Google and NCLAT’s order in ‘an antitrust case’

Context

Recently, Google has filed an appeal in the Supreme Court against a verdict by the National Company Law Appellate Tribunal (NCLAT) where it upheld a penalty of Rs.1,338 crore imposed by India’s competition regulation body on the company, for its anti-competitive conduct in the Android ecosystem.

• The Competition Commission of India (CCI) also appealed the NCLAT order in the Supreme Court.

National Company Law Appellate Tribunal (NCLAT): National Company Law Appellate Tribunal (NCLAT) was constituted under Section 410 of the Companies Act, 2013 for hearing appeals against the orders of National Company Law Tribunal(s) (NCLT), with effect from 1st June, 2016. Competition Commission of India (CCI): CCI is a statutory body responsible for enforcing the Competition Act, of 2002. It was duly constituted in March 2009. The Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act) was repealed and replaced by the Competition Act, 2002, on the recommendations of the Raghavan committee. Composition: The Commission consists of one Chairperson and six Members who shall be appointed by the Central Government.

Background

• In January, the Supreme Court refused to suspend any of the antitrust remedies ordered by the CCI against Google last year.
• It had asked the NCLAT to hear the case on merit and rule by March end.
• CCI’s allegations on Google:
  • Competition commission of India earlier found Google guilty for undertaking anti-competitive practices.
  • The Competition Commission of India (CCI) says that Google’s business was found to be driven by the “ultimate intent of increasing users on its platforms”.
  • Google was found abusing its dominant position in multiple markets with its Android mobile operating system (OS).
  • It has used its dominant position in the online search market, resulting in the denial of market access to competing apps.
  • It has done the same in the Android app store market to protect its position in online general search, which violates competition law.

Why has Google appealed the NCLAT order?

• Google mentioned that the NCLAT “correctly found” that harm for anti-competitive behaviour needs to be proven, but “did not apply this requirement to several of the CCI’s directions that it upheld”.
• To present our case before the Supreme Court, we can demonstrate how Android has benefitted Indian users, developers, and OEMs, and powered India’s digital transformation.

What did the NCLAT order entail?

• The National Company Law Appellate Tribunal (NCLAT) has upheld a penalty imposed by Competition commission of India (CCI) on Google.
• It held that mandating pre-installation of its entire Google Mobile Suite (GMS) – a family of key Google apps and services– amounted to “imposing unfair conditions on Original equipment manufacturer (OEMs) which is an abuse of dominant position” by the company.
• By bundling products like its search engine or the Chrome browser, Google had perpetuated its dominant position.
• NCLAT stated that the CCI in its order against Google did not violate the principles of “natural justice” and based it on relevant material submitted to it.

Restrictions placed by Google:

• Google licences Android as well as its various applications (Play Store, Search, YouTube, Maps, Gmail, etc.) to smartphone OEMs for pre-installation in mobile devices, through various agreements viz., MADA, AFA/ ACC and RSA.
• Mobile Application Distribution Agreement (MADA)
  • OEMs are required to pre-install the entire Google Mobile Suite (GMS) covering 11 applications of Google as a bundle, and place these apps on the home screen of the device.
  • GMS is a collection of Google applications and Application Programme Interface (APIs) that help support functionality across devices.
  • GMS includes wide range of key Google apps such as Google Maps, Gmail, YouTube, etc.
• Anti-fragmentation Agreement (AFA): The OEMs which have chosen to pre-install Google’s apps on their mobile devices are restricted from manufacturing and marketing not only smart mobile devices but also any smart device (viz. smart speakers, smart watches, smart TVs, smart navigation system, etc.), on alternative versions of Android.
• Revenue Sharing Agreement (RSA): Google pays share from its advertisement revenue to OEMs in exchange for exclusive installation of its search services on their smart mobile devices.

Present stance for Google:

• Google managed to achieve some relaxations in the final verdict pronounced by the NCLAT, primarily those that would have severely impacted its own products.
• Google will now not need to allow hosting of third-party app stores inside the Play Store, as had been previously ordered by the CCI.
• Google will also not need to allow users to remove pre-installed apps such as Google Maps, Gmail and Youtube.
• The company can also continue imposing curbs on so-called “sideloading”, a practice of downloading apps without using an app store.