On 14 October 2022, the Supreme Court of India dismissed appeals filed by WhatsApp LLC (WhatsApp) and Facebook Inc (now Meta) challenging the jurisdiction of the Competition Commission of India (CCI) to investigate WhatsApp’s 2021 Terms of Service and Privacy Policy (the 2021 policy). The petitions filed before the Delhi High Court were also dismissed and led to this challenge (1).

Facts

In its order dated 24 March 2021, the CCI noted that the 2021 policy required users to consent to the sharing and integration of user data with other Meta group companies as a precondition for using the services of WhatsApp.(2) It was observed that users were not provided a choice to “opt-out” of the integration of user data across Meta’s group companies.

The CCI prima facie held that the ‘take-it-or-leave-it’ nature of privacy policy and terms of service of WhatsApp and the information sharing stipulations mentioned therein, merit a detailed investigation in view of the market position and market power enjoyed by WhatsApp.(3)

On 7 April 2021, WhatsApp and Meta filed a writ petition before the Delhi High Court, arguing that in light of the Supreme Court’s decision in the Bharti Airtel case,(4) the CCI’s jurisdiction would be ousted.

Delhi High Court

The petition by WhatsApp and Meta was dismissed by the single judge bench through an order dated 24 April 2021.(5) The single judge noted that while some issues for consideration before the CCI and the constitutional courts may overlap, there cannot be an inviolable rule that the CCI would be divested of its jurisdiction merely on this account.

The order of the single judge was thereafter challenged before a division bench of the same High Court through writ appeals dated 4 May 2021. These appeals were dismissed through an order dated 25 August 2022.(6) The division bench, upholding the order of the single judge bench, noted that the two separate authorities were examining different issues. In particular, the Supreme Court was examining whether the 2021 policy violated an Indian citizen’s right to privacy as guaranteed by the Constitution of India, while the CCI’s investigation was confined to assessing whether there was a violation under the Competition Act 2002. The division bench held that both authorities were within their respective spheres of jurisdiction and that the CCI’s investigation would not be affected by the outcome of the Supreme Court’s proceedings.

Supreme Court

The Supreme Court affirmed the division bench’s views and observed that the CCI was an independent authority empowered to consider any violation under the Competition Act. Further, the Supreme Court stated that once the CCI has formed a prima facie opinion that a violation under the Competition Act may exist, an investigation following such prima facie opinion cannot be said to be “wholly without jurisdiction”. The Supreme Court, relying on the observations made in its landmark decision of Competition Commission of India v Steel Authority of India Limited and Another, also noted that the proceedings before the CCI were required to be disposed of at the earliest opportunity.

Comment

The Supreme Court’s judgment constitutes a strong backing for the CCI’s jurisdiction to investigate data and privacy concerns under the Competition Act and the need for expediency in its proceedings. The issue of jurisdictional challenge posed by the parties, however, has been brushed aside for a seemingly perplexing reason. It was held that the CCI’s consideration of a complaint/information and its resultant prima facie view that a contravention of the Competition Act exists (and should be investigated) meant that its investigation order was not “wholly without jurisdiction”. It seems that the Supreme Court has noted that in light of the CCI being the only authority entrusted with the responsibility of enforcing the Competition Act, it cannot be said to have acted outside its jurisdiction in cases where it has, preliminarily, identified a violation of the Competition Act.

Interestingly, the order of the division bench offers a more robust examination of the parties’ challenge and, therefore, offers helpful clarification on the scope of the Bharti Airtel case in determining the contours of the CCI’s jurisdiction. It observed that the CCI examines conduct through the prism of competition law and that its jurisdiction is not simply ousted because other courts are assessing the same facts on different aspects or subjects of law.

For background, in the Bharti Airtel case, the CCI initiated investigations against certain telecoms operators based on an entrant’s allegations that incumbent operators had colluded to deny it access to requisite infrastructure, in violation of terms of certain “interconnection agreements”, licence agreements and other regulations framed by the telecoms regulator, Telecom Regulatory Authority of India (TRAI). The CCI’s jurisdiction was challenged by the telecoms operators on the grounds that the “jurisdictional fact” as to whether there was a violation of the above terms and conditions could only be determined by the TRAI. The Supreme Court, upholding the challenge, stated that the sector regulator would have primacy over the dispute and should first examine the “jurisdictional facts”; the CCI’s jurisdiction to investigate allegations of anti-competitive conduct could be examined only once the TRAI was of such prima facie opinion.

This investigation will also be the first instance where non-price parameters of competition (eg, data accumulation and data sharing practices) will be assessed as factors contributing to a potential violation of Indian competition law. Competition authorities in other jurisdictions – for example, the European Union, the United Kingdom, Germany, Italy, Australia and Turkey – have also identified antitrust concerns over the usage and accumulation of data by digital platforms.

The CCI’s prima facie finding on the “exploitative” nature is also interesting. It appears to reflect consumer protection concerns – notably, its views that users must have sovereign rights over their personalised data and that such a policy does not give “a granular choice” to the users and appears “prima facie unfair to users”.

Endnotes

(1) Meta Platforms Inc v Competition Commission of India & Anr, SLP (C) No. 17121/2022.
(2) In Re: Updated Terms of Service and Privacy Policy for WhatsApp Users, Case No. 01/2021.
(3) Ibid, para 25.
(4) Competition Commission of India v Bharti Airtel Limited & Ors, (2019) 2 SCC 521.
(5) Whatsapp LLC v Competition Commission of India & Anr WP(C) 4378/2021.
(6) Whatsapp LLC v Competition Commission of India & Anr, LPA 163/2021.

Read the full article here: https://www.lexology.com//Commentary/competition-antitrust/131baa4d-dd5f-4866-99fd-132bec177728

Authors: Sonam Mathur – Partner; Shubhang Joshi – Managing Associate and Animesh Kumar – Associate