In the evolving landscape of India’s digital economy, businesses—small and large—are experiencing a regulatory shift with the proposed Digital Competition Bill, 2024, now undergoing review. While much of the attention has been on how the law targets large digital gatekeepers, its implications are far-reaching, affecting business agreements, digital market access, and data practices across industries.
This article explores the practical impact of the proposed law on Indian businesses, with a focus on structuring agreements and ensuring compliance in the digital marketplace.
Understanding the Purpose of the Digital Competition Law
The draft Digital Competition Bill was recommended by the Committee on Digital Competition Law (CDCL) in 2024, under the aegis of the Ministry of Corporate Affairs. Its objective is to ensure a level playing field in digital markets by addressing anti-competitive conduct by large tech companies, especially those designated as Systemically Significant Digital Enterprises (SSDEs).
The law seeks to prohibit practices such as:
- Self-preferencing by platforms (e.g., favouring their own products or services),
- Restricting third-party businesses from accessing user data,
- Tying services or bundling them in a restrictive manner, and
- Unfair restrictions in contracts with business users.
While these provisions primarily target digital giants, businesses that rely on or partner with such platforms need to reassess their agreements, operations, and data-sharing practices.
Why It Matters to MSMEs and Startups
For many MSMEs, startups, and service providers, digital platforms are essential for market access, advertising, logistics, and customer outreach. Here’s how the proposed law could indirectly impact them:
- Contractual Terms May Change: E-commerce or digital service providers may revise vendor agreements to align with the law, especially concerning exclusivity, data sharing, and pricing structures.
- Increased Transparency: Businesses may benefit from greater fairness in rankings, visibility, and ad placements due to stricter rules on self-preferencing.
- Data Access Rights: The law pushes for greater transparency in how platforms use third-party business data. This may empower smaller businesses with more clarity and control over their digital presence.
Thus, while not the primary targets, Indian businesses engaging in digital commerce should be proactive in reviewing their contracts and digital partnerships.
Compliance Considerations for Businesses
In view of the potential enactment of the Digital Competition Law, businesses can consider the following compliance steps:
- Review Platform Agreements: Check for clauses that may be considered restrictive or exclusive in nature. Businesses may want to renegotiate such terms to ensure fairness and compliance with evolving norms.
- Assess Digital Dependencies: Understand your dependence on any one platform or digital service provider. Avoid arrangements that could be construed as single-point failures.
- Audit Data Practices: Ensure that your customer or partner data is handled in line with privacy laws and not unduly shared or controlled by platforms without transparency.
- Keep Contracts Flexible: New contracts with digital vendors should have review clauses that account for regulatory changes, including any future compliance under digital market laws.
Engaging with legal and accounting advisors to audit your current digital arrangements can provide clarity and reduce future compliance risks.
Looking Ahead: Digital Policy is Business Policy
With increasing digitization across sectors—whether retail, logistics, hospitality, or services—regulatory frameworks around digital competition are becoming central to business planning. This marks a shift in how companies must view their digital presence—not merely as a marketing tool but as a compliance subject.
As Chartered Accountants, we play a pivotal role in helping clients not just with financial reporting and taxation, but also with business structuring, contract reviews, and risk assessments. The Digital Competition Law is a reminder that advisory functions are expanding into digital governance, and staying updated with such developments is key to long-term business resilience.
Conclusion
India’s proposed Digital Competition Law is not just about regulating Big Tech; it represents a broader attempt to shape fair digital markets. Businesses—especially those relying on digital intermediaries—should see this as an opportunity to bring greater transparency, fairness, and foresight into their commercial agreements and partnerships.
By adopting a proactive approach, Indian businesses can not only stay compliant but also thrive in a digital economy that values ethical and competitive practices.
