CCI retains jurisdiction to investigate competition violations despite ongoing constitutional challenges to social media policy

Whatsapp LLC & Facebook Inc Versus Competition Commission of India & Anr.

Whatsapp LLC & Facebook Inc Versus Competition Commission of India & Anr. - 2022:DHC:3251 - DB Issues Involved:
1. Jurisdiction of the Competition Commission of India (CCI) vis-`a-vis pending Supreme Court matters.
2. Formation of a prima facie case by CCI for investigation under Section 26(1) of the Competition Act, 2002.
3. Inclusion of Facebook Inc. and Facebook India Online Services Pvt. Ltd. in the investigation.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Competition Commission of India (CCI) vis-`a-vis pending Supreme Court matters:
The Appellants argued that the CCI should refrain from investigating the 2021 Policy due to overlapping issues already pending before the Supreme Court and other High Courts. The Court noted that the Supreme Court and High Courts are considering the 2021 Policy through the lens of fundamental rights violations, particularly the right to privacy under Article 21 of the Constitution, whereas the CCI's investigation pertains to potential anti-competitive practices under the Competition Act, 2002. The Court emphasized that the spheres of operation are vastly different and that parallel inquiries by different authorities in their respective domains are not uncommon. The Court concluded that the CCI has the liberty to proceed with its investigation under Section 26(1) of the Act, irrespective of the proceedings pending before the Supreme Court and other courts.

2. Formation of a prima facie case by CCI for investigation under Section 26(1) of the Competition Act, 2002:
The Appellants contended that the CCI failed to establish a prima facie case warranting an investigation. The Court referred to the CCI's Order dated 24.03.2021, which provided detailed reasoning for forming a prima facie case. The CCI observed that WhatsApp's "take-it-or-leave-it" nature of the 2021 Policy, the lack of transparency, and the potential for data sharing with Facebook Companies raised competition concerns. The CCI highlighted that WhatsApp's dominant position in the market for OTT messaging apps through smartphones in India, coupled with the absence of credible competitors, justified an investigation into potential violations of Section 4 of the Act. The Court upheld the CCI's reasoning, noting that the formation of a prima facie case does not require detailed adjudication but should be based on sufficient material to warrant an investigation.

3. Inclusion of Facebook Inc. and Facebook India Online Services Pvt. Ltd. in the investigation:
The Appellant in LPA 164/2021 argued that Facebook Inc. is a separate legal entity from WhatsApp and should not be subjected to the investigation. The Court found merit in the submission that the 2021 Policy's data-sharing mechanism directly benefits Facebook Inc., making it a proper party in the investigation. The Court also addressed the Impleadment Application filed by Facebook India Online Services Pvt. Ltd., stating that the decision to include the Applicant in the investigation stemmed from information secured from the Internet Freedom Foundation. The Court concluded that the Applicant's remedy lies in challenging the CCI Order through a writ petition rather than being impleaded in the appeal. The Court deferred to the wisdom of the DG and the CCI and rejected the Impleadment Application, granting the Applicant the liberty to take appropriate legal steps.

Conclusion:
The Court dismissed the appeals, affirming the learned Single Judge's judgment dated 22.04.2021, which upheld the CCI's jurisdiction to investigate the 2021 Policy under Section 26(1) of the Competition Act, 2002. The Court found that the CCI had provided sufficient reasoning to form a prima facie case and that the investigation into potential anti-competitive practices by WhatsApp and Facebook Inc. was justified. The Court also rejected the Impleadment Application filed by Facebook India Online Services Pvt. Ltd., emphasizing that the Applicant should seek redress through appropriate legal channels.