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Synopsis

The National Company Law Appellate Tribunal recetnly upheld the fine that was imposed on Google by the Competition Commission of India (CCI) for abuse of its dominant position in the Android market, which resulted in the denial of market access for competing search apps.

Google LLC and Google India Private Limited had filed an appeal to challenge the CCI's order in which CCI had found that Google abused its dominant position and violated Section 4(2)(a)(i), 4(2)(b)(ii), 4(2)(c), 4(2)(d), and 4(2)(e) of the Competition Act, 2002. The CCI had also told Google to stop engaging in anti-competitive practices that were found to violate Section 4 of the Competition Act, of 2002.

The NCLAT bench of Justice Ashok Bhushan (Chairperson) and Dr Alok Srivastava (Technical Member) upheld the impugned order of CCI except the four directions issued in paragraphs 617.3, 617.9, 617.10, and 617.7 which were:

Paragraph 617.3: Google shall not deny access to its Play Services APIs to disadvantage OEMs, app developers, and its existing or potential competitors. This would ensure the interoperability of apps between Android OS, which complies with the compatibility requirements of Google and Android Forks. Under this remedy, app developers could port their apps easily onto Android forks.

Paragraph 617.9: Google shall allow the developers of app stores to distribute their app stores through the Play Store.

Paragraph 617.10: Google shall not restrict the ability of app developers, in any manner, to distribute their apps through side-loading.

Paragraph 617.7: Google shall not restrict the uninstalling of its pre-installed apps by the users.

Background Facts

In 2005, Google purchased Android, a smartphone operating system (OS). Google's Android was introduced as an open-source licensable smartphone operating system in 2008.

Google inked a Mobile Applications Distribution Agreement (MADA) with Original Equipment Manufacturers (OEMs) in 2009-10, under which the OEMs received a suite of Google's applications. In addition, Google signed Revenue Sharing Agreements (RSA) with OEMs. 

The OEMs use this Operating System & Google's apps on their smartphones.

The consumers of Android-based smartphones filed a complaint against Google LLC and Google India under Section 19(1)(a) of the Competition Ac, 2002, alleging abuse of the dominant position by Google in the mobile Operating System markets.

Google submitted that Apple was making it harder for Google to compete since Apple's business was selling high-end smart devices with cutting-edge software and Google's business was focused on getting more people to use its platforms and use its services.

However, according to the CCI bench, Google's Play Store and Apple's App Store could not be used instead of one other.

The CCI had observed that Google runs the Android operating system and licences its other owned apps that aren't open source. "The companies that make smart mobile devices (called "OEMs") put this operating system and Google apps on them. Google has several agreements that outline its rights and responsibilities. These include the Mobile Application Distribution Agreement (MADA), the Anti-fragmentation Agreement (AFA), the Android Compatibility Commitment Agreement (ACC), the Revenue Sharing Agreement (RSA), and so on", CCI had noted. 

The Commission had also found that Google was a dominant player in all the relevant markets under its consideration. This included the market for smart mobile devices with licensable operating systems (OS), the app store for Android smart mobile, general web search services, and online video hosting platforms (OVHP) in India.

The CCI had determined that Google's dominance in the online search industry meant denying other search apps access to the market. The CCI had also noted that Google took advantage of its strong position in the Android OS app store sector to protect its dominance in a general internet search.

The CCI had issued a cease-and-desist order against Google for engaging in anti-competitive practices that were found to violate Section 4 of the Competition Act. 

This was done using its power under Section 27 of the Competition Act. Google was also told to adjust its behaviour within a specified time, and the CCI had fined it Rs. 1337.76 Crore under Section 27 of the Competition Act, 2002, for abusing its dominant position in several markets in the Android Mobile device ecosystem.

NCLAT Proceedings

The Tribunal heard the submissions made by all the parties and observed, "The object of the Competition Act is to prevent practises that hurt competition. For finding abuse under Section 4 of the Act relating to the dominant position, it has to be held that the conduct is anti-competitive. For proving abuse of dominance under Section 4, effect analysis is required to be done. The test to be employed in the effect analysis is whether the abusive conduct is anti-competitive or not."

"Pre-installation of the entire GMS Suite amounts to the imposition of an unfair condition on OEMs, which is an abuse of Google's dominant position and results in a breach of Sections 4(2)(a)(i) and 4(2)(d) of the Act, and before coming to this conclusion, the Commission has also conducted an ‘effect analysis," the Tribunal held.

Further, the Tribunal noted that "Google has perpetuated its dominant position in the online search market, resulting in the denial of market access to competing search apps in breach of Section 4(2)(c) of the Act, and has abused its dominant position by tying up its Google Chrome App and YouTube with the Play Store, thereby violating the provisions of Section 4(2)(e) of the Act.

Accordingly, the NCLAT bench dismissed the appeal filed by Google and upheld the penalty imposed by CCI.

Case Title: Google LLC & Anr vs. Competition Commission of India

Statute: The Competition Act 2002