TaxTMI 
TaxTMI 
2023 (4) TMI 173
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....i, Ms. Amritha Chandramouli, Mr. Rahul Vijay Kumar, Mr. Ram Narayan, Mr. Madhav Gupta, Advocates for CCI/R-1 Ms. Shama Nargis, DD/CCI, Mr. Davander Prasad, DD/CCI, Ms. Shweta Gupta, YP/CCI Mr. Abir Roy, Mr. Vivek Pandey, Mr. Aman Shankar, Ms. Sukanya Viswanathan, Mr. T. Sundar Ramanathan, Advocates for Impleader in I.A Nos. 327 & 336 of 2023. Mr. Amit Sibal, Sr. Advocate with Mr. Naval Chopra, Mr. Yaman Verma, Mr. Aman Singh Sethi, Ms. Shally Bhasin, Ms. Raveena Lalit, Ms. Prerna Parashar, Ms. Parinita Kare, Mr. Shivek Endlaw, Mr. Rohan Bhargava, Mr. Prateek Yadav, Mr. Rishabh Sharma, Mr. Saksham Dhingra, Mr. Darpan Sachdeva, Advocates in I.A. No. 630 of 2023 Mr. Rajshekhar Rao, Sr. Advocate, Mr. Naval Chopra, Mr. Yaman Verma, Mr. Aman Singh Sethi, Mr. Ajit Warrier, Ms. Raveena Lalit, Ms. Prerna Parashar, Ms. Parinita Kare, Mr. Prateek Yadav, Mr. Prateek Gupta, Mr. Shivek Endlaw, Ms. Shally Bhasin, Mr. Darpan, Mr. Rohan Bhargava, Mr. Harshil Wason, Mr. Yashraj Samant, Ms. Chandini Anand, Advocates in I.A. No. 232 of 2023 JUDGMENT ASHOK BHUSHAN, J. This Appeal by two Appellants - Google LLC and Google India Pvt. Ltd. (hereinafter referred to as 'Google') has bee....
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...., proceedings were initiated for infringement of Article 102 of the Treaty of the Functioning of the European Union. The EC took a decision on 18.07.2018 which found Google having abused its dominant position in the relevant market in the European Union. European Commission imposed penalty and fine on Google. iii. On 28.08.2018, Respondent Nos. 2 to 4 to this Appeal viz. Umar Javeed, Sukarma Thapar and Aaqib Javeed filed information under Section 19(1)(a) of the Act, 2002 before the Competition Commission of India. Informants claimed to be users of android based smartphones. The Informants stated that the majority of the smartphones and tablet manufacturers in India use Google Android System. Informants stated in their information that Google is dominant in India. The Informants delineated four distinct relevant markets i.e., (i) Licensable Smart Mobile OS; (ii) App Stores for Android Mobile OS; (iii) Online Video Hosting Platform ( OVHP ); and (iv) Online General Web Search Service. India was stated to be relevant geographical market in the application. Informants alleged that Google is engaged in different kinds of anti-competitive practices. Allegations alleging violation of ....
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....ontravention of Section 4 read with Section 32 of the Act." v. The Commission expressed its prima facie opinion in the order that mandatory pre-installation of entire GMS suite under MADA amounts to imposition of unfair condition on the device manufacturers and is thereby contravention of Section 4(2)(a)(i) of the Act. vi. After order dated 16.04.2019 passed by the Commission under Section 26(1) of the Act, the Director General commenced inquiry under Section 19 of the Act. vii. Director General issued several notices to Google requesting for information. Google responded to various notices and submitted its comprehensive response. viii. Notices were also issued to the Informants by the Director General. The Director General also sought information from third parties including mobile handset manufacturers (both Indian & foreign brands) who install Android OS and Google apps & services in their handsets for Indian market. Third parties who are active in the Indian market relating to app stores for Android OS, online general web search service and web browser were also approached by the Director General for seeking information and data clarification. Information was also ....
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....ed, and arbitrary; unilateral decision to modify Developer Terms i.e. OPP and DOA by Google; suspension from the Play store without any cogent reason; losses suffered by third parties app developers due to the arbitrary conduct on part of OPs etc., it appears that Google's aforesaid behaviour, including the terms and conditions discussed above, amounts to the imposition of an unfair or discriminatory condition, limiting and restricting the technical and scientific development of apps to the prejudice of users, and in the denial of market access by Google in violation of Sections 4(2)(a)(i), 4(2)(b), and 4(2)(c) of the Act." xi. In Chapter 10, conclusion of the Director General was separately recorded and Director General in Para 10.18 stated: "10.18 To sum up, Google is found to be contravening the provisions of Section 4(2)(a)(i); Section 4(2)(b); Section 4(2)(c); Section 4(2)(d) and Section 4(2)(e) of the Act." xii. The Report of the Director General dated 29.06.2021 was considered by the Commission on 06.10.2021. On 06.10.2021, the Commission directed for forwarding an electronic copy of the non-confidential version of the investigation report to the parties i....
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....ion 4(2) of the Act. Conclusion of the Commission has been recorded in Para 614, which are to the following effect: "614. The Commission concludes that, 614.1. mandatory pre-installation of entire GMS suite under MADA (with no option to un-install the same) and their prominent placement amounts to imposition of unfair condition on the device manufacturers and thereby in contravention of the provisions of Section 4(2)(a)(i) of the Act. These obligations are also found to be in the nature of supplementary obligations imposed by Google on OEMs and thus, in contravention of Section 4(2)(d) of the Act. 614.2. Google has perpetuated its dominant position in the online search market resulting in denial of market access for competing search apps in contravention of Section 4(2)(c) of the Act. 614.3. Google has leveraged its dominant position in the app store market for Android OS to protect its position in online general search in contravention of Section 4(2)(e) of the Act. 614.4. Google has leveraged its dominant position in the app store market for Android OS to enter as well as protect its position in non-OS specific web browser market throu....
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.... applications, and (b) deciding the placement of pre-installed apps, on their smart devices. 617.2. Licensing of Play Store (including Google Play Services) to OEMs shall not be linked with the requirement of pre-installing Google search services, Chrome browser, YouTube, Google Maps, Gmail or any other application of Google. 617.3. Google shall not deny access to its Play Services APIs to disadvantage OEMs, app developers and its existing or potential competitors. This would ensure interoperability of apps between Android OS which complies with compatibility requirements of Google and Android Forks. By virtue of this remedy, the app developers would be able to port their apps easily onto Android forks. 617.4. Google shall not offer any monetary/ other incentives to, or enter into any arrangement with, OEMs for ensuring exclusivity for its search services. 617.5. Google shall not impose anti-fragmentation obligations on OEMs, as presently being done under AFA/ ACC. For devices that do not have Google s proprietary applications pre-installed, OEMs should be permitted to manufacture/ develop Android forks based smart devices for themselves. ....
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....m to competition is inherent, which needs to be analysed before holding any violation of Section 4. The Commission decisional practice, as is proved from various decisions taken by the Commission, in respect of abuse of dominant position under Section 4, indicate that the Commission has always entered in to analyses of anti-competitive effect. It is submitted that as per the Scheme of Section 4, dominant position itself is not prohibited. What is prohibited is abuse of dominant position and for establishing abuse, the Commission must prove the same. The Commission has not undertaken any analyses as required by Section 4 in the impugned order. It is submitted that what is prohibited under Section 4, sub-section (2) (a) is imposition of unfair or discriminatory conditions in purchase or sale of goods or services. A conduct shall be unfair or discriminatory only when it is anti-competitive. The Commission has come to the conclusion that MADA contains unfair conditions, which is incorrect conclusion. MADA is not imposed on OEM. The concept of imposition contains a compulsion, there is no compulsion on OEM to enter into any MADA Agreement with Google. The MADA is an optional and per dev....
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....ing into MADA by any OEM. No OEM has filed any complaint before the Commission alleging any unfair conditions imposed by Google. Bundling per se cannot be said to be unfair imposition on the OEM. By giving a suite of Apps, OEM get high quality and desirable Apps for free with negligible storage and screen space being consumed. There is no foreclosure effect of the MADA. MADA's terms are fair on OEMs because they do not restrict non-Google Apps from being preinstalled on OEM's devices. In evidence, the Commission, itself noted that Stores like Galaxy, Xiaomi, Huawei, Oppo are preinstalled by OEM along with play store of Google. Competing browsers are also preinstalled by OEM. Various competing browsers preinstalled in devices of different manufacturers. The users are free to disable a preinstalled App in their device. Inability to uninstall Apps does not constitute an unfair term on OEMs nor does it impact competition. To answer the question that was asked to OEMs that if they face possible dilemma in terms of allowing installation of competing Apps with apprehension of causing duplication of Apps and filling up precious ROM space (in addition of Google's), several OEMs have given a....
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....perly. AFA were introduced when Android ecosystem was introduced, there was no question of any dominance by the AFA. AFA/ ACC set out the minimum baseline, which an OEM has to follow. In Android, there are 15,000 models and 1100 OEMs. There is no restriction on OEM to innovate. AFA/ ACC cannot be said to be anti-competitive. There is no stoppage of invocation by any OEM. In the impugned order, the Commission has observed that AFA/ ACC obligations result in reduced incentives for OEMs to distribute "Forked Android" version. The Commission's observation regarding AFA/ACC is unfounded. Google being aware of the risk of the fragmentation inherent in open business model, it adopted the AFA before the launch of the Android device to address this threat. The Commission also failed to appreciate the evidence, which proves failure of Symbian OS, an open-source platform, which did not implement any minimum compatibility standards. The objective of minimum compatibility is that any app writer can write an app, once and it would run on every device within the ecosystem. An "Android Fork" is a device, which uses the Android OS, but does not meet the compatibility requirements as laid down in CD....
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.... survey was conducted by the DG. The Competition Commission has recognised that there is large universe beyond RSA, but no analysis has been undertaken. The Competition Commission has conjectured of several conclusions, which are not based on any evidence. There is no denial of market access by RSA. The RSA covers only qualified devices. There is no imposition of any unfair terms on OEM by MADA and RSA. The MADA and RSA has to be separately looked into, both being different Agreements. Only there are six RSAs, wherein OEMs entered into Agreement with Google. OEMs have other Agreement with other service providers. Xiaomi entered into RSA with Bing in 2018. The MADA is complete agreement with the matters it deals with. The RSA is optional. Two contracts can be read together only when they are part of the same transaction. 8. Coming to Android Fork, Shri Kathpalia submits that Commission has found violation of Section 4(2)(b) (ii) of the Act by observing that Google, by preinstallation of proprietary Apps and conditional upon signing of AFA/ACC for all Android devices, has reduced the incentive of device manufacturers to develop and sell devices operating on alternative versions of....
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....ts that Google Chrome, which is a search engine of Google is not required to be made as default search under the MADA. The OEMs are entitled to preinstall as many search engines as they may desire and ultimately it is the user, who can disable any preinstalled search and install any other search engine. The Commission ignored the fact that despite Chrome being preinstalled, UC browser was downloaded on 79% Android devices in 2018. On Desktop, Chrome is not preinstalled, but 86% of users downloads Chrome. Ninety percent users prefer using Chrome because of its better quality. The commission ignored that from 2018 to 2020 more than 90% of top 25 selling devices in India preinstall rival browsers. Default setting does not deny market access to competitors and users are free to switch away from the default settings, if they so choose. 11. Shri Kathpalia submits that Commission has erred in concluding that Google had leveraged Play Store in the App Store market for Android to strengthen Google Search position in the online search market. He submits that MADA does not restrict OEMs from preinstalling competing search services on their devices. The Commission's conclusion that competin....
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....is submitted that the above direction was issued without any discussion or finding. Without there being any discussion or finding, no such direction could be issued. The direction is in breach of Section 27 and is ultra vires. No finding of abuse on this count has been reported by the Commission. There is no finding of abusive conduct regarding Play Store market. Coming to direction contained in paragraph 617.10, it is submitted that there is no finding of abuse of dominance. It is submitted that Google does not prohibit sideloading. It only issues warnings. Warnings are issued by Google to save the user from malware and harm. Coming to the direction issued under paragraph 617.3, Shri Kathpalia submits that Google cannot be asked to share APIs which are intellectual property of Google. Directing sharing of the API by Google shall stop all innovation and discourage technical advancement. The direction was to share the API with Android Forks. Coming to direction in paragraph 617.5, it is submitted that the obligation imposed on OEM, AFA/ACC is to make the device compatible. There is no restriction on the OEM to develop Android Forks for themselves. There is no basis for issuing direc....
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....pared and submitted simply to confirm the European Commission's android decision. The DG has framed leading questions to third parties in order to reach pre-decided conclusion. The learned Senior Counsel referred to several examples of leading questions put by the DG to third parties during his submissions. Detailed list of many questions has also been placed by learned Senior Counsel before the Court. It is submitted that framing of these questions clearly demonstrate that investigation was conducted not in an objective manner and DG wanted to elicit the answer, which was indicated by the question itself. The Commission also in its order has ignored the aforesaid aspects. The DG's conduct is in violation of the principles of natural justice. The Commission by condoning such leading questions to elicit adverse statements against Google for reaching the pre-decided conclusion has also erred. The DG as well as the Commission were independently duty bound to base their findings after due consideration of all the evidence on record, including various statements made by OEMs in support of Google's business model. The DG failed to consider such evidence, which was supportive of Google....
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....ional penalty as has been imposed by the impugned order. The statutes where provisional penalty can be imposed, expressly provides for imposition of provisional penalty. The learned Senior Counsel has referred to the provisions of Customs Act. The learned Senior Counsel submits that for imposing penalty, the entire turnover of Google has been taken, whereas only relevant turnover with respect to which allegation of violations were made could have been taken, if at all. It is submitted that revenue of the Appellant regarding Desktop and PC cannot be taken into consideration, since the said revenue is beyond the market which were under consideration before the DG and the Commission. Shri Maninder Singh submits that penalty and fine imposed are disproportionate and deserve to be interfered with. It is submitted that whole exercise indicates that both the DG and the Commission had considered the issues with pre-determined mind and entire proceeding is replete with confirmation bias. 17. Shri Maninder Singh, learned Senior Counsel submitted that impugned order has been passed in absence of a Judicial Member, which is a mandatory requirement under the law, where adjudicatory functions....
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....roved that MADA obligation amounts to unfair conditions under Section 4(2)(a)(i). The threshold requirement for OEMs executing MADA is that such OEMs should have already executed ACC/AFA. The MADA contains condition that Google shall offer all 11 Apps bundled together, but not independently or selectively on non-exclusive or royalty free basis. Non-exclusive basis means that only those OEMs, who have signed the ACC will get Google bundle of Apps. The MADA provides for tying of bundling arrangement. Anyone who has taken Apache open license cannot produce a device with Android Fork, since it will be a handicap in denying access to Google 11 Apps either bundled or as independent Apps. By signing AFC/ACC by OEM, AOSP becomes closed license. Eleven core Applications are re-bundled together and pre-installed by Google on OEM devices. All eleven Google core Applications are placed at the default home screen. The MADA provides that MADA devices are those, which can run only Android OS and are approved by Google. The learned ASG has referred to various clauses of the MADA to support his submission. The clauses in MADA provides that OEM Companies need no obligation to install Google Applicat....
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....Google search is set as the default search or engine for other remaining search access point available on Android devices. RSA further mandates that OEM take steps to ensure that Google once set as default on all search access points on a device - also endures as the exclusive search service on that device. The obligation imposed by Google on OEM through a combination of MADA and RSA converge to ensure that Google Search is both the default and exclusive search service on Android devices. The submission of the learned Senior Counsel that RSA is an optional Agreement is contrary to the factual scenario. Google sets out the monetary incentives offered to OEMs to promote Google Search as a default and exclusive search service. The impugned order has correctly pointed that vast amount of monetary incentives offered by Google to OEMs to enter into RSAs ensures that Google Search is set as the default and exclusive search service on all MADA Android devices. 20. Shri Venkataraman submits that Clause 2.4.3 of RSA read with Exhibit D grants certain exemptions to certain jurisdictions like the European Economic Area, Russia, Turkey and Korea from the rigours of exclusivity, which is othe....
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....s a significant barrier to entry. The whole ecosystem developed by Google has relegated Forks to an inferior position. The submission of Google that Google granted waivers is also meaningless since seeking waivers cannot be equated with commercial freedom of OEMs to decide their partners. The obligations under ACC continued, which cemented the dominant position of Google. By making scope of AFA all pervasive, Google has created significant disincentives and entry barriers for any enterprise, considering distributing a Fork. AFA is a supplementary obligation imposed to further Google's tying objective under the MADA. Google has maintained and strengthened its dominant position through the AFA/ACC, which restricts competition within the larger Android ecosystem. Google is a virtual monopolist in the licensable smart device OS. The Commission has, after detailed analyses, found that Google has reduced ability and incentive of OEMs to develop and sell devices operating on Forks and thereby limited technical or scientific development to the prejudice of the consumers, in contravention of Section 4(2)(b)(ii). 23. Shri Venkataraman further submits that a special responsibility is cast ....
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....empowers the CCI to impose the remedy by directing the enterprise to discontinue abuse of dominant position, appropriate measures can be taken to achieve the object. It is submitted that not sharing APIs by Google was done with the anti-competitive objective of discouraging Forks. Appropriate direction was therefore issued to share the APIs. The impugned order contains sufficient analysis regarding APIs. The learned ASG further submits that Google must permit side-loading. Google imposes excessive restriction, which have severely impacted Google's competitors, who side-load competitive Apps on Android OS. Direction to Google to allow listing of third party Apps in its Play Store is also in consonance with the findings returned by the Commission. 26. Replying to submission of learned Counsel for the Appellant on imposition of penalty by the Commission on the ground that Commission has not taken into consideration the relevant turnover, the learned ASG submits that all relevant facts have been taken into consideration by the Commission while imposing fine. It is submitted that relevant turnover as laid down by the Hon'ble Supreme Court has been noticed by the Commission. Thereafte....
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....ng in I.A. No.630 of 2023 on behalf of Epic Games Inc. Shri Sibal submits that Google excludes all App Store from Google Play Store. There are severe impediments for downloading and side-loading. The Epic Games also operates its own App Store. In sideloading, there are warnings issued by Google, which are deterrent and result in inability to download. The Applicant is compatible with Android. The remedial measures directed by the Commission flows from the conclusion of the Commission. Shri Amit Sibal has also referred to Section 27, sub-clause (g), which empowers the Commission to pass such orders as it may deem fit. It is submitted that Section 27 (g) gives ample powers to the Commission to pass any order as measure of penalty. Google's policy of exclusion of third parties Apps is without any basis. There is Google Play Store on 98.4% mobile devices. Referring to the obstacles of sideloading, Shri Sibal submits that sideloading is confronted with 13 steps. In PC, there are no restrictions in downloading the Apps. The only reason to do this is to cement the dominance of Google. 29. Shri Abir Roy, learned Counsel appearing for the Applicant in I.A. No.327 and 336 of 2023 on behal....
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....id to be replete with confirmation bias? 3. Whether pre-installation of entire GMS Suite amounts to imposing of unfair condition on OEMs which is an abuse of dominant position by the Appellant resulting in breach of Section 4(2)(a)(i) and 4(2)(d)? 3a. Whether the Commission, while returning its finding on breach of Section 4(2)(a)(i) and 4(2)(d), has not considered the evidence on record and has not returned any finding regarding the Appellants conduct being anti-competitive? 4. Whether the Appellants by making pre-installation of GMS Suite conditioned upon signing of AFA/ACC for all Android Device Manufacturers (OEMs) has reduced the ability and incentive of the OEMs to develop and sell devices operating on alternative versions of Android i.e., Android Fork and thereby limited technical and scientific development which is breach of the provisions of Section 4(2)(b)(ii) of the Act? 4a. Whether the Commission while returning its finding on breach of Section 4(2)(b)(ii) has not considered the evidence on record and has not returned any finding regarding the Appellants conduct being anti-competitive? 5. Whether the Appellant has perpetuated....
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.... on relevant turnover of the Appellants, disproportionate and excessive? 14. Relief if any to which the Appellants are entitled? 34. Before we proceed to examine various issues as noted above, we may have a brief overview of jurisprudence of competition law. 35. The competition law is about the economic analysis of markets within a legal process. The competition law has to be effective in accompanying its primary functions of promoting competitive growth and enhancing consumer welfare needs. The thrust now is to build an active competition environment in which business can thrive and innovate keeping pace with new age development in digital market. The Indian economy has transformed into one of the largest and fastest growing economies in the world. Competition is now mainstream in Indian political economic philosophy. The Commission performs diverse functions, involving investigation, inquiry and adjudication, which requires a complex and sensitive approach, compatible with principles of natural justice. The scheme of the Competition Act, 2002 indicates that Commission has positive duty to eliminate all practices which have an adverse effect on competition. The Comm....
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....or matters connected therewith or incidental thereto." 38. Section 2 of the Competition Act contains 'definition'. Section 3 deals with 'anti-competitive agreements' and Section 4 deals with 'abuse of dominant position'. Sections 3 and 4 are as follows: "3. Anti-competitive agreements.--(1) No enterprise or association of enterprises or person or association of persons shall enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India. (2) Any agreement entered into in contravention of the provisions contained in subsection (1) shall be void. (3) Any agreement entered into between enterprises or associations of enterprises or persons or associations of persons or between any person and enterprise or practice carried on, or decision taken by, any association of enterprises or association of persons, including cartels, engaged in identical or similar trade of goods or provision of services, which- (a) directly or indirectly determines purchase or sale prices; (b) limi....
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....e goods; (d) "refusal to deal" includes any agreement which restricts, or is likely to restrict, by any method the persons or classes of persons to whom goods are sold or from whom goods are bought; (e) "resale price maintenance" includes any agreement to sell goods on condition that the prices to be charged on the resale by the purchaser shall be the prices stipulated by the seller unless it is clearly stated that prices lower than those prices may be charged. (5) Nothing contained in this section shall restrict- (i) the right of any person to restrain any infringement of, or to impose reasonable conditions, as may be necessary for protecting any of his rights which have been or may be conferred upon him under- (a) the Copyright Act, 1957 (14 of 1957); (b) the Patents Act, 1970 (39 of 1970); (c) the Trade and Merchandise Marks Act, 1958 (43 of 1958) or the Trade Marks Act, 1999 (47 of 1999); (d) the Geographical Indications of Goods (Registration and Protection) Act, 1999 (48 of 1999); (e) the Designs Act, 2000 (16 of 2000); (f) the Semi-conductor Integrated Circuits Layout-Design Act, 2000 (....
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....n or eliminate the competitors. (c) "group" shall have the same meaning as assigned to it in clause (b) of the Explanation to section 5." 39. Section 5 deals with 'combination' and Section 6 with 'Regulation of combinations'. 40. Section 18 contains 'Duties of Commission' , which is to the following effect: "18. Duties of Commission.- Subject to the provisions of this Act, it shall be the duty of the Commission to eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade carried on by other participants, in markets in India: Provided that the Commission may, for the purpose of discharging its duties or performing its functions under this Act, enter into any memorandum or arrangement with the prior approval of the Central Government, with any agency of any foreign country." 41. Section 19, empowers the Commission to inquire into any alleged contravention of the provisions contained in sub-section (1) of Section 3 or sub-section (1) of Section 4. Section 19, sub-section (1), (3) and (4) are as follows: "19. Inquiry into certain agreements and do....
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....ay of contribution to the economic development, by the enterprise enjoying a dominant position having or likely to have an appreciable adverse effect on competition; (m) any other factor which the Commission may consider relevant for the inquiry." 42. We have noticed the submission of learned Senior Counsel for the Appellant that it is inherent in Section 4 that effect analysis is to be conducted before coming to the conclusion that dominant position has been abused by an enterprise or group. The learned Senior Counsel for the Appellant submitted that very object of the Act is to prevent practices having adverse effect on competition and the duties of the Commission include a duty to eliminate practices having adverse effect on competition. The adverse effect on competition has to be proved before holding any violation of provisions of Section 4. Shri Kathpalia has further submitted that Competition Commission of India has been following the practice of effect analysis, which is apparent from various decisions taken by it and the practice of the Commission is in accord with the statutory scheme. It is submitted that conducting effect analysis is thus requirement of law.....
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....n Section 4, whether any analysis of conduct of an enterprise or group of anti-competitive has to be looked into or not? 44. Before we proceed further, it is useful to notice the relevant case laws, which have been relied by learned Counsel for both the parties. 45. The learned Senior Counsel for the Appellant has relied on the judgment of the Competition Commission of India in Indian National Shipowners' Association (INSA) vs. Oil and Natural Gas Corporation Limited (ONGC) - Case No.01 of 2018 decided on 02.08.2019. The Competition Commission in the said judgment held that the existence of an unfair condition may amount to a contravention of Section 4(2)(a)(i) of the Act, however, examination of exploitative conduct which involves imposition of an unfair conditions by a dominant enterprise in a B2B transaction is essentially to undertake a fairness or reasonability test, which requires examining both how the condition affects the trading partners of the dominant enterprise as well as whether there is any legitimate and objective necessity for the enterprise to impose such condition. Paragraph 135 of the judgment is as follows: "135. Having given due regard to the af....
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....competition or elimination of any competitor nor has any intent to that effect is demonstrated. The Commission notes that providing free services cannot by itself raise competition concerns unless the same is offered by a dominant enterprise and shown to be tainted with an anti-competitive objective of excluding competition/ competitors, which does not seem to be the case in the instant matter as the relevant market is characterised by the presence of entrenched players with sustained business presence and financial strength. In a competitive market scenario, where there are already big players operating in the market, it would not be anti- competitive for an entrant to incentivise customers towards its own services by giving attractive offers and schemes. Such short-term business strategy of an entrant to penetrate the market and establish its identity cannot be considered to be anti-competitive in nature and as such cannot be a subject matter of investigation under the Act." 47. Shri Kathpalia has further relied on judgment of Competition Appellate Tribunal ("COMPAT") in Schott Glass India Pvt. Ltd. vs. Competition Commission of India - 2014 SCC OnLine Comp AT 3, where the Com....
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....y app or not, which implies that the users will have an option to use any other payment apps which might already have been downloaded on their smartphones. Thus, in the absence of any explicit or implicit imposition which takes away this discretion, the mere integration does not seem to contravene Section 4(2)(a)(i) of the Act. 92. As regards the allegation under Section 4(2)(d) of the Act, the Commission observes that though the Informant has used the word 'bundling', the nature of such allegation is more akin to 'tying' as understood in the antirust context generally. While 'tying' refers to a practice whereby the seller of a product or service ('tying product') requires the buyers to also purchase another separate product or service ('tied product'), which essentially is the allegation of the Informant; 'bundling' typically means that the two products are sold by the seller in a fixed proportion as a bundled package at a particular price. 93. The economic literature, as well as the decisions by other competition authorities, has laid down certain conditions which need to be fulfilled to conclude a case of tying. Such conditions are (i) the tying and tied produc....
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....he allegation regarding denial of market access. With more than 60% market shared by the other consultancy firms and in absence of any evidence regarding OP group's influence on the Discoms' decision to follow the nomination route, the Commission is of the view that contravention of Section 4(2)(c) cannot be made out in the instant case." 50. On the other hand, learned ASG has placed reliance on judgment of Competition Commission of India in Case No.13/2019 - MCX Stock Exchange Ltd. vs. National Stock Exchange of India Ltd., wherein in paragraph 25.1, the Commission has observed that once it is established that an enterprise or group is engaged in a conduct specified in clauses (a) to (e) of Section 4, there is no statutory requirement to examine any other additional impact on competitors. In paragraph 25.1, following was stated: "25.1 The contention that there is no observation on harm to consumers in the Commission's order dated 25.05.2011 and hence there is no element of abuse deserves to be dismissed because section 4 does not require it to be established. The section first and foremost requires that it be established that an enterprise or group is in domina....
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....ffect of the practice in question, the opposite situation that a certain course of conduct has not produced actual anti-competitive effects cannot rule out the possibility that that conduct was in fact capable of doing so when it was implemented, even if a long period of time has passed since that conduct took place. Such absence of effect could stem from other causes and be due to, inter alia, changes that occurred on the relevant market since that conduct began or to the fact that the undertaking in a dominant position was unable to complete the strategy underpinning that conduct. 123. Having regard to the foregoing, the answer to the fifth question is that Article 102 TFEU must be interpreted as meaning that, when a dominant position is abused by one or more subsidiaries belonging to an economic unit, the existence of that unit is sufficient for a finding that the parent company is also liable for that abuse. The existence of such a unit must be presumed if, at the material time, at least almost all of the capital of those subsidiaries was held, directly or indirectly, by the parent company. The competition authority is not required to adduce any additional evidence unl....
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....ve effects. A competition authority is not required to show intent on the part of the undertaking in question to exclude its competitors by means or having recourse to resources other than those governing competition on the merits. Evidence of such intent does, however, constitute a factor which may be taken into account in order to determine that a dominant position has been abused." 54. In the above case also, the Court (Fifth Chamber) held that dominant position must be assessed on the basis of whether that practice is capable of producing anti-competitive effect. The said judgment also does not support the submission of Counsel for the Commission rather it supports the submission of Appellants. 55. We may refer to a judgment of Hon'ble Supreme Court reported in (2019) 8 SCC 697 - Uber (India) Systems Pvt. Ltd. vs. Competition Commission of India, wherein while considering Section 4, sub-section (1), Hon'ble Supreme Court has laid down the following in paragraph 5: "5. There are two important ingredients which Section 4(1) itself refers to if there is to be an abuse of dominant position: (1) the dominant position itself. (2) its abuse. "....
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....llate authorities have adopted distinct approaches in different scenarios. For instance, in a case involving NSE, the CCI noted that NSE was dominant in the relevant market. It ordered NSE to modify its zero-price policy and to cease and desist from its unfair pricing, exclusionary conduct and from unfairly using its dominant position in the other market(s) to protect its own market. In coming to this conclusion, CCI followed a per se approach and did not enquire into the effect of the NSE's conduct. On appeal, CCI's decision was upheld by COMPAT. 4.4 However, the CCI has also relied on an effects-based approach to analyse abuse in many of its orders. In Dhanraj Pillay v. Hockey India, the CCI held that the Act was not violated where allegedly abusive contractual restrictions were not disproportionate to a sporting organisation's legitimate regulatory goals. It looked into the effects of the restrictive conditions imposed and noted that the conditions did not amount to abuse of dominance as they were intrinsic and proportionate to the objectives of the organisation. In the Schott Glass case, the COMPAT found that unlawful price discrimination required a showing of both "(i....
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...., the EC issued its Article 102 Guidance to clarify the position of law in relation to abuse of dominance. Within this, it was noted that for exclusionary abuses in Article 102, the EC will intervene if there is any likelihood of anticompetitive foreclosure. Even in its recent case laws, the EC has adopted an effects-based approach while analysing exclusionary abuse. However, such an effects-based approach is not mandated for exploitative abuses under Article 102. In Intel v. Commission, it was noted that there were two types of abuses in Article 102 of the TFEU- 'by nature abuses' (usually exploitative abuses, such as exclusivity rebates, excessive pricing, etc.) and 'other abuses' (usually exclusionary abuses, such as tying, product design, refusal to supply, etc.). It was held that 'by nature abuses' remain presumptively unlawful, but if a dominant firm submits evidence that its conduct is not capable of restricting competition, then an assessment of all the circumstances must be undertaken to decide whether the conduct is abusive. For 'other abuses' (usually exclusionary abuses), it was noted that a proper effects analysis must be undertaken irrespective of whether such a claim....
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.... by dominant entities before passing orders regarding such conduct. The CCI has relied on the effects built into some of the clauses of Section 4(2) to support its approach, e.g. "denial of market access in any manner" in Section 4(2)(c). 4.12. The Committee did not find any significant issues with the decisional practice of CCI discussed above, and found it to be in line with global practices. After conducting an analysis of the CCI's orders, the Committee came to the conclusion that the current text of Section 4(2) has not proven to be a hindrance to the CCI's ability to assess effects in abuse of dominance disputes. It was agreed that since it may not be necessary to undertake an effects analysis in all kinds of abuse, e.g. exploitative abuse, it may not be appropriate to mandate an effects analysis in Section 4(2). Therefore, it was concluded that no legislative amendment is required in this regard." 59. We may also notice that Article 102 of Treaty on the Functioning of the European Union ("TFEU") contains provision of abuse of dominant position. Article 102 is as follows: "Article 102 Any abuse by one or more undertaking of a dominant position wi....
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...., that is to say, discounts conditional on the customer's obtaining all or most of its requirements-whether the quantity of its purchases be large or small-from the undertaking in a dominant position. This formalistic approach was followed in several cases on rebates. In Intel v Commission the General Court continued to adopt a strict approach to exclusivity rebates, which it said were illegal unless the dominant firm could show an objective justification for granting them. However, there was an increasing intellectual consensus against the application of per se rules to unilateral behaviour, and the judgment of the General Court in Intel attracted particular hostility because of its formalistic approach. On appeal the Court of Justice, in paragraph 137 of its judgment, cited paragraph 89 of the judgment in Hoffmann-Law Roche; however, in paragraph 138 the Court added an important qualification to what appeared to be a per se prohibition: However, that case-law must be further clarified in the case where the undertaking concerned submits, during the administrative procedure, on the basis of supporting evidence, that it conduct was not capable of restricti....
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....at it prioritises enforcement activity in relation to conduct that is likely to lead to an anti-competitive foreclosure of the market, thereby having an adverse effect on consumer welfare." 62. In the judgment of Court of Justice in Case C-52/09 Konkurrensverket v Teliasonera Sverige, the Court has held "in order to establish whether [a margin squeeze] is abusive, that practice must have an anti-competitive effect on the market. 63. The decisional practice of the Commission as noted above in majority of cases is to enter into 'effect analysis' and the judgment of the COMPAT in Schott Glass India Pvt. Ltd. (supra) also endorsed the same view. We may now revert to Section 4, Explanation to Section 4, sub-section (2) provides as follows: "Explanation.- For the purposes of this clause, the unfair or discriminatory condition in purchase or sale of goods or service referred to in sub-clause (i) and unfair or discriminatory price in purchase or sale of goods (including predatory price) or service referred to in sub-clause (ii) shall not include such discriminatory condition or price which may be adopted to meet the competition; or (b) limits or restricts- ....
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....hat conduct of a dominant enterprise or group, which is held to be abusive has to be anti-competitive conduct and there has to be effect analysis on the above point. 66. We, thus, answer Issue No.1 in following words: For proving abuse of dominance under Section 4, effect analysis is required to be done and the test to be employed in the effect analysis is whether the abusive conduct is anti-competitive or not. Issue No. 2 67. The learned Senior counsel for Appellant has submitted that order of the Commission is replete with confirmation bias by relying on decision of European Commission dated 18.07.2018 in Case No. 40099, Google Android. It is contended that after the press release the judgment was issued, within a month information was submitted, on the basis of which proceedings under the Act were initiated. It is submitted that the report of the Director General indicates that the Director General proceeded to collect materials to submit Report finding abuse of dominant position by Google. It is submitted that the Commission after receipt of the report, returned finding similar to what was recorded in the European Commission judgment which indicates the existence of....
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....he submission of the learned Senior Counsel for the Appellant that the order of the Commission is replete with confirmation bias. Issue No. 3 and 3a 70. Before proceeding to consider the rival submissions of the parties we need to notice the relevant clauses of the Mobile Applications Distribution Agreement (MADA). The Appellant has brought on record sample Mobile Applications Distribution Agreement (MADA) with Karbonn in the Convenience Compilation. The Agreement dated 26.09.2018 begins with following background: "BACKGROUND WHEREAS: A. Google offers an integrated suite of mobile services on a non-exclusive, royalty-free basis to Android device manufacturers that have executed an Android Compatibility Commitment; B. Company desires to license Google's suite of mobile services to provide a consistent high-quality out-of-the-box user experience on Company's Android Compatible Devices; C. Nothing in this Agreement is intended to restrict Company or end users from installing third-party services on devices with Google's suite of mobile services, including services with similar functionality: and D. Company is unde....
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.... (ii) the Google Play Store icon; and (iii) an icon clearly labeled or branded "Google" that provides direct access to the Core Applications (using the icons and text Google provides or approves in writing)." 76. The submission advanced by learned Senior Counsel for Appellant is that MADA is an optional and per-device agreement which is voluntary and not unfair and the terms of MADA are not imposed on OEMs. The expression 'imposes' contains an element of compulsion which is not present in any of the Clauses of MADA. MADA is not unfair and does not restrict competition. The learned Senior Counsel for the Appellant has further submitted the OEMs do not find MADA's conditions unfair. It is submitted the Oppo told the Director General that GMS Apps are basic tools which are necessary for better user experience and despite pre-installed apps, Oppo has competing apps. Evidence given by Intex, Sony and Samsung have also been referred by the learned Senior Counsel for the Appellant. The Director General has asked Xiaomi and Samsung as to whether they have requested Google for exemption from pre-installation of Google Chrome. Xiaomi informed that it had sought exemption from G....
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.... OS in India; (c) Market for general web search services in India; (d) Market for non-OS specific mobile web browsers in India; (e) Market for online video hosting platform (OVHP) in India. In para 330, Commission held Google to be dominant in all these markets. No submission has been advanced before us questioning the finding of dominance recorded by the Commission. The Commission has examined in-depth the bargaining power of Google vis-à-vis OEMs in finalizing terms and conditions of the MADA. The Commission considered reply submitted by Google in the investigation as well as the response submitted by Xiaomi, Oppo, Huawei, Karbonn and Vivo. In Para 350 of the judgment, the Commission rejected the argument of Google that OEMs can negotiate the terms with Google. Commission, also after considering the relevant materials, has come to the conclusion that there is weak countervailing buyer power with OEMs. In para 354 following has been observed: "354. It is further noted that Google's apps covered in GMS have attained a status that without them, the customers would not be find a smart device attractive. Accordingly, the OEMs would not be in a position to offer devices....
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.... outcompeting Google s apps on the merits." 80. The Commission also concluded that the claim made by Google that MADA is optional and voluntary, does not reflect the commercial reality in terms of the real choice available to a device manufacturer. In para 468, the following has been observed: "468. The claims made by Google that MADA is optional and voluntary, do not reflect the commercial reality in terms of the real choice available to a device manufacturer. While an OEM is not obligated to pre-install any Google app on its Android devices, what cannot be lost sight of is that lack of essential Google apps, e.g., Play Store, erodes marketability of the devices. Majority of users expect these apps on an Android device, which unless pre-installed, cannot be accessed as they are not distributed through other Android app marketplaces. Google's policy of withholding its own apps from non-Google Android app marketplaces reinforces the compulsion for OEMs to pre-install these apps on their Android devices. Access to Play Store is particularly critical as Google is including more functionality and API calls under the closed licensing of Google Play. This makes Google Play Se....
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....rt IV dealing with remedies and liabilities, stated thus: "Until a short time ago anomalies used to be caused by the fact that the remedies employed in administrative law belong to two different families. There is the family of ordinary private law remedies such as damages, injunction and declaration; and there is a special family of public law remedies particularly certiorari, prohibition and mandamus, collectively known as the prerogative remedies. Within each family the various remedies can be sought separately or together or in the alternative. But each family had its own distinct procedure." At p. 514 it was elaborated that "this difficulty was removed in 1977 by the provision of a comprehensive, 'application for judicial review', under which remedies in both facilities became interchangeable". At p. 573 with the heading "Application for Judicial Review" in Chapter 17, it is stated thus: "All the remedies mentioned are then made interchangeable by being made available 'as an alternative or in addition' to any of them. In addition, the court may award damages if they are claimed at the outset and if they could have been awarded in an ordinary action."....
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.... 3 SCC 752: AIR 1990 SC 1031] it was held that the State when acting in its executive power, enters into contractual relations with the individual, Article 14 would be applicable to the exercise of the power. The action of the State or its instrumentality can be checked under Article 14. Their action must be subject to rule of law. If the governmental action even in the matter of entering or not entering into contracts, fails to satisfy the test of reasonableness, the same would be unreasonable. Rule of reason and rule against arbitrariness and discrimination, rules of fair play, natural justice are part of the rule of law applicable in situation or action by State/instrumentality in dealing with citizens. Even though the rights of the citizens, therefore, are in the nature of contractual rights, the manner, the method and motive of a decision of entering or not entering into a contract, are subject to judicial review on the touchstone of relevance and reasonableness, fair play and natural justice, equality and non-discrimination. It is well settled that there can be "malice in law". It was also further held that whatever be the act of the public authority in such monopoly or semi-....
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....., Case No. 20 of 2017", where the Commission has held that in terms of competition law, in cases of abuse of dominant position, the seminal issue is what harm is caused to the end consumer due to the behaviour of the dominant player. We, thus, conclude that what is said by OEMs who have Revenue Sharing Agreement with Google is not the final word on the dominant abuse by Appellant. There were other statements by various competitors showing the harm caused to them. OEM's statement thus has to be viewed in context of their total dependency on Google. The Commission has noted the submission of Amazon, Mozilla and Micromax, where they have stated that they could not enter into commercial relationship with OEMs due to restrictions imposed by Google on such OEMs through pre-existing commercial arrangement which may stand breached. In Para 447.3, the Commission has extracted the reply of Mozilla. Para 447.3 is to the following effect: "447.3 Relevant extract from the reply of Mozilla is reproduced as under: '...The web browser represents the front line between the consumer and the web. Common barriers to entry and expansion for web browser developers include: (1) the....
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....that MADA does not define 'must have apps' in any manner. Commission in its order at various places has referred to 'must have apps' as to the Play Store and has also referred 'must have apps' as Core Applications i.e. eleven applications of Google. 86. The Commission has used expression 'must have apps' in reference to Play Store and Play Services. Play services is the only place where essential Google APIs are housed without which phone does not become functional or interact with applications and the OS. Due to the significance and importance of Play Services which houses essential services, the Commission mentioned the said app as 'must have app'. Use of the expression 'must have apps' has been done by the Commission in the process of giving emphasis. At other places 'must have apps' has been referred to as eleven Core Applications of Google which are pre-installed by virtue of MADA. For a MADA signatory, eleven applications of Google are 'must have apps'. Use of expression 'must have apps' thus in no manner diminishes the emphasis which is sought to be laid by the Commission on the significance and relevance on the one hand of eleven Core Applications and on the other hand o....
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.... have also reduced the potential choice for users. Further, the pre-installation requirement for the entire bouquet of apps of Google is in the nature of supplementary obligation imposed on the OEMs, if they wish to pre-install even a single app of Google. The Commission is of the view that these practices of Google, especially when seen along with AFA/ ACC and RSAs, harms competition as the restrictions prohibits alternative vendors from outcompeting Google's apps on the merits." 90. We need to also notice judgment relied upon by learned Senior Counsel for the Appellant. The learned Senior Counsel for the Appellant has placed reliance on judgment of the Competition Appellate Tribunal (COMPAT) in "DLF vs. Competition Commission of India, 2014 SCC OnLine Comp AT 17", where Competition Appellate Tribunal has held that "an imposition has an element of compulsion" for it to be anti-competitive. There can be no quarrel to the proposition laid down by the Appellate Tribunal in the above case. In the present case, the Commission after considering all facts and circumstances has come to the conclusion that OEMs have no negotiation power and they have to accept the terms and conditions o....
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.... contracts, would not fall within the scope of Section 4(2)(a)(i) of the Act. There is no material on record to indicate that Clause 4.4 is, in any manner, commercially unconscionable and had found its place in the GSPA on account of unilateral imposition by GEECL by virtue of its dominant position." 94. There can be no quarrel to the proposition as laid down by the Hon'ble Delhi High Court in the above judgment. The manner in which the Appellant has abused its dominant position in the present case has been examined in detail by the Commission. The conditions imposed by Google for reasons noted in order of the Commission have been held to be unfair resulting in violation of Section 4(2)(a)(i). The judgment which has been cited by learned Senior Counsel for the Appellant were on the facts of the said cases and so far as proposition of law is concerned there can be no quarrel but present is a case where all facts have been considered and examined by the Commission, as noted above. 95. We note that MADA, which is primarily about licensing Google's suite of Mobile Services as is stated in Recital 'A' and 'B' of MADA, obligates the OEMs to distribute "Core Applications" upon the O....
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.... merits." 98. In view of the foregoing discussion, we concur with the findings and conclusion of the Commission as returned in Para 614.1. Issue No.3 and 3a are answered in following manner: (i) Issue No.3: Pre-installation of entire GMS Suite amounts to imposing of unfair condition on OEMs which is an abuse of dominant position by the Appellants resulting in breach of Section 4(2)(a)(i) and 4(2)(d). (ii) Issue No.3a: The Commission while returning its finding on breach of Section 4(2)(a)(i) and 4(2)(d) has considered the evidence on record and has returned finding that the conduct of the Appellant harms the competition. Issue No.4 and 4a. 99. The issues relate to Android Fork. A Fork is an operating system that is a modified, competing version of Android OS based on the Android source code. The issue in consideration is that whether making pre-installation of GMS Apps conditional upon signing of AFA/ACC, reduces ability of developers to make Fork version of Android thereby violating Section 4(2)(b)(ii). Anti-Fragmentation Agreement was introduced in India in 2011. AFA was succeeded by Android Compatibility Commitment (ACC). From 2017 onwards signing of A....
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....b)(ii) of the Act." 101. The learned Senior Counsel for the Appellant has relied on paragraph 555 of the Commission's decision, where it was observed that Google has a legitimate interest in licensing its Apps only for those devices which meet the requirements set by it. Paragraph 555 of the Commission's order is as follows: "555. The Commission notes that there are three aspects of the anti-fragmentation obligations. At first level, the OEMs can pre-install Google's proprietary apps i.e., GMS only on those Android devices which meet the compatibility requirements of Google. Google has a legitimate interest in licensing its apps only for those devices which meet the minimum requirements set by it. Thus, these anti- fragmentation obligations would allow Google to prevent OEMs from making any such changes in the OS which would interfere with the proper functioning of its proprietary apps. The Commission notes that some standardization may be required in order to ensure consistent and expected user experience from Google's proprietary applications. Thus, to some extent such restrictions, can be said to be justifiable to the extent these are applicable on devices with Googl....
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.... 104. Similarly, in paragraph 564.2, the evidence of Lava was noticed, which again stated about restricting the ability of developers to develop a holistic alternative of Google's App ecosystem. Paragraph 564.2 is to the following effect: "564.2. Lava has submitted that, ...AFA/ACC obligations restrict the developer/OEM's ability to modify and/or create a forked version as an alternative OS in any other combination or to develop upon it. This definitely affects the entry of new developers/OEMs and ability of existing developers to innovate, create and further develop an OS which is a true alternate to Android. However, since Lava has not yet attempted any such modifications to the android system, we are not in a position to comment on the actual impact of the same on future scientific development of an alternative OS. As per our current understanding, android fork developers are able to utilize the Google API's to a limited extent. This restricts their ability to develop a holistic alternate app eco system..." 105. The obligation imposed by AFA/ACC has been noticed by the Commission in paragraph 510, which is to the following effect: "510. F....
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.... if any". The response given by the Xiaomi has to be considered in its entirety. The statement noted by the Commission in paragraph 564.1 was the response given by Xiaomi as a general perspective. The general perspective, which is perceived by OEMs is relevant material to be considered and we do not find any error in the Commission's finding considering the aforesaid response of the Xiaomi. 109. Similarly, the learned Senior Counsel has referred to the statement of Lava. According to the Appellant, Lava has also stated that "However, since Lava has not yet attempted any such modifications to the android system, we are not in a position to comment on the actual impact of the same on future scientific development of an alternative OS". The OEM Lava's statement as quoted in paragraph 564.2 by the Commission was a clear statement that AFA/ACC obligations restrict the developers to modify or create a Fork version as an alternative OS in any other combination or to develop upon it. The value of the statement cannot be said to be diminished on the basis of the statement that Lava has not yet attempted any such modification. The perception of OEM on the limitation of development has cor....
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....s and conditions of AFA/ ACC made it literally impossible for the device manufacturers from partnering any developer of forked version of OS. The same is evident from the reply of Amazon and is reproduced as under: '..as regards the Fire devices business, Amazon initially considered a variant of an LG tablet under both Amazon and LG's brands, where LG would have modified an existing tablet and installed on it the Fire OS. This product, however, was not launched and this project was, in fact, cancelled at an advanced stage when prototypes (more specifically, "Engineering Validation Test" units) were being tested. The main reason for the cancellation of this project was LG's concerns that its agreement with Google would be terminated by Google due to LG supporting a forked version of Android. This led to Amazon developing its own tablet (i.e., the Fire tablet) using a contract manufacturer ("CM") (Quanta) which would operate on the Fire OS. (Emphasis supplied)" 111. The reply of Amazon, which has been noted and considered by the Commission cannot be termed irrelevant. Amazon tried to develop Android Fork and the failure of its product cannot be said to be irrelevant. D....
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....posing restrictions on OEMs, thereby also limiting scientific development. A clear finding has been recorded by the Commission in paragraph 583, as extracted above, that restriction imposed vide various clauses in AFA/ACC are unreasonable and disproportionate in scope and has resulted in foreclosure of its competitors in OS market. In paragraph 563, the Commission has again held that the anti-fragmentation obligation restrict the level of competition in the relevant market by disincentivizing the competing OS developers from developing Forked version of Android. Paragraph 563 is as follows: "563. As regards Google's contentions that AFA/ACC have unleashed competition and expanded opportunities for rival OSs, the Commission notes that the impact of the obligations imposed by AFA/ACC need to be appreciated from the perspective of Android fork OS developers. As already explained supra, these obligations have foreclosed the market for competing Android Fork OS developers. Further, the OEMs covered by AFA/ACC have limited flexibility in modifying the Android OS, as the customizations are controlled by Google via unilaterally deciding the CTS and CDD requirements. The anti-fragm....
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....itors. The Commission has also relied on the Revenue Sharing Agreements (RSAs) entered by Appellant with OEMs. 118. We have already referred to the Revenue Sharing Agreement in preceding paragraph of this judgment. We need to notice certain clauses of the Revenue Sharing Agreement. In the Convenience Compilation, Revenue Sharing Agreement entered into by Google with Huawei Software Technologies Co., Ltd. effective w.e.f. 01.12.2017 has been brought on record. Clause 1 is the 'Definitions' clause. Clause 2 deals with 'Revenue Sharing Eligibility'. Clause 2.1 provides: "2.1. Revenue Share Requirements 2.1.1. Devices With Google Applications. In order for an Android Compatible Device with Google Applications to qualify as a Qualified Device and for Company to receive Shared Net Ad Revenue for such Qualified Devices, Company must meet the conditions set forth below with respect to such Qualified Device, and such Qualified Device is subject to Google's approval: 2.1.1.1. compliance with the Search Access Point requirements in accordance with Exhibit B; 2.1.1.2. implementation of the applicable Client ID in accordance with Section 2.3; ....
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....rty Alternative Assistive Service that is prohibited from providing results or performing actions; and/or (b) a third party Alternative Assistive Service (or third party Alternative Assistive Service that is Company-branded), so long as it is not preloaded or visible on or accessible from the Default Home Screen or the Minus One Screen; 24.1.2 implement or install on any Qualified Device (including without limitation via the out-of-box experience or non-user, initiated download) (a) a Hotword in connection with any third-party assistant or third party assistant that is Company-branded; or (b) a hardware button or other physical affordance that invokes such third party assistant or third party assistant that is Company-branded; 2.4.1.3. present Introduce or suggest (including without limitation from an over-the-air prompt, or any promotional materials with respect to a Qualified Device) an Alternative Service to an End User except as specified in subsection 2.4.3 below; or 2.4.1.4. with respect to implemented, preloaded, or otherwise Installed applications on a Qualified Device, alter or adjust (or suggest to End Users to alter or adjust) the default searc....
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....nt evidences and correctly come to the conclusion that Appellant has abused its dominant position in the online search market resulting in denial of market access for competing search apps. 123. We have examined the above submissions raised by learned Senior Counsels for the parties. We may first take up submission of learned Senior Counsel for the Appellant that MADA and RSA need not be read together to arrive at a conclusion that RSA precludes pre-loading of competing search apps. 124. RSA can be entered by the Appellant with an OEM only when OEM is a MADA signatory. A MADA signatory necessarily has to sign an ACC. When a OEM signs all the three agreements its consequence has to be conjointly looked into. Thus, submission of the Appellant cannot be accepted that all the three agreements have to be separately looked into. Learned ASG has rightly placed reliance on judgment of the Hon'ble Supreme Court in "S. Chattanatha Kurayalar v. Central Bank of India, (1965) 3 SCR 318". In para 3 of the judgment following legal principle has been laid down: "....The principle is well - established that if the transaction is contained in more than one document between the same pa....
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....of course one deed between the same parties may be read to show the meaning of a sentence and may be equally read, although not contained in one deed but in several parchments, if all the parchments together in the view of the Court make up one document for this purpose." 28. The rationale behind this principle was explained by Fletcher Moulton L.3. in Manks V. Whiteley as follows: "...where several deeds form part of one transaction and are contemporaneously executed they have the same effect for all purposes such as are relevant to this case as if they were one deed. Each is executed on the faith of all the others being executed also and is intended to speak only as part of the one transaction, and if one is seeking to make equities apply to the parties they must be equities arising out of the transaction as a whole. It is not open to third parties to treat each one of them as a deed representing a separate and independent transaction for the purpose of claiming rights which would only accrue to them if the transaction represented by the selected deed was operative separately. In other words, the principles of equity deal with the substance of things, which in s....
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....s these cost savings on to consumers, and motivating firms to undertake research and development to meet customer needs. 2.2.1.2. Economic growth and development: Economic growth-the increase in the value of goods and services produced by an economy-is a key indicator of economic development. Economic development refers to a broader definition of an economy's well-being, including employment growth, literacy and mortality rates and other measures of quality of life. Competition may bring about greater economic growth and development through improvements in economic efficiency and the reduction of wastage in the production of goods and services. The market is therefore able to more rapidly reallocate resources, improve productivity and attain a higher level of economic growth. Over time, sustained economic growth tends to lead to an enhanced quality of life and greater economic development. 2.2.1.3. Consumer Welfare: Competition policy contributes to economic growth to the ultimate benefit of consumers, in terms of better choice (new products), better quality and lower prices. Consumer welfare protection may be required in order to redress a perceived imbalance....
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....petition Commission of India" (for short "the Commission") which has the power to perform different kinds of functions, including passing of interim orders and even awarding compensation and imposing penalty. The Director General appointed under Section 16(1) of the Act is a specialised investigating wing of the Commission. In short, the establishment of the Commission and enactment of the Act was aimed at preventing practices having adverse effect on competition, to protect the interest of the consumer and to ensure fair trade carried out by other participants in the market in India and for matters connected therewith or incidental thereto. 9. The various provisions of the Act deal with the establishment, powers and functions as well as discharge of adjudicatory functions by the Commission. Under the scheme of the Act, this Commission is vested with inquisitorial, investigative, regulatory, adjudicatory and to a limited extent even advisory jurisdiction. Vast powers have been given to the Commission to deal with the complaints or information leading to invocation of the provisions of Sections 3 and 4 read with Section 19 of the Act. In exercise of the powers vested in it ....
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....subject of all the three agreements relate to android open source and are interrelated. We, thus, are of the view that all agreements in question have to be conjointly read and their cumulative effect has to be noticed especially in reference to the competition. 128. Coming to the submission of the Appellant that the Commission lost sight of the difference in pre-2014 RSAs and post-2014 RSAs, the above argument cannot be accepted in view of categorical observations made in Para 403 of the Commission's order where the Commission has observed "that the Commission understands that the agreements prior to 2014 covered all the Android devices of the respective OEM, whereas the coverage of RSAs for the period pertaining to post 2014, were in respect of identified portfolio of devices". 129. The Commission has also observed that the Appellant has not brought on record any substantial pre-installation agreement between competing search service provider and an OEM which may reduce Google's dominance in the relevant market. A positive finding has been recorded that that competing general search services are not able to counter the competitive edge secured by Google for itself through p....
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....d RSA is also another factor which even acts as entry barrier for pre-installing any competing general search apps by OEMs. In Para 412, the Commission has held: "412. Further, if a third-party search service provider wants to pre-install and set its search as default in Android, it will have to compensate the OEMs for the potential loss of revenue sharing. However, the total payment to OEMs by Google far exceeds the annual revenue of its key competitors Microsoft &Yahoo from search business in India. Based on the data presented by the DG, it is noted that a competing general search service could not have matched Google's revenue share payments to OEMs. In this regard, it is further noted that since the scope of these arrangements is generally global in nature, therefore, the competing general search service would have to offer a revenue share to OEMs sufficiently high to negate the payments made by Google at global level. This significantly impacted their ability to pay the OEMs." 131. The Commission has also returned finding that abuse of dominance by Appellant has anti-competitive effect which harms competition in the search engine market. Para 411 is referred to....
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....mposed a fine of EUR4.34 billion on Google for, among other practices, tying its Google Search app and Chrome browser with the Play Store, which enables users to download, install and manage the apps on Android, Google's smart mobile operating system. In the Commission's view the inclusion of Google Search and Chrome in the Play Store was capable of restricting competition for two main reasons. First, it provided Google with a significant competitive advantage that competing general search engines and internet browsers could not offset, Google Search and Chrome apps were pre-installed on virtually all Android devices, which meant that they were more likely to be used than if users had to download them. Secondly, Google's tying practices were found to deter innovation, harm users of general search services and internet browsers and strengthen Google's dominant position for general search services The decision is on appeal to the General Court and much is at stake is Google entitled to pre-install its own apps in its Play Store, or should it be required to permit OEMs to choose the apps that are pre-installed on their smart mobile devices?" 136. The Commission has ....
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....losing distribution channels for rivals OVHPs and thereby, deterring their incentive to innovate and offer choice to users. Such leveraging by Google allows it not only to protect but also reinforces its dominant position in the market for OVHPs. The Commission further notes that Google by the abovementioned tying safeguarded its revenue from advertisements resulting from YouTube." 142. The Commission has also noted that Google had a market share of more than 95% since 2009 in online general web search market. The Commission has also held that tying between Play Store and Google Search has been used to achieve and perpetuate dominance by Appellant and having anti-competitive effects. The competitive search engines have to take additional measures to compete with Google Search. 143. From the foregoing discussion, we are of the view that conclusion of the Commission, as recorded in Para 614.3, 614.4 and 614.5 regarding contravention of Section 4(2)(e) are based on relevant materials and reasons which does not warrant any interference in exercise of our appellate jurisdiction. In result, we answer the issues in following manner: (i) Issue No.6 and 6a: Appellant has leve....
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....ktop/ laptop and smartphone market. In light of the aforesaid, please furnish complete details about the fact that user bias to pre-installation may be more pronounced in mobile segment than PC/Laptops." d. "There, admittedly was an impact of the non-availability of the prime screen placement for your browser i.e. UC Browser as compared to Google's Chrome and further pre-loading of any other apps competing with Google Browser in Android devices. Please provide a detailed response alongwith relevant documents, if any, to support your assertion." e. "In light of the same, please furnish details of possible loss (not restricted to monetary loss) if any, faced by you due to inability of existing Android Handset makers to distributed your Handset (Fire OS) or make software for Fire OS on account of AFA/ACC obligations." f. "Whether the restriction imposed on the device manufacturers by using AFA/ACC has any negative impact on future scientific development of alternative OS. Please submit a detailed response"" 145. The learned Senior Counsel has referred to judgment of the Hon'ble Supreme Court in Competition Commission of India vs. Steel Authority of India ....
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.... Hon'ble Supreme Court in Oryx Fishries Pvt. Ltd. vs. Union of India and Ors. - (2010) 13 SCC 427. 148. The Hon'ble Supreme Court in the above case had occasion to consider whether action taken by Marine Products Export Development Authority was justified. It was contended before the Hon'ble Supreme Court that show-cause notice issued by the Authority stated that it has been proved beyond doubt that you have sent sub-standard material to M/s Cascade Marine Foods, LLC, Sharjah and it was contended that Authority having already made up its mind, the show-cause notice or proceedings were empty formality. The Hon'ble Supreme Court in the above case observed following in paragraph 27, 28, 29, 32, 32, and 33 as follows: "27. It is no doubt true that at the stage of show cause, the person proceeded against must be told the charges against him so that he can take his defence and prove his innocence. It is obvious that at that stage the authority issuing the charge-sheet, cannot, instead of telling him the charges, confront him with definite conclusions of his alleged guilt. If that is done, as has been done in this instant case, the entire proceeding initiated by the show-cause....
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....ng if such a proceeding has to inspire confidence in the mind of those who are subject to it." 149. The above observation can have no application in the facts of the present case. In the present case, the Director General was not taking any decision on any of the rights of the parties. The notices issued by the Director General were notices enlisting several questions and asking the response. The learned Senior Counsel for the Appellant may be right that certain questions, which have been framed ought not to have been framed in the manner they were framed. However, the OEMs, which have given answers to the questions, were in no manner inhibited by the framing of questions and the answers given by the OEMs, which has been noted by the Commission in its order indicate that several OEMs gave answers in the negative. 150. The learned Senior Counsel for the Appellant Shri Maninder Singh has relied on judgment of the Hon'ble Supreme Court in Varkey Joseph vs. State of Kerala - (1993) Supp (3) SCC 745 wherein Hon'ble Supreme Court has held that the question shall not be put to enable the witness to give evidence which the prosecutor wishes to elicit from the witness. In paragraph 11....
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.... as leading questions by the Appellant, it cannot be said that Director General has pre-decided the issue. The notices issued by the Director General were with the object of eliciting information, his function was only inquisitive in nature. 153. The learned Senior Counsel for the Appellant has also placed reliance on judgment of Competition Appellate Tribunal in the GlaxoSmithKline Pharmaceuticals Limited and Ors. vs. Competition Commission of India - Appeal No.85 of 2015. The COMPAT in this judgment, in paragraph 42 laid down following: "42. "In our opinion, the investigation conducted by the DG lacked objectivity and the findings recorded by him are ex facie erroneous and legally unsustainable and the Commission committed grave error by approving the conclusions of the DG that the appellants are guilty of collusive conduct in violation of Section 3(3)(d) read with Section 3(1) of the Act. It is more than evident from the record that in response to tender notice dated 25.06.2011, GSK had given bid for 1,00,000 doses of QMMV @ Rs.3000.90 per 10 doses vial and Sanofi had given bid for supply of 90,000 doses @ Rs.2899/- per 10 doses vial. Both the appellants had given co....
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....for the Appellant has also relied on the judgment of the Hon'ble Supreme Court in Ranjit Thakur vs. Union of India - (1987) 4 SCC 611. The Hon'ble Supreme Court in the above case had occasion to consider principles of natural justice, bias and real likelihood of bias. The Hon'ble Supreme Court held that biased judgment is a nullity. The proposition laid down by the Hon'ble Supreme Court is well settled. In paragraph 16 and 17, the Hon'ble Supreme Court has laid down following: "16. It is the essence of a judgment that it is made after due observance of the judicial process; that the court or tribunal passing it observes, at least the minimal requirements of natural justice; is composed of impartial persons acting fairly and without bias and in good faith. A judgment which is the result of bias or want of impartiality is a nullity and the trial "coram non-judice". (See Vassiliades v. Vassiliades [AIR 1945 PC 38 : 221 IC 603] .) 17. As to the tests of the likelihood of bias what is relevant is the reasonableness of the apprehension in that regard in the mind of the party. The proper approach for the Judge is not to look at his own mind and ask himself, howe....
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.... hold that the CCI is per se or purely a judicial tribunal. As an adjudicatory body, there can be, no doubt, of course, that its orders are quasi-judicial and must be preceded by adherence to a fair procedure. As to what is a fair procedure has been elaborately dealt with by Section 26 and various regulations that mandate the kind of opportunity that various interested parties are to be given. Equally, in the course of such proceedings, the CCI is required to make procedural orders-which, a line of decisions require-are to be based on reasons. The final adjudicatory order, of course, has to contain elaborate reasoning. In that sense, the CCI is, no doubt, a Tribunal. But it is emphasized again that it is not purely a judicial Tribunal but discharges multifarious functions, one of which is adjudicatory. 148. It follows, therefore, that in line with the above declaration of law, at all times, when adjudicatory orders (especially final orders) are made by CCI, the presence and participation of the judicial member is necessary. 212. In view of the findings of this Court, in the previous parts of this judgment, the following conclusions are recorded and directions issu....
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....cancy, etc. not to invalidate proceedings of Commission.- No act or proceeding of the Commission shall be invalid merely by reason of - (a) any vacancy in, or any defect in the constitution of, the Commission; or (b) any defect in the appointment of a person acting as a Chairperson or as a Member; or (c) any irregularity in the procedure of the Commission not affecting the merits of the case." 160. Section 15, sub-clause (a) protects act or proceeding of the Commission, which suffers from any defect in the constitution of the Commission. 161. The learned ASG has referred to judgment of this Tribunal in Amazon.com NV Investment Holdings LLC vs. Competition Commission of India - Competition Appeal (AT) No.01 of 2022, where the judgment of the Delhi High Court was also taken into account and it was noted that the said judgment is pending as on date before the Hon'ble Supreme Court and relying on Section 15 of the Competition Act, this Tribunal held that the absence of Judicial Member is not a fatal one. 162. In view of the foregoing discussions, we are of the view that order of the Commission cannot be set-aside on the submission of learned Counsel ....
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.... of directing the enterprise to discontinue such abuse of dominant position. It is submitted that there is ample power under Section 27(g) also to pass such other order or issue such directions as it may deem fit. 169. During the course of submission, the learned Senior Counsel for the Appellant submitted that any developer of Apps/App store can distribute their Apps and Apps Store through Play Store of Google for which Google provides an Agreement to be entered where App developer has to share a portion of revenue received from App. There is no finding in the order of the Commission that Google has abused its dominance in restricting App developers to put their Apps through Play Store. The learned Counsel for one of the Intervenors has also submitted that any developer of Apps can put his App in Google Play Store provided it enters into an Agreement, where it has to share part of its revenue from the App with Google. 170. From the submissions which have been advanced by the learned Senior Counsels for the parties, it is clear that the Appellant does not prohibit distribution of App developed by any App developer through its Play Store. If there is requirement to enter into a....
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....itions of the Appellant. 174. We, thus, are of the view that direction issued in paragraph 617.9 is unsustainable and deserves to be set-aside. 175. The direction issued by Commission in paragraph 617.10 is that "Google shall not restrict the ability of app developers, in any manner, to distribute their apps through sideloading". This direction has also been challenged by the Appellant. The learned Senior Counsel for the Appellant submits that this direction is unnecessary, since side-loading, unlike the Apple ecosystem, is permitted on the Android Platform. A user is allowed to download any app, outside the Play Store, through the general internet. Google only displays appropriate statutory warnings to users about the risks, which risk has also been acknowledged by the Commission also. Mere warnings can in no way be equated to a restriction. The Commission has not returned any finding of infringement in relation to sideloading restricting the competitiveness of rival app stores. The DG has also recorded the issue only in the context of Play Store's alleged dominance and entry barriers in the market for app stores for Android. It is submitted that direction is contrary to the....
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....tain any finding that Appellant has abused its dominant position in Play Store qua sideloading. The learned Counsel for the Appellant has relied on a judgment of the Hon'ble Delhi High Court delivered on 14.02.2023 in Winzo Games Private Limited vs. Google LLC and Ors. - CS(COMM) 176/2022. In the above case, a suit was filed by Plaintiff to restrain Google LLC from displaying any warning against the use of the gaming platform/ application 'WinZo Games' of the Plaintiff on the Android Operating System. It was contended before the Court that Google resisted the suit and contended that warning is being used on a non-discriminatory basis in respect of all third-party APK format files/ applications, which can be downloaded from the internet. The Hon'ble Delhi High Court noticed the statutory provisions under the Information Technology Rules, where defendants are required to put in place such warnings so s to guard the user against potential threat. It is useful to notice the analysis and findings of the Hon'ble Delhi High Court in paragraph 17, 18, 19, 20 and 21, which is to the following effect: "17. The warning given by the defendants is in the nature of a disclaimer and does....
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.... out below: "8. Reasonable Security Practices and Procedures.- (1) A body corporate or a person on its behalf shall be considered to have complied with reasonable security practices and procedures, if they have implemented such security practices and standards and have a comprehensive documented information security programme and information security policies that contain managerial, technical, operational and physical security control measures that are commensurate with the information assets being protected with the nature of business. In the event of an information security breach, the body corporate or a person on its behalf shall be required to demonstrate, as and when called upon to do so by the agency mandated under the law, that they have implemented security control measures as per their documented information security programme and information security policies. (2) The international Standard IS/ISO/IEC 27001 on "Information Technology - Security Techniques - Information Security Management System - Requirements" is one such standard referred to in sub-rule (1). (3) Any industry association or an entity formed by such an association, whose membe....
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....or operating system. Thus, the provision which is relied by learned ASG in support of its submission, itself permits imposition of measures, which are strictly necessary and proportionate and do not endanger the integrity of the hardware or the operating system. We, thus, are of the view that direction under paragraph 617.10 was unnecessary. 180. The next direction, which has been attacked by the learned Senior Counsel for the Appellant is direction issued in paragraph 617.3, which is to the following effect: "617.3. Google shall not deny access to its Play Services APIs to disadvantage OEMs, app developers and its existing or potential competitors. This would ensure interoperability of apps between Android OS which complies with compatibility requirements of Google and Android Forks. By virtue of this remedy, the app developers would be able to port their apps easily onto Android forks." 181. The learned Counsel for the Appellant contended that the Commission has not returned any finding that Appellant has a duty to supply Play Services APIs for OEMs. It is submitted that the Commission did not demonstrate that Play Services APIs fulfil the criteria of 'essential fa....
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....he APIs, particularly Google Play Services, is a core system software that enables key functionalities of every certified Android device. Certified Android devices are those devices, on which Google Play Protect is installed and Google certifies to ensure that these devices are secure and ready to run Apps from Google and the Play Store. It is argued by the learned Senior Counsel for Appellant that these APIs are proprietary Apps, which are made available to App developers and OEMs and are continually updated by Google. 185. The various core device features that Google Play Services provide services relating to security and reliability (through installation of Google Play Protect which provides protection from malware), facility to developers through thousands of continually updated APIs such as 'Google Cast' for streaming, Google Maps, provision of accurate location information and sending notifications through a messaging transport layer and enabling core services, such as making emergency call, autofill services, sending and receiving files etc.. Thus, it is clear that the APIs which include Google Play Services are APIs that provide essential services to the Apps which are p....
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....nstalled apps by the users". 192. The learned Senior Counsel for the Appellant submits that the Commission has imposed the said direction on the ground that users inability to remove Google's preinstalled Apps from the devices contributes to their tendency to use the preinstalled options and not use alternatives, which causes foreclosure. The Appellant's contention is that user are fully entitled to disable preinstalled Apps in three simple steps, which can be applied only in a three seconds and after the App is disabled, it stops being visible to the users and it vanishes from the screen. The disabled Apps do not collect data and do not perform any background functions or use any device resources and can be re-enabled only by a user. 193. The Commission has already issued direction under Section 27, where Appellant has been directed that OEMs shall not be restrained from choosing from amongst Google's proprietary applications to be pre-installed and should not be forced to pre-install a bouquet of applications and in deciding the placement of pre-installed apps, on their devices. When the preinstalled Apps are at the choice of the OEMs and they are not obliged to preinstall ....
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....n interpreted to mean the corporate entity turnover pertaining to the products and services that have been found to be contravening the provision of Competition Act. 199. With regard to the calculation of "relevant turnover" in the present case, he has argued that the CCI found Google's model of providing Android Mobile OS, with signing of MADA, ACC/AFA and RSA as anti-competitive and violative of the provisions of the Competition Act, and besides this, the CCI has not rendered any finding in relation to contravention of the Competition Act and its provisions. He has further argued that the CCI has, inter alia, held that the revenue of Google pertaining to India in relation to its apps and services shall be taken into account for computing the relevant turn over and the penalty levied on Google by the Impugned Order which is not correct. He has further argued that the calculation of "relevant turnover" is not correct in the light of Hon'ble Supreme Court judgment in the matter of Excel Crop Care Limited (supra) and turnover relating to those Apps and services of Google that have not been found to contravene any of the provisions of the Competition Act which should not form part ....
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....ion (that was made in 2021) without informing Google that it viewed Google data as inaccurate). 203. The Learned Senior Counsel for Appellant has argued that Google was asked to provide accurate and reliable information vide order dated 6.10.2021 whereby Google was asked to submit audited Balance-Sheet and Profit & Loss Account for three years as well as details of turnover and profit generated or arising/accruing from India by Google and its group entities from all revenue streams associated with Android Apps (including advertising and revenue generated from play store and Apps which are part of GMS) for the three financial years viz. 2018-19, 2019-20 and 2020-21 by affidavits supported by certificates of Chartered Accountants by 5.11.2021. He has added that Google sought some more time for submitting the requisite financial details which was granted by CCI and thereafter Google submitted audited financial statements of GIPL and Alphabet (the global company) on 26.11.2021 and sought three weeks extra time to submit financial information regarding turnover and profit from all revenues streams associated with Android including advertising and revenue from Play Store plus GMS Apps....
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.... on the information submitted which has been cogently dealt with and reflected in the Impugned Order. 206. The relevant provision in Section 27 regarding imposition of penalty in the Competition Act, 2002 is as follows:- "Orders by Commission after inquiry into agreements or abuse of dominant position 27. Where after inquiry the Commission finds that any agreement referred to in section 3 or action of an enterprise in a dominant position, is in contravention of section 3 or section 4, as the case may be, it may pass all or any of the following orders, namely: - Xx xx xx xx (b) impose such penalty, as it may deem fit which shall be not more than ten per cent. of the average of the turnover for the last three preceding financial years, upon each of such person or enterprises which are parties to such agreements or abuse: 42[Provided that in case any agreement referred to in section 3 has been entered into by a cartel, the Commission may impose upon each producer, seller, distributor, trader or service provider included in that cartel, a penalty of up to three times of its profit for each year of the continuance of such agreement or ten per cent.....
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....ld be imposed on the total/ entire turnover of the offending company or only on "relevant turnover". The Hon'ble Supreme Court opined that adopting the criteria of 'relevant turnover' for the purpose of imposition of penalty will be more in tune with the ethos of the Act and the legal principles which surround matters pertaining to imposition of penalties. While reaching this conclusion, the Hon'ble Supreme Court recorded the following reasons: "..When the agreement leading to contravention of Section 3 involves one product, there seems to be no justification for including other products of an enterprise for the purpose of imposing penalty. This is also clear from the opening words of Section 27 read with Section 3 which relate to one or more specified products. It also defies common sense that though penalty would be imposed in respect of the infringing product, the maximum penalty imposed in all cases be prescribed on the basis of 'all the products and the total turnover of the enterprise. It would be more so when total turnover of an enterprise may involve activities besides production and sale of products. like rendering of services etc. It, therefo....
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....ich give rise to huge traffic and data which are effectively monetized through advertisements which bring revenue to Google. It would, therefore, be correct to say that what is coming out of the revenue streams coming from the mobile devices have at that very base the OS of the device. The multi-sided nature of these digital platforms is clear from the fact that on one side there are the OEMs and app developers, while on the second side are the users that generate data and traffic, and on the third side are the advertisers who use these digital platforms for advertising their goods and services. 211. The substratum of Android OS on which the mobile ecosystem is based, is therefore, the foundation of Google ecosystem, comprising of Google search driven apps and other apps that derive data from users and funnel the traffic and data from them into Google Search results which becomes one of the important bases of its advertisement revenue. The payment received from advertisers is, therefore, dependent on the data and traffic coming from the various apps, including the search apps feeding primarily in and also other strengthening and refining Google search service. Through 'network e....
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....s/heads in India arising out of the entire business of Google India's operations of Android OS based mobiles. 216. We also note that Google has not provided the financial information as sought by the CCI vide its order dated 6.10.2021, and reiterated in its later order dated 17.10.2021. The inadequacy of the data supplied by Google has been mentioned in detail in paragraphs 630, 631, 632, 633 and 634, whereafter the CCI points out to significant inconsistencies and wide disclaimers in presentation of the requisite data by Google. In such a situation, CCI has carried out the "best estimation" on the basis of a financial statements and information submitted by Google. Therefore, we agree with the CCI's decision to quantify the monetary penalties on the basis of data presented by Google. In during so, also note that the CCI has considered the lower of the two figures, from between Rs.19,904 crores which is the sum total of various segments/heads of Google business in India for FY 2020-2021 and Rs. 16742 Crores, which is its total revenue from entire business from Indian operations for the FY 2020-21. Thus, in a conservation approach, the CCI has taken the lower of these two figures....