Delhi HC asks CCI to consider plea by start-ups against Google's new payment policy

New Delhi: The Delhi High Court on Monday asked the Competition Commission of India (CCI) to consider on or before April 26 a plea by Alliance of Digital India Foundation (ADIF) against Google's policy on permitting the use of third party payment processors for paid app downloads and in-app purchases on a commission basis.

The order was passed by Justice Tushar Rao Gedela on a petition by ADIF which is an alliance of individuals and an industry representative body of the innovative start-ups in the country.

The petitioner had approached the high court earlier this month with the grievance that the anti-trust regulator had failed to act on its application in relation to the new payment policy owing to lack of quorum.

"There is no impediment, legal or otherwise, in directing the CCI to take up the applications under Section 42 (contravention of CCI orders) of the Act, as filed by the petitioner, for hearing and considering the same in accordance with law on or before 26.04.2023. Accordingly, the petition stands disposed of in above terms," said the court.

The court noted that any vacancy or defect in the constitution of CCI would not invalidate any proceedings so far as its adjudicatory powers are concerned, and as per Additional Solicitor General N Venkataraman, CCI was constituted in accordance with the provisions of the Competition Act and was very much functional and carrying out adjudicatory functions.

"Merely because of a defect or a vacancy in the constitution of the CCI, the CCI cannot be considered as a statutory authority not having jurisdiction to adjudicate the complaints or other proceedings pending before it. Any interpretation, other than the aforesaid, would render the provisions of Section 15 otiose and which could not possibly be the intention of the Legislature either," it said.

The petitioner had earlier submitted that under its ‘User Choice Billing’ policy, which is slated to come into force from April 26, Google would be charging service fee at 11% or 26% in case of third party payment processors, which is anti-competitive and an attempt to bypass an order passed by the Competition Commission of India.

The petitioner had said the US technology giant operates a mobile application marketplace for android devices called 'Play Store' which enjoys supreme dominance in that market and under the present framework, there is no requirement to pay any commission for third party payment processors.

The court was informed that in October last year, the CCI, while imposing a penalty of Rs 936 crore, had asked Google to allow and not restrict app developers from using any third-party billing services and to not impose any discriminatory condition.

The petitioner had said its grievance was that the CCI has failed to act on its plea in relation to the new policy owing to lack of quorum to consider the issue.

It had contended that the CCI must invoke the "doctrine of necessity" and look into the matter as a refusal to intervene will cause irreversible harm to the petitioners and other app developers, and lead to distortion in the market.

The implementation of the policy, in the meantime, must be kept in abeyance till the matter is looked into by the anti-trust regulator, the petitioner had prayed.

Google had opposed the petition on several grounds, including that since there were only two members and the Chairperson was yet to be appointed, the CCI was incapable of adjudicating the application filed by the petitioner.

In its 38-page order, the court said its observations shall not tantamount to any expression on the merits of the case and the same is without prejudice to the rights and contentions of all the parties to be taken at an appropriate proceeding.

It also said the question of examining whether the doctrine of necessity is or is not applicable to the present case does not arise at all.