Source: Indian Express  

Introduction 

The recent landmark verdict by Judge Amit Mehta of the US District Court for the District of Columbia, finding Google in violation of antitrust laws, has sent ripples through the global tech. The ruling, which held that Google unlawfully maintained monopolies in "general search services" and "general search text ads," may have far-reaching implications beyond US borders. Of particular interest is its potential impact on ongoing litigation against Google in India, where the tech giant faces similar allegations of anti-competitive practices. 

How did the U.S. Antitrust Verdict on Google Compare to Regulatory Actions in India? 

• The primary antitrust statutes in the United States include the Sherman Act, the Clayton Act, and the Federal Trade Commission Act, which collectively prohibit unreasonable restraints of trade, monopolization, and unfair methods of competition. 
• The Google case, the central issue revolves around Section 2 of the Sherman Act, which prohibits monopolization, attempted monopolization, and conspiracy to monopolize. 
• The legal standard for monopolization under U.S. antitrust law  
  • monopoly power in the relevant market and  
  • the willful acquisition or maintenance of that power through exclusionary conduct. 
• Judge Mehta's ruling focused on Google's alleged monopolization of the "general search services" and "general search text ads" markets, finding that Google's practices met the legal criteria for antitrust violations. 
• The court's ruling stems from a lawsuit filed by the U.S. Department of Justice and several states, alleging that Google illegally cemented its market dominance through annual payments to device manufacturers and web browser providers. 
• Judge Mehta identified Google's position as the "default" search engine as a critical factor in its monopolistic practices, terming it a "major, largely unseen advantage over its rivals." 
• The court emphasized the significance of "default distribution" in the search engine market, noting that users' tendency to adhere to preset search options grants Google billions of daily queries through these access points. 
• The geographic scope of the judgment is limited to the United States market, which may differentiate it from market conditions in other jurisdictions, such as India. 
• In India, Google faces similar allegations of anti-competitive practices, with the Alliance of Digital India Foundation (ADIF) recently filing a complaint regarding Google's conduct in the online advertising market. 
• The Competition Commission of India (CCI) has previously imposed a substantial monetary penalty on Google for abuse of its dominant position in the Android mobile device market. 
• Judge Mehta's ruling highlights the significant barriers to entry for potential competitors in the search engine market, including high capital costs, access to distribution channels, and brand recognition. 
• The court observed that for a new entrant to compete effectively with Google, it would need to develop a comparable quality search engine, build a competitive ad platform, and offset potential revenue shortfalls, requiring billions of dollars in investment. 
• In response to such market dynamics, the Indian Ministry of Corporate Affairs has proposed the Draft Competition Bill, 2024, which aims to regulate Systemically Significant Digital Enterprises (SSDEs) and prevent anti-competitive practices in the digital sphere. 
• The proposed Indian legislation imposes restrictions on SSDEs, including prohibitions on self-preferencing and unauthorized use of user data, which has met with objections from major technology companies citing potential impediments to innovation and research. 

Antitrust Law  

• United Kingdom:  
  • a. Primary legislation: Competition Act 1998 and Enterprise Act 2002  
  • b. Main enforcer: Competition and Markets Authority (CMA)  
  • c. Key features: Prohibits anti-competitive agreements and abuse of dominant position  
  • d. Post-Brexit: Independent merger control regime, parallel investigations to EU possible 
• European Union:  
  • a. Legal basis: Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU)  
  • b. Primary enforcer: European Commission  
  • c. Key features: Prohibits anti-competitive agreements and abuse of dominant position across member states  
  • d. Significant fining powers and ability to conduct dawn raids 
• Germany:  
  • a. Main legislation: Act Against Restraints of Competition (Gesetz gegen Wettbewerbsbeschränkungen, GWB)  
  • b. Enforcing authority: Federal Cartel Office (Bundeskartellamt)  
  • c. Recent focus: Amendments to address digital markets and big tech companies  
  • d. Strong enforcement record, particularly in cartel cases 
• United States:  
  • a. Core legislation: Sherman Act, Clayton Act, Federal Trade Commission Act 
  • b. Enforcers: Department of Justice Antitrust Division and Federal Trade Commission  
  • c. Key principle: Promotion of consumer welfare and economic efficiency  
  • d. Features both civil and criminal enforcement 
• Japan:  
  • a. Primary law: Antimonopoly Act  
  • b. Enforcing body: Japan Fair Trade Commission (JFTC)  
  • c. Prohibits: Unreasonable restraints of trade, private monopolization, unfair trade practices  
  • d. Recent trends: Strengthened investigative powers and increased fines 

Antitrust Law in India  

• Antitrust law, referred to Competition law in India, 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. 
• In India, the Competition Act, 2002, serves as the primary antitrust legislation, with the Competition Commission of India (CCI) as the regulatory body responsible for enforcing competition law. 
• The CCI's approach to antitrust enforcement shares similarities with U.S. and EU models but is tailored to the specific economic conditions and policy objectives of India. 
• Both U.S. and Indian antitrust laws recognize the concept of "abuse of dominant position," which is central to the allegations against Google in both jurisdictions. 
• The proposed Draft Competition Bill, 2024 in India aims to update the country's antitrust framework to address the unique challenges posed by digital markets and large technology companies. 

What is the Background Antitrust Law in India? 

• The Competition Act, 2002 
  • The New Economic Policy of 1991 initiated deregulation and competition promotion in India. 
  • In response to the inadequacy of the MRTP Act (Monopolies and Restrictive Trade Practices Act, 1969), the Raghavan Committee recommended substantial reforms, leading to the enactment of the Competition Act in 2002. 
  • The Competition Act established the Competition Commission of India (CCI) and regulates anti-competitive agreements, abuse of dominance, and mergers above certain thresholds to ensure fair competition in the Indian market. 
• The Competition Law Review Committee and its recommendations 
  • After a decade of enforcement under the Competition Act, the Ministry of Corporate Affairs formed the Competition Law Review Committee (CLRC) to review and amend key provisions. 
  • The CLRC, in its 2019 report, recommended updating the competition law framework in India but suggested caution in regulating digital entities due to the nascent stage of the digital economy. 
  • The CLRC deliberated on including factors like 'control over data' or 'network effects' in assessing dominance but concluded that the existing provisions of the Competition Act were flexible enough to consider such novel factors. 
• The Competition (Amendment) Act, 2023 
  • The Competition (Amendment) Act, 2023, implemented recommendations from the CLRC Report to widen the scope of Section 3 of the Competition Act, particularly in digital markets, by including 'other agreements' under Section 3(4). 
  • Recognizing loopholes in regulatory scrutiny of acquisitions by dominant firms in the digital space, the amendment introduced a deal value threshold of INR 2,000 crore for notifying transactions to the CCI if the acquired entity has substantial business operations in India. 
  • The amendment also broadened the definition of 'relevant market' under Sections 19(6) and 19(7) of the Competition Act, incorporating factors like the nature of services and switching costs associated with demand or supply. 
• The Parliamentary Standing Committee’s Report on ‘Anti-Competitive Practices by Big Tech Companies 
  • The Standing Committee Report highlighted concerns about anti-competitive practices by large digital enterprises, including unfair trade practices, self-preferencing, and violation of consumer rights. 
  • It emphasized the rapid evolution of digital markets and the need for an ex-ante competition law framework to address market dynamics effectively. 
  • The report identified ten anti-competitive practices (ACPs), such as anti-steering provisions, platform neutrality, data usage, and exclusive tie-ups, and recommended measures like designating Systemically Important Digital Intermediaries (SIDIs) and establishing a Digital Markets Unit within the CCI to regulate digital markets effectively. 
• Committee on Digital Competition Law and its mandate 
  • The Committee on Digital Competition Law (CDCL) was formed by the MCA to review the Competition Act's efficacy in addressing digital market challenges, with a focus on anti-competitive practices by large digital enterprises and the need for ex-ante regulatory measures. 
  • The growth of India's digital ecosystem, accelerated by the COVID-19 pandemic, led to increased internet users and the emergence of start-ups. However, concentration among large digital enterprises created imbalances in the market. 
  • The Committee's working process involved extensive stakeholder consultations, sub-group analysis, and engagement with legal research entities, resulting in a comprehensive report structure covering the evolution of competition law, analysis of existing frameworks, examination of international practices, and recommendations for a separate digital competition law, supported by detailed annexures. 
• India's Draft Competition Bill, 2024 
  • The bill aims to prevent anti-competitive practices by large tech companies. 
  • It introduces the concept of Systemically Significant Digital Enterprises (SSDEs).  
  • The bill imposes restrictions on SSDEs, including: 
  • Prohibiting self-preferencing of products and services  
  • Barring unauthorized use or sharing of users' personal data 
  • Big tech companies have objected to the bill, citing compliance burdens.  
  • Concerns raised that the bill may shift focus from innovation to compliance. 

Conclusion  

The antitrust landscape in India is evolving rapidly to address the unique challenges posed by digital markets and large technology companies. The recent U.S. verdict against Google, while not directly applicable, may influence ongoing litigation and regulatory approaches in India. The proposed Draft Competition Bill, 2024, with existing frameworks like the Competition Act, 2002, and its amendments, reflects India's efforts to create a robust ex-ante regulatory mechanism for digital markets. As these legal frameworks continue to develop, they aim to balance the promotion of innovation with the prevention of anti-competitive practices, potentially reshaping the competitive dynamics of India's digital economy.