1/24/23, 3:58 PM Supreme Court upholds CCI's investigation of WhatsApp's privacy policy - Commentary - Lexology

November 3 2022
S O N A M M AT H U R ,

Supreme Court upholds CCI's investigation of SHUBHANG JOSHI

WhatsApp's privacy policy

TT&A | Competition & Antitrust - India

 Facts

 Delhi High Court

 Supreme Court

 Comment

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).(1) The petitions filed before the Delhi High
Court were also dismissed and led to this challenge.

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

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1/24/23, 3:58 PM Supreme Court upholds CCI's investigation of WhatsApp's privacy policy - Commentary - Lexology

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

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1/24/23, 3:58 PM Supreme Court upholds CCI's investigation of WhatsApp's privacy policy - Commentary - Lexology

"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".

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1/24/23, 3:58 PM Supreme Court upholds CCI's investigation of WhatsApp's privacy policy - Commentary - Lexology

For further information on this topic please contact Sonam Mathur or

Shubhang Joshi at TTA by telephone (+91 11 46299999) or email
(sonam.mathur@tta.in or shubhang.joshi@tta.in). The TTA website can
be accessed at www.tta.in.

Animesh Kumar, legal associate, assisted in the preparation of this

article.

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.

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