XVIII INTERNAL MOOT COURT

COMPETITION, 2023

3 - 7 November, 2023

MOOT PROPOSITION
1. The Union of Tristan emerged as an independent nation in 1947 after being under
Colonial rule for two centuries. With a substantial population of approximately 1.3 billion
people, Tristan possesses a varied and dynamic economy. Upon gaining independence,
Tristan created its own Constitution and adopted a Parliamentary form of Government.

2 . In 1991, the Tristan Government brought reforms to its economic policies to liberalize the
market and opened its economy to multinational corporations and foreign investment.
Thereafter, in the early 2000s, it brought modifications in the legislative framework
governing competition in the Tristian markets. The Competition Act, 2002 ("Act"), which
came into effect in 2009, replaced the archaic- Monopoly and Restrictive Trade Practices
Act, 1969, and the provision regarding Combination Regulations was brought into force in
2011.

3. The Competition Act established the Competition Commission of Tristan (“CCT”) to

interalia prevent practices causing adverse effects on competition, promote and maintain
competition in markets, safeguard the interests of consumers, and ensure freedom of trade, in
Tristan. As per the changing economic scenario and nature of businesses, the Act was
amended in 2023 to fill in the loopholes that had emerged and ensure a robust antitrust
regime in Tristan.

4. In March 2020, a pandemic hit Tristan which led to a massive country-wide lockdown
leading to the closing down of all brick-and-mortar educational institutions. The online
education sector in Tristan witnessed a boom. With the proliferation of digital technology
and increased internet connectivity, online education gained substantial traction. The sector
has become a hotspot for investment, with numerous start-ups and established players
offering a diverse array of courses and learning platforms.

5. The education sector in Tristan has expanded beyond tutoring and entrance exam
preparations to include teaching aids like notes, smart-learning tech, etc. This led to a surge
in start-ups growing significantly in size and scope. As the sector evolved, concerns regarding
equitable access to quality education and the effectiveness of online learning methods gained
prominence, thereby prompting stakeholders to focus on inclusivity and pedagogical
innovation.

6. One such entity was Funacademy Pvt. Ltd. (Funacademy), incorporated in 2014. It offers
educational offerings for students of various age groups, as well as coaching services for
various competitive exams in Tristan. Through live classes, interactive sessions, and
comprehensive study materials, Funacademy has democratized access to quality education.
Its user-friendly interface and personalized learning approach have attracted millions of
learners, making it a key player in reshaping the landscape of online education in Tristan.

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7. Over the years due to its immense popularity, Funacademy gained attention, and its
market share increased significantly. Bidani Group (headquartered in Sombay, Tristan) is a
private multinational investment holding company that invests in various sectors across
multiple countries. Intending to capitalize on the growth potential of Funacademy, Mr.
Rajeev Bidani, the CEO of Bidani Group, made the strategic decision to invest in
Funacademy by way of a Share Subscription Agreement.

8. Bidani Group acquired a stake of 76% in Funacademy and as a result of the investment,
Funacademy was able to enhance its operations by upgrading its platform regularly. It
resulted in improved user experience and accelerated its rate of customer acquisition.
Funacademy now has 35% of the market share.

9. Matrix Tech Pvt. Ltd (Matrix), is a company incorporated in Tristan, founded by

renowned data scientist Dr. A.V. Patil in the year 2015 with the objective of designing
Artificial Intelligence (AI) based products for various sectors which had a huge consumer
base owing to the demographics of the country. In 2019, Matrix successfully designed a
unique AI-based tool called “Alpha” that can answer students’ queries, solve their doubts,
and provide assistance to grasp a subject. It also provides assistance for examination
purposes by generating specific answers and overall improving the learning experience of the
users.

10. It caters to the needs of students of varying age groups and within a short span of time
Alpha became a popular AI tool among the student community of Tristan. Matrix then
applied for the grant of a patent of the AI tool under the relevant provision of the Patents
Act, 1970, and successfully obtained a patent in May 2019.

11. The collection of user data was essential for the functioning of the Alpha AI. Matrix uses
this data to provide targeted advertisements on its platform and processes the data for
development of other products. Further, in 2020, a company named AGK Ed-Tech Pvt. Ltd.
which had its presence in the education sector of Tristan, and had the best faculties providing
education through its online platform approached Matrix to use Alpha AI. Both the
companies entered into an agreement to provide their services together.

12. AGK came up with a scheme that if the users wish to continue enjoying the benefits of
online education from the best faculties provided by it, then first they need to subscribe
themselves to Alpha AI by paying a subscription charge. Initially, they are providing both
the services separately at a cheap rate to increase user engagement. The new scheme was
applicable to all the existing users as well as to new users. Since the success percentage of
users using AGK services was high, all the users were enrolling themselves in Alpha and
paying separate subscription charges for it.

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13. After integrating Alpha with its services, the market share of AGK skyrocketed within a
short period reaching almost 20%. As the industry of online education grew remarkably
during the pandemic, a few more players in this sector established themselves with significant
market share. Oscorb Inc. an international Ed Tech Company through its Tristan arm
(Oscorb Tristan Pvt. Ltd.) enjoys 5% of the market share whereas Vyanjan LLP incorporated
in the year 2020 and is one of the fastest growing Tristian company in this sector enjoys 10%
of market share.

14. BlackHat Senior Pvt. Ltd. (“BlackHat”) incorporated in 2015, is a company specialized
in providing online education in various courses. Until 2021, BlackHat held a 25% market
share in the relevant market of coaching segment on online education platforms. However,
BlackHat witnessed a fall in its market shares towards the end of 2021, which, in its view, was
a result of the arrangement between Matrix and AGK.

15. As AGK and Matrix were providing services at a cheap rate, BlackHat lost a substantial
user base and was unable to hit its projected targets. The other players in the market who did
not have access to Alpha AI were losing market shares rapidly and it became very difficult
for them to survive in the market and continue as a going concern.

Information filed in Case No. 3 of 2023

16. In November 2022, Black Hat filed an information before the CCT alleging that Matrix
Tech indulged in anti-competitive practices by entering into a tie-in agreement with AGK. In
its information, BlackHat also alleged that AGK and Matrix were abusing their dominance
through predatory pricing and were collecting user data through Alpha AI, which was
subsequently transferred to Matrix Tech so as to provide targeted advertisements without the
prior consent of the users.

17. On receiving the information, the CCT formed a prima facie opinion that as per the acts
and omissions on the part of Matrix and AGK, they had contravened the provisions of the
Act and therefore directed the matter to the Director General (DG) for a detailed
investigation.

18. The report of the DG revealed that Matrix Tech and AGK Ed Tech through their
arrangement caused AAEC in the relevant market and violated Section 3 and 4 of the Act.
Subsequently, CCT passed an order in March 2023 imposing a penalty of INR 50 CR on
both the companies. Aggrieved by the order of CCT, Matrix Tech filed an appeal in the
Tristan Company Law Appellate Tribunal (TCLAT).

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19. Alpha emerged as a ground-breaking innovation in the industry, with numerous
experts predicting its capacity to fundamentally transform the online education delivery
landscape. As per media reports various international Ed-tech companies, such as Spectre
Inc., attempted to create a software similar to Alpha, however, but were not successful.
Consequently, educational platforms across the globe were actively seeking partnership
with Matrix Tech to get access to Alpha AI.

20. In April 2023, seeing a potential investment in Alpha, Bidani Group through its arm
Funacademy, announced the acquisition of a 25% stake in Matrix Tech by way of a share
subscription agreement. The news of the acquisition remained in the spotlight for several
days. Market analysts weighed in discussing how Bidani’s "killer acquisition" would not
only eliminate potential future competitors but also provide them with a technology that
had the potential to revolutionize online education.

21. In May 2023, CCT issued a Show Cause Notice (SCN) to Funacademy, seeking its
response regarding the transaction involving the acquisition of a 25% stake in Matrix
Tech. The CCT stated that this transaction did not qualify for exemption and therefore is
mandated to be notified to the Commission. Thus, Funacademy was in clear violation of
Section 6(2) and Section 6(2A) of the Act.

22. Funacademy submitted that at the time of the transaction, there was no vertical
overlap or complementary overlap between Funacademy and Matrix Tech and that it was
done solely for investment purposes, thereby notification to the commission was not
required. They further submitted that Funacademy’s work is primarily to deliver online
educational services whereas Matrix Tech develops AI Software and they are qualified
under the exemptions given in Schedule I of Combination Regulations, 2011.

Combination No. C-2023/11/47523

23. The CCT reviewed the submissions and supporting documents presented by
Funacademy. After careful examination, the CCT concluded that the de minimis
exemption did not apply to the said acquisition. Consequently, the acquisition fell
squarely within the purview of a combination as per Section 5 of the Act, necessitating
Funacademy to obtain the commission’s approval as stipulated in Section 6(2) of the Act.
They further observed that the said combination is likely to cause an appreciable adverse
effect in the relevant market.

24. The CCT found Funacademy and Matrix guilty of failure to notify the acquisition
within 30 days of the execution of the Share Subscription Agreement as well as its
completion/consumption without prior approval. The CCT concluded that the acquisition
by Funacademy violated the Combination provisions of the Act. Based on these
observations, the CCT levied a penalty of TNR. 10 crore upon Funacademy and Matrix.
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25. Further, the CCT was of the view that the combination is likely to cause AAEC due to an
increase in market concentration but approved the transaction subject to the modification
that Matrix Tech will never share the user database of Alpha AI with Funacademy otherwise
it will breach the privacy of the users.

26. Funacademy and Matrix failed to accept the modifications proposed by the CCT and
thereby after the lapse of the prescribed period under section 31, the CCT passed an order
under section 31(2) rejecting the combination. Being aggrieved, Funacademy and Matrix
filed an appeal before the TCLAT challenging the CCT's order passed under Section 31 of
the Competition Act.

27. The TCLAT has decided to hear the appeals together, and will now hear all arguments,
including the issues and contentions raised by Matrix Tech and Funacademy, and the matter
is scheduled for final arguments in 25th Spetember 2023.

Issues:

1. Whether the CCT has jurisdiction to decide issues pertaining to data privacy.

2. Whether the acts and omissions on the part of Matrix Tech and AGK were sufficient to
conclude that they entered in an anti-competitive agreement.

3. Whether Matrix and AGK has abused its dominance in the relevant market through
predatory pricing.

4. Whether Funacademy and Matrix have violated Section 5 and 6 r/w Section 20 of the Act.

Note:
The laws of Tristan are pari-materia with the laws of India.
The precedents of India hold substantive value.
The Tristan competition regime is modelled primarily after the European Union (“EU”)
competition law framework and the jurisprudence laid down in EU and United States of
America (“USA”) is held in high regard.
All the names, characters and events depicted in the proposition are entirely fictitious.
Any resemblance, in any manner whatsoever, is a mere coincidence.

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 ANNEXURE A

Market Share of the Companies as per a market report

COMPANY MARKET SHARE

Funacademy 35%

AGK Ed Tech 20%

BlackHat 25%

Oscorb Inc. 5%

Vyanjan 10%

Others 5%

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