NCLAT upholds Rs 1,337.76 cr fine on Google, make some modifications in CCI orde

The NCLAT on Wednesday upheld the orders of the fair trade regulator CCI imposing a penalty of Rs 1,337.76 crore on tech major Google in the Android mobile devices case, with some modifications.

A two-member bench of the National Company Law Appellate Tribunal (NCLAT) has directed Google to implement the direction and deposit the amount in 30 days. “We upheld this penalty The appellant (google) is allowed to deposit the penalty” after adjusting 10 per cent of the amount already deposited as per its previous order of January 4 within a period of 30 days, it said. It also granted Google 30 days time to implement the measures as directed by the Competition Commission of India, which have been upheld by NCLAT.

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The NCLAT bench comprising Chairperson Justice Ashok Bhushan and Member Alok Shrivastava also made some modifications to the CCI order passed on October 20, 2022. The modifications to the CCI order include striking down some portions related to permission for uninstalling Google suite software, and some other points. It also rejected Google’s plea that there was a violation of natural justice by the CCI in the probe. An e-mail sent to Google for comments did not elicit any response. On October 20 last year, the Competition Commission of India (CCI) slapped a penalty of Rs 1,337.76 crore on Google for anti-competitive practices in relation to Android mobile devices. The regulator had also ordered the internet major to cease and desist from various unfair business practices.

This ruling was challenged before the National Company Law Appellate Tribunal (NCLAT), which is an appellate authority over the orders passed by the CCI. Google in its petition had contended the investigation carried against it by the CCI was “tainted”, contending that the two informants on whose complaint the fair trade regulator initiated the enquiry were working at the same office that was investigating the tech major. According to Google’s plea, the CCI failed to conduct an “impartial, balanced, and legally sound investigation” while ignoring evidence from Indian users, app developers, and OEMs. Challenging the CCI order, Google said the findings are “patently erroneous and ignore” the reality of competition in India, Google’s pro-competitive business model, and the benefits created for all stakeholders.

Google claimed the DG copy-pasted extensively from a European Commission decision, deploying evidence from Europe that was not examined in India or even on the Commission’s file. CCI, during the course of the hearing, alleged that Google has created a digital data hegemony and called for a market space with “free, fair and open competition”. Additional Solicitor General N Venkataraman, who had represented CCI before the appellate tribunal, said a market with greater freedom for all players would be in total sync with principles of free competition rather than the ‘walled garden’ approach of the internet major.

He had submitted that Google had used its money-spinning search engine as the ‘castle’ and the rest of the other apps to play the defensive role of ‘moat’. This ‘castle and moat’ strategy is data hegemony, which means a big market player tends to get bigger and bigger while a small entrant struggles to attain a critical mass of users and user data. According to him, data capture and data deployment are getting exploited and monetised as advertisement revenues. When choice is the guiding principle of the competition law, Google’s hegemony reduces both choice and competition. Venkataraman emphasised that implementation of the remedies made by the CCI would go a long way towards having a market with greater freedom for all players, which would be in total sync with the principles of free competition rather than the ‘walled garden’ approach of Google.

The abuse of dominance by Google stands proved in every criterion laid under Section 4 of the Competition Act in terms of mandatory pre-installation, premier placement and bundling of core apps. Such practices result in the imposition of unfair conditions and supplementary obligations, he said. The NCLAT started its hearing in the Android matter on February 15, following a direction of the Supreme Court. The apex court had directed the NCLAT to decide the appeal by March 31.

On January 4, a separate bench of the NCLAT issued a notice over Google’s plea, directing it to pay 10 per cent of the Rs 1,337 crore penalty imposed by the CCI. It had declined to stay the CCI order and put the matter for a final hearing on April 3, 2023. This was challenged by Google before the Supreme Court, which also declined to stay the CCI order but directed the NCLAT to decide on Google’s appeal by March 31.