NCLAT modifies Google Play Store penalty to Rs 217 cr, partially upholds CCI order

The National Company Law Appellate Tribunal (NCLAT) has delivered its judgment in the appeal filed by Alphabet Inc. and other Google entities, challenging the order passed by the Competition Commission of India (CCI) concerning alleged anti-competitive practices related to the Google Play Store.  

Background of the Case

The case originated from information submitted to the CCI, leading to the registration of Case No. 07 of 2020. The CCI directed the Director General (DG) to conduct an investigation, and the DG submitted a report. Subsequently, information from Match Group Inc. and the Alliance of Digital India Foundation (ADIF) led to additional cases (Case No. 14 of 2021 and Case No. 35 of 2021), which were later consolidated with the original case.  

NCLAT’s Decision: Key Points

After hearing arguments from all parties involved, the NCLAT upheld some of the CCI's findings but also modified certain aspects of the order.  

• Upheld Findings of Abuse of Dominance: The NCLAT upheld the CCI's findings that Google had abused its dominant position.  
   
• Modified Penalty: The NCLAT modified the penalty imposed by the CCI. The tribunal agreed with the argument that the penalty should be based on Google's "relevant turnover" (i.e., revenue attributable to Google Play) rather than Google's entire turnover in India.  
   
• Treatment of Different UPI Integrations: The NCLAT addressed the CCI's finding that Google used different methodologies to integrate its own UPI apps compared to rival UPI apps.  
   
• Analysis of Anti-Competitive Effects: The NCLAT's decision involved a detailed examination of whether Google's conduct had anti-competitive effects, as required under Section 4 of the Competition Act.  
   

Arguments and Counter-arguments

• Google's Arguments: Google argued that the CCI's identification of the relevant market was incorrect, the determination of abuse of dominance was flawed, and the penalty was wrongly calculated. Google contended that there was no abuse of dominance.  
   
• CCI's Arguments: The CCI defended its order, asserting that it had correctly analyzed the evidence and rightly concluded that Google had violated the Competition Act. The CCI argued that Google's practices, including the mandatory use of GPBS, were anti-competitive and harmed both app developers and competition in the market.  
   
• Informant's Arguments: The informant (Respondent No. 3) supported the CCI's order, emphasizing Google's dominant position and the negative impact of its practices on app developers.  
   

Key Legal and Economic Considerations

The NCLAT's decision involved important legal and economic considerations, including:

• Definition of Relevant Market: The NCLAT examined how the CCI defined the "relevant market" to assess Google's dominance. This is a critical aspect of competition law, as the definition of the market determines the scope of competition and the assessment of a company's market power.  
   
• Abuse of Dominant Position: The NCLAT analyzed whether Google's conduct constituted an abuse of its dominant position under Section 4 of the Competition Act. This involved determining whether Google imposed unfair conditions, limited technical development, or denied market access