Supreme Court refuses Google interim stay against CCI’s huge fine for abusing market dominance

In a relief to device manufactures and app developers, the Supreme Court refused to interfere with an NCLAT order upholding the CCI's Rs. 1,337 crore penalty on Google. The court has asked NCLAT to dispose of Google's appeal by March 31.

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WAS the Competition Commission of India (CCI) right in imposing enormous fines on Google for abusing its dominant position in the smartphone market? The answer remains up in the air, even as the Supreme Court on Thursday refused to grant the company interim relief from a National Company Law Appellate Tribunal (NCLAT) order denying to interfere with a CCI order that imposed a fine of Rs. 1,337 crores.

The CCI had imposed this penalty on Google on October 20 last year for abusing its dominant position in multiple markets in the Android mobile device ecosystem under Section 4 of the Competition Act, 2002. Additionally, the company was directed to cease and desist from unfair business practices. A separate fine amounting to Rs. 936.44 crores was also imposed on Google by the CCI five days later, for "abusing its dominant position with respect to its Play Store policies."

The Supreme Court bench comprising Chief Justice of India (CJI) Dr. D.Y. Chandrachud and Justices P. S. Narasimha and J. B. Pardiwala, while denying interim relief to Google, noted that CCI's findings cannot be said to be without jurisdiction or containing an apparent error, but refrained from remarking on the merits of the fair trade regulator's findings. "Any expression of opinion of this court on merits would affect the appeal before NCLAT," the court stated, requesting the NCLAT to dispose of Google's appeal by March 31.

Senior Advocate Abhishek Manu Singhvi, appearing for Google India, argued that it would be presumptuous to state that Google had deliberately followed anti-competitive business practices to increase its market penetration. The disproportionate market share, he argued, was rather a sign of Android's, and by extension, Google's "excellence". Singhvi insisted that Mobile Application Distribution Agreement (MADA), a licence requirement for device manufactures to use Android's apps, is a "free, voluntary, non exclusive agreement."

Additional Solicitor General of India (ASG), N. Venkataraman, appearing for the CCI, claimed that after the European Commission imposed a €4.34 billion penalty on Google for breaching European Union antitrust rules, "the company had accepted the order, implemented the directions, and adopted all changes." Venkatraman accused Google of following contradictory standards for its European and Indian customers.

On MADA, the ASG contended that device manufacturers had little to no choice but to sign the "anti-competitive" agreement. "Google Play services, which are very important for OEMs (Original equipment manufacturers), cannot be downloaded by users independently," he noted.

Meanwhile, CJI Dr. Chandrachud remarked that insisting device manufacturers to pre-install a bouquet of Google apps on smartphones "affects the choice of the consumer".

Earlier this month, the NCLAT had refused to stay CCI's two October orders imposing penalties on Google, while directing it to deposit at least 10 per cent of the imposed fine within four weeks. The Supreme Court on Thursday granted a minor relief to Google by extending the time to deposit the said amount by one week.

It may also be noted that the public version of CCI's October orders redact the portions which contain the total revenue generated by Google in India through its various businesses, at the company's request. However, since the extent of the penalties were calculated as a set percentage of the average turnover of the company from 2018-21, it can be reasonably estimated that its annual average revenue in the given period would have been around Rs. 13,000 crores.

The Supreme Court's refusal to grant the company interim relief comes as a win for smaller companies that develop applications that have a Google equivalent.

Click here to view the Supreme Court's full order.

(With inputs from Tanmay Pal, a student at National Law University, Delhi and an intern with The Leaflet.)