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: Competition Commission of India.
Every contract between two parties is bound by some terms and conditions. One has to abide by the terms of the contract. One such term of the contract is performance in manner or at time prescribed or sanctioned by promise. The same was decided by Mr. Ashok Chawla (Chairperson) Dr. Geeta Gouri (Member) Mr. Anurag Goel (Member) Mr. M. L. Tayal (Member) Mr. S. L. Bunker (Member) in the case of M/s Consim Info Private Limited (informant) vs. M/s Google Inc. &amp; M/s Google India Private Limited (opponent party) [Case Nos. 07 &amp; 30 of 2012]. The facts of the case are that an information u/s 19(1)(a) of the Competition Act, 2002 was filed against the opponent party alleging that Google runs its core business of online search and search advertising in a discriminatory manner, causing harm to advertisers and indirectly to consumers and creating an uneven playing field by favouring its own services and of its vertical partners, by manipulating the search algorithms. It was also alleged that Google provides a number of vertical search services like YouTube, Google News, Google Maps etc. and in order to promote its vertical search services, it mixes many of vertical results into organic search results. The effect of such manipulation of results was Google’s vertical search partners will appear predominantly when an internet user searches for some information, irrespective of whether the search results are most popular or relevant. Subsequently the consumer unity &amp; trust society (CUTS) alleged that Google was abusing its dominant position by practices like search bias, search manipulation, denial of access and creation of entry barriers for competing search engines etc. After perusal of the case, the commission asked the director general was asked to investigate into the matter. The Commission clubbed both the cases u/s 26(1) of the Act, r/w Regulation 27 of the Competition Commission of India (General) Regulations, 2009 since the allegations in the previous case also pertained to abusive conduct of Google in the online search engine markets. During the investigation it was found out that Google did not furnish the information as requisitioned by the Office of the DG. Accordingly, the DG reported the matter to the Commission seeking initiation of proceedings against Google in terms of the provisions contained in sections 43 and 45 of the Act. Google argued that they have a reasonable cause and moreover, they have accompanied by the DG during its investigation. Further, it was argued by Google that the information sought by the DG were vast and not specific hence it took time to provide the information. The Commission, however, taking into consideration the totality of the facts and circumstances of the case, held that 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. The Commission also considered the documents sought for by the DG, and hence is of opinion that ends of justice would be met if the maximum fine envisaged under the provisions of section 43 of the Act is imposed upon the opposite parties by taking only one instance of noncompliance. It is, however, made clear that if the opposite parties further fail to comply with the directions of the DG in future, each instance of noncompliance shall be taken separately besides considering the same as aggravating factor for the purposes of imposition of fine. In the result, a fine of rupees one crore is imposed upon the opposite parties. The opposite parties are further directed to deposit the same within a period of 60 days from the receipt of the order. The opposite parties are also directed to furnish the information/ documents required by the DG vide the notices under consideration within a period of 10 days from the receipt of this order, if not already furnished.
 COMPETITION COMMISSION OF INDIA Case Nos. 07 & 312 Case No. 012 In Re: M s Consim Info Private Limited 1. M s Google Inc. USA 2. M s Google India Private Limited Case No. 312 Consumer Unity & Trust SocietyInformant Opposite Party No. 1 Opposite Party No. 2 1. M s Google Inc. USA 2. M s Google India Private Limited Opposite Party No. 1 Opposite Party No. 2 C. Nos. 07 & 312 CORAM Mr. Ashok Chawla Dr. Geeta Gouri Member Mr. Anurag Goel Mr. M. L. Tayal Mr. S. L. Bunker Shri Ravi Sekhar Nair and Shri Sameer Gandhi Advocates for the opposite parties in both the cases. Order under section 43 of the Competition Act 2002 In Case No. 012 an information under section 19(1)(a) of the Competition Act 2002was filed against M s Google Inc. and M s Google India Private Limited by M s Consim Info Private Limited alleging that Google runs its core business of online search and search advertising in a discriminatory manner causing harm to advertisers and indirectly to consumers and creating an uneven playing field by favouring its own services and of its vertical partners by manipulating the search algorithms. It was also alleged that Google provides a number of vertical search services like YouTube Google News Google Maps etc. and in order to promote its vertical search services it mixes many of vertical results into organic search results. The effect of such manipulation of results was that C. Nos. 07 & 312 Google‟s vertical search partners will appear predominantly when an internet user searches for some information irrespective of whether the search results are most popular or relevant. The Commission on perusal of the material available on record and after hearing the arguments advanced on behalf of the informant opined that their existed a prima facie case to direct the Director Generalto cause an investigation to be made into the matter. Accordingly the Commission vide its order dated 03.04.2012 directed the DG to investigate the matter and to submit its report. Subsequently another information viz. Case No. 312 was filed by Consumer Unity & Trust Societyagainst Google wherein it was also alleged that Google was abusing its dominant position by practices like search bias search manipulation denial of access and creation of entry barriers for competing search engines etc. The Commission in this case also vide its order dated 20.06.2012 found prima facie the acts conduct of Google to be in contravention of the provisions of section 4 of the Act and accordingly ordered investigation in this case as well. It was also noted by the Commission that since the allegations in the previous case also pertained to abusive conduct of Google in the online search engine markets it was ordered that the subsequent information be clubbed with the previous case in terms of the provisions contained in proviso to section 26(1) of the Act read with regulation 27 of the Competition Commission of IndiaRegulations 2009. Both the aforesaid cases are pending investigation before the DG and a consolidated investigation report is awaited. investigations it appears the DG sought certain information and documents from Google. It appears that Google did not C. Nos. 07 & 312 furnish the information as requisitioned by the Office of the DG. Accordingly the DG reported the matter to the Commission seeking initiation of proceedings against Google in terms of the provisions contained in sections 43 and 45 of the Act. The proposal of the DG for initiation of penalty proceedings was considered by the Commission in its ordinary meeting held on 13.02.2014 wherein it was observed that the opposite parties have not supplied complete information documents as sought for by the DG vide its numerous notices dated 12.02.2013 26.09.2013 11.10.2013 13.11.2013 27.11.2013 03.12.2013 and 21.12.2013. It was further noted by the Commission that the opposite parties have shown an attitude of either withholding the information sought by the DG or furnishing only a part of the information sought. It was observed by the Commission that non filing of complete reply to the aforesaid notices of the DG shows willful disregard of the opposite party to the communication of the DG. As such the Commission decided to issue show cause notice to the opposite party under section 43 of the Act. The opposite party was directed to file reply to the show cause notice within two weeks of the receipt of same. As regards the offences under section 45 of the Act the Commission at this stage reserves its action. At the outset it would be appropriate to quote the show cause notice issued to the opposite parties under section 43 of the Act read with regulation 48 of the Competition Commission of Indiaregulations 2009: Subject: Show cause notice under section 43 of the Competition Act 2002 read with regulation 48 of the Competition Commission of India regulations 2009 in the case of M s Matrimony com private limited against Google Indian Private LimitedC. Nos. 07 & 312 1. Whereas the Competition Commission of India vide its order dated 03.04.2012 was of the opinion that there existed a prima facie case under section 26(1) of the Competition Act 2002and referred the matter to the Director Generalfor investigation. 2. Whereas pursuant to the aforesaid direction the DG following notices to you furnish certain information documents within the stipulated time therein from the receipts of the said notice either by appearing in person or through an authorized representative: i) Notice dated 12.02.2013 ii) Notice dated 26.09.2013 iii) Notice dated 11.10.2013 iv) Notice dated 13.11.2013 v) Notice dated 27.11.2013 vi) Notice dated 03.12.2013 vii) Notice dated 21.12.2013 3. Whereas you have failed to furnish the complete information as required by the DG within the stipulated time. 4. Whereas the Commission vide its order dated 13.02.2014 prima facie satisfied that there has been a non compliance of the directions given to you by the DG in exercise of its powers conferred under section 36(2) of the Act. 5. You are hereby directed to show cause in writing within two weeks from the receipt of this notice as to why a penalty in terms of the provisions of section 43 of the Act be not imposed upon you. C. Nos. 07 & 312 6. That if no cause is shown by you within the stipulated period it shall be presumed that you have nothing to say in the matter and the Commission shall proceed further in accordance with the provisions of law. 7. The oral submission if any may be made before the Commission on date 06.03.2014 at 10:30 AM in person or through an authorized representative. DG. The opposite parties filed reply to the aforesaid show cause notice and were also heard by the Commission on 06.03.2014. The opposite parties in their reply contended that far from displaying a failure to comply Google has mademultiple lengthy submissions to date both in response to requests from the DG and of its own volition despite the increase in scope and scale of the issues under investigation and every effort to engage frequently with the DG including facilitating direct interactions with its employeeswho were best placed to explain the highly technical issues that form part of the investigations. It was further submitted that there has been no non compliance or any unreasonable delay on Google‟s part in the provision of information to the It was argued that Google has adopted and continues to maintain a policy of complete cooperation and frequent engagement with the DG and has dedicated significant time and resource in assisting the DG with the investigations. It was highlighted that from the time of commencement of Consim and CUTS investigations Google has rendered complete cooperation and compliance by providing extensive information in the form of written responses to numerous sets of questions detailed voluntary submissions and several in person meetings. It was also sought to be suggested that the scope C. Nos. 07 & 312 of both investigations is extremely broad reaching into almost every commercial activity of Google globally. Further issues under consideration have grown in scale and complexity rather than becoming more focused over the course of the investigations. In both investigations it was argued that there have been no set parameters for the time periods to provide information under consideration. Neither CUTS information nor Consim information clearly outlines any period of contravention. As a result information on occasions was required to be provided for lengthy periods ranging up to five years. It was argued that given the broad contours of the investigations which have expanded over time and which currently stretch to nearly every facet of Google s businesses the information requests issued by the DG have often been extremely wide ranging. At times these requests have been very broadly worded and required the production of complex and technical information. Further as the investigations have progressed information requests have been issued with increasing frequency often with short timeframes for response. This has made the process of collecting and presenting information in a timely and reader friendly fashion even more It was also contended that owing to the broad nature of the investigations information requests have often been widely worded and unspecific potentially catching information not wholly relevant to the issues under investigation. It has been in part because of this that Google has invested significant time and resource in delivering presentations and information voluntarily which would help the DG better understand Google s business. Coupled with the often technical nature of the information sought making it ever more challenging for Google to respond within short periods of time. Each time a request for information is received Google has to identify relevant business persons divisions who which are C. Nos. 07 & 312 often located in different parts of the world collate information distill and present the same into a reader friendly format for the DG. It was further argued that Google is a global organization with offices all over the world. There is no single central database from which to source all the information sought by the DG and the information sought is seldom "off the shelf". As such responding to information requests has often required extensive work to be undertaken by Google employees located in different countries departments divisions and roles across multiple time zones. A detailed sequence of events relating to the notices was also given in the reply stating categorically that all the requests identified in the show cause notice have been met in full. Further it was argued that for all but one of the areas of inquiry Google submitted its complete responses prior to the show cause notice being issued. Conceding delays it was argued that the delays have been few and far between and have only occurred for genuine reasons relating to the complexity and scale of the information in question. It was averred that though Google regrets any inconvenience that this may have caused Google s aim was always to provide a full and complete response in a form that would be useful to the DG s investigation. It was sought to be suggested that such behavior is not typical of a party that is attempting to either withhold information or provide only part of the information in disregard of the requests made. Lastly it was submitted that throughout the investigation Google has displayed good faith and a complete willingness to cooperate with the DG and the Commission. Google has expended considerable effort in providing information that is relevant to the investigation whether specifically requested or voluntarily offered. Multiple written submissions have been made including extensive responses to requests from the DG and voluntary C. Nos. 07 & 312 submissions and numerous in person meetings have been held often at Google s request in order to facilitate the DG s better understanding of its business. Most importantly the following points were highlighted : i) First section 43 of the Act allows the Commission the discretion to find a breach and impose a penalty only in circumstances where a person “fails to comply” with a direction given by the Commission or the DG “without reasonable cause”. ii) Second in applying section 43 the Commission must also distinguish between “belated compliance” and “failure to comply” Third various courts in India have established that a penalty will not ordinarily be imposed unless the party against whom failure was alleged acted deliberately or in defiance of law or was guilty of conduct contemptuous or dishonest conduct or acted in conscious disregard of its obligation.SCC 627). iv) At no point has Google disregarded any requests for information. Delays have been minimal and where occurring have arisen for genuine reasons of complexity and scale. In each case Google has responded to requests as soon as it has been practicable and has liaised constantly with the DG to explain the relevant circumstances. v) Further contrary to the notice which states that Google “failed to furnish complete information” as of the date of the notice all requests barring one had been met in full and the remaining requests had been met by the date of this C. Nos. 07 & 312 vi) Not only has there not been a failure to comply the standard of reasonable cause" has been met on the few occasions when there has been a delay. It cannot therefore be the case that Google s conduct in these investigations warrants enforcement action under section 43 of the Act. In fact it is an established principle in India that even if a minimum penalty is prescribed the authority competent to impose the penalty will be justified in refusing to impose penalty when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute Hindustan Steel Limited v. State of Orissa)Further in assessing the issues raised in the notice it is essential that the Commission is fully aware of the context to the requests listed in the notice. These investigations raise numerous issues that expanded in scope over the course of the investigations rather than becoming focused and which touch on almost every aspect of Google s business in India and abroad. The challenges raised by the complexity and broad scope of the investigations have been compounded by the three changes in the officers responsible for the case at the DG since the original orders of the Commission. It would be wrong and manifestly unfair to attribute the general length of time taken in these investigations to date to any apparent delays in Google s provision of information. Google s intention to offer complete cooperation to the DG at all times is reflected in the fact that Google has submitted close to ten thousand pages of information in response to almost 20 separate notices comprising over 200 distinct questions requests. As on the date of this submission Google is continuing to engage with the DG and is providing additional information and documents as are being requested by the DG from time to time. In light of the above it was prayed to the Commissions that the legal standards provided under section 43 of the Act have not been met and a penalty is not merited. C. Nos. 07 & 312 The Commission has very carefully perused the material available on record besides examining the reply written response tendered by the opposite parties to the show cause notice issued by the Commission under section 43 of the Act as also follow up submissions of the opposite parties. The Commission has also heard at length the counsel for the opposite parties. One of the contentions of the counsel appearing for the opposite parties relates to the DG widening the scope of investigation particularly with respect to information sought on remote tech Adword accounts. The Commission however observes that the 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. As noted earlier the show cause notice issued by the Commission under section 43 of the Act was relatable to the notices dated 12.02.2013 26.09.2013 11.10.2013 13.11.2013 27.11.2013 03.12.2013 and 21.12.2013 issued by the DG to the opposite parties seeking information documents specified therein. It would be appropriate to delineate in detail the information documents as sought thereunder and the response of the opposite parties thereon. Information related to algorithmic changes It may be noted that pursuant to Q. 11(i) of the notice of the DG dated 12.02.2013 it was required of the opposite parties to give details about the change in search algorithm made by the opposite parties either manually or by means of automated software in the last 24 months on each occasion by C. Nos. 07 & 312 26.02.2013. In response thereto Google vide its letter dated 08.03.2013 inter alia submitted that they do not manipulate the search results and manual algorithmic changes are aimed to enhance users experience by providing them most useful and relevant results in response to their query. On the matter being taken up by the DG with the opposite parties and their counsel the opposite parties were directed to furnish the details of algorithmic changes for a limited period i.e. w.e.f. August 2010 to December 2010 and August 2011 to December 2011 which substantially reduced the overall volume of information to be submitted. In view of the further request by the opposite parties seeking 4 weeks of additional time vide notice dated 26.09.2013 the DG granted additional time upto 04.10.2013. As Google vide letter dated 04.10.2013 furnished only a list of changes made to the search algorithm and not the details of changes the DG vide its letter dated 11.10.2013 intimated the opposite parties that the Office of the DG required much more than mere the title of the changes made in the algorithm i.e. reasons and supporting internal documents to facilitate investigation to reach a logical conclusion. It was specifically mentioned that in view of the observations in the said letter their reply was not considered as complete and full. It may be noted that till 15.01.2014 i.e. when the DG reported the matter to the Commission the opposite parties did not supply the said information. Non submission of copies of Agreements In order to examine the issue related to exclusivity the Office of the DG vide Question No. 1 of notice dated 13.11.2013 directed Google to furnish copies of agreements entered with certain parties as specified in the notice along with other details as enumerated therein. In response thereto the opposite parties through their advocate vide letter e mail dated 25.11.2013 submitted part reply of the queries and sought an extension of seven days for submission of reply of remaining Query No. 1. Accordingly the opposite party was granted time till 02.12.2013. On non receipt of reply the opposite parties were further reminded and directed to furnish reply by 06.12.2013. C. Nos. 07 & 312 Again it appears that the opposite parties vide letter dated 06.12.2013 sought extension up to 11.12.2013. Accordingly they were granted time till 11.12.2013. On 11.12.2013 the opposite parties met the DG and expressed that they were pre occupied to prepare for the deposition of the opposite parties scheduled on 16 18 December 2013 and they would furnish the same after recording of statement. Again notice vide e mail dated 21.12.2013 was issued by the DG advising the opposite parties to submit requisite information by 26.12.2013. No information was furnished by the opposite parties till the time the proposal for initiation of penalty proceeding was mooted by the DG vide its note dated 15.01.2014. Non submission of internal supporting document relate to termination of Octathorpe Adsense Account The DG vide Q.2 of notice dated 13.11.2013 asked Google to furnish the reasons for termination of Adsense account viz. Octathorpe on the ground of invalid clicks. Google vide letter dated 25.11.2013 furnished certain information whereupon the DG vide its notice issued through e mail dated 27.11.2013 directed the opposite parties to furnish the related data and supporting internal documents which led to its termination by 03.12.2013. Google vide letters dated 06.12.2013 and 11.12.2013 furnished Adword account statement but did not furnish any relevant data related to invalid clicks and internal documents related to the decision for such shut down. Non submission of internal documents related to termination suspension of certain tech support Adword accounts. The Office of the DG vide Q.3 of notice dated 13.11.2013 directed Google to furnish certain information related to termination suspension of tech support accounts. Based on the information received Google was inter alia directed by the Office of the DG vide notice dated 03.12.2013 to furnish the certified copies of internal documents containing the decision for the C. Nos. 07 & 312 internal review of tech support Adword accounts and enforcement action thereon by 10.12.2013. The opposite parties vide letter dated 11.12.2013 submitted certain information to the Office of the DG but did not furnish internal documents as sought within the given timeframe. Nor did they seek any extension of time for compliance. Non furnishing of informations following on from the depositions within the given timeframe Lastly it may be observed that during 16 18 December 2013 while recording statements of the representatives of Google the opposite parties told the DG that they would revert on certain issues but failed to do so. Accordingly they were vide notice dated 21.12.2013 of the DGdirected to furnish the reply to the queries raised during recording of statement by 10.01.2014. However the opposite parties neither furnished the information documents within the given timeframe nor sent any communication in this regard. 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. In the circumstances the 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 as noticed and detailed above. In fact as noted earlier the C. Nos. 07 & 312 opposite parties have conceded the non compliance with the requisitions made by the DG within the stipulated period. In such circumstances the 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. As per the provisions of section 43 of the Act if any person fails to comply without reasonable cause with a direction given by the Commission under sub sectionsandof section 36 orthe Director General while exercising powers referred to in sub sectionof section 41 such person shall be punishable with fine which may extend to rupees one lakh for each day during which such failure continues subject to a maximum of rupees one crore as may be determined by the Commission. It is to be noted that 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. The Commission however taking into consideration the totality of the facts and circumstances of the case and in particular considering the fact that the opposite parties have submitted some of the informations documents as sought for by the DG is of opinion that ends of justice would be met if the C. Nos. 07 & 312 maximum fine envisaged under the provisions of section 43 of the Act is imposed upon the opposite parties by taking only one instance of non compliance. It is however made clear that if the opposite parties further fail to comply with the directions of the DG in future each instance of non compliance shall be taken separately besides considering the same as aggravating factor for the purposes of imposition of fine. In the result a fine of rupees one crore is imposed upon the opposite parties. The opposite parties are further directed to deposit the same within a period of 60 days from the receipt of the order. The opposite parties are also directed to furnish the informations documents required by the DG vide the notices under consideration within a period of 10 days from the receipt of this order if not already furnished. The opposite parties are further directed to cooperate with the investigations by furnishing such other informations documents which may be required by the DG during the course of further investigations. It is ordered accordingly. The secretary is directed to inform the parties accordingly. Sd Ashok Chawla) Sd Geeta Gouri) C. Nos. 07 & 312 Sd Anurag Goel) Sd M. L. Tayal) Sd S. L. Bunker) New Delhi Date: 26 03 2014 C. Nos. 07 & 312 