Competition Commission of India and the Google Probe
The Competition in Markets all over the world is where two or more companies strive to gain profit by competing with one another using various tactics. This practice has a lot of significance as due to this, the companies try to deliver the best of their services at a cost lower than their competitors which ultimately benefits the consumer.
However, sometimes companies, utilizing the favorable conditions, get into unhealthy market practices and try to monopolize the markets in their favor. This is always bad for the market as it finally kills the competitors, ends the competition, and the absence of competition is bad for consumers. Competition Commission of India regulates this competition in the Indian Market.
Why in News?
Recently, the Competition Commission of India initiated an inquiry into alleged abuse of dominant position by Google to promote its payments app called Google Pay (formerly Google Tez).
Competition Commission of India
Competition Commission of India (CCI) is the competition regulating body for Indian Markets.
CCI is responsible to enforce the Competition Act, 2002 which was passed in 2003. Even the CCI was constituted through this Act along with the Competition Appellate Tribunal as a judicial body to maintain checks and balances.
AIM: The Competition Commission in India aims to maintain a competitive environment in the Indian Economy and keeping a check on the companies trying to monopolize the market.
The CCI does its job by engaging proactively with asking the stakeholders including government, industries, economic forums, and international trade organizations & regulators.
CCI consists of A Chairperson and 6 members appointed directly by the Central Government.
Competition Act, 2002
Before 2002, the Indian Government used to regulate the competition in the Indian Economy through the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act).
Citing several loopholes in the legislation, the government-appointed Raghavan Committee under the Chairmanship of S.V.S. Raghavan in 1999 to advise a new and effective contemporary competition law to cope up with the economic developments all over the world.
The Committee submitted its report and on the lines of its recommendations, the Competition Act, 2002 was framed and signed by the President in 2003.
The Act prohibits anti-competitive agreements and abuse of the dominant position of enterprises.
It is the regulating legislation for combinations that include mergers, acquisitions, etc. so that they don’t cause adverse effects on the competition within India.
The Act has been amended two times in the past. Once in 2007 and finally in May 2009 when the Provisions related to anti-competitive agreements were added.
The Indian Government also replaced the Competition Appellate Tribunal (COMPAT) with National Company Law Appellate Tribunal (NCLAT) in 2017.
Duties of CCI
To ensure that consumer interests are protected in the market.
To implement policies listed in the Competition Act 2002.
To promote fair and constructive competition in the market.
To prevent the signing and implementation of anti-competitive deals.
To spread awareness about Competition Act and its policies among government bodies and masses.
To collaborate with other government regulatory bodies and work hard in ensuring fair and free practices in the market.
The Google Probe
Google has a humongous presence in the Indian Market with multiple products and services. Statistics suggest that over 91% of Indian Mobile Phone users use phones powered by Android Operating System which is owned by Google. With such a large user base in India, the regulating agencies have a tight eye on the company.
Competition Commission of India pinpointed two major anti-market practices by Google to promote Google Pay, its payments app. 1. Mandatory App for Google Play Store: If one wants to buy a paid app or perform in-app purchases, Google currently mandates that it is to be done only through Google Play’s payment system. 2. Exclusion of other Payment Apps: Google has excluded various UPI apps and e-wallets from its payment options in the Play Store which is an anti-competition practice.
Also, CCI was critical of Google. Since about 90% of the policy of charging 30% commission on all app and in-app purchases by Google downloads are cornered by Google Play Store, a significant volume of transactions being processed in the market would thus be controlled by it.
Earlier, there have been two instances where Google has faced Anti-Trust Probe in India 1. In 2018, the Competition Commission of India fined Google with an amount of $21 million as it was observed by the agency that Google misused its dominant position in the market for online search through practices leading to search bias and search manipulation. 2. In 2019, CCI pulled up Google for misusing its position in the market to reduce the ability of smartphone manufacturers to go for alternate versions of Android OS.