Greater scrutiny ahead for SIDP

The Parliamentary Standing Committee on Finance headed by Jayant Sinha is set to recommend stringent regulation of Systemically Important Digital Platforms (SIDP), which will need to comply with extra obligations and stricter compliances.

The objective of identifying and regulating SIDP is to ensure that digital markets are kept free and open and regulators can address the problems, if any, before market distortions take place.

Once firms are identified as SIDP, they will be obligated to follow a code of conduct that will be binding with penal consequences on the lines of Digital Markets Act (DMA) of the EU.

The Competition Commission of India (CCI) will be the enforcing authority for the new framework and it will frame regulations to identify SIDPs on market-facing criteria such as subscriber base, number of sellers and number of active users.

If this recommendation of Parliamentary Panel becomes law, GAFA (Google, Amazon, Facebook (now Meta) and Apple) — the big tech— will have to change their business models, sources said.

This recommendation to identify and regulate SIDPs will form part of a report on ‘Anti-competitive practices by Big Tech companies’ to be adopted by the Parliamentary Panel on Monday, sources said.

Ex-ante regulation
This Parliamentary Panel report among other things will recommend ex-ante regulation of Big Tech on the lines of the framework specified in the recently-enacted Digital Markets Act (DMA) of the European Union. The DMA came into force from November 1 this year, seven months after it was passed by the European Parliament in March.

The proposed ex-ante — ‘before the event’ regulatory framework — will supplement the ex-post — ‘after the event’ enforcement actions of CCI.

Having an ex-ante regulation will also open up possibilities for start-ups to compete on the merits of their products and services, without being disadvantaged or discriminated by gatekeeper platforms.

Big Tech under fire
The panel had identified ‘Anti-competitive practices by Big Tech’ as a subject for examination and report early this year.

Unlike the present competition regulations that operate post-occurring of anti-competitive conduct, the ex-ante framework is expected to ensure timely and faster market corrections, obviating the need for lengthy investigations and inquiries marred by delays due to judicial challenge during the course of investigations.

In India, Big Tech firms have recently come under the lens of CCI which has issued its rulings against Google and MakeMyTrip imposing heavy monetary penalties, apart from various directions which were in line with the obligations placed upon gatekeeper firms under DMA. The Hindu BusinessLine