Competition Law Hotline: CCI intervention to achieve a level playing field in the digital space!
Posted by By nishithadmin at 21 February, at 15 : 28 PM Print
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CCI intervention to achieve a level playing field in the digital space!
- CCI imposes penalty of USD 21 million on Google for abusing its dominant position by favouring Google’s own verticals in its search engine results.
- CCI has averred that Google was leveraging its dominance in the market for online general web search, to strengthen its position in the market for online syndicate search services.
- CCI directed Google to not enforce any restrictive clauses on third party websites for hosting Google search bars and ads.
- CCI recognizes the need to encourage digital economy and for ‘targeted and proportionate’ public intervention without restraining innovation.
Background
The Competition Commission of India (“CCI”) by its Order dated February 8, 2018 (“Order”) held that Google enjoys dominant position in specified product market in India and has abused its dominant position in contravention of the provisions of the Competition Act, 2002 (“Act”).1 CCI imposed monetary penalty of USD 21 Million, applying the proportionality principle and calculating penalty based on the relevant turnover from the direct sales operations only in India.
This CCI ruling is a first of its kind in the Indian context in relation to the digital space. Interestingly, the decision is not a unanimous decision, but is 4:2. Even the majority view has not held against Google on all counts of allegations, but only three of them. Minority view has not concurred with the majority view on all the three counts.
CCI took note of adjudication by foreign regulators on similar issues, however, independently came to its conclusion based on the facts of the present case and based on the Indian law.
After carefully examining various allegations, the CCI ruled that Google enjoys dominant position in Online General Web Search and Web Search Advertising Services in India and has abused its dominant position by three specific actions.
One of the issues was in relation to display of “Universal Results”2 to certain fixed positions and not in order of relevance. This issue was already been remedied by Google post 2010. The dissenting view however held that since the issue was resolved, there was no need of any regulatory intervention.
The other two grounds were as follows:
- Prominent placement of Google’s flight unit displaying flight offers directed users to Google’s own specialized flight search options as opposed to third-party websites such as MakeMyTrip.com or Yatra.com, depriving users of additional choices and imposing unfair conditions;
- Anti-competitive and restrictive conditions imposed in intermediation agreements executed between Google and website owners for incorporating Google’s search bar on their websites, denying access to competitors to online search syndication services market.
In this update, we have examined the findings and view of the Director General after investigation, the informants’ arguments, Google’s argument and findings under both majority and minority view. However, please note that certain critical details pertaining to market share of Google for specific period in general online search as well as online advertising, traffic faced by Google’s search services, factual submissions by Microsoft in this regard as well as details on web search syndication agreements have been redacted for confidentiality purposes. The parties have submitted confidential and non-confidential version of their responses to the DG’s Investigation Report and prayer for confidentiality to be maintained for the next three years. CCI granted their confidentiality requests, therefore, it is difficult to do a comprehensive analysis of the order without the complete set of figures and statistics.
For detailed analysis of the judgment, please click here.
– Atikant Kaur, Payel Chatterjee, Pratibha Jain & Gowree Gokhale
You can direct your queries or comments to the authors
1 In Re: Matrimony.com Limited (“Matrimony.com”) and Google LLC & Ors. with In Re: Consumer Unity & Trust Society (“CUTS”) and together with Matrimony.com, the “Informants”) and Google LLC & Ors. (collectively referred to as, “Google”)
2 Universal Results – these are groups of results for a specific type of information, such as news, images, local businesses, etc. The results shown in Universal Result groups are stated to be free results.
3 The relevant product market is defined in as ‘a market comprising all those products or services which are regarded as interchangeable or substitutable by the consumer, by reason of characteristics of the products or services, their prices and intended use
4 The relevant geographic market is defined as ‘a market comprising the area in which the conditions of competition for supply of goods or provision of services or demand of goods or services are distinctly homogenous and can be distinguished from the conditions prevailing in the neighboring areas
5 i. market share of the enterprise; ii. size and resources of the enterprise; iii. size and importance of the competitors; iv. economic power of the enterprise including commercial advantages over competitors; v. vertical integration of the enterprises or sale or service network of such enterprises; vi. dependence of consumers on the enterprise; vii. monopoly or dominant position whether acquired as a result of any statute or by virtue of being a Government company or a public sector undertaking or otherwise; viii. entry barriers including barriers such as regulatory barriers, financial risk, high capital cost of entry, marketing entry barriers, technical entry barriers, economies of scale, high cost of substitutable goods or service for consumers; ix. countervailing buying power; x. market structure and size of market; xi. social obligations and social costs; xii. relative advantage, by way of the contribution to the economic development, by the enterprise enjoying a dominant position having or likely to have an appreciable adverse effect on competition.
6 Figures of Google’s market share, financials and other sensitive information have been redacted from the text of the Order available in the public domain.
7 Google inserts certain specialized result designs in the SERP in the form of (i) Universal Results – groups of search results such as news, images or local businesses, (ii) OneBoxes – factual responses for searches on currency, weather, temperature, etc. and (iii) Commercial Units – result types set apart in ad space and distinguished with a “Sponsored” label.
8 OneBoxes provide factual answers to users’ queries. OneBoxes return direct answers to, for example, queries about mathematics, stock quotes, local time, currency conversion, and the weather.
9 Para 248, Page 94 of the Order
10 Section 4(2)(a)(i) of the Act
11 Section 4 (2) (c) Indulges in practice or practices resulting in denial of market access [in any manner]; or
12 Civil Appeal No. 2480 of 2014, decided on May 8, 2017
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