Future-Proofing India’s Digital Markets: Standing Committee Backs Proactive Regulation for a Fair Digital Economy
Following the release of the draft Digital Competition Bill (DCB) in April 2024, another parliamentary committee in India (Standing Committee) published its report on the Competition Commission of India's (CCI) role in the national economy, with an emphasis on the digital sector on 11 August 2025 (Standing Committee Report). The DCB accompanied the report from a specially formed Committee on Digital Competition Law (CDCL) - available here. Our summary of the DCB is available here.
The Standing Committee Report provides a comprehensive roadmap for the evolution of the CCI, particularly concerning its oversight of the burgeoning digital economy. It supports a shift in regulatory approach - moving from a reactive, ex-post framework to a proactive, ex-ante model to effectively address the unique challenges posed by digital markets. However, it advises that DCB's implementation should be careful, gradual, and based on evidence. This approach is necessary due to capacity limitations and concerns from stakeholders regarding the DCB’s impact on innovation and the compliance burden on startups and MSMEs.
The Standing Committee Report benefits from extensive input from the CCI and the Ministry of Corporate Affairs (MCA) - the nodal ministry responsible for guiding India’s competition law and policy. It is expected to influence and guide potential amendments to the DCB before its consideration by the Indian Parliament.
The key takeaways from the Standing Committee Report are provided below. A summary of the Standing Committee’s discussions with key stakeholders is available here.
A New Playbook: The Digital Competition Bill
At the heart of the Standing Committee’s recommendations is the call for a new DCB. This legislation is envisioned as the primary tool to discipline the potential anti-competitive practices arising from concentration of power in digital markets, which often manifest through practices like self-preferencing, predatory pricing, and the tying and bundling of services.
The Standing Committee advocates for a nuanced and evidence-based DCB, cautioning against blanket prohibitions. It proposes a framework that allows for context-specific assessments, recognising that the Competition Act, 2002, is not adequate to allay the issues posed by the fast-paced digital sector. Key recommendations for the DCB include:
Thresholds for designations. The Standing Committee Report suggests that DCB's designation and threshold mechanisms should prevent “inadvertent capture of fast-growing domestic firms”.
Rebuttal Mechanism: To ensure fairness, the Standing Committee Report suggests incorporating a rebuttal mechanism, similar to that in the European Union’s Digital Markets Act, allowing companies designated as Systemically Significant Digital Enterprises to challenge this status in exceptional cases.
Evidence-Based Foundation: Ongoing market studies, such as the one on Artificial Intelligence (AI), should serve as foundational evidence to refine and inform the provisions of the DCB. It cautions against blanket prohibitions of specific conduct, allowing for more context-specific assessments.
Inclusion of Virtual Assistants: The Standing Committee Report notes the omission of “virtual assistants” from the draft DCB and recommends their inclusion to align with global regulatory practices.
Non-price parameters. The Standing Committee Report recommends that the CCI should consider non-price parameters like privacy and quality of service when assessing the impact of potentially anti-competitive behavior on consumer welfare.
Shielding Small Players and Fostering Innovation
A central theme of the Standing Committee Report is the protection of Micro, Small, and Medium Enterprises (MSMEs) and emerging domestic firms from the dominance of large digital platforms. The Standing Committee has underscored the need to prevent the DCB from inadvertently stifling innovation or capturing fast-growing Indian companies with excessive compliance burdens. To this end, the Standing Committee recommends:
Reviewing Merger Thresholds: The Deal Value Threshold (DVT) of ₹2000 crore requires reassessment by the CCI and the MCA. This is crucial to ensure the threshold does not become a loophole for large corporations to acquire promising MSMEs without regulatory scrutiny.
Curbing Predatory Practices: The CCI must proactively investigate predatory pricing and deep discounting by dominant online platforms, which can potentially harm small retailers. The development of specific guidelines on what constitutes anti-competitive pricing is also suggested.
Ensuring Data Access: Mechanisms must be established to ensure smaller businesses can access data, enabling them to compete effectively against large enterprises that control vast data ecosystems.
Empowering the Regulator: Addressing Institutional Gaps
The Standing Committee recognizes that a proactive regulatory mandate is toothless without a well-resourced and skilled regulator. The complexity of digital markets places a considerable strain on the CCI, demanding expertise in big data, algorithms, and AI. To bolster the CCI’s capabilities, the Standing Committee Report recommends:
Addressing Human Resource Gaps: The MCA and CCI must expedite cadre restructuring to increase sanctioned strength, particularly for specialised roles in the Digital Markets Division. Flexible engagement models, like short-term contracts for domain experts, should be explored to attract top talent.
Ensuring Financial Autonomy: The MCA should provide sufficient Grants-in-Aid to meet the CCI’s budgetary needs, reducing its reliance on internal resources. Adequate funding is critical for investing in advanced analytical tools and conducting market studies.
Strengthening Technical Expertise: Continuous investment in training for CCI staff on emerging technologies is essential, alongside collaboration with academic institutions and international counterparts for knowledge sharing.
Reducing Litigation Delays: The Standing Committee also highlighted the need to explore measures to reduce delays in litigation and ensure the effective enforcement of CCI orders, including assessing the impact of provisions like the mandated 25% pre-deposit for appeals.
Building Bridges: A Coordinated Regulatory Approach
Given that digital markets are global and intersect with multiple regulatory domains, the Standing Committee Report emphasizes the need for robust coordination.
At the National Level: The Standing Committee calls for the implementation of the National Competition Policy to foster a unified competition culture across Central and State governments. Enhanced harmony with other regulators, such as the Data Protection Authority and the Ministry of Electronics and Information Technology, is critical to avoid jurisdictional overlaps.
At the International Level: Strengthening collaboration with global competition authorities is vital. However, the Standing Committee Report also cautions the CCI to remain vigilant against attempts by foreign jurisdictions to unilaterally impose regulations that could undermine India’s regulatory oversight.
Conclusion: An Agile Regulator for an Inclusive Digital India
The Standing Committee concludes that while the CCI has been effective, the increasing complexity of the digital sector necessitates a significant evolution. The proposed DCB is a vital step, but its implementation must be managed through a nuanced, phased, and evidence-based approach that considers the CCI’s capacity constraints and avoids placing undue roadblocks to innovation. By proactively engaging with stakeholders, conducting forward-looking market studies, and building its institutional capacity, the CCI can establish itself as an agile and effective regulator, fostering a competitive, innovative, and inclusive digital landscape in India.