NCLAT Refuses To Stay CCI's Order Of Rs 936 Crore Penalty On Google

The National Company Law Appellate Tribunal (NCLAT) on Wednesday refused to stay the second Competition Commission of India (CCI) order imposing a penalty of Rs 936.44 crore on Google for abusing its dominant position through its Playstore policies.

A two-member Bench of Justice Rakesh Kumar, member (judicial), and Alok Srivastava, member (technical), said Google’s appeal against the CCI order was subject to the tech giant depositing 10 per cent of the penalty imposed on it by the antitrust regulator. “Penalty to be deposited with the Registrar in four weeks. The matter is listed for a final hearing on April 17. No interim order,” NCLAT said.

Google had approached the NCLAT seeking a stay on the CCI’s October 25 order that imposed a fine of Rs 936.44 crore on it and asked Google to cease and desist from abusive practices in the Playstore.

Appearing for Alphabet (the parent of Google) on Wednesday, senior advocate Harish Salve argued that CCI’s order finds various examples of abuse by the tech giant without discussing appreciable adverse effects on competition (AAEC) of such alleged abuse. “This goes against the Competition Act and case laws,” he said.

Explaining AAEC, Naval Chopra and Yaman Verma, partners, competition law, Shardul Amarchand Mangaldas, said: “Section 3 of the Competition Act prohibits agreements if they cause or are likely to cause an appreciable adverse effect on competition. Importantly, Section 4 which deals with abuse of dominance, the section under which Google has been found guilty, does not have any AAEC requirement. While the NCLAT has previously held that the effect of abusive conduct must be looked at, when a super-dominant gatekeeper like Google imposes clauses that exclude competitors, the effect on the market is apparent.”

Salve said that if Google complies with the CCI order, it would prompt deep systemic changes in the tech giant’s policies (Playstore and third parties) and leave Google in a difficult position, as it would have lost revenue due to the implementation of the directions.

On the other hand, advocates Samar Bansal and Manu Chaturvedi, appearing for CCI, said Google admitted that it was in the process of implementing similar directions as contained in CCI’s order in other jurisdictions such as Europe — in some instances involving antitrust findings, without pressing for a stay. “However, in India, Google/Alphabet has chosen to appeal and press for a stay of such directions, which shows discriminatory conduct of Google between India and other jurisdictions,” they said.

The case pertains to a Google Playstore policy that requires all app developers to only use Google Play’s billing system (GPBS) to charge customers. GPBS was not only used for receiving payments from apps but also for in-app purchases.

After Google started charging a 30 per cent commission in 2020 for Playstore transactions, some app developers filed a complaint with the CCI, prompting the action.

Last week, the NCLAT also declined to stay another CCI order, in which it had slapped a penalty of Rs 1,337.76 crore on Google for anti-competitive practices in relation to Android mobile devices. In this matter, the tech giant has approached the Supreme Court.

SC to hear appeal

The Supreme Court will hear on Monday an appeal by Google against another CCI order in the Android devices case.

The NCLAT on January 4 refused to grant an interim stay on the order directing the tech giant to change its business model in India.

While admitting Google’s appeal, NCLAT asked it to deposit 10 per cent of the penalty amount of Rs 1,337.76 crore imposed by the CCI, thereby granting some relief on the monetary front. The next hearing on the matter is scheduled for April 3. Google had three months to comply with the CCI’s directions, which ends on January 19.

If a stay is not granted in time and Google fails to comply with the directions of the CCI by January 19, the commission can prosecute Google’s top executives. Additional penalty could also be charged for each day’s delay, legal experts said.

Google on Wednesday mentioned its legal challenge against the CCI order that “will force the US company to change how it markets its Android platform”.

Senior advocate AM Singhvi, appearing for Google in the apex court, said extraordinary directions were passed by the CCI. “Compliance date was January 19 and we filed in December. There is an urgency since the compliance date is almost a week from today,” he said.

Singhvi said the penalty was imposed on Google without any evidence and through a tainted investigation. He said the NCLAT posted the hearing of Google’s appeal to April, which would make Google’s plea infructuous.