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Penalty to be levied on tech giants breaking digital market rules

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If the preliminary discussions in government lead to a planned new law, giants may risk penalty for violating the proposed behavioural norms, reported Livemint. These norms are intended to ensure that digital stay competitive and established corporations do not abuse their position.


According to a person familiar with government deliberations on the matter, two parliamentary standing committees have examined the need for such “dos and don’ts” for businesses in the digital economy, and discussions for a Digital Act, which would prescribe the behavioural norms, are ongoing.


The source, who asked to remain anonymous, claimed that these standards, which forbid actions like “self-preferencing” by e-commerce platforms (promotion of their private labels) and using business user data in the e-commerce platform to compete in the market, are likely to carry a penalty for violation. The penalty is likely to be based on how much money the defaulting business made during the years in which they were at fault.


Currently, (CCI) has the authority to fine a company found guilty of anti-competitive agreements or abuse of dominance up to 10 per cent of its annual sales. According to the source, discussions on the matter have taken place between the (CCI), the ministries of corporate affairs, and electronics, and information technology. The general structure of the proposed law, however, is yet to be decided.


The proposed “dos and don’ts” represent a significant change in the country’s approach to competition regulation because they would give the regulator more control over market oversight and ex-ante regulation of Big Tech rather than investigations based on anti-competitive behaviour that has already occurred.


It is also anticipated that the proposed code of conduct will outline the standards that enterprises must meet in terms of ethical conduct. It is anticipated that this will also cover system interoperability.


The guidelines are not likely to apply universally in segments like search engines, social media platforms, and e-commerce and to be identifies based on their market reach. These are expected to cover only large businesses. These norms which will be called “digital market gatekeepers”.

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