Delhi High Court directs CCI to decide applications of startups against Google’s new in-app billing policy by April 26; Google Files appeal

The Delhi High Court on Monday directed the Competition Commission of India (CCI) to decide the applications moved by a bunch of startups through the Alliance of Digital India Foundation (ADIF) challenging Google’s new in-app billing policy and to dispose of the same on or before April 26.

The bench of Justice Tushar Rao Gedela passed the orders on a plea moved by Indian start-ups like Paytm, Matrimony, MapmyIndia, and TrulyMadly, through ADIF against Google’s new in-app purchase policy, which is set to be applicable from April 26.

“There is no impediment, legal or otherwise, in directing the CCI to take up the applications under Section 42 of the Act, as filed by the petitioner, for hearing and considering the same in accordance with law on or before 26.04.2023. Accordingly, the petition stands disposed of in above terms”, the court ordered.

The court opined that the goals and objectives of a specific enactment should be interpreted in a way that ensures the legislative intent behind such promulgation is carried out to its logical conclusion.

“In other words, merely because of a defect or a vacancy in the constitution of the CCI, the CCI cannot be considered as a statutory authority not having jurisdiction to adjudicate the complaints or other proceedings pending before it. Any interpretation, other than the aforesaid, would render the provisions of Section 15 otiose and which could not possibly be the intention of the Legislature either”, the court said.

However, the decision of the single judge bench has been challenged by the tech giant. Today, before Chief Justice Satish Chandra Sharma led bench, Google's counsel Senior Advocate Sandeep Sethi mentioned the appeal and requested the matter to be listed today.

He also informed the court that CCI is set to hear the matter today at 2:30 pm.

The petitioner Alliance had submitted before the single judge bench that under its ‘User Choice Billing’ policy, which is set to come into force from April 26, Google will be charging a service fee of 11% or 26% in case of a third-party payment processor. It had stated that the same is anti-competitive and an attempt to bypass an order passed by the CCI.

The petitioner had stated that the US technology giant operated a mobile application marketplace for Android devices called ‘Play Store’ which enjoys supreme dominance in that market and under the present framework, there is no requirement to pay any commission for a third-party payment processor. It had also stated that its grievance was that the CCI failed to act on its plea in relation to the policy owing to a lack of quorum to consider the issue.

It had further contended that the CCI must use the "doctrine of necessity" and investigate the situation despite the lack of quorum because failing to act will harm the petitioners and other app developers permanently and cause market distortion.

On Monday, on perusal of Section 8 of the Competition Act, which provides the composition of the commission and not quorum meaning thereby the composition of the commission would consist of the Chairperson and not less than two and not more than six other members who are to be appointed by the Central Government, the single judge bench opined that the composition of the CCI itself has no nexus with the word “quorum” as employed in the proviso to sub-Section 22(3) of the Act.

The single judge bench also stated that the argument that the Act prescribes a minimum number of members who would validly constitute the quorum, so far as the adjudicatory role of the CCI is concerned, is without any legs to stand. “This Court has generally considered various provisions of the Act in general and has observed that there is no provision which prescribes a minimum number of members who would validly constitute a quorum of CCI in its adjudicatory proceedings”, it said.

The single-judge bench further noted that Additional Solicitor General (ASG) N. Venkataraman had stated that the CCI was established in accordance with the Competition Act of 2002, is fully operational, and is also performing adjudicatory duties simultaneously.

Therefore, while disposing of the petition, the court directed the CCI to take up the applications under Section 42 of the Act and consider the same on or before April 26.

Furthermore, the court clarified that the observations made herein are only to the extent of deciding the present petition and shall not tantamount to any expression on the merits of the case and the same is therefore, without prejudice to the rights and contentions of all the parties, to be taken at an appropriate proceeding.

Case Title: Alliance of Digital India Foundation v. Competition Commission of India & Ors.

Statue: The Competition Act, 2002