TaxTMI 
TaxTMI 
2025 (5) TMI 577
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...., J. This Appeal has been filed challenging the order dated 25.10.2022 passed by the Competition Commission of India (hereinafter referred to as "Commission") under Section 27 of the Competition Act, 2002 (hereinafter referred to as "Act") in Case No. 07 of 2020, Case No.14 of 2021 and Case No.35 of 2021. The Commission after receipt of the information in the above cases passed an order under Section 26 of the Act directing for investigation. Director General (DG) conducted the investigation as per the Act and submitted a report to the Commission. Thereafter, after hearing the parties the Commission passed the impugned order under Section 27 of the Act. By the impugned order, the Commission has issued various directions against the Appellant as envisaged in Section 27 and also imposed penalty under Section 27(b) of the Act. Aggrieved by the order passed by the Commission, this Appeal has been filed. 2. Brief background facts which are necessary to be noticed for deciding the Appeal are : - 2.1. This Appeal has been filed by Alphabet Inc. with three other Google entities who are referred hereinafter as "Google". Google LLC launched an app store for Android phones called And....
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....d profit in India. On 06.10.2022, Appellants submitted their financial information as required by letter dated 14.09.2022. The Commission passed final order on 25.10.2022 against which this Appeal has been filed. 3. We have heard Shri Sajan Poovayya, Learned Senior Counsel and Shri Ritin Rai, Learned Senior Counsel for the Appellants, Shri Balbir Singh, Learned Senior Counsel and Shri Samar Bansal, Counsel for the Competition Commission of India and Shri Jayant Mehta, Sr. Counsel with Shri Abir Roy, Learned Counsel for the Respondent No.3. 4. Learned Counsel for the Appellants submits that the Commission's identification of the market is demonstrably wrong. The determination of the relevant market as "market for apps facilitating payment through UPI in India" is demonstrably flawed. There is no basis for such narrow market definition. All digital modes of payments i.e. Wallets, UPI, net banking, credit and debit cards are substitutable both from a customer and merchant perspective. Survey data presented by Google and the response of Amazon clarified that all modes of digital payments such as wallets, UPI, credit and debit cards etc. are substitutable from the consumer perspec....
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.... of any legitimate business interests' is without any basis. The finding that the said is 'devoid of any legitimate business interests' is only bare conclusion without giving any reason and without considering the objective necessity to impose such a condition as explained by Google in its reply. The requirement of Google for requiring app developers to adopt GPBS did not harm competition. The Commission failed to apply the relevant test while examining abuse of dominance. The finding of the Commission that Google discriminated by not using GPBS for YouTube, thereby violating Section 4(2)(a)(i) & (ii) is also unsustainable. No finding has been returned that two requirements i.e. (i) dissimilar conditions applied to equivalent transactions with other trading partners and (ii) harm to competition due to trading partners suffering a competitive disadvantage that led to competitive injury in the downstream market has been established. The Commission also ignored Google defence to the discrimination claimed that after 2020 Google required those Google apps that did not use GPBS to make necessary changes. YouTube is subject to the same policies. The finding of the Commission that Google ....
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....t effect analysis is required to be conducted before coming to a finding that a dominant player has abused its dominance. The Commission has adopted the legally flawed premise that the Commission is not required to conduct an effect analysis stating that "once an entity is found to be dominant in the relevant market, the Act recognises its ability to adversely affect competition in the market". The Commission's submission that Act has been enacted to prevent "likely" effects whereas Section 4 of the Act does not support any such submission. The materials on the record clearly demonstrate that there has been no anticompetitive effect in the market considering the minimal share of UPI transactions on Google Play vis-à-vis transactions in UPI ecosystem. The transactions on Google Play are a mere 0.1% of the total payments processed through UPI in India. The Commission has issued various directions on premise that Google is a gatekeeper which direction amounts to a form of ex ante regulation for undefined "gatekeepers" beyond the Commission's powers under Sections 4 and 27 of the Act. The Report of the Committee on Digital Competition Law and Raghavan Committee Report has made c....
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....r any of the product/service it operates. This is against the principles of proportionality set out by the Hon'ble Supreme Court in Excel Crop's case. Commission could not have imposed a provisional penalty which are against the pronouncement made by this Tribunal in Google LLC vs. CCI (1st Google Case). All directions issued by the Commission in paragraph 395 need to be set aside as well as the penalty imposed. Actual anti-competitive effect has not been proved by any effect analysis. No violation of any of the provision of Section 4 has been established. There was no occasion to pass any order under Section 27. DG's investigation was not in accordance with the principle of natural justice. The DG posed leading questions to the select group which he chooses to include in inquiry. DG excluded key stakeholders from its inquiry, including Google's largest competitor for app distribution, Apple. DG Report cherry picked evidence while ignoring swathes of contrary evidence and submissions from Google and third parties. In submissions, Appellants has raised objections to the procedure adopted by DG in conducting the investigation which was all ignored by the Commission. Google has legiti....
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...., 4(2)(c) and 4(2)(e). The submission of the Appellant that no independent finding has been returned by the Commission on various violation is not correct. The Commission has returned independent finding on each of the violation after considering the material and evidence on record. Coming to the market determination by the Commission, it is submitted that the Commission has determined the relevant market. The submission of the Appellant that other digital payments like wallet, debit card, credit card, net banking are substitutable with payment through UPI app cannot be accepted. The Commission has considered the submissions elaborately and has returned its finding. The Commission has rightly held that UPI enable digital payment apps and debit/credit cards based payments do not fall in the same market. The Commission has also noticed the difference between payment through UPI and net banking and held that there is no substitutability between payment through UPI and transfer through net banking. Similarly, the Commission has also examined and held that payment to UPI and mobile wallets are two different. The Commission has also rightly held that Google to be dominant in the market f....
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.... which is being perpetuated through mandatory GPBS. Unlike, industry practice of making payment in 2-3 days, Google provides itself a leeway wherein the payments are released after a gap of 15 to 46 days from the day of transaction, this is unfair for app developers especially small app developers. If the app developers would have freedom to choose a payment processor of their choice, they would be able to receive payment in shorter time. 5.1. Coming to the imposition of penalty, it is submitted that the Commission follows the two stage analysis prescribed in Excel Crop Care Ltd. case i.e. identifying the relevant turnover for imposing of penalty and (ii) considering all aggravating and mitigating factors in arriving at the quantum of penalty. The impugned order correctly holds that relevant turnover must cover all relevant revenue streams. The Google generates revenue through both advertising and by charging service fees. The conduct of Google is a continuation of its vertical integration strategy based on data collection and monetisation. Data given by Google was incomplete accompanied by several caveats and unsupported by certificates of Chartered Accountants. The impugned or....
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....ection 2(y). The CCI has found violation of provisions of Section 4 in the present case. Section 4 contains heading of 'Abuse of dominant position'. Section 4 of the Act provides as follows: "Abuse of dominant position 4. (1) No enterprise or group shall abuse its dominant position. (2) There shall be an abuse of dominant position 4 [under sub-section (1), if an enterprise or a group] - (a) directly or indirectly, imposes unfair or discriminatory- (i) condition in purchase or sale of goods or service; or (ii) price in purchase or sale (including predatory price) of goods or service. 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- (i) production of goods or provision of services or market therefor; or (ii) technical or scientifi....
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....such enterprises; (f) dependence of consumers on the enterprise; (g) monopoly or dominant position whether acquired as a result of any statute or by virtue of being a Government company or a public sector undertaking or otherwise; (h) entry barriers including barriers such as regulatory barriers, financial risk, high capital cost of entry, marketing entry barriers, technical entry barriers, economies of scale, high cost of substitutable goods or service for consumers; (i) countervailing buying power; (j) market structure and size of market; (k) social obligations and social costs; (l) relative advantage, by way 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." 11. Section 26 deals with 'Procedure for inquiry under Section 19. Section 26, sub-section (1), (3) and (4) are as follows: "Procedure for inquiry under section 19] 26.(1) On receipt of a reference from the Central Government or a State Gov....
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....utor, 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. of its turnover for each year of the continuance of such agreement, whichever is higher. (c) Omitted by Competition (Amendment)Act, 2007 (d) direct that the agreements shall stand modified to the extent and in the manner as may be specified in the order by the Commission; (e) direct the enterprises concerned to abide by such other orders as the Commission may pass and comply with the directions, including payment of costs, if any:; (f) Omitted by Competition (Amendment)Act, 2007 (g) pass such other order or issue such directions as it may deem fit. Provided that while passing orders under this section, if the Commission comes to a finding, that an enterprise in contravention to section 3 or section 4 of the Act is a member of a group as defined in clause(b) of the Explanation to section 5 of the Act, and other members of such a group are also responsible for, or have contributed to, such a contravention, then it may pass orders, under this section, against such....
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....at Investigation did not find sufficient evidence to indicate that Google has abused its dominant position so far as issue pertaining to pre-installation of Google Pay UPI App is concerned. The CCI has determined the following relevant markets in paragraph 234, which is as follows: "234. To summarize, the Commission determines following five relevant markets in the present matter: a. Market for licensable OS for smart mobile devices in India b. Market for app store for Android smart mobile OS in India c. Market for Apps facilitating payment through UPI in-India" 17. The CCI in paragraph 235 has also held Google to be dominant in the first two relevant markets, i.e., market for licensable OS for smart mobile devices in India and for app store for Android smart mobile OS in India. Paragraph 235 is as follows: "235. Further, the Commission also holds Google to be dominant in the first two relevant markets i.e., market for licensable OS for smart mobile devices in India and market for app store for Android smart mobile OS in India." 18. After holding the Google to be dominant in first two relevant markets, the CCI proceeded with the as....
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....d to be in violation of the provisions of Section 4(2)(a)(i) of the Act. 392.2. Google is found to be following discriminatory practices by not using GPBS for its own applications i.e., YouTube. This also amount to imposition of discriminatory conditions as well as pricing as YouTube is not paying the service fee as being imposed on other apps covered in the GPBS requirements. Thus, Google is found to be in violation of Section 4(2)(a)(i) and 4(2)(a)(ii) of the Act. 392.3. mandatory imposition of GPBS disturbs innovation incentives and the ability of both the payment processors as well as app developers to undertake technical development and innovate and thus, tantamount to limiting technical development in the market for in-app payment processing services. Thus, Google is found to be in violation of the provisions of Section 4(2)(b )(ii) of the Act. 392.4. mandatory imposition of GPBS by Google, also results in denial of market access for payment aggregators as well as app developers, in violation of the provisions of Section4(2)(c) of the Act. 392.5. practices followed by Google results in leveraging its dominance in market for licensable mobil....
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.... further its competitive advantage. Google shall also provide access to the app developer of the data that has been generated through the concerned app, subject to adequate safeguards, as highlighted in this order. 395.6. Google shall not impose any condition (including price related condition) on app developers, which is unfair, unreasonable, discriminatory or disproportionate to the services provided to the app developers. 395.7. Google shall ensure complete transparency in communicating to app developers, services provided, and corresponding fee charged. Google shall also publish in an unambiguous manner the payment policy and criteria for applicability of the fee(s). 395.8. Google shall not discriminate against other apps facilitating payment through UPI in India vis-a- vis its own UPI app, in any manner." 22. The discussion of imposition of penalty is contained in paragraph 398. The CCI imposed penalty of Rs.936.44 crores upon Google for violation of Section 4. Paragraphs 416 and 417 are as follows: "416. On a holistic appreciation of the facts and circumstances of the case and the mitigating factors put forth by the OPs, the Commission i....
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....ions for mandatorily using of GPBS have significant negative effect on the improvements and innovative solutions that third party payment processors/ aggregators would be able to bring to the market and is in violation of Section 4(2)(b)(ii) of the Act? (7) Whether Google has abused its dominant position in the app store market and indulged in practices resulting in denial of market access, which is violative of Section 4(2)(c) of the Act? (8) Whether practices followed by Google making developers dependent on Google to access the users on its platform, result in leveraging its dominance in market for licensable mobile OS and app stores for Android OS, to protect its position in the downstream markets, is in violation of the provisions of Section 4(2)(e) of the Act? (9) Whether the CCI found charging of commission/ service fee from 15% to 30% discriminatory? (10) Whether directions in paragraphs 395.2 to 395.8 of the impugned order amounts to form of ex ante regulation for undefined "gatekeepers" beyond the CCI power under Section 4 and 27 of the Act? (11) Whether mention of directions contained in paragraph 395 are ultra....
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....ans 'a market comprising all those products or services which are regarded as interchangeable or substitutable by the consumer, by reason of characteristics of the products or services, their prices and intended use'. The Hon'ble Supreme Court had occasion to consider the concept of 'market' under the Competition Act, 2022 in Competition Commission of Inida vs. Bharti Airtel Ltd. & Ors. - (2019) 2 SCC 521. The Hon'ble Supreme Court held that market definition is a tool to identify and define the boundaries of competition between firms. The main purpose of market definition is to identify in a systematic way the competitive constraints that the undertakings involved face. In paragraph 87 of the judgment, following was laid down: "87. Market definition is a tool to identify and define the boundaries of competition between firms. It serves to establish the framework within which the competition policy is applied by the Commission. The main purpose of market definition is to identify in a systematic way the competitive constraints that the undertakings involved face. The objective of defining a market in both its product and geographic dimension is to identify those actual com....
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....rd, i.e. evidence of Amazon Pay Pvt. Ltd., Paytm, PhonePe, Xiaomi. The observations and findings of the CCI were recorded noting that there is no substitutability between UPI enabled payment system and other payment system, i.e. Wallets, credit and debit cards and net banking. 31. We are of the view that findings entered by the CCI while determining the relevant market and holding the relevant markets, i.e. market for Apps facilitating payment through UPI in India has been correctly determined. The said product market is not interchangeable or substitutable by the consumer by other payment system, i.e. payment by credit or debit cards, Wallet and net banking. Thus, we do not find any infirmity in such determination of product market by the CCI. Question No. (2) (2) What are the legal standards for effect based analysis. Whether effect based analysis means both proof of conduct leading to actual restriction as well as conduct which is capable of restricting competition? 32. Submission of Counsel for the Appellant is that it is now well settled that effect based analysis is requirement before finding out any breach of Section 4. Counsel for the Appellant has referred to j....
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....tted that although this Tribunal in 1st Google Case has laid down that 'effect analysis' of anti-competitive conduct is required to be done but this Tribunal did not elaborate in the above judgment whether the effects analysis would encompass only conduct leading to actual harm or also include conduct that was capable of causing such harm, in reaching its conclusion. Counsel for the Commission has referred to the various paragraphs of the 1st Google Case and certain foreign judgments which have been referred to and relied in 1st Google Case. Counsel for the Respondent has also referred to and relied on various judgments of European Court of Justice, European Commission and Competition Appeal Board of Singapore. 34. We have considered the submissions of the Counsel for the parties and perused the record. 35. We need to first notice the judgment of this Tribunal in 1st Google Case delivered between the parties while deciding an Appeal challenging the order of the Commission holding violation of Section 4 of the Act by Google. In the above case decided by this Tribunal on 29.03.2023 against which judgment, although an appeal is pending before the Hon'ble Supreme Court but the....
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....n of strength, enjoyed by an enterprise, in the relevant market, which, in this case is the National Capital Region (NCR), which: (1) enables it to operate independently of the competitive forces prevailing; or (2) is something that would affect its competitors or the relevant market in its favour." 56. It has been held in the above judgment that abuse of dominant position by an enterprise is something that would affect its competitors or the relevant market in its favour." 38. Report of the Competition Law Review Committee (July 2019) was also noticed in detail. The Committee took the view that effect analysis by the Commission is well within the test of Section 4(2) of the Act, hence, no amendment is required in Section 4(2). It is useful to notice paragraph 58 of the judgment which is as follows:- "58. The Committee after stating as noted above was of the view that effect analysis by the CCI is well within the text of Section 4(2), hence, no amendment is required in Section 4, sub-section (2). It was stated that current test of Section 4(2) has not proven to be a hindrance to the CCI's ability to assess effects in abuse of dominance disputes. In paragraph 4.....
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....ces appear to have been regarded as unlawful 'per se', that is to say, irrespective of whether they produced, or were capable of producing, adverse effects on the market. Historically thee did appear to be a tendency on the part of the EU Courts and Commission to apply per se rules, at least to some abuses. This was exemplified by the law on loyalty rebates. The Court of justice in Hoffmann-Law Roche v Commission had formulated a rule on exclusive dealing and loyalty rebates by a dominant undertaking in per se terms. In paragraph 89 of its judgment, after saying that it would be unlawful for a dominant firm to enter into exclusive dealing agreements which customers, it continued that the same would be true where that firm: Applies, either under the terms of agreement concluded with these purchasers or unilaterally, a system of loyalty rebates, 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 ....
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....monstrated to have the actual or likely effect of restricting or distorting competition. For example, in TeliaSonera the Court said: in order to establish whether [a margin squeeze] is abusive, that practice must have an anti-competitive effect on the market. In Post Danmark I the Court of Justice said that when determining whether a pricing practice could be abusive it was necessary to take into account 'all the circumstances' which would include the likely effects of the practice in question, a formulation repeated in Post Danmark II, The Commission's decisional practice for many years has sought to produce evidence of anti-competitive effects, as can be seen from Microsoft, Google Search (Shopping), Google Android and Qualcomm (exclusivity) payments. Paragraph 19 of the Commission's Guidance on Article 102 Enforcement Priorities says that it prioritises enforcement activity in relation to conduct that is likely to lead to an anticompetitive foreclosure of the market, thereby having an adverse effect on consumer welfare." 40. After considering the relevant cases, this Tribunal recorded its conclusion that effect analysis has to be undertaken. In paragraphs 65....
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....ction 18 provides as follows:- "Duties of Commission 18. 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." 43. Section 18 thus, enjoins 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. Counsel for the Commission has relied on certain other cases. Counsel for the Commission has referred to paragraphs 59 to 62 of the judgment of this Tribunal in 1st Google case especially, the passage from Richard Whish & David Bailey where it has observed:- "Where it is not possible to say that the obje....
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....017] In that case, the Commission is not only required to analyse, first, the extent of the undertaking's dominant position on the relevant market and, secondly, the share of the market covered by the challenged practice, as well as the conditions and arrangements for granting the rebates in question, their duration and their amount; it is also required to assess the possible existence of a strategy aiming to exclude competitors that are at least as efficient as the dominant undertaking from the market (see, by analogy, judgment of 27 March 2012, Post Danmark, C-209/10, EU:C:2012:172,paragraph 29)." 46. The Commission also referred to judgment of the European Court of Justice in case of Google LLC itself where violation of Article 102 TFEU is under consideration in "Google Android- AT. 40099, C (2018) 4761". In paragraph 733 of the said judgment, it was held that the Commission is not therefore required to demonstrate that a particular practice has actual anti- competitive effects. Paragraph 733 of the above judgment is as follows:- "733. Concerning the effects of the dominant undertaking's conduct, while they must not be of a purely hypothetical nature, they do not....
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.... need to put a caveat, the conduct with regard to which effect analysis has to take place is a conduct which has already happened or occurred. No contravention can be proved on any likely conduct of dominant entity. It is only in effect analysis likely effect can be looked into. Whether it has caused actual harm or capable of resulting in anti- competitive effect need also to be looked into. Question No. (3) (3) Whether Commission has conducted any effect analysis in its decision or not? 50. Counsel for the Appellant contended that the Commission has taken the view that once an entity is found to be dominant in the relevant market, the Act recognises its ability to adversely affect competition in the market unilaterally through its conducts, the contravention of the Act stands established. Counsel for the Appellant has referred to paragraph 347 of the order of the Commission, which is as follows:- "347. In view of the above regulatory framework as provided under the Act, the Commission has carefully perused the provisions of Section 4 of the Act and on a holistic consideration thereof, it is observed that "dominant position" under the Act has been defined as meani....
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.... anti- competitive effect contravention can be proved. We are not persuaded to accept the submission of the Appellant that the Commission in its order has not conducted any effect analysis rather Commission in various paragraphs have noticed the Report of the DG, the response given by the Appellant and its conclusion and finding. Thus, we find substance in the submission of the Counsel for the Commission that effect analysis was conducted by the Commission. Question No. (4) (4) Whether the Appellant by requiring app developers to mandatory use of Google Play (GPBS) have imposed a discriminatory condition in sale of goods and services and violation of Section 4(2)(a)(i) was proved? 52. The Commission in paragraphs 246, 247 and 248 of the impugned order has noted and made observations with regard to GPBS. Paragraphs 246, 247 and 248 of the order are as follows:- "246. One of the primary allegations, in the present matter, is mandatory use of Google Play Billing System (GPBS) for distributing paid apps as well as in-app paid content by the app developers to the users. Google defines and describes the Google Play Billing System as: "Google Play's billing ....
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.... billing system, GPBS helps Google to protect users. A secure billing system increases user trust and willingness to buy online, which helps increase revenues for app developers. Further, GPBS allows Google to efficiently collect its service fee without incurring additional costs to monitor and enforce recovery of service fees or impose an additional administrative burden on developers." 54. Google further had pleaded that there is no violation of Section 4(2)(a)(i) since the Google's payment policy is fair, and the use of standard terms that reduces the potential for discrimination. Paragraph 300.2 of the order is as follows:- "300.2. There is no violation of Section 4(2)(a)(i) of the Act because Google's Payments Policy is fair, and the use of standard terms reduces the potential for discrimination. Further, Google Play's developer policies - including the requirement that apps use GPBS for IAPs of digital goods - apply to all apps on Google Play, including Google's own app." 55. The Commission has considered the Report of the DG and defence / reply given by the Google and held that Google has made the use of GPBS mandatory and exclusive for processing ....
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....rectly or indirectly, imposes unfair or discriminatory- (i) condition in purchase or sale of goods or service; or (ii) price in purchase or sale (including predatory price) of goods or service. 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- (i) production of goods or provision of services or market therefor; or (ii) technical or scientific development relating to goods or services to the prejudice of consumers; or (c) indulges in practice or practices resulting in denial of market access [in any manner]; or (d) makes conclusion of contracts subject to acceptance by other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts; or (e) uses its do....
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....312 has held that Google has violated Section 4(2)(a)(ii). In paragraph 312 of the order, following has been held:- "312........................This also amount to imposition of discriminatory pricing as Google's own apps i.e., YouTube is not paying the service fee as being imposed on other apps covered in the GPBS requirements. Thus, the Commission is of the view that Google has violated Section 4(2)(a)(ii) of the Act." 59. The DG in its report has concluded that charging of 15-30% fee by Google is excessive, therefore, unfair in terms of Section 4(2)(a)(ii) of the Act. 60. Google's defence with respect to allegation of violation of Section 4(2)(a)(ii) is that charging of fee of 15-30% from app developers by asking them to use GPBS and engaging a payment processor for its own app YouTube is not comparable. It is submitted that for finding out discrimination between both the entities which are being compared should be based on same footing. App developers who host their apps in Play Store are liable to pay fee on the revenue which are earned by the app developers from the Play Store whereas YouTube is own app of the Google and not claiming fee of 15-30% with rega....
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....rt relies merely on speculative theories of what Google may do with data collected." 62. The Commission returned its finding with respect to violation of Section 4(2)(b) (ii) in paragraph 313, which is as follows: "313. The Commission also concurs with the DG that Google's restrictions for mandatorily using GPBS also have significant negative effect on the improvements and innovative solutions that third party payment processors / aggregators would be able to bring to the market. It takes away the incentives and ability that such payment aggregators would have to innovate in payment solutions designated for IAPs, by restricting their entry into this market Further; mandatory imposition of GPBS also discourages app developers from developing" 63. What is held by the Commission in the impugned order is that Google's restriction for mandatory using GPBS have significant negative effect on the improvements and innovative solutions that third party payment processors / aggregators would be able to bring to the market. Learned Counsel for the Appellant has contended that despite lengthy investigation and having submission from over 40 App developers and payment process....
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....3 million merchants on its platform and expects to reach 1 0 million merchants as there is further adoption of digitalization. 295 lnfibeam also states that it has processed INR 1.4 trillion (US$ 19 billion) in the 2021 FY for its 2.5 million plus clients. 4.61. Accordingly, it cannot plausibly be said that GPB has had the effect of reducing the ability for these companies to innovate and improve their products by reducing their revenue streams given the strong financial performance they themselves have reported. The DG has failed to critically assess accuracy of these submissions. 4.63. The DG has ignored submissions from payment processors that do not support the DG's purported theory of harm. For example, Atom Technologies' Limited (Atom), in its submissions, stated that it did not consider Google to be a competitor as "our focus is on different business segments and different merchant categories". Instead Atom listed a number of payment processors - PayTM, PayU, Razorpay, Billidesk, CC Avenue and Mobikwik - as its competitors. This establishes that, contrary to the Report's findings, payment processors do not consider Google a competitor in payment....
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....ection 4(2)(c) of the Act because Google is not active in the alleged payment processing market, and as such cannot have abused that position to deny payment processors access to that market. Google does not carry out payment processing in India. Google subcontracts with third parties to conduct the payment processing for payments made through Google Play. Further, payment processors can and do provide their services through Google Play." 67. Google pleaded that Google is not active in the alleged payment processing market and as such cannot have abused that position to deny payment processors access to that market. Google does not carry out payment processing in India. Google sub-contracts with third parties to conduct the payment processing for payments made through Google Play with regard to its own app, i.e. YouTube as noted above. The Commission has returned its finding in paragraph 315, which is as follows : "315. The Hon'ble Supreme Court in Competition Commission of India vs. Fast Way transmission Pvt. Ltd. & Ors. (Civil Appeal No. 7215 of 2014), has interpreted denial of market access under Section 4(2)( c) widely, noting that denial of market access 'i....
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....ination. In paragraph 16 of the judgment, following was held: "16. It can be seen that in the facts of the case, the broadcaster, namely, Respondent 5, had a broadcast agreement which was entered into for a period of one year from 1-8-2010. This was sought to be terminated within the aforesaid period by the respondent by notices dated 19-1-2011. The TDSAT has, by its order dated 25-4-2012 [Kansan News (P) Ltd. v. Fastway Transmission (P) Ltd., 2012 SCC OnLine TDSAT 310], adverted to Regulation 4.2 of the relevant Telecom Regulations, and has found that the respondents have not followed the aforesaid Regulations, inasmuch as no reasons for termination have been given in the notices of termination. This being the case, it is clear that, on the present facts, there is an abuse of the dominant position enjoyed by Respondents 1-4 only for the reason that the broadcaster was denied market access on and after 19-2-2011 until 1-8-2011. The words "in any manner" are words of wide import and must be given their natural meaning. This being the case, it is difficult to appreciate the reasoning of the Appellate Tribunal that, as the broadcaster and MSOs are not in competition with one ....
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....ant market. In paragraph 234 of the Commission's order only three markets have been referred, i.e., market for licensable OS for smart mobile devises in India; market for app store for Android smart mobile OS in India; and market for Apps facilitating payment through UPI in India. Google share payment in Google's Play account is less than 1% of the payments made through UPI. Hence, it cannot be said that Google has abused its dominant position in the app store market to cause denial of payment processing. 71. We, thus, find that no violation of Section 4(2)(c) was proved and the Commission's finding that Appellant being dominant in app store market has caused denial of market access to the payment processors and aggregators is unsustainable. Question No.(8) (8) Whether practices followed by Google making developers dependent on Google to access the users on its platform, result in leveraging its dominance in market for licensable mobile OS and app stores for Android OS, to protect its position in the downstream markets, is in violation of the provisions of Section 4(2)(e) of the Act? 72. Question No.8 relates to violation of Section 4(2)(e), which is used for dominant p....
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.... there have to be two markets, one in which the enterprise has a dominant position and the other in which it intends to enter or protect. However, both the markets must be relevant markets distinct from each other. In the wake of our finding, as also the finding by the D.G. that the relevant market in this case is the services by the stock exchange, there is no question of two markets and on that short ground itself the allegation about being guilty of the breach of section 4(2)(e) of the Act must fail. In our opinion, that will be the correct position in law." 75. Next judgment relied is judgment of COMPAT in Schott Glass India Pvt. Ltd. vs. Competition Commission of India - (2014) SCC OnLine Comp At 3. The Competition Appellate Tribunal in paragraph 67 laid down following: "67 ....In our opinion, the very language of Section 4(2)(e) is clear to show that in order to be guilty of Section 4(2)(e) there have to be two markets, wherein the guilty party would have the participation. It is nobody's case that the Appellant is in any way dealing with or has any presence in the downstream market of ampoules, vials, dental cartridges and syringes etc. In fact the biggest co....
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....ought to raise certain observations regarding settlement period, data collection policies and discriminatory conduct, leading to finding of contravention of Section 4(2)(e) of the Act. 77. Learned Counsel for the Commission elaborating his submission contends that the market where entity is dominant i.e., market for licensable mobile OS and app stores for Android OS. The market where Google was leveraging its position and wanted to enter was in the market of all apps competing with Google set of apps. Causal link has been established. Due to dominance in the relevant market through Play Store, the Google is able to give itself 15 to 45 days for payment, while in industry practice, payment is received in only three days or less. With respect to access and control over data, it is clear that Google dominance with respect to Play Store allows it to access control over the data, which it can then use to improve its position in the downstream market. The dominance of Google in first two market is clearly being used by the Google in entering into the third market. The Commission in the impugned order has noticed the use of dominant position for including discriminatory condition in it....
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....ble with UPI. 79. In view of foregoing discussions and findings returned by the Commission in paragraph 357, which finding is based on assessment of evidence available on record and the observations made by the DG, we are satisfied that dominance in first two markets has been used to leverage to promote and protect its position in the market for UPI enabled digital payment apps. Thus, violation of Section 4(2)(e) stands proved. Question No.(9) (9) Whether the CCI found charging of commission/ service fee from 15% to 30% discriminatory? 80. Question No.(9) relates to imposition of unfair and discriminatory prices in sale of goods and services. The DG has returned its observation in paragraph 319.9 that charging of 15% to 30% fee is excessive and therefore, unfair in terms of Section 4(2)(a)(ii) of the Act. The above question need no elaboration, since the Commission itself has returned its finding in paragraph 327 that information available on record is not sufficient to give a finding on the monetization model, as followed by Google. Thus, the Commission did not give any finding on violation of Section 4(2)(a)(ii), with regard to charging of 15% to 30% fees. Finding in ....
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....these 3% of the apps to bear the 100% cost of the Play Store. In the same vein, the Commission also notes that amongst these 97% are those apps also, which have significant business operations but are not contributing towards recoupment of Play Store costs, directly through service fee. The Commission also notes that Google has other revenue streams also from the 'free apps' listed on Play Store, in the form of advertisement related revenue earned by Google from the apps hosted on Play Store and otherwise. These revenue streams are also contributing towards recoupment of the costs associated with Play Store and Android ecosystem, in addition to the service fee. The determination of issues at hand requires examination of all these aspects. 327. Based on the foregoing, the Commission is of the view that information available on record is not sufficient to give a finding on the monetization model, as sketched supra, followed by Google. Therefore, the Commission is not inclined to give any finding on this aspect, al this stage. Google is, however, directed, to ensure that its policies are in alignment with the aforesaid principles given the special responsibilities cas....
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....hat also within its fold. Section 10 does not provide for such liability. It does not make all the partners liable for the offence whether they do business or not." 84. Learned Counsel for the Appellant has submitted that gatekeeper, i.e. special responsibility of dominant entity has not taken shape of law. Learned Counsel for the Appellant has referred to the Report of the Committee on Digital Competition Law submitted on 27 February 2024. It is submitted that the said Report has noticed the structure of the Competition Act and it was observed that CCI under the present statutory regime is based on ex-post facto model. The Committee opined that new tools that strengthen and supplement the CCI's existing ex-post powers are the need of the hour. Learned Counsel for the Appellant has referred to paragraph 2.3 and 2.4 of the Report, which are as follows : "2.3. The Committee deliberated on how the present ex-post framework under the Competition Act is not designed to facilitate timely and speedy redressal of anti-competitive conduct by digital enterprises given the extensive fact-finding and a tiered adjudicatory process involved in ex- post enforcement proceedings. The Co....
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....ets". Paragraph 1.6, 1.7 and 2.12 states as follows: "1.6. Third, ex-post competition investigations are limited to the narrow claims made in each specific case. As such, they may not effectively address repeated conducts by the same digital enterprise, or similar conducts by different enterprises. The Committee observed that addressing such recurring patterns of anti- competitive behaviour through an ex-ante digital competition law will lead to significantly increased administrative efficiency. 1.7. In light of the above discussions, the Committee recommends that a de novo Digital Competition Act that enables the CCI to selectively regulate large digital enterprises in an ex-ante manner be enacted. The Committee further notes that the proposed Digital Competition Act should complement and strengthen the existing competition framework governing large digital enterprises by ensuring timely detection, enforcement, and disposal of proceedings in digital markets." 88. The above Report also clearly captures that the existing powers of CCI, which is based on ex-post facto model and the need of law. With regard to regulating digital market on the mode of ex-ante has a....
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....ph 392.2 are not sustainable. With regard to conclusion in paragraph 392.3, we have already found that violation of Section 4(2)(b)(ii) has not been proved. Hence, conclusions in paragraph 392.3 are not sustainable. Conclusion in paragraph 392.4 relates to violation under Section 4(2)(c) of the Act. We having already found that violation of Section 4(2)(c) has not been proved, the conclusion in paragraph 392.4 is unsustainable. Coming to direction in paragraph 392.5, we having come to the conclusion that the Google is leveraging its dominant position and the violation of Section 4(2)(e) has been proved, the conclusion in paragraph 392.5 are sustained. Conclusion in paragraph 392.6 are sustainable insofar as violation of Section 4(2)(e) of the Act is concerned. Paragraph 394 of the judgment of the Commission is approved, insofar as it has found that Google has abused its dominant position in contravention of provision of Section 4(2)(a)(i) and 4(2)(e) of the Act. 93. Now, we come to remedies as provided in paragraph 395, where in terms of provisions of Section 27 of the Act, the Commission has directed Google to 'cease' and 'desist' from indulging in anti-competitive practices. T....
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....rty-Six crore and forty-four lakhs only) upon Google for violating Section 4 of the Act. Google is directed to deposit the penalty amount within 60 days of the receipt of this order." 96. The challenge to imposition of penalty by the learned Counsel for the Appellant is on the ground that Commission is entitled to impose penalty only on the relevant turnover. The Commission has found Google to be dominant in Play Store and findings of the Commission are based on dominance of Google in the Play Store, leading to abuse of its dominance. It is relevant to notice that Commission itself has noted and referred to the judgment of the Hon'ble Supreme Court in Excel Crop Care Ltd. vs. Competition Commission of India & Anr. in Civil Appel No.2480 of 2014, where Hon'ble Supreme Court has laid down that adopting the criteria of 'relevant 'turnover' for the purpose of imposition of penalty will be more in tune with ethos of the Act and the legal principles. The Commission has stated in paragraph 404 that it proceeds to determine relevant turnover and thereafter, would calculate appropriate percentage of penalty, which observation has been made in paragraph 404. The Commission ultimately alth....
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....e following information for the three preceding financial years (i.e., 2019, 2020 and 2021) within 7 days of receipt of the Order, i.e., by September 22, 2022: (a) "Google's turnover and profit generated or arising /accruing from India, including any of its group entities in relation to revenue streams associated with the Google Play, including: (i) advertising (delivered or displayed in- app or from apps hosted on Google Play); (ii) paid apps and in-app purchases; and (iii) developer fees (b) Google's turnover and profits generated or arising /accruing from its entire business operations in India (including any of its group entities)." 97. * 98. * 99. * 100. * 101. When we look into paragraph 416, where last three preceding Financial Years' turnover has been captured. The turnover captured is from Table-5 of entire business operation in India. Judgment of Excel Corp Care Ltd. (supra) had occasion to consider 'relevant turnover' in the context of imposition of penalty under Section 27(b). The Hon'ble Supreme Court in the above case has framed the questions for consideration. One of the question, i.e. Question No.(i....
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....ndhya Organics Chemicals (P) Ltd., and UPL was fastened with the penalty of Rs 252.44 crores. 8. The appellants filed three separate appeals before Compat. The legal and factual arguments remained the same before Compat as well. In addition, argument was raised on the quantum of penalty. Compat has, vide common judgment dated 29-10-2013 [Excel Crop Care Ltd. v. CCI, 2013 SCC OnLine Comp AT 149], rejected all the contentions, except qua penalty, of the appellants. Insofar as imposition of penalty is concerned, Compat has held that though penalty @ 9% of three years' average turnover was not unreasonable, the penalty cannot be on the "total turnover" of these establishments, and has to be restricted to 9% of the "relevant turnover" i.e. the turnover in respect of the quantum of supplies made qua the product for which cartel was formed and supplies made. In other words, it had to relate to the goods in question, namely, APT and turnover of other products manufactured and sold by the establishments, which were without blemish, could not be included for calculating the penalty." 104. The Commission in the above case has imposed penalty under Section 27(b) of the Act on t....
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....Penalty @ 7% of the average turnover comes in INR 2,16,69,12,773 (USD: 2,98,89,312.39). The order passed by the Commission imposing penalty under paragraph 460-470 is modified and substituted accordingly. Question No.(13) (13) To what relief, if any, the Appellant is entitled?" 107. In view of the foregoing discussions and conclusions, the Appeal is partly allowed in following manner: (i) The decision of the Commission holding contravention of provision of Section 4(2)(a)(i) and 4(2)(e) are upheld. (ii) The finding and decision of the Commission of contravention of Section 4(2)(a)(ii), 4(2)(b(ii) and 4(2)(c) are not upheld. (iii) The directions issued in paragraphs 395.1, 395.2, 395.3 and 395.8 are upheld. Directions issued in paragraphs 395.4, 395.5, 395.6 and 395.7 are set aside. (iv) The penalty imposed on the Google is modified as per computation contained in paragraph 105 of this order. Thus, the penalty imposed on the Google for relevant turnover of last three preceding year of Rs.936.44 crores, is modified to the amount of INR 2,16,69,12,773 (USD : 2,98,89,312.39). The Appellant having deposited 10% of the penalty in the present A....