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2022 (9) TMI 1612 - HC - Companies LawValidity of order of Competition Commission of India - clubbing of information which had been received by the Commission along with Suo Motu Case - HELD THAT - The Court at the outset notes that the petitioner is undisputedly a subsidiary or sister concern of Facebook Inc. While the petitioner has explained its connect with Facebook Inc. to be limited to providing sales and marketing services relating to advertising in India and other support services to it, the Court finds itself unable to shut its eyes to the evident and apparent bond and association between the two. Regard must also be had to the fact that the principal order of the Commission dated 24 March 2021 had while outlining the issues which merited further investigation made repeated reference to the provisions of the Privacy Policy of WhatsApp and the disclosure and sharing of user data by it with Facebook, its subsidiaries, sister concerns and other Facebook companies. The Commission ultimately came to conclude that the sharing of data by WhatsApp with other Facebook companies raised tangible questions which warranted investigation under the Act. Scope of the investigation is thus apparently not merely limited to the operations and conduct of business by WhatsApp and Facebook Inc. alone but also extending and stretching to the subsidiaries and other companies incorporated by the latter. The petitioner cannot possibly dispute the fact that it is a sister concern of Facebook Inc. present in India. In view of the above, the impugned order of the Commission clubbing the information received in respect of its activities with the Suo Motu Case was not only justified but also imperative for the purposes of the investigation. The Court also deems it apposite to observe that Cadila 2018 (9) TMI 844 - DELHI HIGH COURT has lucidly explained the scope of the expression subject matter as occurring in Section 26(1) as not being restricted merely to the allegations levelled but other allied and unenumerated aspects and even to include third parties. It would be pertinent to recall that Cadila was a case where a party was joined by the Director General during the investigation even though no directions had been framed against it by the Commission in its order made under Section 26(1). The challenge to the order of the Commission impugned herein ultimately must also be evaluated bearing in mind that the power exercised by it at the Section 26(1) stage has been aptly described as being a departmental function and a preparatory measure . This essentially since at that stage the Commission is not adjudicating upon the rights of parties. It is merely setting up the stage for the commencement of an enquiry. While passing a direction to investigate under Section 26(1) the Commission is merely calling upon the Director General to assist it in evaluating whether an infraction of the Act has been made out. On an overall conspectus of the aforesaid discussion, the Court comes to the conclusion that the instant challenge is misconceived and clearly lacks merit. Petition dismissed.
Issues Involved:
1. Validity of the Competition Commission of India's (CCI) order dated 12 October 2021. 2. The requirement for the CCI to record a prima facie case under Section 26(1) of the Competition Act, 2002. 3. The scope of the term "subject matter" under Section 26(1) of the Competition Act, 2002. 4. The implications of the CCI's order on the petitioner. Issue-wise Detailed Analysis: 1. Validity of the Competition Commission of India's (CCI) order dated 12 October 2021: The petitioner challenged the CCI's order dated 12 October 2021, which directed the Director General to commence an investigation by clubbing the information received with Suo Motu Case No. 01/2021. The CCI noted that the allegations in the information were substantially the same as those under examination in the ongoing investigation in Suo Motu Case No. 01/2021. Consequently, the CCI decided to club the present matter with the Suo Motu case, stating that no separate order or further direction was required, and the information would abide by the decision in the Suo Motu case. 2. The requirement for the CCI to record a prima facie case under Section 26(1) of the Competition Act, 2002: Mr. Tripathi, representing the petitioner, argued that Section 26(1) of the Act requires the CCI to form a prima facie opinion that warrants an investigation. He contended that the impugned order did not reflect such satisfaction. He cited the Supreme Court's decision in *Competition Commission of India v. Steel Authority of India Limited (2010) 10 SCC 744*, which emphasized that the CCI must express its mind in no uncertain terms that a prima facie case exists, even if detailed reasons are not recorded. 3. The scope of the term "subject matter" under Section 26(1) of the Competition Act, 2002: Mr. Bansal, representing the CCI, argued that the formation of opinion under Section 26(1) is based on the "subject matter" rather than a specific party. He highlighted that the principal issue was the sharing of personalized user information by WhatsApp with Facebook and its subsidiaries. The CCI had recorded detailed reasons in its order dated 24 March 2021, which justified the investigation. The Court referred to the decision in *Cadila Healthcare Limited and Anr. v. Competition Commission of India and Ors. 2018 SCC OnLine Del 11229*, which explained that the term "subject matter" includes allied and unenumerated aspects and can involve third parties. 4. The implications of the CCI's order on the petitioner: The petitioner, a subsidiary of Facebook Inc., argued that its role was limited to providing sales and marketing services and other support services to Meta Platforms, Inc. The Court noted the association between the petitioner and Facebook Inc. and found that the CCI's decision to club the information was justified. The investigation's scope included examining the sharing of user data between WhatsApp, Facebook, and its subsidiaries, which necessitated the petitioner's involvement. The Court concluded that the CCI's order was a preparatory measure and did not entail civil consequences. The challenge to the order was deemed misconceived and lacking merit. Conclusion: The writ petition and the pending applications were dismissed, affirming the validity of the CCI's order dated 12 October 2021.
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