NCLAT upholds CCI order, cuts Google’s penalty to ₹216 crore

Bengaluru The National Company Law Appellate Tribunal (NCLAT) on Friday slashed the penalty imposed on Google by the Competition Commission of India (CCI) for abusing its dominant position in relation to Play Store policies, reducing it from ₹936.44 crore to ₹216.69 crore.

A bench of NCLAT chairperson justice Ashok Bhushan and technical member Arun Baroka partly upheld CCI’s 2022 findings against Alphabet Inc, Google’s parent company, but recomputed the penalty amount, citing a fresh evaluation. Google has already deposited 10% of the revised penalty and has been directed to pay the remaining sum within 30 days.

The order came on Google’s appeal against CCI’s October 25, 2022 decision that found the company guilty of violating several provisions of the Competition Act, 2002. CCI had imposed the original ₹936.44 crore penalty, declaring that Google leveraged its dominant position in the markets for licensable operating systems and app stores for Android mobile devices to unfairly mandate the use of Google Play’s Billing System (GPBS) for paid apps and in-app purchases.

CCI held that this practice stifled competition by restricting innovation among payment processors and app developers, limiting their ability to introduce new technical developments in the market for in-app payment processing services. The regulator further observed that Google’s policy led to denial of market access for payment aggregators and app developers, thereby violating multiple provisions of the Competition Act.

At the time, CCI had also directed Google to “cease and desist” from participating in anti-competitive practices and to modify its conduct within a defined timeline. The CCI ruling said it was imposing a penalty amounting to around seven percent of Google’s average relevant turnover, for violating Section 4 of the Competition Act, 2002, which prohibits any enterprise or group from abusing its dominant position.

While upholding CCI’s findings on abuse of dominance, the NCLAT rejected portions of the order that found Google guilty under Section 4(2)(b)(ii) and Section 4(2)(c) of the Act. These provisions prohibit dominant entities from restricting technological or scientific development and from preventing competitors from accessing the market.

However, the tribunal agreed with CCI’s emphasis on an “effects-based analysis” to assess anti-competitive conduct, affirming that competition law should focus on the actual impact of a dominant entity’s actions rather than their mere form.

“We have framed 13 questions for consideration in this appeal,” the NCLAT bench said. These questions include what constitutes an effects-based analysis and whether it requires both proof of conduct that restricts competition and conduct that is capable of doing so.

Despite the reduction in penalty, the tribunal upheld CCI’s conclusion that Google had violated Section 4(2)(a)(i) by imposing unfair or discriminatory conditions in the sale of services and Section 4(2)(e) by leveraging its dominant position in one market to strengthen its hold in another.