NCLAT refuses to stay CCI order against Google

NCLAT refuses stay on CCI order against Google
NCLAT refuses stay on CCI order against Google

by 5paisa Research Team Last Updated: Jan 09, 2023 - 12:30 pm 5.3k Views
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It could be a setback for the world’s largest and most prestigious search engine, Google. The National Company Law Appellate Tribunal (NCLAT) has denied Google’s request for interim relief. Google had filed an appeal against the recent order of the Competition Commission of India’s (CCI), which had imposed a hefty penalty of Rs1,338 crore on Google. The allegation by CCI was that Google, which owned the most popular and widely used mobile operating system (OS) platform, Google Android, had abused its dominant position in the Android smartphone market in India. Android and the Apple OS constitute the two largest operating systems for mobile phones in the world.

A quick word on the Competition Commission of India (CCI). It is the modern version of the Monopolies and Restrictive Trade Practices (MRTP) Commission. The CCI actually looks into ensuring that there is fair competition in any industry operating in India. The CCI is authorized to investigate and pass penal orders on any deal or any company that abuses its dominant position. The idea is encourage competition and to prevent monopolies or duopolies in the Indian market. Any restrictive practice or any practice that encourages or tries to tiedown the customer forcibly to a single product is considered to be anti-competitive by the CCI. All merger deals also need the approval of CCI.

A few months after the order had been passed, Google had approached the National Company Law Appellate Tribunal (NCLAT) in December 2022. It had challenged the CCI order imposing a Rs. 1,338 crore penalty on the company. As an interim measure, the NCLAT has asked Google to deposit 10% of the penalty with the court as partial payment of the penalty. It has also been decided to fix the matter for a hearing in February on the point of interim stay. It must be noted that NCLAT has not passed any interim order at this juncture but has only asked Google to show its commitment to the word of law by depositing 10% of the total penalty. The interim order will be passed after a detailed hearing of both sides.

Meanwhile, the National Company Law Appellate Tribunal (NCLAT) has sought response from the Competition Commission of India (CCI) regarding the penalty imposed on Google and has also issued a notice to them on the subject. For now, the hearing is tentatively scheduled for hearing on the 13th of February. One of the contentious issues was access to Google Play services APIs. The CCI order had also stated that Google shall not deny access to its Play Services APIs to disadvantage any of the original equipment manufacturers (OEMs), app developers and its existing or potential competitors.

The contention of the CCI has been that the markets must be allowed to compete on merit basis. It has put the responsibility on the dominant companies (Google in this case), to ensure that its conduct does not impinge competition on merits. One of the objections that CCI had raised was that Google had ensured that users will continue to use its search services on mobile devices. Since Google derives most of its revenues from advertisement services, the allegation of CCI was that such an action by Google had indirectly facilitated the uninterrupted growth of advertisement revenue for Google. In short, Google had abused its dominant near monopolistic position to gain monopoly rents in the business.

For now hardware manufacturers that operate on the Google Android platform have other concerns, they are worried that certain directions in the CCI order could open the platform to third-party software or apps; and these may not be as safe as the Android platform. Such smart phone makers also cautioned its users that if Google imposed additional costs for licensing, it would be passed on to users. For now, although the matter is still in limbo, it does look like diverse interest groups are emerging in the Android battle.

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