Google To Pay Penalty Of 136 Crore For Anti-Competitive Conduct In India

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Internet search giant Google has been penalized rupees 136 crores by Competition Commission of India for abusing its dominant position and imposing unfair conditions.

Facts

Consim Info private limited (Informant) alleged that Google causes harm to advertisers and consumers by conducting its main business in a discriminatory manner and at the same time favoring its own services and partners over third parties thereby, creating an uneven playing field. The informant also alleged that Google is abusing its dominant position in the market for online search through practices leading to search bias, search manipulation, denial of access to competing for search engines and creation of entry barriers. Competition Commission of India ordered Director-General to investigate the matter. Director General submitted its report concluding that Google indeed abused its dominant position in the relevant market of General Web Search Service and Online Search Advertising in India. After going through the report and reply of the parties commission framed the following issues.

Issues

  1. What is the relevant market(s) in the present case?
  2. Whether Google is dominant in the said relevant market?
  3. Has Google abused its dominant position in the relevant markets?

Judgement

The commission agreed with Director General on the first issue that General Web Search Services is distinct with Online Search Advertising Services and not substitutable with each other as the scope of two markets is very broad. General Web Search Services cannot be equated website search. Online Search Advertising Services are used for demand fulfillment and unique from advertiser’s perspective as it allows highly targeted advertisements by providing exactly what is asked for. India was the relevant geographic market for both the relevant markets. On issue no.2 Commission concludes that Google is dominant as it has an exponentially greater market share than its nearest competitor. Moreover, Google’s buying power, size, resources is way more than its competitors which further cements its position as a dominant player in the relevant market. Commission found Google abusing its dominant position in 3 major areas 1) Rankings of Universal Results were not displayed by relevance but were rather pre-fixed which was unfair and liable to be punished. 2) Displaying Google’s specialized flight options with prominent display and commercial flight unit amounts to unfair imposition and was in contradiction to Section 4(2)(a)(i) of the Competition Act 2002. Lastly, Google imposed restrictions on publishers which prevented them from obtaining services of competing for search engines. On the issue of penalty, Commission said two objectives should be kept in mind which is

  • a) to reflect the seriousness of infringement
  • b) to ensure that the threat of penalties will deter the infringing undertaking.

Commission to decide the amount considered the sum total of the revenues generated by Google as provided by them and accordingly levied a penalty of 5% of their average total revenue generated from India operations from its business segment for financial years 2013, 2014 and 2015 which equals around 135.86 Crore.

Learning Outcome

From this decision, we learn that no matter how big a company is, it cannot escape the long hands of law and law will not allow such a company to impose unfair conditions on small players because of its size.

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