Deal Street

February 09, 2018

Google Guilty Of Anti-Competitive Conduct: CCI


Google

On February 9, the Competition Commission of India (CCI) published a decision dated 31 January 2018 finding Google LLC, Google Ireland Limited and Google India Private Limited (Google) to have abused its dominant position in violation of Section 4 of the Competition Act, and imposed a penalty of Rs 135.86 crores (USD 21.15 million) on Google for "search bias" and abuse of its dominant position. In addition, the CCI has ordered Google to add a disclaimer to its Commercial Flights unit box and not enforce restrictive and abusive clauses in its search intermediation agreements.

The CCI held that Google enjoys a dominant position in 'Online General Web Search' and 'Web Search Advertising services'. Further, the CCI held Google liable for abusing its dominance in three ways – first, placement of Universal Results before 2010 were pre-determined by Google 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.

The complainants had submitted to the CCI that Google is dominant in both online general web search services and online search advertising services market in India. During the course of investigation, Facebook, Flipkart, Make-my-Trip.com and several other entities submitted that Google is abusing its dominant position in India.

This keenly awaited decision concludes six year old proceedings against Google. In this David vs. Goliath contest, the complaint to the CCI was made by a customer of Google’s services - Matrimony.com Limited (Matrimony.com). A second compliant against Google was filed by a consumer body – Consumer Unity and Trust Society.

Shardul Amarchand Mangaldas & Co acted for Matrimony.com before the CCI and the Office of the Director General (DG). Their team was led by Naval Satarawala Chopra, Partner; assisted by YamanVerma, Principal Associate; Aman Singh Sethi, Senior Associate; and Sapan Parekh, Associate. Shardul Amarchand Mangaldas & Co advised Mr. Rajshekhar Rao, Advocate, to lead arguments on behalf of Matrimony.com before the CCI.

Mr. Naval Satarawala Chopra commented: “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.

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 and the Member Economics forming part of the majority. Also, 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 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.”

The investigation report of the DG, submitted to the CCI in 2015, also contained submissions by several third parties assailing Google’s unfair and opaque conduct in relation to its search engine, its AdWords policy, and unfair agreements regarding advertising on its platforms, including agreements that restrict advertising platform interoperability.

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