• The Competition Commission of India (CCI) slapped a penalty of Rs 1,337.76 crore on Google for abusing its dominant position in multiple markets in relation to Android mobile devices and ordered the internet major to cease and desist from various unfair business practices.

• The regulator, which has passed the order after ordering a detailed probe more than three years ago, has also directed Google to modify its conduct within a defined timeline.

• Google has been under the regulatory lens of CCI, which is currently also looking into a few other cases related to the internet major. Matters pertaining to alleged anti-competitive practices by Google with respect to news content, smart TV and GPay are also before the regulator.

• Smart mobile devices need an operating system to run applications (apps) and programs. Android is one such mobile operating system which was acquired by Google in 2005. Android is a popular open-source, mobile operating system installed by Original Equipment Manufacturers (OEMs) of smartphones and tablets.

• CCI, which had started probing the case in April 2019, has directed that OEMs should not be restrained from choosing from amongst Google’s proprietary applications to be pre-installed and also not be forced to pre-install a bouquet of applications on their smart devices.

• CCI has imposed a penalty of Rs 1,337.76 crore on Google for abusing its dominant position in multiple markets in the Android mobile device ecosystem, apart from issuing the cease and desist order.

Competition Commission Of India

• The Competition Commission of India (CCI) was established in October 2003 under the Competition Act, 2002 for the administration, implementation, and enforcement of the Act.

• The CCI became functional in March 2009.

• The CCI functions as a market regulator by preventing and regulating anti-competitive practices in the country. It also carries out advisory and advocacy functions.

Objectives of CCI:

i) Eliminate practices having adverse effects on competition.

ii) Promote and sustain competition in markets.

iii) Protect the interests of consumers.

iv) Ensure freedom of trade in the markets of India.

v) Establish a robust competitive environment.

• The CCI consists of a chairperson and a maximum of six members appointed by the central government.

• The Commission is also required to give opinion on competition issues on a reference received from a statutory authority established under any law and to undertake competition advocacy, create public awareness and impart training on competition issues.

What is the process of the CCI inquiry?

The CCI can initiate an inquiry:

i) On its own on the basis of information and knowledge in its possession.

ii) On receipt of an information.

iii) On receipt of a reference from the central government or a state government or a statutory authority.

• Any person, consumer, consumer association or trade association can provide information relating to anti-competitive agreements and abuse of dominant position.

• If the Commission is of the opinion that there is a prima facie case, it shall direct the Director General, appointed under the Act, to investigate the matter and report his findings to the Commission.

• After receipt of the investigation report from the Director General, the Commission may forward it to the concerned parties.

• If the report of the DG does not find any contravention of the Act, the Commission shall seek objections from the concerned parties. After considering the objections received, if any, the Commission may accept the report of the DG, or require further investigation to be made by the DG or make inquiries itself.

• In conclusion of the above broad process, the Commission shall determine whether it is a case of anti-competitive agreement or abuse of dominant position or both and after hearing the concerned parties and pass appropriate orders.

• National Company Law Appellate Tribunal (NCLAT) hears appeals against any direction issued or decision made or order passed by the CCI).

Why do we need competition in the market?

• In common parlance, competition in the market means sellers striving independently for buyers’ patronage to maximise profit (or other business objectives).

• A buyer prefers to buy a product at a price that maximises his benefits whereas the seller prefers to sell the product at a price that maximises his profit.

• Competition is now almost universally acknowledged as the best means of ensuring that consumers have access to the broadest range of services at the most competitive prices. 

• Producers will have maximum incentive to innovate, reduce their costs and meet consumer demand. 

• Firms may race to be the first to market a new or different technology. 

• Innovation benefits consumers with new and better products, helps drive economic growth and increases standards of living.

• Competition also can help businesses identify consumers’ needs and then develop new products or services to meet them.

• This would result in reduced costs and wider choice to consumers. A fair competition in market is essential to achieve this objective.

• Competition thus promotes allocative and productive efficiency.

• Antitrust laws encourage companies to compete so that both consumers and businesses benefit. 

• But all this requires healthy market conditions and governments across the globe are increasingly trying to remove market imperfections through appropriate regulations to promote competition.

• Antitrust and competition law are used interchangeably to refer to the legal regime that protects and promotes free and fair competition in the market. The objective of competition policy is to foster innovation, productivity and growth, all of which create wealth and reduce poverty. 

• In this pursuit, competition law aims to control monopolistic, unfair and restrictive trade practices by creating a set of legislations that enhance competition or competitive outcomes in the markets and curb anti-competitive practices by way of sanctions. 

• Furthermore, the strength of competition is likely to influence a country’s competitiveness, that is, the ability of domestic firms to compete in export markets and/or against imports in the home market.

• However, despite all best intentions, markets do not always work well. It has been observed that barriers to competition are all pervasive that harm innovation, productivity and equitable growth.

Additional read: 

Origin of competition laws

Competition laws have a long history. It is believed that the laws against anti-competitive practices date as far back as the middle ages, when cartels, the so-called guilds, were formed in most European cities.

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