The cost of ex-ante regulation of India’s digital markets
₹2,000 crore. Competition in digital markets is regulated in India at present by the Competition Commission of India (CCI). The CCI has powers under the Competition Act, 2002 (Competition Act) to investigate and impose targeted remedies on digital platforms.
It has in the past 10 years initiated investigations in more than 30 cases, including against Google, Matrimony.com, UrbanClap, Meru Travel, Gmail, WhatsApp, Meta, Flipkart, Zomato and MakeMyTrip. The idea of framing of an ex-ante regulatory framework started gaining currency after the parliamentary standing committee on finance recommended it in its 53rd report, the Anti-competitive Practices by Big Tech Companies. After which the government constituted the committee on Digital Competition Law in February 2023 and asked it to assess if having just the competition law would be sufficient for the purpose of regulating digital markets.
It also asked this committee to prepare a draft digital competition law. At the same time, Parliament also cleared amendments to the Competition Act, 2002 for strengthening the broader competition regulatory framework. Now, it seems that India is keen to import the EU’s much-criticised ex-ante regulation framework, side-stepping the internal debates of the committee that were centred on evaluating the significant costs an ex-ante framework will impose on the rapidly evolving digital markets (such as false positives) and if those will outweigh its potential benefits.
Ex-ante regulations are already in use for some parts of digital markets. Under the FDI policy, for instance, foreign funded e-commerce businesses are not permitted to directly or indirectly influence the sale price of goods and services sold on their platforms. The idea is
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