Delhi HC issues notice on Google appeal against order directing CCI to decide plea of Startups against new payment policy

The Bench of Justice Satish Chander Sharma and Justice Subramonium Prasad on Wednesday sought a response from CCI and others on the appeal and listed the matter for July 19, 2023.

On Monday, the bench of Justice Tushar Rao Gedela passed an order and said, "There is no impediment, legal or otherwise, in directing the CCI to take up the applications under Section 42 of the Act, as filed by the petitioner, for hearing and considering the same in accordance with the law on or before April 26, 2023."

The bench was hearing the petitions moved by the Alliance of Digital India Foundation (ADIF) member Startups. While hearing the petition the High Court also considered the submissions on the point of Doctrine of Necessity.

ADIF had moved a plea and argued that Google is trying to bypass the CCI direction by introducing a policy named 'User Choice Billing'(UCB) in place earlier payment method Google Billing Payment System (GBPS)

The single bench noted that the petitioner was already aware of the UCB Pilot system even prior to the filing of the applications under Section 42 of the Act and therefore the urgency as alleged by the petitioner in respect of the intended launch of the UCB Pilot system on April 26, 2023, would not entitle the petitioner from invoking the doctrine of necessity.

The bench considered the submissions made by the senior counsels that the members who presently comprise the CCI are disqualified for any reason.

The bench said, "Having regard thereto, the question of examining whether the doctrine of necessity is or is not applicable to the present case does not arise at all."

The counsel for the petitioner had submitted that the CCI can validly invoke the Doctrine of Necessity in this matter.

On the other hand, Senior Advocate Sandeep Sethi earlier submitted that there is not a complete quorum and any constitution less than three would therefore, be violative of provisions of sub-Section (1) of Section 8 of the Act.

He also submitted that at present, admittedly, there are only two members and the Chairperson is yet to be appointed. On that basis, Advocate Sethi submits that the Commission is incapable of adjudicating the application under Section 42 filed by the petitioner.

Senior advocate Sajan Poovayya appeared for Google and submitted that the doctrine of necessity is invoked against an institution and not in respect of a particular case.

He also submitted that there is no material on record placed by the petitioner which would lead this Court to believe that the doctrine of necessity is to be invoked. The petitioner was already aware that the User Choice Billing (UCB) System was already launched.

Moreover, according to N Venkataraman, learned ASG, the CCI is constituted in accordance with the provisions of the Competition Act, 2002 and is very much functional and also simultaneously carrying out adjudicatory functions, Justice noted in the judgement.

"Keeping in view of the conclusions already drawn by this Court in respect of invoking the doctrine of necessity, the requirement to consider disputed factual aspects is not necessary for the present proceedings under Article 226 of the Constitution of India," the bench said in the judgement.

The petitioner filed the petition and prayed to hold that the CCI can validly invoke the doctrine of necessity in this case for initiating non-compliance proceedings against Google and issue an appropriate order/ direction to CCI for timely disposal of the interim relief application and the application under the Competition Act, 2002, filed by the Petitioner regarding non-effective compliance by Google of the CCI's final order dated October 25, 2022, and to keep UCB's implementation in abeyance till the adjudication by the CCI.

Secondly, the petitioner had prayed to issue an appropriate order/ direction providing interim relief to the Petitioner, directing the other respondents (Google) to keep the implementation of Google's UCB in abeyance, pending adjudication by the CCI on the petitioner's application and maintain the status quo (ie no commission is to be charged when transaction happen via other payment processors mode (non-GPBS mode) as it exists now.

The petitioner apprehended that the proposed official launch of the UCB System will render the Final Order dated October 25, 2022, otiose since under the garb of the UCB System, Google is continuing with the very discriminatory practices which have been frowned upon by the CCI.

Advocate Abir Roy, counsel for the petitioner submitted that upon information provided to the CCI, it conducted an inquiry and rendered the judgment, after investigations, through its Final Order dated October 25, 2022.

The petitioner AIDF has challenged Google's policy before the Competition Commission of India (CCI). The actions of Google are non-compliance with the final order of October 25, 2022, passed by the CCI. The CCI has failed to act on the applications filed by the petitioner due to a lack of quorum.

The policy is for all the app developers on Play Store to mandatorily start using GPBS for all transactions (paid app downloads and in-App purchases). GPBS will entail a 30 per cent commission (for app developers generating more than 1 million USD) or 15 per cent commission (for remaining app developers) and also had a longer settlement period of 45 days in contrast to other payment processors who provided much better terms and conditions, the petition said.

The petition has been submitted that the Competition Commission of India (CCI), which has failed to take action on the multiple applications filed by the Petitioner under the Competition Act, 2002 showing how Google and others are taking actions which are in gross violation and intentional non-compliance with the final order of October 25, 2022, passed by the CCI and the same needs to be remedied on an urgent basis to prevent impending digital market distortion and app developers.

It is said, "The CCI is a market regulator which has a statutory responsibility under the Act, to eliminate practices having an adverse effect on competition, to promote and sustain and protect the interests of consumers and ensure the freedom of trade of market participants in India."

However, due to a lack of quorum since 26 October 2022, it is practically non-functioning, and the Respondent Google is taking advantage of the same are engaging in anti-competitive conduct which will cause irreversible harm to the members of the Petitioner and other app developers in the market and cause distortion in the market.

The petitioner has stated that Google operates a mobile application marketplace for Android devices called, Play Store, and enjoys supreme dominance in that market. Currently, more than 80 per cent of transactions (including in-app purchases and paid app downloads) are done through various secure payment processors that charge 1-4 per cent commission per transaction and a better settlement cycle.

Google brought in a policy for all the app developers on Play Store to mandatorily start using only Google's payment method, named Google Play Billing System (GPBS) for all transactions (paid app downloads and in-App purchases).

GPBS will entail a 30 per cent commission (for app developers generating more than 1 million USD) or 15 per cent commission (for remaining app developers) and also had a longer settlement period of 45 days in contrast to other payment processors who provided much better terms and conditions, the petition said.

The Petitioner, which is an industry body for Indian Startups, filed Information before the CCI in Case against Google. The CCI had passed the final order dated October 25, 2022, imposing certain behavioural remedies on Google.

The CCI had ordered that Google shall allow, and not restrict app developers from using any third-party billing/ payment processing services, either for in-app purchases or for purchasing apps. Google shall also not discriminate or otherwise take any adverse measures against such apps using third-party billing/ payment processing services, in any manner.

It was also ordered that Google shall not impose any condition (including price-related conditions) on app developers, which is unfair, unreasonable, discriminatory or disproportionate to the services provided to the app developers.

Google shall ensure complete transparency in communicating to app developers, the services provided, and the corresponding fee charged. Google shall also publish in an unambiguous manner the payment policy and criteria for the applicability of the fee(s), the CCI had ordered. (ANI)