Money Control, August 11, 2025
The central government is considering to drop the “ex-ante regulations” in the revised draft of the Digital Competition Bill (DCB), as it is increasingly being felt that these measures could stifle innovation in the technology space, and lead to overregulation, two sources privy to the matter told Moneycontrol.
The government, however, will conduct a market study first to determine the feasibility of ex-ante regulations – which had drawn massive flak, when introduced earlier, in the first draft, in March 2024. The draft bill was later withdrawn in September 2024 owing to strong opposition from industry stakeholders – the big tech companies.
Ex-ante regulation, in the context of DCB, is a proactive approach to competition law, designed to prevent anti-competitive behavior from happening in the first place, rather than punishing it after it has already occurred. This is a significant shift from the current “ex-post” framework under the Competition Act, 2002, which involves investigating and penalizing anti-competitive conduct on a case-by-case basis after a complaint has been filed.
In July, Minister of State for Corporate Affairs Harsh Malhotra had told the Parliament: “Based on the suggestions/comments/inputs received, it is felt that an evidence-based foundation through market studies is required to consider all relevant aspects for ex-ante regulation considering it is in nascent implementational stages globally.”
The bill essentially aims to identify and regulate a select group of large digital companies that have a significant presence and the ability to influence the market. These companies would be designated as Systemically Significant Digital Enterprises (SSDEs) based on quantitative thresholds (such turnover, market capitalization, and number of users) and qualitative factors.
Once a company is designated as an SSDE, it will be subject to a set of pre-defined, mandatory obligations and prohibitions — meant to address common anti-competitive practices that are prevalent in digital markets. According to the earlier draft, an enterprise can be declared SSDE, if its India turnover is not less than Rs 4,000 crore or its global turnover is not below $30 billion.
A company can also be deemed an SSDE if its gross merchandise value (GMV) in India is not less than Rs 16,000 crore or if its global market capitalisation is not below $75 billion. One more criterion exists for an SSDE, if an enterprise has had 10 million Indian users of its digital service in the three immediately preceding financial years, or if it has at least 10,000 business users.
The bill’s broad and intrusive approach to business models, coupled with its loosely defined concept of a “Systemically Significant Digital Enterprise,” raises concerns around overregulation. This could stifle innovation, especially given digital markets are fast-paced and constantly evolving.
“The bill’s broad and intrusive approach to business models, coupled with its loosely defined concept of a SSDE raises concerns around overregulation. This could stifle innovation, especially given digital markets are fast-paced and constantly evolving,” noted Karan Singh Chandhiok, Partner, Chandhiok and Mahajan.
These thresholds are likely to change, as officials feel these metrics cover majority of tech companies under its ambit, who will be subject to ex-ante regulations. Sources also say that the Competition Commission of India (CCI), adjudicating authority in digital competition law, has built its capacity to handle complex digital cases, which is pushing the government to reassess the need for ex-ante rules.
Experts say ex-ante regulations are at odds with principle-based regulation. “They proactively prescribe rules or obligations for significantly large companies aiming to prevent market failure as opposed to an interventionist approach, where the regulator steps in after reviewing evidence of harm to the market,” said Avaantika Kakkar, Partner, Cyril Amarchand Mangaldas
“These provisions (ex-ante) were originally proposed to address the speed and scale of potential anti-competitive harm in digital markets, drawing inspiration from the EU’s Digital Markets Act and similar frameworks,” noted Aniket Ghosh, Partner, King Stubb & Kasiva, Advocates and Attorneys.
“However, dropping these provisions could reduce stakeholder resistance, avoid duplication with existing enforcement tools, and enable a smoother passage of the bill while still addressing digital market concerns through strengthened ex-post oversight,” he added.
Chandhiok further says that the government must focus on increasing the bench strength of investigation staff and equipping the authority with the latest forensic tools.
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