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Google questions ‘legal basis’ of seeking accurate financial information by CCI

Mumbai, January 5, 2023 

Competition watchdog had asked Google to furnish the requisite financial details in 30 days; imposed only provisional penalty of ₹ 1,337.6 crore

Google has questioned the ‘legal basis’ of the Competition Commission of India (CCI) in requiring the tech giant to furnish accurate financial details in the Android case.

Through a letter shot off to the fair trade regulator in November last year, Google has asserted that once CCI completes its inquiry and issues final order, it becomes functus officio and any further action in respect of the case including re-determination of penalty can only be examined by the Appellate Tribunal (NCLAT).

‘Action unprecedented’
In the letter, Google has asked the Commission “to clarify the legal basis under the Competition Act that enables the Commission to require further information, or, re-determine the penalty amount once the Commission has passed a final order using the information available to it” and adds “such action is and would be unprecedented”.

It maybe recalled that the CCI had, on October 20, issued final order against Google, finding it in contravention of the provisions of Section 4 of the Competition Act, 2002 which prohibit abuse of dominant position and accordingly, imposed a provisional penalty of ₹ 1337.76 crore upon the tech giant.

In the said order, CCI expressed doubt over the accuracy of the financial data submitted by Google by pointing out that the same was replete with caveats, disclaimers, assumptions and exclusions.

Despite the sum total of revenue of various segments/ heads for the FY 2020-21 being higher than the total turnover of Google for the said financial year, CCI took a conservative approach and decided to take the lower revenue data, as submitted by Google for computation of quantum of penalty.

CCI, however, made clear that the penalty imposed was provisional and subject to revision on Google furnishing the requisite financial details and supporting documents.

Penalty ‘provisional’
“Google is directed to do the needful within a period of 30 days from the receipt of this order. It is further clarified that the basis of determination of penalty i.e., relevant turnover as well as appropriate percentage thereof has already been decided vide this order. However, the actual quantum of penalty may undergo a revision based on revenue data to be submitted by Google and to that extent only, the present penalty is provisional ’”, added CCI in the order.

Instead of complying with the aforesaid directions of CCI, Google wrote a letter on the last day of compliance to CCI and questioned the legal basis of CCI seeking financial details.

Experts question Google’s move. “It is surprising that a Silicon Valley tech giant is taking Indian regulatory process for a ride. The financials submitted by Google are apparently fudged as noted by CCI in its order and it is astonishing that instead of complying with the regulator’s direction, Google is questioning its legal authority to seek its accurate financial details which are necessary for computation of monetary penalties,” said a financial market analyst.

“The matter is required to be looked into seriously by National Financial Reporting Authority (NFRA) and Ministry of Corporate Affairs (MCA) for such recalcitrant attitude of Google. Even the parent entity of Google i.e. Alphabet Inc is also accountable for such financial mismanagement by its subsidiary and Securities Exchange Commission (SEC) may initiate stringent action against Alphabet for such misreporting,” the analyst added.

[The Hindu Business Line]

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