2023 (2) TMI 382 - SC - Law of Competition

Supreme Court Orders Fast-Track Resolution of Appeal, Enforces CCI Compliance Deadline.

The Supreme Court upheld the National Company Law Appellate Tribunal's (NCLAT) decision denying interim relief to the appellants and instructed the NCLAT ... Interim stay pending appeal - prima facie evaluation of impugned order - abuse of dominance - jurisdictional sufficiency of findings at interlocutory stage - administrative directions for expeditious disposal of appealInterim stay pending appeal - prima facie evaluation of impugned order - Whether interim relief should be granted to the appellants pending disposal of the appeal before NCLAT - HELD THAT: - The Court considered the alternative of remitting the matter to NCLAT for a fresh hearing of the interim application or conducting a prima facie evaluation itself and adopted the latter course in order to avoid delay. On a limited, interlocutory appraisal of the material on record, the Court observed that NCLAT had not entered into the merits but that the findings recorded by the CCI could not be said, at this stage, to be without jurisdiction or to suffer from any manifest error warranting interference. Having undertaken the prima facie review, the Court declined to grant interim relief and affirmed the NCLAT order refusing interim stay. [Paras 6, 7, 12, 16]Affirmed the NCLAT's refusal to grant interim relief; no interim stay granted.Abuse of dominance - jurisdictional sufficiency of findings at interlocutory stage - Whether the CCI's findings of anti-competitive conduct and abuse of dominance are so vitiated as to require immediate appellate interference - HELD THAT: - The Court recorded the principal findings of the CCI concerning pre-installation, tying, market effects and commercial compulsion on OEMs, and noted that dominance of Google was not in dispute. At the interlocutory stage, having regard to the material before it, the Court held that those findings could not be characterised as manifestly erroneous or beyond the CCI's jurisdiction so as to justify overturning or staying the operative directions pending appeal. The Court refrained from expressing any final view on the merits, preserving the substantive adjudication for the appellate forum. [Paras 10, 11, 12]CCI's findings are not shown, at the interlocutory stage, to be without jurisdiction or manifestly erroneous; merits to be adjudicated by NCLAT.Administrative directions for expeditious disposal of appeal - What interim administrative directions should be given to the NCLAT and what adjustments to the compliance timeline are appropriate - HELD THAT: - The Court directed that the appeal pending before NCLAT be listed for final hearing and requested NCLAT to dispose of the appeal by 31 March 2023. The Court asked the parties to place a certified copy of this order before NCLAT within three working days and requested the President of NCLAT to issue administrative directions for an early time schedule. In view of interlocutory contestation, the Court extended the time for compliance with the CCI order by a further week, clarifying that actions taken in the interim shall abide by the result of the appeal. [Paras 13, 14, 15, 17]Directed NCLAT to expedite disposal (by 31 March 2023 as requested), required parties to move NCLAT with certified copy, and extended compliance time by one week.Final Conclusion: The Supreme Court, after a limited prima facie appraisal, declined to grant interim relief and affirmed NCLAT's refusal to stay the CCI order; it found no basis at the interlocutory stage to hold the CCI findings to be manifestly erroneous or beyond jurisdiction, directed NCLAT to expedite disposal of the appeal and granted a one week extension for compliance with the CCI directions. Issues Involved:1. Appellate jurisdiction under Section 53T of the Competition Act 2002.2. Interim stay on the order of the Competition Commission of India (CCI).3. Directions issued by CCI regarding anti-competitive practices by Google.4. Penalty imposed by CCI on Google.5. Evaluation of CCI's findings on Google's abuse of dominance.Detailed Analysis:1. Appellate Jurisdiction under Section 53T of the Competition Act 2002:The appellants invoked the appellate jurisdiction of the Supreme Court under Section 53T of the Competition Act 2002, challenging the order of the National Company Law Appellate Tribunal (NCLAT) dated 4 January 2023. The NCLAT had admitted the appeal against the CCI's order dated 20 October 2022 but directed the appellants to deposit 10% of the penalty without granting a stay on the rest of the CCI's directions.2. Interim Stay on the Order of the Competition Commission of India (CCI):The principal grievance was that the NCLAT, while noting the urgency, did not express an opinion on the merits of the interim stay application. The NCLAT listed the appeal for final hearing on 3 April 2023 without granting an interim stay. The Supreme Court had the option to remit the matter back to NCLAT or to consider the interim relief itself. It chose the latter to avoid delays.3. Directions Issued by CCI Regarding Anti-competitive Practices by Google:The CCI, in its order dated 20 October 2022, issued several directions under Section 27 of the Act, including:- OEMs should not be forced to pre-install a bouquet of Google applications.- Licensing of Play Store should not be linked with the pre-installation of Google services.- Google should not deny access to its play service apps to disadvantage OEMs and app developers.- Google should not offer incentives for exclusivity of its search services.- Users should be allowed to uninstall pre-installed Google apps and choose their default search engine during device setup.- Google should allow developers to distribute their app stores through Play Store and not restrict sideloading.4. Penalty Imposed by CCI on Google:The CCI quantified the penalty as a percentage of the average turnover for the years 2018-2019, 2019-2020, and 2020-2021. The appellants contested the penalty, arguing that there was no finding of abuse of dominance by Google in India.5. Evaluation of CCI's Findings on Google's Abuse of Dominance:The Supreme Court noted the findings of the CCI regarding Google's dominance and anti-competitive practices, including:- Pre-installation of Google apps creates a behavioral bias and is a significant promotional opportunity for Google.- Google's requirement for OEMs to pre-install its suite of apps under MADA and AFA agreements is anti-competitive.- The tying arrangement of Google using Android to cement its dominance in search services.- The lack of real choice for OEMs, as not signing MADA and AFA would lead to commercial failure.The Supreme Court concluded that these findings cannot be regarded as contrary to the weight of the record at the interlocutory stage. It refrained from expressing an opinion on the merits to avoid affecting the pending proceedings before the NCLAT.Conclusion:The Supreme Court affirmed the NCLAT's order declining interim relief and requested the NCLAT to dispose of the appeal by 31 March 2023. The appellants were given an additional week to comply with the CCI's order. The appeal was disposed of with directions to the NCLAT for early disposal of the appeal.Pending Applications:All pending applications were disposed of.