₹135 crore fine on Google

CCI passed order for abuse of dominant position

In a landmark decision, The Competition Commission of India (CCI) has found Google guilty of abuse of its dominant position under Section 4 of the Competition Act, and imposed a penalty of 135.86 crore on the search engine for breaking antitrust laws in India because, it said in its order, the search giant was “found to be indulging in practices of search bias”. The CCI has typically followed a light touch approach in relation to technology markets, and therefore, this order indicates that Google’s conduct was particularly egregious. The 190 pages order came to be passed on 08.02.2018 at New Delhi.

The Google decision is a landmark decision and the CCI has established itself as a trend setter when it comes to online markets. Its investigation report finding Google to be dominant and to have abused its dominance preceded that of any authority. Its final order is in line with the order of the European Commission but of course in Europe, Google was fined USD 2.9 billion.

The order was delivered by a 4:2 majority of the Commission, on complaints by Matrimony.com and Consumer Unity & Trust Society filed in 2012 that Google was conducting its business in a discriminatory manner, causing harm to advertisers and consumers. The cases were marked as Number 7 and 30 before the CCI.

It was alleged that Google was creating an uneven playing field by favouring its own services and partners, through “manually manipulating its search results to the advantage of its vertical partners”.

Before the CCI, Matrimony.com was represented by a team from Shardul Amarchand Mangaldas led by Partner Naval Chopra, along with Principal Associate Yaman Verma, Senior Associate Aman Singh Sethi, and Associate Sapan Parekh. The team briefed Rajshekhar Rao, who led arguments.

The respondents – Google LLC, Google India Private Limited and Google Ireland Limited – were represented by Senior Advocates Abhishek Manu Singhvi, Arvind Nigam and Arun Kathpalia. They were briefed by team from AZB & Partners led by Partner Samir Gandhi, Senior Associate Kamya Rajagopal and Associates Kadambari Chinoy, Krithika Ramesh, Anuja Agrawal and Aakarsh Narula. A team from Economic Laws Practices led by Managing Partner Suhail Nathani along with Partner Ravisekhar Nair and Senior Associate Arjun Khera also briefed the Seniors.

Having established that Google has a dominant position in the ‘Online General Web Search’ and ‘Web Search Advertising services’ markets, the CCI held,

“…Google’s market shares have been consistently high, which suggests that it has got other advantages, besides technical advantages, which insulate its market position. The structure of the market is both indicative of and conducive to Google’s dominance. In view of this, the Commission has no hesitation in holding that Google is dominant in both the relevant markets…”

Further, the Commission found that Google was abusing such dominant position, in contravention of Section 4 of the Act, on three counts. First, placement of its Universal Results before 2010 were pre-determined and not based on relevance, which was unfair to the users.

Second, prominent display and placement of Commercial Flight Unit with link to Google’s specialized Flight search service is unfair imposition and deprives users of additional choices. And third, prohibitions imposed on publishers under the negotiated search intermediation agreements are unfair as this restricts their choice of partners.

Therefore, the four members of the CCI decided to impose a penalty on Google at the rate of 5% of its total average revenue generated from India operations for the financial years 2013, 2014, and 2015, amounting to a total of 135.86 crore.

Whilst finding Google to have abused its dominant position by engaging in search bias and other practices, the CCI has nonetheless exercised restraint recognising the dynamic nature of online markets and refrained from agreeing with every finding of its investigation arm. It is relevant to note that the order was a 4-2 majority decision, with both the Chairman Devender Kumar Sikri and the Member Economics forming part of the majority. Members Sudhir Mital and Justice G. P. Mittal did not opine as the other four.

The penalty levied by the CCI, as a percentage of Google’s turnover is welcome at 5%, however, the actual amount, a mere INR 135.86 crores, is a surprise. In fact, the CCI has expressed dismay at the way in which Google provided its turnover figure which raises questions on its veracity.

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