Google’s Settlement—Did CCI Miss the Mark on Consumer Welfare?
- Blog|News|Competition Law|
- 5 Min Read
- By Taxmann
- |
- Last Updated on 3 May, 2025
Ankit Singh Rajput – [2025] 173 taxmann.com 995 (Article)
1. Introduction
Recently, the Competition Commission of India (“CCI”) on 21.04.2025, approved the settlement application proposed by Google in its investigation launched in the Smart TV devices market. In this settlement, Google outlined its Competition Law-compliant New India Agreement, which is set to take effect from July 2025. Under this agreement Google has inter alia proposed to introduce a “fee” for services that were previously offered for free of charge to OEM manufacturers, this settlement proposal in the absence of any economic analysis was subsequently approved by the CCI. Regarding Google’s plan to charge a licensing fee, the CCI acknowledged that it cannot act as a price regulator. However, the CCI ignored the pertinent fact that the extensive scrutiny of Google’s conduct stemmed from its decision to introduce these licensing fees only after the initiation of the investigation, thereby creating a classic “heads I win, tails you lose” situation. While the competition regime in India clearly affirms that the CCI is not a price regulator, there remains a distinct regulatory role when pricing practices adopted by a dominant entity potentially result in unfair pricing that negatively impacts consumer welfare and competition. This development raises significant concerns for end-users, particularly regarding whether a dominant firm, under the umbrella of a settlement, apart from aligning its alleged conduct with the Competition Law, can propose to charge fees for products and services that were previously offered for free. This question touches upon the broader issue of maintaining an equilibrium between regulatory oversight and market freedom, especially when the actions of dominant firms could impact competition and consumer welfare.
2. Background
The information was filed against Google LLC and other Original Equipment Manufacturers (“OEMs”) alleging anti-competitive agreements in violation of Section 3(4), Section 3(1), and Section 32 of the Competition Act, 2002 (“the Act”). The allegations focused on two agreements: the Television App Distribution Agreement (“TADA”) and the Android Compatibility Commitments (“ACC”), which reportedly contained restrictive covenants leading to anti-competitive practices, breaching Section 3(4) and Section 4 of the Act. The informants claimed that Google established dominance in the market for licensable operating systems for smart TVs and app stores, with nearly all Android TVs pre-installed with Google’s Play Store. Google allegedly bundled its Play Store with the Android TV OS, preventing OEMs from offering competing forked Android operating systems and restricting market access. Additionally, it was alleged that Google was limiting competition by not providing its Play Store to other licensable operating systems. OEMs bound by ACC/AFA agreements were reportedly prohibited from developing their own Android-based operating systems, creating entry barriers and stifling innovation. The agreements also imposed unrelated obligations, restricting OEMs’ freedom across their entire device portfolio, not just devices with Android TV or Play Store pre-installed.
Considering the information, the CCI was of the prima facie view that Google has contravened the provisions of Section 4 of the Act and directed the Director General (“DG”) to investigate. The DG submitted Confidential and Non-Confidential versions of the Investigation Report wherein it found contravention against the Google, subsequently after receiving of the investigation report, the Google filed a settlement application under the under Section 48A of the Act read with the CCI (Settlement) Regulations, 2024 (“Settlement Regulations”), which after deliberations and considerations of the responses received by the parties was finally approved by the CCI.
3. Investigation into Potential Harm to End Consumers Was Overlooked
The primary objective of introducing the settlement mechanism under Indian Competition Law is to ensure quicker resolution of competition concerns and to enhance consumer welfare. By encouraging enterprises to acknowledge regulatory concerns and agree to corrective measures without prolonged litigation, settlements allow anti-competitive practices to be addressed swiftly, minimizing harm to consumers and reducing the regulatory burden.
Recently during a preliminary hearing for an investigation initiated against Google’s in its updated payment policies for its proprietary app store. It was argued by Google that the CCI, as a market regulator, cannot dictate prices as it wishes to prospectively charge. However, the CCI while passing an order for initiation of investigation under Section 26(1) of the Act, observed that antitrust regulators may intervene where a dominant player’s pricing conduct harms consumer interests or stifles competition. Indeed, Section 4(2)(a)(ii) of the Act specifically proscribes the imposition of unfair prices in the purchase or sale of goods or services by a dominant enterprise. Further, the CCI referred to its earlier decision in Shamsher Kataria v. Honda Siel Cars India Limited [2015] 59 taxmann.com 419 (SC), where it relied on the European Court of Justice’s ruling in United Brands Company and United Brands Continental BV v. Commission ([1978] ECR 207). According to the United Brands’ decision, to establish unfair pricing, one must examine whether the difference between the costs actually incurred, and the price charged is excessive.
However, the CCI’s granting approval to the Google’s proposal of introduction of “fees” in its settlement application highlights a missed opportunity for the CCI to negotiate with Google to temporarily halt its plan to charge a “fee” for the products which were earlier offered for free and carry on an investigation embracing the economic analysis as and determine whether the fees proposed will not fall as “unfair pricing” against the end users. If Google had introduced such fees during the ordinary course of business, it would have been difficult for the CCI to regulate that action, given that it is not a price regulator per se. During the settlement stage, the CCI was primarily focused on assessing the conduct negatively affecting the market, while doing so the implications of Google’s introduction of new pricing mechanisms under guise of settlement could have been investigated.
Moreover, as the CCI itself acknowledges that it can regulate allegations of unfair pricing, examining the allegation of unfair pricing involves determining the cost of the product to the entity vis-vis its selling price. Consequently, in such a situation it may not be incorrect to state that, while investigating unfair pricing, an anti-trust regulator effectively assumes a role akin to that of a price regulator.
Therefore, while approving Google’s settlement application, the CCI could have exercised greater caution by temporarily negotiating and persuading Google to halt its plans to introduce fees for previously free services and conducting a swift investigation in its proposed pricing policy. Such a move would have allowed the CCI to thoroughly assess the long-term competitive impact before permitting a significant market shift while simultaneously it would have also helped the CCI in analysing any negative implications it may have on consumer welfare.
By allowing the immediate imposition of fees, the situation risks becoming a case of “hoist with their own petard,” where the very remedy intended to correct market distortions through settlement application may end up harming consumer welfare. Therefore, it is argued that a temporary suspension would have provided the CCI with the necessary breathing space to verify that Google’s proposed changes were not a strategic move to entrench its dominance under the cover of settlement.
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