The Commission’s order under Section 26(1) of the Act was challenged before the High Court by WhatsApp and Facebook. The single-judge bench had held that the Commission would not be divested of its jurisdiction that it possesses under the Act merely because an issue may be pending before the Supreme Court or the High Court. It was also observed that the Commission’s order is purely administrative in nature and does not entail any consequence on the civil rights of WhatsApp and Facebook. Accordingly, the single-judge bench dismissed the petitions filed by WhatsApp and Facebook.
Aggrieved by the judgment passed by the single-judge bench, WhatsApp and Facebook approached the Delhi High Court. The Court observed that at the outset that it becomes pertinent to delineate the objective of the Act and the role of the Commission. It said that the objective of the Act is set out in the Preamble itself, i.e to establish a Commission to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers, and to ensure the freedom of trade carried on by other participants in markets in India and for matters connected therewith or incidental thereto.
Chapter II of the Act prohibits certain agreements, abuse of dominant position and regulation of combinations, with Section 4 specifically prohibiting the abuse of dominant position. Chapter IV of the Act deals with provisions which set out the duties, powers and functions of the Commission, with Section 18 stating that it shall be the duty of the Commission to eliminate practices relating to the principles set down in the Preamble itself.
The High Court noted that it has been succinctly enumerated by the Supreme Court in Competition Commission of India vs Steel Authority of India (supra) that the main objective of the competition law is to promote economic efficiency using competition as one of the means of assisting the creation of a market responsive to consumer preferences. Satisfactory implementation of competition law would lead to a threefold advantageous system wherein there would be allocative efficiency, which ensures effective allocation of resources; productive efficiency, which ensures that costs of production are kept at a minimum; and dynamic efficiency, which promotes innovative practices. One can only proceed ahead with a matter entailing an attack on the jurisdiction of the Commission by keeping these objectives of the Act in mind.
The primary issue that was submitted before the Court is with regard to the overlapping jurisdiction of the Commission and the constitutional courts and whether the Commission should abstain from exercising its jurisdiction to maintain comity between decisions of different authorities on the same issues. In this context, WhatsApp and Facebook had placed heavy reliance on Competition Commission of India vs Bharti Airtel (supra) to submit that therein the sectoral regulator, TRAI, was given leeway by the Supreme Court to conduct its inquiry, over the Commission. The observation of the single-judge bench that certain issues that the Commission is seized of “may substantially be in issue before the Supreme Court and this Court” does not lead to a conclusion that the Supreme Court or this Court are adjudicating upon the same issue.
The Court further noted that the order of the Commission states that accumulation and processing of personal data from WhatsApp, in addition to its own direct data collection, can be done by Facebook for the purposes of consumer profiling that allows for targeted ads, inter alia, which, in turn, has the potential to undermine competitive processes and create further barriers to market entry in stark violation of Section 4(2)(c) and (e) of the Act.
The Court observed that it was therefore evident that the Commission has, after due consideration, arrived at its decision that a prima facie case of violation of provisions of the Act has been made out against WhatsApp and Facebook that would require an investigation to be initiated by the DG. The single-judge bench took into consideration all these factors before observing that concentration of data in the hands of WhatsApp may raise competition concerns, thereby resulting in the violation of Section 4 of the Act.
—By Adarsh Kumar and India Legal Bureau