Author name: CBCL

[By Aryan Rawat] The author is a student of National Law University Odisha.   Introduction At the outset, the competition watchdog of India has booked Google, the creator of Android operating system for a barrage of anti-competitive restraints and abuse of dominant market mechanisms in the licensable mobile operating systems. As its zenith, Google has dominance in India with a monopoly of 99.74% share in the web search market raising concerns over the level playing field for other players. In this discussion, the test of effect-based analysis for establishing dominance by Google in relevant markets has been implemented and its relevance in India and the EU has been brought to light. The article implores the probe by CCI and NCLAT’s orders against Google while examining the way forward for antitrust suits for big techs in India. Test for Dominance: Checks and balances Through a series of decided cases, it has been a common judicial norm to use effect analysis to prove the dominance in digital markets. In Indian National Shipowners’ Association (INSA) v. ONGC Case No. 01 of 2018, a reasonability and fairness test has been instrumented to find out how the conditions lead to the dominant power of an enterprise and also examine the objective necessity for an enterprise to impose such conditions. The test of dominance need not be proved individually for every unit of an enterprise and the existence of abuse by parent company is enough to establish the liability for abuse. However, while dealing with cases like Faridabad Industries Association v. Adani Gas and GHCL Ltd v. Coal India, the effects-based approach was not adopted which marks the inconsistency in the application of the effects analysis test. In the European Union, under the ambit of the Treaty on Functioning of the European Union (TFEU), the courts have adopted the effect-based approach while dealing with dominant position and exclusionary abuse created by an entity. Precisely, Article 102 of the TFEU deals with abuse of dominance in relevant markets and is in cohort with Section 4 of the Indian Competition Act of 2002. Also, the European Couts of Justice have booked Google for anti-competition practices in compliance with Article 102 in 2018.  ‘Dominance’ as referred to in Article 102 of TEFU would mean “a position of economic strength on the relevant market by giving it the power to behave independently to an appreciable extent of its competitors and ultimately of its consumers.” The effect-based approach has been implored to develop a comprehensive framework to identify consumer harm and point out anti-competitive foreclosures. In the Intel v. Commission case, it was held that ‘exclusionary abuses’ can be considered only after a conclusive process of effect analysis to decide on the dominance factor of an entity in the market. This indicates that conduct will be termed as abusive and illegal only if it will deter competition, have anti-competitive effect and reproduce exclusionary effects. One of the issues that arose in the Google Android case was the application and necessity of an effects-based test and NCLAT, in appeal has decided in the affirmative regarding the usage of the effect-based perspective to check the dominance of Google in the market. The step is in adherence to establishing semblance with EU Competition law. In past, Indian antitrust adjudicating authorities have been lukewarm and inconsistent in adopting the effect-based approach, unlike EU. The approach is evolving towards the effects of dominance and not only protecting the competition but also the competitors. Facts deciding the faith of Google The parent company of Google, Alphabet has been faced with numerous antitrust investigations and proceedings in jurisdictions across the globe. With advancements in technology, Google has diversified its services and developed the Android Operating System, which is used by about 80% of smartphones worldwide, further widening the consumer reach by launching breakthrough applications and software in the Android smartphone industry.  However, these numbers serve as a trembling disadvantage to original equipment manufacturers operating in the Android market. The competition watchdog of India has condemned dominance created by Google services like Chrome, YouTube, and Google Play Store in contravention of Section 4 of the Act and imposed a penalty of INR 1337.76 crore vide Section 32 of the Act. The investigation was conducted by Director General and the final report chalked out the issues pertaining to anti-competitive practices. The dynamic nature of digital markets has  called in new forms of competition by creating network effect and multi-sided markets which are challenging to analyse under the traditional competition law jurisprudence. The tendency of consumers to not shift to new systems due to high switching costs or limited portability of data causes barriers to entry in digital markets.  The issues framed by the CCI are evidently similar to the antitrust proceeding by the EU where Google was fined 4.34 billion euros for strengthening the dominance of Google’s search engine. For the analysis of the anti-competitive practices and Google’s dominant position, CCI has delineated five relevant market(s) which are (i) licensable OS for smart mobile devices, (ii) apps stores, (iii) general web search services, (iv) non-OS mobile web browsers and (v) market for online video hosting platforms (OVHP) in India. Under Section 27 of the Act, the Commission has ordered Google to modify the agreements in contravention of fair coemption and innovation. The lawsuit can be traced back to 2018 when CCI adjudicated a complaint case in Mr. Umar Javeed & Ors. v Google LLC , where the Google services were called into question for scrutiny under section 4 of the Act. Although the paramount position in occupied by Google by owning Android’s governance model, deciding the roadmap, restrictive compatibility of Google forks and charging a commission of 30% for all in-store purchases. Appeal to NCLAT against CCI Orders The orders and penalty imposed by the CCI have been appealed by Google in National Company Law Tribunal (NCLAT) and the tribunal has admitted the appeal on submitting 10% of the imposed penalty. CCI imposed INR 1337.76 crore for violation of

[By Akul Mishra] The author is a student of Jindal Global Law School. Introduction: The Competition (Amendment) Act, of 2023 introduced several amendments to its parent statute which was in force since 2002. However, the amendments ignore a specific red flag when it comes to ensuring accountability in the remedial actions taken by companies who may have violated Chapter II of the Act after being served a notice or brought to the Appellate Tribunal.  However, the new amendments have followed the EU model, which now allows enterprises called into question over violations, to have a remedial commitment to violations stated by the Competition Commission of India. However, there are several issues regarding this newly introduced provision under Section 48(1). Although following the EU model, which has now developed as a rather strict competition regulator worldwide is not a liability for the CCI, there must be further considerations under the new provisions for the CCI to ensure that its jurisdiction and adjudicating ability are not withheld, and competition regulations are not downgraded to a checklist. Tracing the New Process: The new amendments have introduced Section 48A, which introduces the term ‘settlement’. Simply put, settlement allows for the enterprise under 48A(1) for settlement of proceedings initiated under Section 26(1). The onus on applying for settlement is on the enterpriseIt must follow the strict timeline and only apply between the date of the receipt of the report and the date  of any order has been passed by the CCI. Settlement is placed on the fact that the enterprise indirectly admits (without any liability, per se) the violation and offers to pay a fee or even introduce means to invalidate any violative process. Thus, it flows from a different tangent of a general ex-post proceeding Further, the CCI has the discretion to assess the violation on its gravity, timeline, nature etc., and assess whether the settlement is adequate for the violation or requires greater action. Otherwise, under 48A(5)  the CCI can pass an order to reject the settlement offer, and continue with the investigation, the order being non-appealable. Further, Section 48B also provides a distinct yet similar concept, by enabling the enterprise to offer commitments, to address all the violations assessed in receipt of the investigation report. The CCI is similarly enabled under 48B to have a discretionary power to assess whether the commitments are enough, and whether to accept or reject the application from the enterprise. Further, 48C gives a safeguard to the CCI if the enterprise applies for settlement or commitment but defers the improvements or contravenes a supportive order under Sections 48A and 48B. The Issues arising out of the Statutory Gap: A bare reading of 48A(3) and 48B(3) simply infers that the CCI needs to, after discretion over the submissions of settlements/ commitments simply has to accept them through an order. Further, there is no mention of whether the CCI has to record the infringement in question, and the sole discretion remains with the CCI if it wants to revoke the order which ascertains a settlement/commitment. The reason behind Competition law is to regulate markets, with a wide array of stakeholders in these transactions, including the enterprise, customers, sellers etc. Thus, there are ample provisions for addressing the concerns of a layman who may indirectly or directly suffer due to the violation of Competition Regulations/ the act itself and must get enough redressal at the appellate tribunal for the same. Thus, Section 53N provides redressal opportunities for the layman under the new amendments. Any person under Article 53(N) can now approach the Appellate Tribunal for damages amounting out to several instances including because of an order of settlement passed by the Commission. This amended provision provides a redressal forthe new provisions under Section 48A only. However, it is extremely hard to prove that there is damage arising out of a settlement order unless an infringement is mentioned in that order, which is not mandated by any provision under the new amendments. Furthermore, there is no provision for redressal for a layman who may suffer from damages out of a commitment order. The logic here could be, that a commitment order means improvement, where the enterprise has taken steps from the violations that made part of the investigation report. However, there is no guarantee that one investigation report encompasses all the violations, which may be encompassed by one guaranteed commitment, but never rectified by the commitment, so quoted by the enterprise. Although the CCI has the discretionary power under 48C to check on all the commitments/ settlements promised by the company, the procedure will not be completed within a small timeline. During the timeline that ranges from an order of commitment to a revocation under 48C, which would then reinitiate the investigation under Section 26, stretching the wait for further redressal. Thus, there is a clear gap because there is no feature under the newly amended 53N for redressal/damages during an investigation. Further, there is no obligation to list the infringement that occurred under orders passed in the positive, under 48A. Thus, if the settlement order does not include the right so infringed, it would be nearly impossible to bring in the provisions of 53N, as damages must amount out of an infringed statutory provision. Further, the draft Settlement Regulations, particularly reg 7 clearly demarcates that the settlement order will not amount “finding of contravention by the Commission against the Settlement Applicant”. This would then amount to having absolutely no mention of the right so infringed, which was settled through an applicable payment. Thus, it is not clear how a layman may appeal to the tribunal for damages out of a settlement order. Further, the only recourse may be reg 5 of the draft regulations, which may allow a layman to submit objections to the settlement order. However, it is not clear if the term any party under 5(1) would amount to any party in public, or any concerned party regarding the complaint under Section 26. Thus, this gap is

[By Arjun Kapur & Akash Hogade] The authors are students of National Law University, Mumbai.   Introduction As airlines look to streamline operations and cut costs, mergers between airlines are becoming more frequent. However, as fewer competitors mean higher prices and poorer customer service for consumers, airline mergers can also raise concerns about the state of the market. The Competition Commission of India (CCI) enforces India’s competition law. When assessing an airline merger, the CCI considers various factors, such as how will it affect consumer demand, competition, and the aviation sector as a whole. This raises several potential competition issues, including decreased competition on domestic and international routes, the foreclosure of competitors, and increased airline coordination.  On September 1, 2023, the CCI approved the merger of Air India and Vistara, subject to a few conditions. The requirements address the concerns about competition that the merger and the market participants in the airline industry have raised. The effects of the merger on consumer welfare and airline industry competition in India are still being felt. However, the merger’s approval by the CCI is expected to significantly affect the Indian aviation industry. In this blog post, we’ll discuss the potential competition issues raised by the merger of Air India and Vistara. We’ll look further at the merger from a wider angle, considering what airline mergers mean for competition law and the global aviation sector. The aviation sector is at a critical juncture where it must carefully balance the benefits of market competition with the need for consolidation. The CCI’s decision will influence the industry’s future landscape and create a standard for similar mergers and acquisitions. Impact on Competition in the Indian Context The recent merger that the CCI has approved has certain complications that the competition watchdog should have considered. These complications include an adverse effect on competition in the aviation sector. The Competition Act, 2002 (The Act) under S.20 enumerates the factors the commission should consider while approving any combination. The factors determining the appreciable adverse effect on competition (AAEC) in the aviation sector were not considered by the CCI. This merger of two big giants owned by the same parent company (Tata Group) has the potential to affect the prices of air tickets and create barriers at the entry level of the market, which will be the second most significant player in the aviation industry after Indigo in terms of market share. The resulting merger will also have India’s leading airline with a fleet of 218 aircraft. S.20 lists factors which will affect the competition in the market. The merger has the potential to restrict rapid expansion and create entry barriers. The fact that there are very few players in the domestic aviation market leads to very restricted competition. In this close-knit competition, the merger is seen as a giant that stops new players from entering the market. The fact that the merger will acquire a large percentage of passengers and fleet will discourage players from entering the market. The domestic aviation industry has only ten players in the market after GoFirst declared bankruptcy. The aviation industry is also prone to many external factors that affect any airline’s stability. There have been many instances in the past where many airlines have declared insolvency and left the aviation industry. The merger will also have the possibility of other airlines failing, an apparent factor under S.20 that causes AAEC. The merger will acquire a significant share of the market, which affects other airlines and might affect the stability of other players. The CCI did not investigate these possibilities to allow the merger. The Competition watchdog invoked the doctrine of necessity to approve the merger. The doctrine has been invoked because there is no necessary quorum existing in CCI. These mergers, which potentially might affect the airline industry and the CCI by invoking the doctrine of necessity, also show an escapist attitude on their part. The competition watchdog also faltered by basing that there will be no entry barriers only on the example of Akasa Air. The assumption that the merger will not create entry barriers just because Akasa Air could manage to set foot right in the industry is also flawed. The merger has been approved, provided both companies have fulfilled their commitments. The commitments given by both companies have been enumerated in the annexures attached to the report. These commitments are also subject to certain limitations, which have been enumerated in the order. There are ten limitations listed by both companies wherein they won’t be able to fulfil the commitments. CCI has ignored the possibility of non-fulfilment of the commitments under limitations. There is no strict interpretation of these limitations; this gives the companies an enormous scope to have an ambiguous interpretation of them and not fulfil their commitments. The fact that CCI has approved this merger and overlooked the restrictions imposed on the conditions showcases the prematurity of the decision. A possible scenario would have been  if the companies falter and do not fulfil their obligations after the merger, it would be excruciatingly difficult for CCI to undo a herculean merger. A viable path that should have been taken by the CCI would be to see whether all commitments have been fulfilled by the companies first and then approve the merger. These possibilities had to be considered by the CCI, considering the ramifications of the merger showcasing that CCI has committed a grave error in approving the merger. Analyses of the Global Airline Merger Market The merger is likely to have a significant impact on the competitive environment and change how Indian airlines operate around the world. Globally, competition authorities are approaching airline mergers with more scepticism. This is a result of various factors, concerns about how mergers will affect prices, choice, and innovation are fueled by the airline industry’s growing concentration, the dominance of a small number of major airlines on specific routes and markets, and the growing dominance of these airlines. In several cases involving airline mergers in

[By Vrinda Gaur] The author is a student of Dr Ram Manohar Lohiya National Law University Lucknow.   INTRODUCTION The Competition Commission of India (CCI) has recently issued a warning to those using the Green Channel Route (GCR) for mergers and acquisitions. The Green Channel Route was created to make the merger process more efficient and faster and facilitate ease of doing business after Regulation 5A was added to the Combination Regulations, 2011 by the Competition Commission of India (Procedure regarding the Transaction of Business relating to Combinations) Amendment Regulations, 2019 (Combination Regulations). However, in light of the recent warning raised by the CCI with regard to its possible misuse and transparency concerns, it becomes imperative to delve into the plight of the parties opting for this route and evaluate the circumstances that challenge the ease of doing business landscape. The aim of this article is to delve into the intricacies of the present mechanism and provide solutions henceforth. UNDERSTANDING THE NORM GCR is a means by which parties opting for mergers will be granted automatic approval of the CCI subject to the condition that the transaction does not adversely affect the competition landscape. This principle was first put to deliberation by the Competition Law Review Committee. It was given effect by the insertion of a new Regulation 5A under the Combination Regulations vide an amendment dated 13 August 2019 (Amendment). Schedule III of the Amendment lays down certain qualifying conditions which require the parties to the transaction, their respective group entities and/or any entity in which they, directly or indirectly, hold shares and/or control to (a) not produce/provide similar or identical or substitutable product(s) or service(s) (Horizontal Overlaps)  (b) not engaged in any activity relating to production, supply, distribution, storage, sale and service or trade-in product(s) or provision of service(s) which are at different stage or level of the production chain (Vertical Overlaps) and (c) are not engaged in any activity relating to production, supply, distribution, storage, sale and service or trade-in product(s) or provision of service(s) which are complementary to each other (Complementary Overlaps). The provisions give the parties the liberty to conduct a self-assessment regarding the fulfilment of the above criteria and on the satisfaction of the same, file form I along with the declaration form in Schedule IV that the transaction in question will not cause any adverse impact on competition. If, to the satisfaction of the CCI, the transaction complies with all the pre-requirements for making a party eligible under Section 5A, it may pass an order deeming approval of the same under section 31(1) of the Competition Act, 2002. On the contrary, if the CCI is satisfied that the application made under section 5A  fails to meet any of the qualifying conditions, it may retract the approval granted and direct the combination to be dealt as per the old route. IS IT REALLY EASE OF DOING BUSINESS? Previously, parties had to go through a tedious application process under the competition regime, which took a total of 210 days before the transaction could be finalized and deemed approved. However, this mechanism was introduced to speed up economic transactions by relieving the parties from this lengthy process. However, progress in this direction has been unsustainable, and there are mainly two contentions. The Competition Act initially upheld a two-tier mechanism in sharp contrast to a three-tier qualification under Section 5A. The additional complementary overlap under section 5A has diluted the speed of application disposal as parties are imposed with an increased burden to assess their complementary patterns with each other and this so-called self-assessment is a mind-wrecking and resource-draining process. Further, there is a lack of consensus amongst experts on the connotation of the term “complementary” and interpretations, explicit or implicit, are absent in statutes and case laws. Though a clarification has been issued by the CCI regarding complementary overlaps, it does not adequately address the complexity of the matter. The clarification gave the example of ink and cartridge as goods that would fall within the transaction of Complementary overlaps. However, such an example is too simplistic for parties to understand as most corporations function in complex areas of operation and diversified investments. This would lead to subjective conclusions on the part of the parties opting to avail this route and authorities enforcing the same and it is likely that applications may get rejected due to this duality in the application of mind in interpreting the true connotation of the term. If the application is rejected due to non-compliance with the complimentary requirements, the parties involved will have to spend additional time filing under the previous system, in addition to the time already invested under the new mechanism. This goes against the original purpose of the GCR, which was to expedite the processing of applications. Subsequently, the provision fails to impose any strict time limitation on the CCI while disposing of the application. As a result, applications may languish in limbo and authorities may take more than reasonable time to dispose of the same leading to parties holding off on investments or other strategic operations while awaiting regulatory approvals. This would not only compromise the integrity of the review and approval process but also hinder economic growth and the ability of businesses to adapt to changing market conditions to their advantage. Moving forward, the scope of corporations likely to fall within the purview of this mechanism has been outlined in an extremely narrow sense. The Combination Rules give no regard to the fact that all large corporations and enterprises engage in maintaining a heterogeneous investment portfolio which caters to the long-term needs of risk mitigation, capital preservation and ensuring stability at times of market fluctuations. Due to such diversification of investments, they are more likely to fall within the complementary overlap category.  Hence, though it might be easier for small-scale enterprises to effectuate under such compact combinations, the same is unlikely for larger corporations, depriving them of the benefits of this route. Additionally, the overlaps are