Antitrust Investigation
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This Blog is written by Piyush Gupta from CPJ College of Higher Studies & School of Law, Delhi. Edited by Saumya Tripathi.
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ANTITRUST
Antitrust laws are those rules and regulations that’s keep the track on the dispersal of economic power in business and also make sure that healthy competition should sustain in the economy, so that economy can grow and flourish.
Antitrust laws are applicable to all kinds of industries and businesses, including transportation, manufacturing, and distribution.
The main function of antitrust laws is to prohibit numerous of business practices that creates hurdle in trade. Illegal practices can be in the form of price fixing, mergers to cut the competition, and predatory acts.
In the United States, antitrust law is a pool of federal and state government laws which regulates the behavior and organization of business corporations. It generally promotes competition for the benefit of consumers. The three main statutes are the Sherman Act of 1890, the Clayton Act of 1914 and the Federal Trade Commission Act of 1914. These Acts serve three major functions. First, Section 1 of the Sherman Act prohibits price-fixing and the operation of cartels, and prohibits other collusive practices that unjustly restrain trade. Second, Section 7 of the Clayton Act restricts the mergers and acquisitions of organizations that would likely substantially lessen competition. Third, Section 2 of the Sherman Act prohibits the abuse of monopoly power.
ANTITRUST INVESTIGATION
Antitrust refers to any inquiry arranged by any antitrust investigator for the motive of identifying whether any person or an industry or any business is or has been involved in any kind of antitrust violation or in any kind of activity for a merger, joint venture, acquisition, which if executed, may result in an antitrust violation.
INTRODUCTION
Competition Commission of India (CCI) is investigating allegations that Google is abusing its market position to unfairly promote Google Pay.
India’s antitrust body is viewing into allegations that Alphabet Inc.’s Google is abusing its market position to unethically promote its mobile payments app in the country. The complaint was filed in February and the Competition Commission of India (CCI) has kept the identity of the complainant confidential. The complaint alleges the US tech giant more blatantly showcases its Google Pay app inside its Android app store in India, giving it an unfair gain over apps of competitors which hurt consumers. As per the complaint, Google’s Play Store in India shows Google Pay prominently, which gives it an unfair advantage and affects consumers. The complaint alleges that Google Pay is promoted through ‘search manipulation’. Moreover Google can promote the payments app due to its dominant position in the operating system market and also alleged the company is able to use its dominant position in the mobile operating system (OS) market [Android] to promote Google Pay.
SIGNIFICANCE OF THIS DEVELOPMENT
1) Antitrust investigation was intended to protect and promote healthy competition within all sectors of the economy.
2) Antitrust investigation stops businesses and individuals from fixing prices or from dividing markets.
3) Antitrust investigation intends to ban unfair competitive practices.
4) Antitrust investigation intends to prohibit the appointment of the same person to make business decisions for competing corporations.
5) Antitrust investigation helps in stopping the abuse of monopoly power.
IMPACT
This development would impact Google negatively, since google is a big Tech giant, it has millions of subscribers. There can be following implications:
- Google can lose the confidence of millions of its subscribers.
- CCI can also conduct investigation and if allegations are going out to be true, then google will have to pay heavy penalty and charges.
- Google will also lose its market or brand value.
CASE LAWS
United States v. Microsoft Corporation, 253 F.3d 34 (D.C. Cir. 2001):
It was a noted American antitrust law case in which the U.S. government suspects Microsoft of illegally maintaining its monopoly position in the PC market primarily through the legal and technical restrictions it put on the abilities of PC manufacturers (OEMs) and users to uninstall Internet Explorer and use other programs such as Netscape and Java.
United States of America vs Thomas J. Abraham:
The suspect and co- conspirators involved in a combination and plan in unreasonable restraint of interstate trade and commerce in violation of Section 1 of the Sherman Act.
The combination and conspiracy consisted of a continuing agreement, understanding, and concert of action among the defendant and co-conspirators, the substantial terms of which were to rig bids and assign contracts for the provision of utility construction services awarded by Rochester Gas & Electric (“RG&E”).
For the purpose of forming the aforesaid combination and conspiracy, the defendant and co-conspirators did those things which they combined and conspired to do, including among other things:
1) Participating in meetings and conversations to discuss the allocation of, and the prices to be bid on, contracts for the provision of utility construction services to RG&E;
2) Agreeing on the chosen winner and the prices to be bid on contracts for the provision of utility construction services to RG&E; and
3) Receiving payments from RG&E on contracts for utility construction services awarded on the basis of collusive and rigged bids.
ANALYSIS
1) The complaint alleges the USA tech giant more prominently showcases its Google Payapp inside its Android app store in India, giving it an unfair advantage over apps of competitors.
1.1) Google Pay allows users to do digital transactions, inter-bank fund transfers and bill payments.
1.2) It competes with Softbank-backed Paytm and Walmart’s PhonePe, both of which are prominently used in India.
1.3) Facebook’s WhatsApp is also planning a similar service in the near future.
2) Google has not responded to the allegations yet and is expected to respond in due course.
3) The CCI can direct its investigations unit to conduct a wider probe into the allegations or dismiss the case if it finds no merit in it. Google will appear before the CCI, which will then decide on the way forward.
4) This is Google’s third major antitrust challenge in India.
In 2018, the CCI fined Google $21 million for ‘search bias’.
It was alleged that Google was indulging in abuse of a dominant position in the market for online search through practices leading to search bias and search manipulation, among others.
In 2019, the CCI started probing Google for allegedly misusing its dominant position to reduce the ability of smartphone manufacturers to opt for alternate versions of its Android mobile operating system.
Antitrust Law:
- Antitrust law, also referred to as Competition law,aims to protect trade and commerce from unfair restraints, monopolies and price-fixing.
- It ensures that fair competition exists in an open-market economy.
- The Competition Act, 2002 is India’s antitrust law.It repealed and replaced the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act) on the recommendations of the Raghavan committee.
The Competition Act, 2002:
- It was passed in 2002 and was amended by the Competition (Amendment) Act, 2007. It follows the philosophy of modern competition laws.
- The Act prohibits anti-competitive agreements, abuse of dominant position by enterprises and regulates combinations, which causes or likely to cause an appreciable adverse effect on competition within India.
- In accordance with the provisions of the Amendment Act, the Competition Commission of India and the Competition Appellate Tribunal (COMPAT) were established.
- The government replaced COMPAT with the National Company Law Appellate Tribunal (NCLAT) in 2017.
CONCLUSION
At last, what I deduce from the above explanations that, CCI will investigate this matter and if the allegations are going to be true the Google can be slammed with heavy charges and penalties. And if CCI didn’t find any merit in the case then CCI can stop the investigation and will acquit Google and also not slam penalties on Google. If the allegations are true then the google will face most impacted in terms of in its customer base as well as financially.
REFERENCE
https://www.nytimes.com/2020/05/15/technology/google-antitrust-investigation.html
https://en.wikipedia.org/wiki/United_States_antitrust_law
https://definitions.uslegal.com/a/antitrust-investigation/
https://www.thenewsminute.com/article/google-pay-under-cci-scrutiny-unfair-promotion-app-125466