Case Caption.
Google LLC and Another —————————————–Appellants.
Competition Commission of India and Others——————Respondents.
Case Number.
Civil Appeal Number 229 of 2023.
Case Citation.
2023 SC 88.
Bench
Hon’ble Chief Justice D.Y. Chandrachud, Justice Narsimha and Justice J.J. Pardiwala.
Introduction.
A market is said to run in a free and fare manner when there exists competition between the suppliers in a relevant market. But when one producer tries to use and opt practices that decrease the competition in the market, thus removing other producers out, then such a behaviour is said to cause “Appreciable Adverse Effect on the Competition” [1]and hence giving rise to an Anti-Competitive Market.
Section 3 of the Competition Act talks about types of Anti-Competitive Agreements, whereas Sec 4 of the Competition Act talks about the Abuse of Dominance in the Market. Herein the case of Google LLC v CCI, Google was charged for its abuse of dominant position in the market by compelling the users to pre-install google apps and the same was creating an anti-competitive market. This was also causing appreciable adverse effect on the competition in the market, as other producers were denied the share in the market due to this type of arrangement by Google.
Facts of the Case.
According to Section 19(1)(a)[2] of the Competition Act, 2002 (the “Act”), the “Informants” filed a lawsuit against Google LLC and Google India Private Limited (collectively, “Opposite Parties” or “Google”), alleging, among other things, that Google had violated Section 4 of the Competition Act by abusing its dominant position in markets related to mobile operating systems. The former Google Inc., currently known as Google LLC, is a wholly owned subsidiary of holding firm Alphabet Inc. (Alphabet) and a Delaware limited liability company. Google provides a variety of IT-related services, with a concentration on operating systems, platforms, enterprise, advertising, and search.
As per the informants, Google abused its dominant position in this case by requiring smartphone and tablet manufacturers to preinstall only Google’s own applications or services in order to get any GMS component in devices built in, sold in, exported to, or marketed in India. Such actions were alleged to have interfered with the “development and market access of rival mobile applications or services”, in violation of Section 4[3][ii] of the Act read with Section 32[iii][4].
Google forced the android users to pre-install the applications and make some as the default applications such as the search engine- Google Chrome, Play-store, You-tube etc
A fine of Rs. 1338 Crore was imposed on Google by CCI, against which Google LLC appealed before the Hon’ble Supreme Court of India.
Issues Raised
- Are the stipulations of Sections 4(2)(a)(i) and Section 4(2)(d) of the Act violated by the necessary pre-installation of the whole GMS suite under MADA, which is considered an unjust condition imposed on device manufacturers?
- Whether Google violated Section 4(2)(e) of the Act by using its dominating position in Play Store to defend its dominant position in general online search.
Contention of Parties
The number of Advocates from both the sides was appreciable and each one of them presented equally fantastic set of arguments before the Hon’ble Court.
Contentions of Respondents
As two separate products that come pre-installed with Google’s app store, it has combined its Android operating system and app store (Play Store).
The Android Compatibility Commitments (ACC), originally known as the Anti-fragmentation Agreements (AFA), bind OEMs and forbid them from producing, distributing, or selling any other smart devices that run a rival forked version of the Android operating system. Thus, in breach of Section 4(2) of the Act, developers of those forked Android operating systems are barred from the market.
Due to the absence of Google’s Play Store on other licensable operating systems, it also prevents access to devices running on other systems.
It has raised a barrier to entry by preventing OEMs who have signed ACC/AFAs from creating their own operating system for smart devices based on modified Android. impeding future study and technological and scientific advancements in such forked Android-based operating systems.
As a result, these agreements are in violation of Section 3(1) of the Act since they are of the type indicated in Section 3(4) and are having a significant negative impact on competition. The OEMs of smart devices are now prohibited from selling products with forked versions of competing Android operating systems, preventing their rivals from entering the market for licenced platforms for the devices.
Appellants Contentions
It establishes the ‘Android Open- Source Project (AOSP)’ and grants all third parties a licence under an open-source licence. It is accessible to everyone and does not need (or provide) licensees the right to preinstall any exclusive Google services, apps, or software. Other Android derivatives, such as Amazon’s Fire OS, have advanced in development thanks to this open-source project.
According to the AOSP licence, a third party has the authority to study, change, and freely distribute the Android source code to anyone. It is entirely up to the OEMs and operating systems to tweak AOSP and launch their own Android platforms. Android TV, on the other hand, is Google’s adaptation of the Android operating system for smart televisions, and it is licenced as an Android TV launcher under the Television App Distribution Agreement (TADA), just like Google’s other exclusive apps.
It denied that Android devices and the Play Store dominated the market and said that TADA was a distinct and optional agreement on a device-by-device basis that gave customers access to a selection of Google apps that were already pre-installed. OEMs have the option of installing it on their products or not.
In order to encourage competition between Android devices and other well-established competitors in the market, OEM partners maintain a minimal standard of baseline compatibility for smart devices that operate on Android TV in their ACC.
Decision by the Apex Court
As a result, in accordance with Section 27 of the Act, the Commission hereby orders Google to “stop engaging in anti-competitive practises that have been determined to be in violation of Section 4 of the Act, as described in this order”. Below are some examples of measures in this regard:
OEMs are free to (a) select which of Google’s proprietary apps they want to pre-install on their smart devices and are not required to do so; (b) choose where those pre-installed apps will appear on their devices.
A mandate to pre-install Google search services, Chrome browser, You Tube, Google Maps, Gmail, or any other Google programme is not permitted when licencing Play Store (including Google Play Services) to OEMs.
Google is prohibited from restricting access to its play service apps in order to harm OEMs, app creators, and its current or potential competitors. This would guarantee app compatibility between Android OS and Android Forks while meeting Google’s compatibility standards.
The previous decision by the CCI us upheld and it was directed to Google to duly submit the compensation amount
Defects of Law
The statutory provision that surrounded the case herein was The Competition Act of 2022. The whole case revolved around nothing but the very basic Anti-Competitive Market and the Abuse of Dominant Position by cartels in the relevant market. The Competition Act of 2002 provides checks and balances for maintaining a market with equal competition for all the producers but the major cartels of the market put dominating affect over small producers by engaging themselves into anti-competitive behaviour thus causing Appreciable Adverse Effect on the Competition., with the help of political leaders. Small production houses also do not raise voice against such malpractices.
Critical Comment.
The judgement has set forth a precedent for future cases in the field of Competition Law. Since the Act is still in its nurturing stage, there are not many landmark judgements for the same, but with the advent of the judgement of Google LLC v. CCI, a landmark has been set .
Any person (in the instant matter- Google) or government agency that is involved in any activity pertaining to the production, distribution, etc. of commodities or services is considered an enterprise. The term “Enterprise” takes in its ambits to those which have been engaged in production, distribution or control of articles or the services of any kind.
For the violation of Section 3 of the Competition Act, there needs to be an existing agreement.[5] As defined in Section 2(b)[6] of the Act, an “agreement” includes all arrangements, and understandings that are formal,[7] in writing, or informal, that are not intended to be enforceable by legal proceedings.[8]
In the case of Apple Inc. v. United States, 2013[9], the U.S. Department of Justice accused Apple and several book publishers of “conspiring to fix the prices of e-books.” The publishers settled, but Apple went to trial and lost, with the court finding that Apple’s exclusive dealing arrangements with publishers violated antitrust laws.
Similarly in the instant case, there was an arrangement in which the google applications were to be pre-installed in the android devices, making it anti-competitive, and violative of the Indian laws.
In Brown Shoe Co. v. United States[10], 1962, an U.S. Supreme Court case, the court used the “market power” test to determine whether Brown Shoe’s acquisition of several smaller shoe companies violated antitrust laws. The court held that the relevant market was the national market for shoes, and that Brown Shoe had enough market power to create a monopoly.
Similarly in Google LLC v CCI, Google was indeed a monopoly in the market, thus supressing other producers.
According to the principles encoded in anti-trust laws, a tying arrangement is when a seller forces the sale of a desirable product in exchange for the sale of an unfavourable product, taking advantage of consumers’ demand for the desirable product to promote sales of the less desirable one[11]. It’s possible that the arrangement is the consequence of a legal or technological obligation.[12]
It is to be mentioned that such arrangement will be considered as anti-competitive if the products that are involved in such an arrangement are separate and different and the seller has sufficient market for the products involved in the agreement. [13]When a seller has the ability to successfully raise prices or impose other onerous conditions, such a tie-in, on any considerable number of purchasers in the market, that seller has sufficient market power.[14]
In the case of Kodak v. Image Technical Services [15], Kodak was accused of requiring customers to use Kodak parts and services in order to maintain their Kodak photocopiers. The court found that this tie-in arrangement was anti-competitive and violated antitrust laws because it created a barrier for competing service providers.
Similarly in Google’s case, google that has a large market anyhow was forcing the universe of population to pre-install all the google based applications thus causing an appreciable adverse effect in the market.
Conclusion
Competition Law in India is now in its budding stage, and not everyone is aware of the pros of it. Earlier, many production houses were abused by the dominant powers in the market, and no one was even there to hear them out. Many industries came and went in different sectors, but none dared to challenge the then Dominant Powers running monopoly in the market.
The Competition Act of 2002 acts as a backbone to small manufacturers and production houses, saves them from the anti-competitive behaviours of the large share-holders in the market, thus maintaining a fair competition in the Indian Market as well as Economy.
Post the judgement of Google LLC v Competition Commission of India, a landmark has been set for the those who violate the Competition Laws in India. There was a clear abuse of its dominant position by Google, my making it mandatory for the Android users to pre-install google apps, and thus not giving room to other service providers. Thus, the fine imposed upon google is apt, since it was mis-using and abusing its position in the market thus supressing other big and small market powers.
Abhishek Sinha
New Law College, Bharati Vidyapeeth Deemed to be University, Pune.
[1] Competition Act, § 4, No. 12, Acts of Parliament, 2002 (India).
[2] Competition Act, § 19 (1)(a), No. 12, Acts of Parliament, 2002 (India).
[3] Competition Act, § 4, No. 12, Acts of Parliament, 2002 (India).
[4] Competition Act, § 32, No. 12, Acts of Parliament, 2002 (India).
[5] Samir Agrawal v. ANI Technologies Pvt. Ltd, 2018 Comp LR 1114 (CCI).
[6] Competition Act, § 2(b), No. 12, Acts of Parliament, 2002 (India).
[7] Technip SA v. SMS Holding Pvt. Ltd., (2005) 5 SCC 465.
[8] Director General (Supplies and Disposals) v. Puja Enterprises Basti, 2013 Comp LR 714 (CCI).
[9] Apple Inc. v. United States 952 F. Supp. 2d 638, 2013 (US).
[10] Brown Shoe Co. v. United States citation 370 U.S. 294 (1962).
[11] J Dianne Brinson, Proof of Economic power in a Sherman Act Tying Arrangement Case : Should Economic Power be Presumed When the Tying Product is Patented or Copyrighted?, 48 LA L REV 29 (1987); Northern Pacific R Co v. United States, 356 US 1 (1958).
[12] Abir Roy & Jayant Kumar, Competition Law in India (2nd ed.2014).
[13] Sonam Sharma v. Apple Inc., 2013 Comp LR 346 (CCI).
[14] Fortner Enterprises Inc v. United States Steel Corp ET AL, 394 US 495 (1969).
[15] In the case of Kodak v. Image Technical Services 504 U.S. 451 (1992).