House panel seeks spl digital division in CCI to bridge enforcement gaps

Parliamentary Standing Committee on Commerce says antitrust body needs to be strengthened to bridge gaps

The Competition Commission of India (CCI) needs to strengthen its enforcement powers, the Parliamentary Standing Committee on Commerce has recommended, urging that a digital market division should be created within the antitrust body to bridge the existing gaps in enforcement of rules in digital markets. The committee has also suggested participation from all existing regulators concerned with e-commerce, such as the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Consumer Affairs, Food and Public Distribution, Ministry of Electronics and Information Technology, and Reserve Bank of India, in creating the expert division.

The committee also took a hard stance on the ex-ante regulatory framework. “It is high time India revamps and strengthens its ex-ante regulatory framework and takes steps to identify entities that act as gatekeeper platforms and set a threshold for qualifying as gatekeeper,” said the committee in its report.

The panel also suggested that international practices could be referred to identify entities that act as gatekeepers. “Globally, including the European Union (EU), Germany and the United Kingdom (UK), competition regulators are increasingly recognising that significant combination transactions in digital markets may escape the traditional thresholds of asset value and turnover,” it said. It has recommended that the Competition Act, 2002, be amended to prescribe additional quantitative criteria such as the number of registered or active consumers and sellers on the platform, number of transactions taking place, and volume of revenue generated to identify entities that act as gatekeeper platforms.

The parliamentary committee presented a report titled Promotion and Regulation of E-Commerce in India on June 15. It was prepared after hearing views from many stakeholders, including the DPIIT, Ministry of Commerce, Ministry of Finance, Vidhi Centre for Legal Policy, National Restaurant Association of India, Ecom Express, and various state governments. 

It suggested widening the powers of the CCI to increase anti-competition scrutiny in merger and acquisitions conducted by e-marketplace giants.

The committee also stated that the current FDI policy is limited in addressing anti-competitive practices in the e-marketplace. It also said there should be no differential treatment if the marketplace is international or domestic when it comes to ongoing concerns related to deep discounting, preferential treatment, and antitrust issues.

Key suggestions

• Enactment of Draft Competition (Amendment) Bill, 2020, at the earliest
• Special regulations for e-commerce platforms that act as gatekeepers  
• Stringent regulations in e-pharmacy sector
• FDI policy should not differentiate between foreign and Indian marketplace platforms
• Treatment of personal and non-personal data within same framework not conducive

“The committee observes that while the FDI policy on e-commerce attempts to address various issues in the e-commerce sector, it fell short in its enforcement mechanism. A time-bound investigation mechanism is required to address the fast- paced digital market and to ensure that unfair market practices do not occur due to the sluggish investigation process,” said the report.

It asked the CCI to formulate a mandatory code of conduct that clarifies acceptable conduct between operators of e-marketplaces on the one hand and their business users and consumers on the other, after extensive consultation with all stakeholders. The code of conduct should also mandate certain practices to be carried out by platforms such as facilitating data interoperability, enabling multi-homing, facilitating data mobility and ensuring transparency in usage of data, in addition to enumerating prohibitions.

The panel has pointed to the increasing threat of anticompetitive practices like deep discounting. It has called for the creation of a ‘holistic framework’ to address such issues.

Amazon and Flipkart both have been accused by sellers of preferential treatment to certain sellers.

The Committee is of the view that treatment of personal and non-personal data within the same regulatory framework might not be conducive in the process of using data to obtain quantifiable economic benefit. The committee, therefore, recommends that a separate framework for regulation of personal and non-personal data may be formulated in such a way that the Data Protection law exclusively deal with Personal Data and a separate statutory framework be formulated for governing non-personal data.