Competition Law

[By Avik Sarkar]  The author is a student at K.L.E. Society’s Law College, Bengaluru. The Competition Commission of India has time and proved through its revolutionary judgements that they are the real guardian for consumers and small market players by saving them from harrowingly oppressive policies of the big market players. And on this occasion in the case Neha Gupta v Tata Motors the commission has demystified the limitation aspect with regards to filing complaints before the competition commission of India. The question of applicability of limitation period with regards to competition matters has always been a contentious one  Introduction The Competition Act, 2002 is prevalently known to maintain equipoise in the market with a target to protect consumers at the macro level and protect small and medium businesses from the abuse of dominant position and anti-competitive practices by the large enterprises. It has a standardized gambit using which it keeps the dominant players in the market in check. As this act is still in the embryonic stage of its development, we generally see many judgements devolved regarding competition matters. And with each judgement, it is demystifying various conundrums pertaining to contentious questions of the act. In a recent case in the matter of Neha Gupta v. Tata Motors, the Competition Commission (hereinafter referred to as CCI) of India demystified its standpoint regarding the applicability of the limitation period in competition matters. The CCI had held that it doesn’t impose any limitation period for filing any complaint. This piece holistically analyses the same. Factual matrix The informant Neha Gupta was the owner of the business Varanasi Auto Sales Pvt Ltd (hereinafter referred to as VASPL) which was an authorised dealer of Tata Motors. It was mainly dealers of commercial vehicles, spare parts, etc. The dealership agreement between the two was signed in the year 2011 and had ended in the year 2017. Neha Gupta had filed a complaint against Tata Motors accusing them of having imposed unfair terms in their dealership deed thereby amounting to an abuse of dominant position (Section 4 of Competition Act, 2002). And simultaneously, Tata Motors had also indulged in a tie-in arrangement with their financial institution name Tata Capital and Tata Motor Finance. This was done in order to maintain their market share which amounted to indulging in anti-competitive practices (Section 3 of Competition Act, 2002). In broad terms, the clauses imposed by Tata Motors were subverting the position of the dealers. A similar allegation was levelled against Tata Motors by another dealer named M/s Kanchan Motors (the dealership agreement signed between the two was in the year 2016 and ended in 2021). Against all the allegations by its dealers, Tata Motors had raised several issues one of them being delay on the part of the informant in bringing up the matter to the commission. Analysis In rem issue Pertaining to the concern of delay in the present matter CCI stated that under Competition Act,2002 there is no limitation period to file a complaint. It can be said that the investigation conducted by CCI are in-rem in nature and are not in-personam disputes. There might be situations when a lis might prima facie come across as an in-personam dispute, but the issue raised might be contentious in nature and may contribute to future market distortions. And in such situations, it becomes important to make the public aware of the market distortions. Merely because the informant doesn’t suffer any direct losses or is not personally aggrieved will not vitiate the in-rem nature of the information. Therefore, any person can file information under the Competition Act, 2002 with regards to abuse of dominant position and anti-competitive practices. The same was held in the case of In Re: XYZ and Indian Oil Corporation which stated that authority orders are in rem and not in-personam. Anti-trust authorities deal with market situations that are dynamic in nature and are evolving with time. With innovations happening all around the globe the anti-trust authorities have to keep themselves updated and armour themselves with each and every available weapon to tackle unforeseen and unprecedented situations. Therefore, it would be grossly erroneous to apply a limitation period while attempting to tackle such unforeseen situations. And as per the Act, the CCI is empowered to carry out inquisitional functions in public interests. Therefore, application principles of the limitation period in inquiry-based institutions would be grossly iniquitous. The above dictum of the commission has brought the Indian perspective in parity with the European antitrust law which imposes no limitation on the investigation by the commission. This dictum will surely give a lot of relief to the authority in terms of carrying out an investigation with not much intervention and can thereby deliver a diligent and biased free report on any issue. Locus Standi demystification The proceedings before the commission are inquisitional and in-rem in nature therefore the locus standi is not a sine qua non for filing information. The issue relating to the locus of the informant under the Act was further clarified in the case of  Samir Agrawal v. Competition Commission of India where it was stated that “when the CCI performs inquisitorial, as opposed to adjudicatory functions, the doors of approaching the CCI and the appellate authority, i.e., the NCLAT, must be kept wide open in the public interest, so as to subserve the high public purpose of the Act..”.Thus, questioning the locus of the informant is totally infructuous On the contrary, it should not be mistaken that the absence of a limitation period may lead to any kind of frivolous information’s being filed. Therefore, CCI shall diligently examine reasons for delayed filings and based on the same it accepts or reject complaints. Any kind of impropriety will lead to the dismissal of the complaint and lead to the imposition of penalties envisaged under section 45 of the Act. But, the process of examining the propriety of information shall vary from situation to situation. This process helps in eliminating frivolous complaints and wastage of public resources and be prevented. The main aim is to detest market players from practices that can have an appreciable adverse effect on

[By Saikishan B Rathore] The author is a student at Gujarat National Law University, Gandhinagar.  It is settled law that a statutory body cannot grant interim relief unless such power has been vested by the statute. Section 33 of the Competition Act, 2002 empowers the Competition Commission of India to grant interim relief upon satisfaction that an act in contravention of Section 3(1), Section 4(1) or Section 6 is committed, continues to be committed or is likely to be committed. CCI has issued orders under this section with utmost circumspection. The most recent need arising on 9th March, 2021 as it issued an order granting interim relief to the informants (Fab Hotels and Treebo), restraining the opposite parties (MakeMyTrip and GoIbibo) in Re: Federation of Hotel & Restaurant Associations of India and Anr. v. MakeMyTrip India Pvt. Ltd. and Ors (hereafter “MMT-Go”). The three-fold test: CCI v. SAIL In CCI v. SAIL, the Supreme Court recognized CCI’s jurisdiction to grant interim relief, subject to three conditions. Firstly, CCI ought to record its satisfaction in clear terms than an act of contravention of the stipulated provisions has taken place; Secondly, if it is necessary to issue an order of restraint; Thirdly, if there is every likelihood that the party to the lis would suffer irreparable and irretrievable damage, or there is definite apprehension that it would have an adverse effect on competition in the market. Applying the 3-fold test: Road to MMT-Go As mentioned above, CCI has exercised this power very cautiously in the past. In Financial Software Pvt. Ltd. v. ACI (hereafter “ACI case”), the conduct of ACI in restricting the choice of ACI Banks for availing the services of third parties including the informant for customization and modification of a particular software appeared to be in contravention of section 4 of the Act. Thus, the CCI was compelled to grant interim relief pending enquiry subsequent to the order under Section 26(1). Further, in Fast Track Call Cab Pvt. Ltd. v. ANI Technologies Pvt. Ltd., the CCI found it essential to restrain Ola Cabs from charging way below the average variable cost as it posed an imminent threat to the competition in the market. However, in certain cases, there is no requirement for issuing such orders. For instance, in Re. National Shipowners Association v. ONGC, the informant prayed for a direction to restrain ONGC from taking any action, or threatening to terminate the ‘Charter Hire Agreement’ entered into with the member companies of the Informant till disposal of the inquiry and the matter pending before the CCI. Although the CCI noted a clear threat to competition in the market, it was satisfied with ONGC’s undertaking that it would not invoke the clause to terminate the said agreement and thus, refrained from issuing an order under Section 33. In the recent case of MMT-Go before the CCI, an enquiry was already in progress in furtherance to CCI’s order dated 28-10-2019. However, the properties of the informants were not listed on the website of MMT-Go which was clearly in a dominant position in the relevant market of online franchising services for booking hotels in India. Moreover, as per the order under Section 26(1), it was clear that there existed a confidential commercial agreement between MMT & Oyo that prioritized the listing of Oyo Hotels on the website, thereby, indicating a likelihood to cause an appreciable adverse effect on competition. Further, it was clearly stated by the informants that inquiry has been pending for more than 15 months, and any further delay would eliminate competition in the market with special reference to the informant hotels that have been delisted. Therefore, the CCI rightly responded to the urgent need for interim relief as there is a clear denial of market access which is likely to eliminate competition in the market until there is a final determination. Section 33 & 26(1): The difference in satisfaction As laid by the Supreme Court in CCI v. SAIL at para 117, there is an express obligation on CCI to record satisfaction that there has been a contravention of the provisions mentioned under Section 33. However, this satisfaction is to be understood differently from what is required while expressing a prima facie view in terms of Section 26(1) of the Act. While the former is a definite expression of the satisfaction recorded by the Commission upon due application of mind, the latter is a tentative view at that stage. Whether such ‘definite expression of satisfaction’ amounts to final determination? The order under Section 26(1) is an administrative order. It merely sets in motion the inquiry, and the final determination is subject to the judicial scrutiny of the DG’s report. It is settled that the degree of satisfaction under Section 33 is not merely tentative. Therefore, it is a legitimate concern whether the exercise of such discretion by the CCI would play a major role in the pending enquiry/matter. There cannot be a uniform degree of satisfaction in every case. As noted by the CCI in the MMT-Go case, it completely depends on the evidence and circumstances of each and every case. For instance, in the recent G-Meet case, the CCI did not find any evidence placed by the informant to order an enquiry. On the other hand, in the MMT-Go case, there was enough evidence at the preliminary stage to display a clear denial of market access and foreclosure of competition by the dominant enterprise. Another prominent example is the ACI case. When the order under Section 33 issued by the CCI (mentioned above) was appealed before the Competition Appellate Tribunal in ACI Worldwide Solutions Pvt. Ltd v. Competition Commission of India, the Comp AT refrained from expressing any opinion because it was of the view that confirmation of interim relief or otherwise would itself affect the investigation by the DG which is pending and it is also likely that it may affect the merits of the matter. Instead, it directed expeditious disposal of the matter by giving CCI a time limit

[By Pragya Dixit] The author is a student at ILS Law College, Pune.   The Competition Commission of India (CCI) in an Order dated 09.11.2020, directed an investigation against Google and its affiliates on information filed alleging violation of Section 4 of the Competition Act, 2002 (Act). The Commission ordered the aforementioned investigation in relation to three allegations leveled against Google. Amongst those three allegations, one allegation involved the issue of “pre-installation of Google Pay on Android resulting in a ‘status – quo bias’ in consumers”. This article aims to discuss how status quo bias, alternatively known as ‘default behavior in consumers’ is a problem in the competition arena and has a deeply negative impact on market competition and consumers’ interest. The allegations made by the informant in the case against Google stated that by pre-installation of Google Pay as a default payment option in Android phones at the time of initial set – up results in a status – quo bias which is detrimental to the interest of other players in the market, as it places Google Pay in the users’ devices, making it a default option already available to them. The default nature in phones drives users to make use of google pay instead of going for other alternatives present in the payment markets. It results in denial of market access to various other competitors in the same market and ultimately gains Google a significant competitive advantage over the other players, which is a contravention of Section 4(2) of the Act. Another issue similar to this had also arisen quite recently in a case before the CCI, wherein several allegations were raised in a complaint against WhatsApp and its parent company Facebook. The said complaint raised objections that WhatsApp is abusing its dominant market position in the “market of internet-based messaging apps through smartphones” by creating its own United Payments Interface (UPI) payments system i.e., ‘WhatsApp Pay’ within its messaging platform. It was visible in the WhatsApp case that by doing so, it facilitates the pre-installation of WhatsApp pay in mobile phones, which would ultimately make it more amenable to users than other options available. The CCI instead of dealing with it chose not to recognize it in the WhatsApp case. However, the same issue has arisen again in a much clearer manner before the Competition watchdog and by issuing an investigation this time CCI has taken a step in the right direction. What is the problem of Status Quo Bias or Default behavior in consumers? The default behavior in consumers was a very less discussed issue in the Competition arena until recently, wherein the Competition and Markets Authority (CMA) of the UK in its market study on Online Platforms and Digital Advertising tried to explain the issue and the associated threats. The study explained that “the default behavior in consumers while using applications and information providing websites, is something which has been encouraged by the transformation in the ways of interacting and acquiring information.” In today’s high-tech world we can all access almost every information available on a particular subject just with a single click. Online platforms are loaded with so much information that focusing on what information is relevant and what not has become a herculean task for a consumer. Adjacent to this, the availability of information in such an easy manner has made all of us impatient and has resultantly reduced our tolerance for delay. This behavioral change in the digital environment forms the backbone of the ever-increasing default behavior in the customers. To summarize it in a one-line we can say that “Default behavior on the part of consumers is a propensity to avoid wasting time by accepting the default option presented to them”. Though it sounds like that it is the best option available for a consumer, because it looks like a way by which a consumer can select the options which are more favorable to him and can get rid of the unnecessary and extraneous information, resultantly saving his time and cost. However, CMA in its guidelines while analyzing this behavior rejected this belief. It stated that the default behavior of consumers plays an enormous role in shaping the competition in social and search media. A consumer’s choice in the selection of various applications such as ‘what search engine to use is highly influenced by default options available to him. A consumer is more likely to make use of applications that are easily accessible and directly available to him on his device.  However, when consumers start using these apps on a regular basis, the power of these platforms to influence consumer choices increase manifolds. As most of these apps in one way or another are engaged in collecting consumer data. This data helps them in providing better and personalized services which ultimately helps them in creating control over their users. This control exercised over users ultimately binds them to these applications which automatically creates hurdles for the other players in gaining users and increasing their market reach. This is the sole reason why these big firms and platform owners pay extreme importance to devise ways of achieving the status of default in users’ devices. For example:- In 2019, Google paid 1.2 Billion Pounds to different parties in the UK alone, in order to appear as the default feature on their devices. This exercise helps giant companies to increase their profits. The bone of contention lies in the fact that consumers are now habituated and are not willing to shift because they are provided with what seems to them the most economical, efficient, and easy way to fulfill their needs. However, they do not realize that this exercise on the contrary is blocking their ways towards other and perhaps better available alternatives. It not only acts as a detriment to the consumers but it also harms other players in the market as their user base is being blocked, leading them to enormous losses and ultimately wiping them off the market. How does

[By Jatin Lalwani] The author is a student at the National Law School of India University.   The last month once again saw the rejuvenation of the debate around a breakaway football league with the announcement of the European Super League. However, the time bomb was diffused within 72 hours amidst widespread criticism and threats of bans despite Florentino Perez stating that they have a strong legal case. Although the proposal involved various legal issues, much of the debate surrounded Competition Law which will also be the focus of this article. Soon after the announcement of the Super League, the UEFA President warned the clubs involved and their players of the potential bans from competitions. This was based on the controversial Article 49 of the UEFA Statutes which states that UEFA will have the sole discretion to organize or abolish any competition in UEFA territory. Further, the competitions which are not organized by UEFA but are organized on its territory must take prior permission from FIFA or UEFA. The failure to follow this would lead to disciplinary measures under various codes and will attract bans. This rule is the central point of debate around the Competition Law issues in Europe. European Competition Law and Sports: The application of competition regulations to sports has a long history. The judgments of the Court of Justice in the cases of Walrave, [1] Dona,[2] Bosman[3] specified that sports will be subject to competition regulations. A sporting exception was created to exclude the activities which are purely sporting in nature and do not involve any economic element. However, the case of Meca–Medina[4] has dismissed this exception by stating that the purely sporting nature by itself is not sufficient to exclude the activities from the competition regulation. Article 101 and 102 of The Treaty on the Functioning of the European Union (TFEU) provides for anti-competitive agreements and the abuse of dominant position respectively. Article 101 applies to both undertakings and associations of undertakings while Article 102 applies only to undertakings. The CJEU has consistently interpreted undertakings to include entities engaged in economic activity regardless of its legal status. It does not look at the objective of the entity for the determination of undertaking. Like other sports associations, FIFA and UEFA follow a pyramid structure with various clubs forming part of it and hence can be classified as associations of undertakings. Although associations of undertakings are excluded from Article 102, the Commission has clarified that sports associations normally can be considered dominant undertakings for the purpose of Article 102. Anti-Competitive Agreements and Abuse of Dominant Position: For any action to be covered under Article 101 there must be an agreement, decision, or concerted practice. In relation to sports, it should be first ascertained whether the rules by the sports associations regarding bans, expulsions (loyalty clauses) could be considered agreement, decision, or concerted practice. In one of the cases against FIFA, it claimed that such rules cannot be classified under the mentioned categories. However, it was rejected and held that such rules are covered under decisions by the undertakings. A similar position has since been followed by the Commission in subsequent cases as well. The competition law in Europe does not prohibit holding a dominant position in a market. It is only when abuse of such dominance occurs that the Commission steps in. Abuse of dominant position occurs when an entity inhibiting dominance in a market uses it to eliminate an existing competitor or prevents a competitor from entering the market. For a claim of abuse of dominance, the first step is to establish the dominance of such undertaking. Most of the sports associations enjoy monopoly in the market as they are the sole organizer and regulator of the sport involved and hence are dominant. Further, even if we look at other factors such as economic strength, market structure, independent behavior, the sports association will still be considered dominant. It has been even held that undertakings enjoying super-dominance in a market which have powers like a quasi-monopoly have stricter obligations to prevent abuse. Some authors have argued that since the clubs form the central part of the decision making in these sports associations and the threat of breakaway league have led to the meeting of demands, the associations cannot be considered dominant in presence of countervailing buying power.[5] The recent European Super League saga has although proved contrary to the assumption. Even if it were to happen, the proposition misses out on the fact that the presence of countervailing buying power only exists when multiple clubs come together. Single clubs would not have recourse to any other competitor and hence sports associations will function independently of any forces in the market even if the threat is given by a single club and hence, still hold a dominant position in the market. Loyalty clauses as a threat to competition: Almost all the statutes of the sporting associations at all levels provide for loyalty clauses. Since the early 2000s, these clauses have been a constant area of scrutiny by the national courts and the European Commission. Most of these cases have dealt with the rules on participation in non-authorized events or sanctioning of such events. Although, sanctioning rules are not anti-competitive by itself, they must be looked at from the lens of the objective test and the proportionality test as has been propounded by the CJEU. However, these tests have only succeeded as a defense when the rules are necessary for attaining uniformity in the sport and in the public interest such as rules of play, anti-doping etc. The sanctioning rules for a new competition or participation in them have been held to be anti-competitive in nature. The conflict of interest between the regulatory and the commercial functions of the associations has been looked at by the courts. The first major case concerning this conflict of interest was related to Fédération Internationale d’Automobile (FIA) which is the international body for motor sport.[6] It issued a license for participation in

[By Kunal Singh] The author is a student at Vivekananda Institute of Professional Studies, GGSIPU. Overview Last year Apple announced to cut down the commission rates charged from developers, with less than $1 million revenue, from 30% to 15% on in-app purchases. Following the footsteps of Apple, Google recently announced that it would drop the rate of commission charged on in-app purchases from 30% to 15% for developers that sell in-app digital goods on its Play Store. This concession will be available to the developers for the first $1 million revenue earned utilizing the Play billing system each year. The truncated fee will apply to the developers starting July 1, 2021. While this move by Google, at first sight, may look benign and propitious for developers, it entails significant anti-competitive concerns with it. In this article, the author argues that this move by Google qualifies as an abuse of the dominant position and analyses the probable outcomes against the backdrop of this announcement. Identifying the Key Anti-competitive Issues Albeit the announcements by both Apple and Google have caused a discourse among the startup community, they differ on the nature of charging commissions. Apple had announced that once a startup has crossed its $1 million revenue threshold, it would be charged 30% of the service fee; on the other hand, Google announced that it would provide $1 million revenue relaxation every year. Separating the variability between these two announcements, they coincide on one aspect that they foreclose the competition in the relevant market of in-app purchases (‘IAP’). Before establishing that both these tech giants have abused their dominant position, it would be prudent to delineate the relevant market of IAP in which they yield their influence. In-app purchasing refers to purchasing of goods and services from within the mobile application on a mobile device. Initially, it sanctions developers to offer their goods and services for free, then later situate them in a position to charge for upgrades as paid feature unlocks and special items for sale. This IAP allows developers to accrue profit even if they sell their product for zero cost initially. Now, application stores such as Google’s Play Store and Apple’s App Store allow users to download applications with the inbuilt feature of IAP and simultaneously charge developers a particular portion of the sales, which is 30% in this case, made by them through IAP. Charging a particular portion of the total sales may not look anti-competitive, but the conditions precedent to it may draw the attention of antitrust watchdogs. Both Google and Apple require developers to use their respective billing systems to give effect to transactions cognate to IAP. The author argues that binding developers to only use their respective billing systems for IAP tantamounts to directly imposing unfair and discriminatory conditions in the sale of goods or services, as provided under Section 4(2)(a) of the Competition Act, 2002 (‘The Act’). This arbitrary condition is three-pronged; firstly, it leaves developers with no choice but to use their respective billing systems; secondly, it denies the market access to other rival competitors in the relevant market of IAP; thirdly, both Google and Apple are using their dominant position in the market of operating systems (‘OS’) to influence and foreclose the competition in the separate and distinct market of IAP. Is binding developers to use respective billing systems unfair? The decision of Google making it mandatory for the application developers to use its billing system is a take-it-or-leave-it condition. It implicatively insinuates that if developers do not comply with this guideline, they might run the peril of losing access to a large number of users in India, thus being highly dependent on Google. This take-it-or-leave-it condition is in line with WhatsApp’s recent update regarding its privacy policy, where it mandated users to give their consent to the sharing of their data with Facebook if they wish to continue using WhatsApp. The Competition Commission of India (‘Commission’), in its order, noted that such conduct amounts to the imposition of unfair terms and conditions on the user as it leads to the degradation of non-price parameters such as quality, which violates Section 4(2)(a) of the Act which deals with abuse of dominance. As of 2020, Google has about 95.23% of the market share in the relevant market of OS in India, making it a dominant entity in the market of OS. Since Google has a dominant position in the relevant market, it would be prudent to surmise that almost all the application developers have their applications hosted on the Play Store, which leaves them with no option but to accept the terms and conditions of Google if they do not want to lose their market share. It can be said that the acts of Google are in congruence with the prominent concept of leveraging. While one may argue that how this concept, which is related to stock markets, is related to Google, the core concept is still the same. Leveraging is borrowing extra capital or funds to increase the potential return from an investment thus causing an advantage to the stakeholder. In the case of Google, the dominant position is the extra capital, which it uses to gain an advantage over the other market players. As has already been discussed that Google has about 95.23% market share in the relevant market of OS in India, it is thus leveraging its dominant position to gain an unfair advantage over the industry players in the relevant market of OS. A classic example of losing the market share due to non-compliance happened in the late last year when Epic Games allowed users to purchase Fortnite’s in-game currency directly, thus bypassing Apple’s IAP framework and the substantial 30% cut that Apple takes, which led to Apple banning the game from App Store. As of now, Google has not taken such action against any developers, but it could be a probable course of action if developers do not comply. Thus, the author believes that the take-it-or-leave-it nature