to comply with the
obligations and the
regulations framed
Section 10 Fair and transparent dealing
A Systemically Significant Digital In the proviso certain illustration may
Enterprise shall operate in a fair, be added to this section to make clear
non-discriminatory, and the terminology of fairness,
transparent manner with end users transparency and non-discrimination.
and business users.
Section 11 Self-preferencing
SSDE shall not, directly or -
indirectly, favour its own products,
services, or lines of business, or
those of: (a) related parties; or (b)
third-parties with whom the
Systemically Significant Digital
Enterprise has arrangements for
the manufacture and sale of
products or provision of services
over those offered by third party
business users on the Core Digital
Service, in any manner.
Section 12 Data Usage
SSDE shall not use non-public data The impact of data usage on end users
of business users operating on its (Consumers and small businesses)
core digital platform to compete needs to be studied.
with such business users
SSDE cannot without consent of For instance, a study titled “A Survey-
end users or business users Based Assessment of the Impact of
the Draft Digital Competition Bill,

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 (a) intermix or cross use the 2024 On MSMEs In India” pointed
personal data of end users that MSMEs rely on targeted
or business users collected advertisement for revenue generation,
from different services customer acquisition, time saving and
including its Core Digital efficiencies and the ability to compete
Service; or (b) permit usage in the market4.
of such data by any third
party. A study carried out by CIRC titled
SSDE have to allow business users Digital Competition Bill, 2024 and its
and end users of its Core Digital potential impact on consumers in
Services to easily port their data in India mentioned that frequent
a manner as may be prescribed. consent pop-ups would have a
negative impact on consumers
experience of using the application5.
Similarly, seamlessness will be
compromised once the designated
SSDEs are required to unbundle the
apps or services.
Section 13 Restricting third party applications -
SSDE shall not (a) not restrict or -
impede the ability of end users and
business users to download, install,
operate or use third-party
applications or other software on
its Core Digital Services; and (b)
allow end users and business users
to choose, set and change default
settings.
Section 14 Anti-steering
SSDE cannot restrict Basic principles regarding what is
communication between end users integral could be defined in the Act
and business users unless such itself.
restrictions are integral to the
provision of core digital service of
SSDE
What is “integral” have to be
specified by Commission through
regulation.
Section 15 Tying and bundling A study “A Survey-Based Assessment
of the Impact of the Draft Digital

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 Competition Bill, 2024 On MSMEs In
India” mentioned that unbundling of
products and services in digital
markets and serving them ala-carte is
problematic for business users
(MSME’s) 6

A study carried out by CIRC titled

Digital Competition Bill, 2024 and its
potential impact on consumers in
India” mentioned that Integrated
products and services generate better
user experience and any attempt to
disintegrate product, unbundling
them might have implications on
convenience, price and user
experience and it will increase the cost
of the products7

Bundled products need to be

observed closely, specifically in search
engine market, free search cannot be
provided without bundling it with
advertisements.

Many existing tying and bundling

services currently available and that
may be pro-competitive effects will
become illegal under provisions of the
Bill.

CHAPTER IV POWER OF THE

COMMISSION TO CONDUCT
AN INQUIRY
Section 16 Power of the Commission to The Bill envisages various functions
inquire into non-compliance of such as regulation making, addition to
obligations by Systemically the list of core digital services, framing
Significant Digital Enterprises and conduct requirements, investigations,
Associate Digital Enterprises

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 adjudication of matters etc will be
performed by CCI.

The government may consider giving

adequate time and creating adequate
regulatory capacity before
commencing the enforcement of the
law.

Section 17 Orders of the Commission after -

inquiry
Section 18 Settlement -
Section 19 Commitment -
Section 20 Revocation of orders on -
settlements and commitments
CHAPTER V POWERS OF THE
COMMISSION AND
DIRECTOR GENERAL
Section 21 Power of the Commission to
regulate its own procedure and
conduct studies
(1) In the discharge of its functions,
the Commission shall be guided by
the principles of natural justice, and
subject to the other provisions of
this Act and of any rules made by
the Central Government, the
Commission shall have the powers
to regulate its own procedure. (2)
The Commission shall have, for
the purposes of discharging its
functions under this Act, the same
powers as are vested in a Civil
Court under the Code of Civil
Procedure, 1908 (5 of 1908), while
trying a suit, in respect of the
following matters: (a) summoning
and enforcing the attendance of
any person and examining him on
oath; (b) requiring the discovery
and production of documents; 170
(c) receiving evidence on affidavit;
(d) issuing commissions for the
examination of witnesses or
documents; (e) requisitioning,

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subject to the provisions of
sections 123 and 124 of the Indian
Evidence Act, 1872 (1 of 1872),
any public record or document or
copy of such record or document
from any office. (3) The
Commission may call upon such
experts, from the fields of
economics, law, technology,
regulation, accountancy,
commerce, international trade, or
from any other discipline or
conduct such studies as it deems
necessary to assist the Commission
in the discharge of its functions
under this Act, including for
specifying regulations with regard
to obligations under Section 7. (4)
The Commission may direct any
person: (a) to produce before the
Director General or the Secretary
or an officer authorised by it, such
books, or other documents in the
custody or under the control of
such person so directed as may be
specified or described in the
direction, being documents relating
to any trade, the examination of
which may be required for the
purposes of this Act; (b) to furnish
to the Director General or the
Secretary or any other officer
authorized by it, any relevant
information relating to their
products or services or areas of
expertise, as may be required for
the purposes of this Act.
Explanation. — For the purposes
of this section, the term
“document” includes information
in the possession of a Systemically
Significant Digital Enterprise and
its Associate Digital Enterprise
whether stored electronically or

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 otherwise. (5) Subject to the
provisions of this Act, Sections 7,
8, 9, 10, 11, 12, 13, 14, 15, 16, 17 22
and 35 of the Competition Act, and
the regulations framed thereunder,
shall apply mutatis mutandis to the
Commission’s powers and
activities under this Act
Section 22 Reference by Statutory Authority -
Section 23 Reference by Commission -
Section 24 Director General to Investigate A separate Digital Market Unit
Contraventions (DMU) within CCI needs to be
constituted to assist the Director
General in carrying out this work. The
unit needs to have a manpower plan
with the required competencies.

Section 25 Interim order -

Section 26 Acts taking place outside India -
Section 27 Contravention of orders of -
Commission
Section 28 Penalties -
Section 29 Contravention by Companies -
Section 30 Limitation Period for initiation of -
inquiry
Section 31 Crediting sums realised by way of -
penalties to Consolidated Fund of
India
Section 32 Rectification of orders -
Section 33 Execution of orders of -
Commission imposing monetary
penalty
CHAPTER VII APPEALS AND POWERS OF
APPELLATE TRIBUNAL
Section 34 Appeal to Appellate Tribunal -
Section 35 Awarding Compensation -
Section 36 Procedures and powers of -
Appellate Tribunal
Section 37 Appeal to Supreme Court -
Section 38 Power of the Central Government -
to exempt enterprises

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 Section 39 Power of Central Government to -
issue directions
Section 40 Power of Central Government to -
supersede Commission
Section 41 Restriction on disclosure of -
information
Section 42 Chairperson, Members, Director -
General, Secretary, officers and
other employees, etc., to be public
servants
Section 43 Protection of action taken in good -
faith
Section 44 Act to have overriding effect -
Section 45 Application of other laws not -
barred
Section 46 Exclusion of jurisdiction of civil -
courts
Section 47 Power to seek recommendations -
Section 48 Power to make rules -
Section 49 Power to make regulations and -
process of issuing regulations
Section 50 Power to issue guidelines -
Section 51 Power of the Central Government -
to notify and amend Schedules
Section 52 Finance, Accounts and Audit -
Section 53 Power to remove difficulties -
SCHEDULE I A “Core Digital Service” includes
any of the following: (a) online • The definition of online
search engines; (b) online social intermediation service is open
networking services; (c) video- ended and creates uncertainty
sharing platform services; (d) within the startup ecosystem.
interpersonal communications • The action needs to be
services; (e) operating systems; (f) targeted on those services that
web browsers; (g) cloud services; pose competition concern. A
(h) advertising services; and (i) broad focus will challenge
online intermediation services. innovation.

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