Lawyers call NCLAT decision upholding CCI penalty on Google a balanced judgment

Google Vs CCI

Lawyers lauded the National Company Law Appellate Tribunal’s decision to uphold a penalty of Rs 1,338 crore imposed on tech giant Google by the Competition Commission of India (CCI) for abusing its dominant position in the Android ecosystem.

They said the tribunal’s judgment struck the right balance by ensuring that Google is penalised for anti-competitive practices, while also protecting its business interests.

What did NCLAT say?

NCLAT said Google abused its dominant position in the Android ecosystem by imposing stringent conditions in agreements with original equipment manufacturers (OEMs). The tribunal upheld the CCI’s finding that Google used its dominant position to ensure that OEMs could not pre-install their competing search apps.

However, the tribunal reversed the CCI’s order in some aspects, holding that:

a)Google need not give its proprietary Application Programming Interface (API) to third-party app developers.

b) Google can continue to warn users when they download apps directly from the website as opposed to its Play Store (sideloading).

c)   Google need not permit third-party app stores in its Play Store.

d) Google can restrict uninstallation of pre-installed apps in Android phones.

Balanced judgment

“NCLAT’s judgment is a balanced one,” said KK Sharma, competition law partner at Singhania & Co. “It confirms the CCI’s penalty against Google while not confirming certain observations and directions that did not have connections with the infringements of law.”

He noted that NCLAT upheld the chaff without removing the grain.

Step ahead in law

“The judgment is a setback for Google as the major part of the order of the CCI has been affirmed by NCLAT. However, setting aside some of the CCI’s directions gives some reprieve to Google,” said Sandeep Bajaj, managing partner at PSL Advocates & Solicitors.

He said that even though this reprieve would not have any financial implications for Google, it would not be subject to further revision.

“The judgment is a definite step ahead in development of competition law in India and a signal for large global players to abide by Indian laws,” he said.

Important for Google

According to Kanika Chaudhary Nayar, a partner at DSK Legal, the directions that NCLAT set aside are very important from Google’s perspective.

On NCLAT’s ruling that Google need not give its API to third-party app developers, she said, “APIs are essentially proprietary items and they fetch value. A tech company works on innovation and if they’re giving open access to their technology to everyone, then what incentive will they have to innovate and bring in more technology? This direction is probably one of the most important for Google.”

On the matter of overruling the direction on permitting third-party app distributors in Google’s Play Store, she said, “The tribunal has said that by passing this direction, the competition regulator was trying to punish Google for being dominant. And dominance is not punishable under the Act, only an abuse of that dominance is punishable.”

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Reasoned judgment

Amir Bavani, founder of AB Legal in Hyderabad, said NCLAT has given a reasoned judgment.

“It is a very reasoned judgment wherein the appellate tribunal categorically stated that for proving abuse of dominance under the Competition Act, 2022, effect analysis is required to be done and it is to be tested whether the abusive conduct is anti-competitive or not,” Bavani said.

He said the appellate tribunal also rendered a detailed analysis on why pre-installation of the entire GMS Suite amounts to imposing unfair practices on OEMs and how the tech giant enjoys a dominant position in the Android market, resulting in breach of various provisions of the Act.