Author name: CBCL

[By Aneesh Raj & Chirantan Kashyap ] The authors are students of  National Law University and Judicial Academy, Assam.   Introduction The world’s biggest search engine has received a great shock from the country’s top court. The Supreme Court of India has rejected Google’s petition challenging the NCLAT ruling dated January 4, 2023. The Competition Commission of India (hereafter CCI) fined Google a large sum for abuse of dominance. Google sought remedy from the NCLAT initially, but once they refused, it turned to the Supreme Court of India for relief; however, this court also refused to entertain its petition. Aggrieved by the decision of the court, Google has agreed to comply with the order of CCI and to deposit the 10% penalty amount. The CCI has levied a fine of over ₹ 1337 crore on Google for abuse of its dominant position in India’s smartphone operating system market. Google, in its appeal, has termed the decision of CCI as “patently erroneous” and ignoring “the reality of competition in India, Google’s procompetitive business model, and the benefits created for all stakeholders.” The CCI order has been described as “fraught with substantive, analytical, and procedural errors, including inter alia ignoring exculpatory evidence and statements from Indian OEMs and developers.” Google has also accused the CCI’s investigating arm, namely the Director General’s Office, of mindlessly copying and pasting the order from the foreign authorities. The aim of this article is to analyse the order and also explain what it means for the general population. Facts of the case: The controversy arose following the disclosure of information by Mr. Umar Javeed, Ms. Sukarma Thapar, and Mr. Aaqib Javeed under Section 19(1)(a) of the Competition Act, 2002 (hereinafter the “Act”), alleging that Google LLC and Google India Private Limited (collectively, “Opposite Parties”/”Google”) violated Section-4 of the Act. It is believed that these informants are Android smartphone users. They had said in their submission that Android is an open-source mobile operating system that anyone may create and use freely. The Android Open-Source Project (AOSP) is the source code for Android that is subject to a basic licence. An interesting point that is stated by the informants is that the smartphones and tablets in the Indian market are being run on the Android operating system, which itself is being developed by Google. Google also offers various applications and services in the form of Google Mobile Services (GMS). Informants have described GMS as a suite of Google services that can be used to enhance a device’s performance. According to the experts, GMS includes a variety of Google services that can only be accessed through GMS and not downloaded independently by device manufacturers. These services include Google Maps, Gmail, and YouTube. Android device manufacturers must enter into certain agreements with Google before these apps and services can be installed. The informants further stated that end users would not be able to directly use these services. According to the informant, Google has been engaging in a number of anticompetitive practices, both in the core market and in peripheral areas, in order to further solidify their dominant position as the preeminent provider of online general web search services and online video hosting platforms (through YouTube). The informants made the following allegations against Google in their claims: Google requires that manufacturers of smartphones and tablets only pre-install Google’s apps or services if they want to get any part of GMS in smartphones made, sold, exported, or marketed in India. It was said that this action made it harder for rival mobile apps or services to develop or get into the market, therefore violating Sections 4 read with section 32 of the Act. Google combines or bundles various Google applications and services, such as Google Chrome, YouTube, Google Search, etc., with additional Google applications, services, and/or application programming interfaces. This conduct made it harder for people to get smart mobile devices that used different, possibly better versions of the Android operating system. Google doesn’t let smartphone and tablet makers in India make and sell “Android forks,” which are different versions of Android for other devices. This regulation made it harder for people to get access to new, smart mobile devices that might run on better versions of the Android operating system. Based on the information received, the commission forms a prima facie opinion that there is a contravention of Section 4 of the Act. So, using its power under Section 26(1) of the Act, it directed the investigating arm, which is the office of the Director General (DG), to do an investigation. Based on its investigation, the DG submitted a report addressing certain issues highlighted by Google. Investigation by the DG:  An investigation was laid out by the office of the director general in order to gather material. The office of director general contacted Google and other concerned parties. Other parties include mobile phone makers (both Indian and foreign brands), who install Android OS and Google apps and services on their phones; third parties active in the Indian market for Android OS app stores, an online general web search service, and a web browser; key players in the online video hosting platform; key Indian app developers, etc. Based on the said investigation, five relevant markets have been identified as being important to the resolution of the challenges at hand. These are the markets in India for licensable operating systems for smart mobile devices such as smartphones and tablets, the market for an app store for Android smart mobile OS, the market for general web search services, the market for non-OS-specific web browsers, and the market for an online video hosting platform (OVHP). As previously indicated, the DG has determined that Google dominates the aforementioned key markets. While compiling the investigation report, the DG also took into account the other apps and services that are considered core apps under Mobile Application Distribution Agreement (MADA). After examining the conduct of Google, the office of the director general reaches the conclusion that preinstallation of the whole GMS suite

[By Aditya Kashyap & Arnika Dwivedi] The authors are students of Symbiosis Law School, Pune.   Introduction The Delhi HC recently pronounced a judgement in the contentious case of MakeMyTrip-GoIbibo. The 10% deposit imposed on the appellants by the NCLAT for the admission of the appeal, was upheld by the High Court with the caveat that no further request is made in respect of the remaining 90% of the penalty amount. The story starts in 2018 with a commercial agreement between MakeMyTrip-GoIbibo and OYO, which acted as a vertical agreement, which caused the delisting of two major competitors of the latter i.e., Treebo and Fab Hotels from the former’s website. This resulted in FHRAI filing an information report with the CCI, alleging anti-competitive trade practices along with the contravention of Section 3 and Section 4 of the competition Act . Along with the aforementioned commercial agreement, they also complained against the Price Parity Clause in MMT-Go agreement with hotels, listed on its website. The price parity clause prohibited hotels from offering better terms or prices on other Online Travel Agent (OTA) website or even the hotel’s own website, than what was being offered at MMT-Go’s platform. There are certain questions which need to be addressed before the merits of allegations could be determined, Firstly, whether the Opposing parties held a dominant position in the market. Secondly, whether there was an abuse of the dominant position. Thirdly, whether the agreement between the opposing parties was in nature of refusal to deal. Dominant Position in the Relevant Market  MMT-Go are mainly involved in providing Search, Compare and Booking (SCB) services for end users, the CCI observed that MMT-Go also offered services to hotels that included inventory listing, tracking potential customers, and sales. The submissions made by MMT-Go to define markets based on hotels’ accessibility to end consumers were turned down by the CCI due to the fact that different services are provided to different types of customers i.e. the hotels and the end customers. The CCI found that end users most valued the seamless integration of SCB functions on Online Travel Agents (OTA) platforms. The CCI also found that OTAs helped hotels increase demand by improving visibility and discoverability, even when rooms were booked through other channels. This was true even without OTAs. This difference led the CCI to distinguish online and offline distribution. The CCI said OTAs had their own relevant market within online distribution, further sub-segmenting it. The CCI accepted the DG’s definition for MMT-Go as “-market for online intermediation services for booking of hotels in India”. The CCI agreed with the DG that MMT-Go had a market monopoly. The CCI considered that MMT-Go had no real competition and that hotels relied on it to stay afloat and expand. CCI also considered the fact that MMT-Go was not subject to any real competitive restraints. Abuse of Dominant Position  The CCI found that exclusivity requirements, and the price and room parity requirements hampered OTA competition by limiting the competitive tools available to other OTAs. Additionally, the CCI found that these requirements had a negative impact on the sale of rooms through other platforms/channels, highlighted the reliance of hotels on MMT-Go, and may have allowed MMT-Go to negatively impact prices. As a direct consequence of this, the CCI arrived at the conclusion that MMT-Go engaged in abusive practices due to its dominant position. The Competition Commission of India (CCI) did not accept MMT-Go’s defense that enforcing parity terms was a common practice in the industry. The findings of the DG regarding predatory pricing by MMT-Go were disregarded by the CCI as a result of the DG’s failure to correctly apply the costs that were pertinent to determining the average variable cost. The CCI concurred with the DG’s conclusions regarding the misleading information that was presented on the MMT-Go platform, which prevented hotels from accessing the market. Refusal to Deal  The CCI found that MMT-Go and OYO’s agreement to remove Treebo and Fab Hotels amounted to refusal to deal. The CCI also noted that the arrangement was a win-win between two vertically related entities to eliminate competitors in their respective markets. The CCI considered how the delisting singly benefited OYO. The CCI said the agreement limited consumer choices and made entering new markets harder. The CCI ultimately arrived at the conclusion that the exclusionary and mutually beneficial agreement between MMT-Go and OYO constituted a refusal to deal in violation of Section 3(4)(d) of the Act. CCI found that the agreement was anti-competitive and had an appreciable adverse effect on competition within India. The Competition Commission of India found that the opposite parties violated Section 4(2)(a)(i) as the price parity clause prevented hotels from offering better prices or terms on other platforms or their own websites. The commercial agreement between the parties denied market access and constituted refusal to deal, violating Section 3(4)(d), 4(2)(c), and 3(1). Following this, a penalty of 5% of total average turnover was imposed on MMT-Go and OYO. Relevant Turnover The penalty imposed was another contentious issue in the case, the penalty was imposed on the total turnover of MMT-Go and, not merely the hotel segment. This can be seen as being inconsistent with the concept of “relevant turnover” as developed by the Apex Court in Excel Crop Care Limited v. Competition Commission of India, the court stated that the penalty is to be imposed on the turnover which is the “turnover in respect of the quantum of supplies made qua the product for which cartel was formed and supplies made.” So this would support the position that the penalty should only be imposed on the hotel segment of the business and not the total turnover, this is based on the doctrines of proportionality and the doctrine of purposive interpretation. The doctrine of proportionality developed by the Indian Judiciary in Arvind Mohan Sinha v. Amulya Kumar Biswas states that the penalty imposed on the person should not be unequal to the significance of the violating act committed. In Bhagat Ram v. State of Himachal Pradesh the court

[By Sanidhya Bajpai] Dr. Ram Manohar Lohiya National Law University, Lucknow. Introduction In a globalized world where big capitalists are fighting tooth and nail to dominate the market, it becomes essential to curb their anti-competitive practices. In this blog, the author demonstrates how certain aspects of Predatory Pricing are restrictive and how they are not fruitful in prohibiting anti-competitive practices. The strategic lowering of prices by a firm to oust competitors is known as Predatory Pricing. The intention behind predatory pricing is to eliminate/oust the competitors and create a monopoly in the market. Not all discounts and sales are seen as predatory pricing. According to section 4(2)(a)(ii) of the Competition Act, 2002 (“Act”), the enterprise needs to hold a dominant position in the market to be charged with Predation. It is assessed by factors like (i) prices set by the firm being below the cost price, (ii) the sole purpose behind the predatory pricing being to eliminate the competition, (iii) competitors facing threats from such pricing, (iv) and, the firm aiming to regain the losses after creating the monopoly by jacking up the prices. CCI’s ambiguous approach to dominant player and predatory Pricing The Competition Commission of India (“CCI”) in numerous judgments has denied the allegations of Predatory Pricing on the basis of the firm being a new entrant in an established market and not being a dominant player or on the basis of the necessity of deep discounting in the market for network effect. However, this approach of the CCI towards Predatory pricing needs to be streamlined as a new entrant with hefty capital and funding from big capitalists can disrupt the whole market. The prerequisite of being a dominant enterprise in the relevant market to be charged with predation is restrictive and the country needs more holistic criteria in the interest of market and competition. The Act defines the dominant position in Section 4 to be a position of strength that a firm enjoys in the relevant market which enables it to operate independently of the competition or take steps that affect its competitors, consumers, and market in its favour. The CCI explained in the Mcx Stock Exchange Ltd. & Ors. V. NSE NSE case that evaluation of the strength of an enterprise is not to be seen solely on the basis of the market share but rather on the basis of stipulated factors such as size and importance of competitors, the economic power of the enterprise, entry barriers, etc. as mentioned in Section 19 (4) of the Act. The CCI in the instant case further  enumerated that the indicator of the dominant position has not to be pegged down to a percentage but is to be construed in conjunction with other factors. This delineates that the Act and commission aimed to give a holistic and encompassing approach to the definition of the dominant position. However, the fact remains that the commission in allegations related to predatory pricing by an enterprise has restricted itself to a narrower approach of dominant player and for these reasons it would be safe to alter the provisions in order to encompass the firms with substantive market power who have the power to oust the competitors by predatory pricing and other anti-competitive practices. Market domination should not be a necessary criteria The commission in various instances has denied the allegations of predatory pricing on the basis of the narrower approach to the dominant player term, like in Bharti Airtel Limited v. Reliance Industries Limited, the CCI held that simply providing free services cannot be seen as predatory pricing unless it was done by a dominant enterprise along with other anti-competitive practices to eliminate the competitors. The commission emphasized that the telecom market already had established enterprises and Jio’s practices were not anti-competitive as it was a new entrant. It is evident from Jio’s growth that a firm backed up by big capitalists can disrupt the market even without being the dominant player. The market share of Jio stands at 36% and it is the market leader in the current times, which is a quintessential example of flawed predation assessment. Shopee was alleged to be undercutting prices to loss-making levels in order to monopolize the market. It was alleged to be at the predation stage with deep pockets and a threat to Indian small businesses, however, CCI held in Vaibhav Mishra v. Sppin India, that Shopee is a new entrant in the established market and hence there was no predatory pricing. In FHRAI & Anr. v. MMT & Ors., the CCI while imposing a penalty on MMT, OYO, and Go-Ibibo rejected DG’s finding on predatory pricing stating that nuanced assessment is required in such platform market cases, as the success of such platforms depends heavily upon network effect. In the Shopee case, the CCI held that its deep discounting is not predatory as it is not a dominant player and thus, it is not anti-competitive. However, in close competitive markets like e-commerce, there is hardly any scope of being the dominant player. In such cases, the authorities should focus on the extent of harm such Predatory Pricing can cause to the market and not whether the firm is dominant or not. CCI mentioned in the MMT-Go judgment that a nuanced assessment is required of predatory pricing in such platform market cases, the same way it is difficult to adjudge a clear dominant firm in a market and all other aspects apart from market share need to be taken into consideration. How predation adversely affects the market? Predation adversely affects the market as a whole, after one firm monopolizes a market, the output decreases, and the prices rally up, which in turn negatively affects the consumers. Moreover, if one firm has control over a market the quality of the service or product also comes at its discretion, an example of this can be WhatsApp, it has a monopoly in the market as everyone uses it as a default messenger and because of that it