ADIF writes to CCI for interim relief to Indian startups in Apple case

Alleges company is using dilatory and delaying tactics in regulator's investigation

The Alliance of Digital India Foundation (ADIF), in an application to the Competition Commission of India (CCI), has alleged that technology company Apple is using dilatory and delaying tactics in the regulator’s investigation against the company and has sought interim relief for Indian startups and digital companies, according to people close to the development.

 

Apple is facing a probe by the CCI for alleged abuse of dominant position in the app store market, leading to rise in costs, and stifling of competition for smaller developers who rely on its iOS ecosystem for distribution and revenue. The complaint was filed by non-profit Together We Fight Society. CCI has not levied any penalty against Apple and is yet to take a decision in the case.

 

Apple has challenged recent amendments to the Competition Act that allow penalties to be based on a company’s global turnover. Apple in its plea has said that the new penalty framework exposes the company to potential fines of up to $38 billion, which is 10 per cent of its average global revenue over the past three years.

 

ADIF has said that the litigation is delaying the final adjudication process and an interim order should be considered for Indian startups and digital companies by the CCI for some immediate relief.

 

“There are international orders which have come against Apple as well. A view can be taken by the Commission now as an interim measure,” an industry source said.

 

Section 33 of the Competition Act allows the CCI to issue interim orders to temporarily restrain any party from carrying on any act (which is in contravention with the Act) until the conclusion of such inquiry or until further orders, without giving notice to such party, where it deems it necessary.

 

An email sent to Apple remained unanswered till the time of going to the press and attempts to connect with ADIF members failed.

 

Sources in the know, however, confirmed that ADIF has sent a letter to CCI and are hopeful that there will soon be some movement on their application.

 

The Supreme Court in a matter of SAIL versus CCI in 2010 had said that CCI can issue an interim order, but it has to use this power sparingly.

 

“There has to be application of mind of higher degree and definite reasons having nexus to the necessity for passing such an order need be stated. Further, it is required that the case of the informant-applicant should also be stronger than a mere prima facie case,” the court had said.

 

Apple’s challenge to the issue of penalty being levied on global turnover has been opposed by the government in the Delhi High Court. The government has told the court that levying such penalties would discourage breaches by multinationals.

 

A Reuters report, quoting the affidavit, filed by the government in the court said that according to the regulator, weighing only India-specific turnover as the basis for the calculation of penalties, especially in the case of global digital firms, fails to deter the impugned behaviour.