Parliament Standing Committee Demands Stricter Digital Competition Rules
The Standing Committee's "Action Taken" Report on the CCI's digital markets enforcement record
The Parliamentary Standing Committee on Finance (Committee) presented its 37th report to Parliament on 10 August 2026 (Report). This “action taken” Report assesses responses from the Ministry of Corporate Affairs (MCA) on the Competition Commission of India’s (CCI) effectiveness in regulating digital markets, based on recommendations made by the Committee in August 2025 (see our blog post on the 2025 report here).
We set out below the key highlights from the Report:
Push for ex-ante regulation: The Committee considered that traditional ex-post enforcement was too time-consuming, noting that investigations “often conclude only after competitors have been forced out of the market”. It urged the MCA to hasten the finalisation of the DCB, and ensure that it included cloud services and virtual assistants. It recommended empowering the CCI’s Digital Markets Division (DMD), established in 2024, to oversee its implementation.
Prioritising MSMEs and startups: The Committee made several recommendations geared towards protecting the interests of medium and small scale enterprises (MSMEs) and startups in digital markets.
“Strategic Steer” to prioritise MSME concerns: Noting that the effort to formulate a National Competition Policy stagnated in 2014, the Committee recommended that the MCA issue a “Strategic Steer” to the CCI, directing its regulatory priorities toward protecting MSMEs.
E-commerce code of conduct: The Committee flagged concerns in the e-commerce segment that threatened local retail ecosystems and small store operators. It recommended the MCA formulate an e-commerce code of conduct, administered by the CCI, to promote platform neutrality, algorithmic transparency, and non-discriminatory data access.
Guidelines for pricing practices: The Committee also directed the CCI to develop clear regulatory guidelines to define when pricing practices such as deep discounting and predatory pricing become illegal market abuses. In the Committee’s view, these would help prevent such practices from persisting unchecked leading to the undermining of fair competition and limiting consumer choice.
Merger review thresholds: The Committee urged a sector-specific review of Deal Value Threshold (DVT), particularly for acquisitions in data-heavy and high-innovation sectors. The key concern was that the existing thresholds, including DVT, were insufficient to halt the gradual monopolization of the digital economy. Notably, the MCA flagged that lowering merger review thresholds could actually hinder MSMEs, by raising compliance burdens and filing requirements. Since the DVT’s introduction, the CCI reviewed 39 deals, very few of which related to digital markets, and none of which raised any competition concerns. The MCA also observed that targeted sector-specific policy measures administered by the Ministry of MSMEs are better suited to protect the interests of MSMEs, rather than merger control, which is “designed to address structural competition concerns at the market level”.
Penalty deposit mechanism: The Report also highlights a sharp debate over financial deposits in statutory appeals from CCI orders. The MCA highlighted the mandatory 25% pre-deposit rule as a deterrent to frivolous appeals and supported penalty recovery. However, the Committee warned that a flat 25% deposit could create an unsustainable financial barrier for smaller entities, recommending a reduced 10% deposit tier for MSMEs to preserve access to justice.
Capacity building at the CCI: The report highlights that the DMD was operationalised in September 2024. While currently staffed by a core team of 7, a cadre restructuring proposal to add 55 posts is under consideration. The Committee has suggested that the DMD be fully integrated into the new ex-ante framework, utilizing specialized algorithmic auditors and data scientists to monitor compliance. Separately, for FY 2025-26, the CCI has proposed a steep budget revision to ₹100.84 crore (compared to the MCA’s ₹54.21 crore allocation), signaling its intent to invest heavily in advanced analytical tools and market studies.
Key takeaways
The Report signals three deliberate shifts in India’s competition policy landscape.
First, the Report indicates a legislative preference for ex-ante regulation as a more effective method to regulate competition in digital markets. This is reflected in the Committee’s urgency to bring into effect the proposed DCB, but also specific codes and guidelines in the e-commerce segment.
Second, and relatedly, the Committee highlights the inherent constraints of traditional ex-post intervention. Even with the extensive 2023 and 2024 legislative overhauls bolstering the CCI’s toolkit, the Report suggests these measures remain insufficient. The Committee observed that protracted legal battles often impede penalty collection and the implementation of corrective measures, resulting in a significant regulatory vacuum. This has also accelerated the call for increased budgetary support and technical expertise at the CCI to effectively oversee the digital economy.
Third, policymakers increasingly view competition law as a protective shield for Indian MSMEs and startups. Although the MCA pushed back on lowering merger thresholds, the proposed “Strategic Steer” sends a clear message that small enterprises remain vital stakeholders in competition policy.