2014 (4) TMI 586 - Commission - Indian Laws

Discrimination in search advertising and online search - Abuse of dominant position - CCI had ordered investigation into allegations of abuse of dominant position by Google by practices like search bias, search manipulation, denial of access etc and creation of entry barriers of competing search engines and Google engaged in dilatory tactics to prolong investigation - Non submittion of documents called for - Held that - scope of the present investigations ordered under section 26(1) of the Act is very broad and encompasses various aspects relating to Google s policies with respect to online search advertising. Further, it is not limited to advertisers of any particular industry and would cover all who advertise on Google. Against this background, information sought by the Office of the DG with respect to the suspensions of Adword accounts of remote tech support advertisers, squarely falls within the ambit of the present investigation. In view of the sequence of events adumbrated above, it is evident that the opposite parties have failed to comply with the directions given by the DG in exercise of its powers under section 41(2) read with section 36(2) of the Act. The Commission is constrained to note that despite liberal indulgence shown by the DG to the opposite parties, the opposite parties engaged in dilatory tactics in order to procrastinate and prolong the investigations without any justifiable reason - Commission notes that no cause, much less any reasonable cause, was shown by the opposite parties save and except raising and advancing the pleas based on abstract propositions (broad and complex scope of investigations stretching to every facet of Google s businesses etc.) as noticed and detailed above. In fact, as noted earlier, the opposite parties have conceded the non-compliance with the requisitions made by the DG within the stipulated period - Commission has no hesitation in holding that the opposite parties have rendered themselves liable to be proceeded and punished in terms of the provisions contained in section 43 of the Act. When law casts an obligation upon the party to comply with a direction, the same needs to be complied with in the manner and the time stipulated therein. Further, it is trite to state that every failure to comply with the directions and requisitions constitutes a separate ground for imposition of penalties. In the instant case, as detailed hereinabove, it is manifest that the opposite parties have failed to comply fully with the various notices issued by the DG on different occasions. Despite reminders and opportunities extended by the DG, the opposite parties advanced frivolous and vexatious pleas to delay and avoid compliance. It may be noted that the period of failure to comply commenced w.e.f. 26.02.2013 in terms of the first notice of the DG dated 12.02.2013 whereby the opposite parties were directed to comply with the requisitions contained therein before the said date - fine of rupees one crore is imposed upon Respondent - Decided in favour of appellant.

Summary

Issues Involved:
1. Allegations of discriminatory practices by Google in online search and search advertising.
2. Allegations of Google abusing its dominant position.
3. Non-compliance by Google in providing information to the Director General (DG) during investigations.

Detailed Analysis:

1. Allegations of Discriminatory Practices by Google:
The case began with an information filed under section 19(1)(a) of the Competition Act, 2002, by M/s Consim Info Private Limited against Google Inc. and Google India Private Limited. It was alleged that Google manipulated its search algorithms to favor its own services and those of its vertical partners, causing harm to advertisers and consumers. The Commission found a prima facie case and directed the Director General (DG) to investigate the matter.

2. Allegations of Google Abusing its Dominant Position:
A subsequent information was filed by Consumer Unity & Trust Society (CUTS) alleging that Google was abusing its dominant position through practices like search bias, search manipulation, denial of access, and creating entry barriers for competing search engines. The Commission found prima facie evidence of contravention of section 4 of the Act and ordered this case to be clubbed with the previous one for a consolidated investigation.

3. Non-Compliance by Google in Providing Information:
During the investigation, the DG sought various information and documents from Google, which were not fully furnished. The DG reported this non-compliance to the Commission, prompting the initiation of penalty proceedings under sections 43 and 45 of the Act. The Commission observed that Google had not supplied complete information/documents as requested in multiple notices. Despite Google's claims of cooperation and the complexity of the information requested, the Commission found that Google had failed to comply with the DG's directions without reasonable cause.

Non-Submission of Specific Information:
- Algorithmic Changes: Google was required to provide details about changes in its search algorithm but failed to supply complete information despite multiple notices and extensions.
- Copies of Agreements: Google did not furnish copies of agreements related to exclusivity as requested by the DG.
- Internal Supporting Documents: Google did not provide internal documents related to the termination of certain Adword accounts and other tech-support Adword accounts within the given timeframe.

Commission's Findings:
The Commission noted that Google's non-compliance was deliberate and without reasonable cause. Despite Google's arguments about the broad and complex scope of the investigations, the Commission held that Google had engaged in dilatory tactics to prolong the investigations.

Penalty Imposed:
The Commission imposed a fine of rupees one crore on Google, considering it a single instance of non-compliance. Google was directed to deposit the fine within 60 days and to furnish the required information/documents within 10 days from the receipt of the order. The Commission also warned that any further non-compliance would be considered as separate instances for imposing additional penalties.

Conclusion:
The Commission concluded that Google had failed to comply with the DG's directions, thereby violating the provisions of section 43 of the Competition Act, 2002. The order emphasized the importance of compliance with legal directions and the consequences of failing to do so.