The Competition Commission of India (CCI) recently issued its first-ever order under the newly launched Settlements and Commitments regime in the Android TV Case (Kshitiz Arya & Ors vs Google LLC). This order marks a watershed procedural moment as it represents the debut settlement application under the fresh enforcement framework.
The case revolved around allegations that Google had abused its dominant position in the market for licensable smart TV operating systems by imposing unfair contractual conditions on original equipment manufacturers (OEMs). Similar to the Android OS Case, which resulted in the imposition of significant monetary penalties and remedial measures on Google, the Android TV case led to an examination of anti-competitive clauses in Google’s agreements with OEMs. Among other concerns, a key allegation was that Google restricted the ability of OEMs to offer Android forks (an alternate version of the Android operating system).
The Director General’s investigation confirmed that Google was dominant in the relevant market. Key issues included mandatory app bundling, restriction on competing apps and denial of market access. Google voluntarily offered a set of behavioural commitments for a period of 5 years with regular reporting to ensure adherence.
A Split Decision
While most CCI orders are unanimous, this was the first settlement case where a member of the CCI issued a dissenting opinion. The dissent flagged concerns that OEMs could prefer the status quo, as piecemeal access to Google apps, could result in an additional economic burden on OEMs. That said, the order will have resounding implications, while nudging entities towards the settlement mechanism.
Key Takeaways
Potentially faster timelines: Anti-trust enforcement typically involves prolonged proceedings. This order demonstrates the CCI’s willingness to utilise the settlements mechanism to resolve cases more expeditiously. The mechanism also helps balance the CCI’s responsibilities with those of the parties under investigation by allowing them to provide specific commitments to avoid significant penalties.
Potential Reduction in Penalties: While the order does not contain details of the penalty reduction, it can be presumed that the settlement amount would be far lesser than the previous penalties imposed on Google. The mechanism allows applicants a viable alternative to limit potential financial exposure.
Transition to a pragmatic solution-based approach: The order demonstrates a significant shift from a punitive approach to a mutually acceptable commitments-based approach, aligning with global practices. Globally, negotiated remedies are preferred over unilateral penalties as they create a conducive environment that fosters trust and incentivises parties to adhere to offered commitments.
The dissenting opinion highlights the need for the CCI to scrutinise whether commitments lead to real-world benefits while ensuring a competitive market. Concerns like OEMs retaining the existing arrangement make it critical to monitor Google’s compliance. Still, this order is a landmark, kickstarting the settlement mechanism with one of the most widely known tech companies. Pertinently, the legislative intention was to position the regime as a game-changer, bridging the gap between the regulator and potential applicants. While it remains to be seen whether the regime achieves its intended aim to reduce compliance costs, flexible remedies and most importantly, quicker closure, the order certainly shows that it is off to a great start.
