Thursday, March 30, 2023

Supreme Court denies interim relief to Google against CCI penalty

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The Supreme Court has refused Google any interim relief in its plea against a Competition Commission of India (CCI) order imposing a penalty of Rs 1,337 crore for abusing its dominant position in the Android mobile device ecosystem.

A Bench of Chief Justice of India DY Chandrachud, Justice PS Narasimha and Justice JB Pardiwala ordered that they would not not enter into the merits as the matter is pending in the National Company Law Appellate Tribunal (NCLAT).

The bench further said that findings arrived by CCI are not without jurisdiction. It said that while we are not interfering with order of NCLAT, we request the tribunal to dispose off the appeal by March 31, 2023.

The Court directed has asked the parties to approach the NCLAT with a certified copy of its order with three days. An additional weeks time has been given to the Google to comply with the CCI order.

Google India was represented by Senior Advocate Abhishek Manu Singhvi who said they were ready to partially comply with the CCI order in terms of directions 1-5, and ensure that the search app pre-installation exclusivity is not pursued.

In his submission, Singhvi said that the order by CCI is a series of non-reasons, based on misapplication of a Parliament Standing Committee report.

He explained that Android is not a closed ecosystem unlike Apple, and has a open source and is compatible with 15,000 smartphone models. Apple has only 1. There are 500 million compatible devices only in India, and 1,500 global manufacturers or original equipment manufacturers (OEMs).

He added that as per the CCI order we must license the proprietary software. We have an anti-fragmentation agreement.

He also talked about MADA (Mobile Application Distribution Agreement) Rules which allows for multiple play stores. People tend to install multiple. Indians download the most.

The CJI then asked, “If so is the case why should you insist on Chrome, if it is a bouquet, you lose open source…it affects choice to consumer. All that you have goes against you.”

Singhvi responded that it was so because Google is there due to its excellence, not dominance.

He added that the third direction of CCI is highly objectionable. Rival Play Store owner should be able to sit inside my Play Store.

He questioned, “How do I control security, malware? No direction anywhere else in the world (like this). Unfortunate non-innovation. This direction was given without any evidence of abusive dominance.”

OEM chooses the best in the market, Google is always selected since it is the best in the market. There is no restriction on uninstalling…no finding on abuse of dominance.

He added that there is nothing today to show that the European Act is relevant in this case. There was a Parliamentary Standing Committee report.

Talking further he said that EC did not direct any for uninstalling. Only CCI did. EC gave a limited direction for unbundling search and Chrome from Google Play.

CJI Chandrachud said, “Can we not be ahead of European Union? EU maybe a benchmark for us to not fall behind, but we can surely move ahead.”

“Look at the nature of EU market and our market. We cannot lose sight of the peculiarities of our market. The depth and penetration of the market. Data is cheap today because of the mass and consumption therein.”

Representing the CCI, Additional Solicitor General N. Venkataraman said that seven grounds are there which directly ridicule the quasi-judicial authority. “We rely on EC not because we have to follow it, whole case of CCI is post decision of EU. What steps have been taken? No cut copy paste submission by us.”

CJI Chandrachud then asked, “Suppose they are directed to comply today. Will that lead to irreversible action and appeal becoming infructous?”

ASG Venkataraman added:

  • These new licensing operations had to come in effect in 2018, and now he says he will comply in 3 months. Three years it has been.
  • Size of mobile phone market in 2021 was 540 billion euros. We aim to have tier 2 and 3 companies develop here, have local manufacturing here. This is our roadmap from 2021 to 2025-26.
  • Competition law democratizes business and stops any feudalistic practice. Any stay will create a hurdle.

Appearing for the intervenors, Senior Advocate Mukul Rohatgi argued, “Mandatory pre-installation of apps reduces incentive to download anything else. There is no reason for India not to be treated at par. You cannot treat the laws of this country as laws of third world.”

The Court was hearing Google’s appeal against the January 6 NCLAT order refusing interim relief of stay on the Competition Commission of India (CCI) order of October 2022 that had imposed a Rs 1,337 crore on the tech giant for abusing its dominant position in the Android mobile device ecosystem.

Apart from imposing the penalty, the CCI had directed Google to cease and desist from participating in anti-competitive practices and directed it to modify its conduct within a defined timeline.

The NCLAT had opined that since there was no urgency shown in filing the appeal, Google could not be allowed to insist on interim relief. It thus listed the matter for further hearing on April 3. The tribunal had also directed Google to deposit 10 per cent of the fine amount.

On Monday, while hearing an application seeking a stay on the CCI ruling, the top court had asked Google whether it will put in place the same regime in India as it has in Europe with respect to the Android mobile devices market.

The judges then went on to remark that they would consider sending the stay application back to the NCLAT for fresh determination, but passed no such order.

CJI Chandrachud remarked that it would hear the stay application on merits the next day.

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