TECI releases report on ‘Intermediary Liability for Online Marketplaces’ ~ Report by PwC India & Fidus Law examine business aspects, regulatory trends & legal judgements in India, the US, UK, Europe & Australia

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~ Recommends measures to evolve “Intermediary Liability” regulatory framework & mitigate operational complexities faced by online intermediaries in India ~

~ Report highlights growing role of online marketplaces as part of India’s digital economy ~

Mumbai, March 10, 2021 (GNI): The E-Business Council of India (TECI), alongwith PwC India & Fidus Law Chambers today released a comprehensive report that analyses various aspects relating to “Intermediary Liability” of online marketplaces. This report focuses on those intermediaries which are online marketplaces providing e-tail and e-consumer services (including e-travel).

The report titled “Understanding Intermediary Liability for online marketplaces”, takes a close look at the role of online marketplaces as intermediaries and examines the current intermediary liability laws that govern them.

The principle of “Intermediary Liability Limitation” is the cornerstone for all platform businesses, that  enables them to act as an effective intermediary with a clear definition of their role, responsibilities and liabilities. However, in practice, multiple laws & rules governing intermediaries, are often not understood in entirety and applied unevenly across various instances. In many instances the basic nature of an online marketplace as an intermediary is burdened with additional responsibilities, none of which are inherent to the role it plays as a platform connecting buyers and sellers.

While online marketplaces are experiencing growth and accelerated adoption, they continue to face operational complexities due to government and judicial overreach in several instances. This is largely due to a limited, though evolving understanding of the role of intermediaries vis-a-vis other users on the platform. The report aims to further this process of understanding by examining various issues and related judicial and regulatory precedents. 

Currently, the Information Technology (IT) Act, 2000, governs online marketplaces as intermediaries and also defines their functions. The IT Act also has a ‘safe harbour’ provision for intermediaries which exempts them from liability for activities that are not initiated, selected or modified by them. 

Additionally, various other economic and sectoral regulations and policies like FDI Guidelines, the Consumer Protection (E-Commerce) Rules, the Legal Metrology Packaged Commodities Rules, the Food Safety and Standards Act, the Indian Copyright Act, and the Trade Marks Act limit the roles and responsibilities of online marketplaces to the functions that they provide. However, despite having a distinct regulatory framework for intermediaries, it is observed that intermediaries are often penalised for the activities of their users, without the former’s role being assessed or investigated adequately.

This TECI report identifies such challenges through an analysis of certain recent legal judgements and regulatory precedents on the issue of accountability of intermediaries. The report also refers to precedents from other countries in order to incorporate & highlight the international approach towards establishing the accountability of intermediaries. 

After analysing the legal precedence on intermediary liability and learnings from Indian & international cases, the report highlights the need for revisiting the approach to how online marketplaces are recognised in India and what they should be held liable for. 

This report also recommends certain amendments in Section 79 of the IT Act in order to strengthen intermediary liability regime in India, with the objective to help create an enabling & predictable operating environment for online marketplaces.

About TECI: The E-Commerce Council of India (TECI) was formed in March 2019 as an industry association of e-commerce marketplaces and digital-first brands in India. TECI is a not-for-profit, membership-driven professional organization. 

Given the fast growth of the sector and rapid innovation in product and service offerings, TECI has broadened its scope beyond just marketplaces & digital brands to cover a wider range of online businesses covering both physical and digital goods and services, including related businesses. Aligned with this, The E-Commerce Council is now known as The E-Business Council of India. 

TECI has been an active voice of the e-commerce industry, marketplaces and digital first brands in India. Over the last nearly two years, it has articulated the e-commerce sector’s PoV through various discussions at the Ministry of Commerce, Niti Aayog, Ministry of Consumer Affairs and multiple other forums.

TECI’s focus is on commissioning high-quality research on sectoral issues that can help promote long-term, balanced growth of India’s Internet economy. It also seeks to work collaboratively with the government and other stakeholders to recommend policy measures aligned towards creating a self-reliant, deeply-networked Indian Internet sector.

Every month, more than 100 million users interact with the online businesses operated by members of TECI. More than 30 global and domestic institutional investors have invested more than USD 2.25 Billion in the enterprises founded by TECI members. More information about TECI is available at teci.org.in