Google fined ₹1,337 crore by CCI for unfair practices, NCLAT confirms

In a major setback for Google, the National Company Law Appellate Tribunal (NCLAT) has rejected its appeal and upheld the ₹1,337 crore penalty imposed by the Competition Commission of India (CCI) for abusing its dominant position in the Android mobile device market.

The NCLAT also directed Google to deposit 10% of the fine amount as an interim measure and to cease and desist from engaging in anti-competitive practices.

What did CCI find?

The CCI had passed its order in October 2022 after a six-year-long investigation into Google’s conduct in relation to licensing of the Android operating system and several of its mobile applications such as the Play Store, Google Search, Google Chrome, YouTube etc, reports BarandBench.com

The CCI had examined various agreements that Google entered into with device manufacturers and app developers that restricted their choice and innovation. The CCI had concluded that Google had abused its dominant position in the relevant markets by:

• Imposing pre-installation and exclusivity requirements on device manufacturers;
• Providing preferential treatment to its own apps and services on Android devices;
• Using its dominance in general search services to influence the outcomes of specialised search services such as travel, maps, news etc.

The CCI had held that these practices had harmed competition and consumers in India and had levied a penalty of 5% of Google’s average total revenue from India for the financial years 2018-19, 2019-20 and 2020-21.

What did Google argue?

Google had challenged the CCI’s order before the NCLAT on various grounds. It had argued that:

• The CCI had failed to conduct an impartial, balanced and legally sound investigation and had copied extensively from a European Commission decision that was not relevant to India;
• The CCI had ignored the pro-competitive effects of Google’s mobile app distribution practices and the benefits they provided to users and developers;
• The CCI had applied an incorrect legal standard to assess Google’s conduct and had not established any causal link between Google’s practices and any alleged harm to competition or consumers.

Google had also sought an interim stay on the CCI’s order pending the disposal of its appeal.

What did NCLAT decide?

The NCLAT, after hearing the parties for over a month, pronounced its judgment on March 29, 2023. The NCLAT rejected Google’s appeal and upheld the CCI’s order in its entirety. The NCLAT held that:

• The CCI had conducted a thorough and independent investigation and had relied on relevant evidence from India and abroad;
• The CCI had correctly identified the relevant markets and Google’s dominant position in them;
• The CCI had established that Google’s practices had resulted in foreclosure of competition, distortion of consumer choice, creation of entry barriers and leveraging of market power.

The NCLAT also refused to grant any interim relief to Google and directed it to deposit 10% of the fine amount with the Registrar NCLAT within four weeks. The NCLAT also directed Google to modify its conduct within three months as per the CCI’s order.

What are the implications?

The NCLAT’s judgment is a landmark decision in the field of competition law in India. It reaffirms the CCI’s authority and expertise to deal with complex cases involving digital markets. It also sends a strong signal to other dominant players in the online space to refrain from engaging in anti-competitive practices that harm consumers and competitors. The judgment is likely to have significant implications for Google’s business model and operations in India as well as for other stakeholders such as device manufacturers, app developers, online service providers and users.