Does CCI have the power to make Google pay the penalty?

They are mighty and they dominate markets across continents. They are also accused of stifling competition and not allowing smaller firms to flourish. Even the United States -- which is home to big techs like Apple, Amazon and Google – had to come out with an antitrust bill to introduce a level-playing field. But according to some reports, the bill is at risk of failing as some big companies are bent against it and have spent millions of dollars in lobbying.

Is consumer still the king?

Domination of a few big companies means higher prices and a lack of options for consumers like us. So it is when we look towards the government to set things right.

The Google case

The Competition Commission of India, or CCI, has imposed a penalty of 1,337.76 crore rupees on Google. The action has been taken against the tech giant for allegedly abusing its dominant position in multiple markets in the Android mobile device ecosystem. The CCI has also issued a cease and desist order against Google and directed the company to modify its conduct within a defined timeline. Google has 30 days to provide the required financial details and supporting documents.

This latest setback for Google comes just a month after the European Court of Justice’s General Court upheld the EU executive commission’s 2018 decision to impose a penalty on the tech giant, only reducing the fine amount from 4.34 billion euros to 4.125 billion euros. The latest EU fine is only one among a larger number of antitrust penalties, which add up to over 8 billion euros, that Google could face in Europe. As on September 14, Google still had the option to move the appeal in the latest case to the EU’s Court of Justice, the bloc’s top court.

How CCI works   

The CCI can take action against two activities -- abuse of dominant position and anti-competitive conduct. It can receive a complaint from a central or state government authority or an informant. It can even look into issues on its own. If prima facie there is a case then the director general office is asked to submit a report. If there is no contravention then CCI can ask the parties concerned to share their objections or it can decide to close the matter.

What CCI can do

However, if a case is made out, then the CCI can give directions for further inquiry or take action. What action can it take? The anti-trust watchdog can issue directions to the parties concerned to discontinue such practices, re-enter negotiations or impose a penalty. The maximum penalty can be 10 percent of the average turnover of the last three years. But, if it is a cartel, then an even higher fine can be imposed. So, how likely is it that the CCI will succeed in making Google pay the India penalty? An analysis of its past record might provide an indication.

The Competition Commission of India’s annual report for 2018-19, which is the latest one available, reveals that most of the commission’s orders till the 31st of March, 2019, were under appeal before the National Company Law Appellate Tribunal or under challenge before various High Courts and the Supreme Court.  

A reply in Rajya Sabha in July revealed that between April 2017 and June 2022, the CCI imposed penalties amounting to 4,369.39 crore rupees in 241 cases for violations of various provisions of the Competition Act, 2002. But, only an amount of 197.88 crore rupees, or about 4.5 per cent of the total, had been paid by the companies. The rest had been stayed or set aside by tribunals and courts. In some cases, the statutory time granted for the deposit of the penalty by the parties had not expired.  

A Parliamentary Standing Committee report also revealed a decline in the budgetary allocations for the CCI in the last four years. The CCI was allocated 46 crore rupees in FY23 according to the budget estimates, showing no increase over the FY22 revised estimates. The funds allocated to the Commission would have an impact on the resources at its disposal to pursue cases.

As of March 2022, out of the sanctioned strength of 195 staff, 69 positions were vacant. Inadequate staffing is also likely to negatively impact the CCI's effectiveness. Compare this to the EU Commission's staff of 800, most of which can be roped in for research. According to a 2018 news report, the CCI's research team had only 41 posts at that time.

[Expert byte in]

The action against Google follows close on the heels of the Competition Commission slapping penalties on online travel firms MakeMyTrip and Goibibo and hospitality services provider OYO for unfair business practices.  In fact, recent times have seen many cases related to digital markets and new-age companies coming up before the CCI, involving online marketplace platforms, app stores, and payment gateways, to name a few. Against this backdrop, CCI Chairperson Ashok Kumar Gupta recently said that the regulator was constantly honing its toolkit to meet the challenges arising from digital markets. Gupta added that the CCI planned to hire data scientists and algorithm experts for its upcoming digital markets and data unit.