9911796707
TMI Blog2021 (4) TMI 1385X X X X Extracts X X X X X X X X Extracts X X X X ..... Court and this Court. However, the same cannot necessarily mean that during the pendency of those petitions, the respondent no.1 is completely denuded of the jurisdiction vested in it under the Competition Act, 2002 or that it must necessarily await the outcome of such proceedings. Therefore, it is not a question of lack of jurisdiction of the respondent no. 1, but rather one of prudence and discretion. It must be remembered that any finding by the respondent no. 1 on any of the issues would always be subject to the findings of the Supreme Court or of this Court in and would be binding on the respondent no. 1. Such is the case in every proceeding before the respondent no. 1. Nevertheless, while such issues are being determined by the Supreme Court or by the High Court, it cannot be stated that the respondent no.1 has to necessarily await the outcome of such proceedings before acting further under its own jurisdiction. The respondent no.1 has to proceed within its own jurisdiction, applying the law as it stands presently. In this regard, it is noted that the submission of the learned ASG appearing for the respondent no. 1 that the scope of inquiry before the respondent no. 1 is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms of Service and Privacy Policy dated July, 2012. On 25.08.2016, WhatsApp updated its Terms and Services of Privacy Policy (hereinafter referred to as the 2016 Update ). It is claimed that WhatsApp users prior to the 2016 Update were given a one-time opportunity to opt-out of Facebook using their WhatsApp account information. The users who joined WhatsApp after the release of 2016 Update, however, were not offered this opt-out option. 4. The 2016 Update was challenged in a Public Interest Litigation, being W.P.(C) 7663/2016 titled Karmanya Singh Sareen Anr. vs. Union of India Ors., before this Court. This Court by its judgment dated 23.09.2016, was pleased to dispose of the petition with the following observations and directions:- 20. Having regard to the complete security and protection of privacy provided by the Respondent No. 2 initially while launching WhatsApp and keeping in view that the issue relating to the existence of an individual's right of privacy as a distinct basis of a cause of action is yet to be decided by a larger Bench of the Supreme Court [vide K.S. Puttaswamy (supra)], we consider it appropriate to issue the following directions to protect the interest o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C) No. 1355/2021 titled Dr.Seema Singh Anr. vs. Union of India Anr. It is further contended that the petitioner, in the above-referred Special Leave Petition and the intervener therein (Internet Freedom Foundation), have filed applications seeking to restrain WhatsApp from implementing the 2021 Update. The said applications are pending before the Supreme Court. 9. The petitioner(s) (WhatsApp and Facebook) challenge the Impugned Order passed by the respondent no.1 on the ground that despite the judicial challenge to the 2021 Update pending before the Supreme Court and before this Court, the respondent no. 1 has wrongly taken suo moto action and passed the Impugned Order. 10. Mr.Salve, the learned senior counsel for WhatsApp LLC., and Mr. Rohatgi, learned senior counsel appearing for Facebook Inc., submit that the issue as to whether the sharing of the information available with WhatsApp with Facebook violates the right of privacy of the users protected under Article 21 of the Constitution of India, and as to whether the petitioner(s) are under any legal obligation to provide an opt-out facility to the users of WhatApp, are issues that are pending adjudication before the Constitution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Terms and Conditions of Service to its users. 14. On the other hand, the learned Additional Solicitor General appearing for the respondent no.1, submits that apart from the issues which are pending before the Supreme Court in SLP(C) No. 804/2017 or before this Court in the petitions mentioned hereinabove, the respondent no.1 is examining the 2021 Update in relation to any violation of the provisions of Section 4 of the Competition Act, 2002. He submits that the respondent no. 1 is examining as to whether the excessive data collection by WhatsApp and the use of the same has any anti-competitive implications. He submits that the concentration of data in the hands of WhatsApp may itself raise competition concerns, thereby resulting in violation of the provisions of Section 4 of the Act. 15. Placing reliance on the judgment of the Supreme Court in Competition Commission of India vs. Steel Authority of India Ltd. Anr., (2010) 10 SCC 744, he submits that the Impugned Order has been passed under Section 26(1) of the Act and it does not determine any rights or obligations of the parties; it is only administrative in nature; and is not appealable. He submits that in fact, the petitioner(s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for. Formation of a prima facie opinion departmentally (the Director General, being appointed by the Central Government to assist the Commission, is one of the wings of the Commission itself) does not amount to an adjudicatory function but is merely of administrative nature. At best, it can direct the investigation to be conducted and report to be submitted to the Commission itself or close the case in terms of Section 26(2) of the Act, which order itself is appealable before the Tribunal and only after this stage, there is a specific right of notice and hearing available to the aggrieved/affected party. Thus, keeping in mind the nature of the functions required to be performed by the Commission in terms of Section 26(1), we are of the considered view that the right of notice or hearing is not contemplated under the provisions of Section 26(1) of the Act. xxxxx 93. We may also usefully note that the functions performed by the Commission under Section 26(1) of the Act are in the nature of preparatory measures in contrast to the decision-making process. That is the precise reason that the legislature has used the word direction to be issued to the Director General for investigation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner(s). In fact, the Impugned Order could have been passed without notice or granting an opportunity of hearing to the petitioner(s). Though the respondent no. 1 is to give reasons in the Impugned Order, in my opinion, as it is not to give any conclusive findings but is to form only a prima facie opinion to order an investigation, it need not deal with all the submissions of the petitioner(s) in detail. 19. In the present set of petitions, the respondent no.1 has, inter alia, given the following reasons for directing an investigation to be carried out by its Director General into the 2021 Update of WhatsApp:- 20. Based on the above, the Commission concluded that WhatsApp is dominant in the relevant market for OTT messaging apps through smartphones in India. As such, in light of the said holding of the Commission in Harshita Chawla case, there is no occasion to separately and independently examine the issue of relevant market and dominance of WhatsApp therein, when there is no change in the market construct or structure since the passing of the said order in August, 2020 and announcing of the new policy by WhatsApp on January 04, 2021 which itself seems to emanate out of the entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pronounced network effects of WhatsApp significantly circumscribe the usefulness of the same. The network effects have been reflected when despite increase in downloads of the competing apps like Signal and Telegram, user base of WhatsApp apparently did not suffer any significant loss. As pointed out in Harshita Chawla case (supra), the second largest player in terms of market share in the relevant market of instant messaging and thus the next sizeable alternative available to users is Facebook Messenger, which too is a Facebook Group company. Thus, the conduct of WhatsApp/ Facebook under consideration merits detailed scrutiny. 27. The Commission is of further opinion that users, as owners of their personalised data, are entitled to be informed about the extent, scope and precise purpose of sharing of such data by WhatsApp with other Facebook Companies. However, it appears from the Privacy Policy as well as Terms of Service (including the FAQs published by WhatsApp), that many of the information categories described therein are too broad, vague and unintelligible. For instance, information on how users interact with others (including businesses) is not clearly defined, what would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... choice, neither upfront nor in the fine prints, to object to or opt-out of specific data sharing terms, which prima facie appear to be unfair and unreasonable for the WhatsApp users. 30. On a careful and thoughtful consideration of the matter, the conduct of WhatsApp in sharing of users personalised data with other Facebook Companies, in a manner that is neither fully transparent nor based on voluntary and specific user consent, appears prima facie unfair to users. The purpose of such sharing appears to be beyond users reasonable and legitimate expectations regarding quality, security and other relevant aspects of the service for which they register on WhatsApp. One of the stated purposes of data sharing viz. targeted ad offerings on other Facebook products rather indicates the intended use being that of building user profiles through cross-linking of data collected across services. Such data concentration may itself raise competition concerns where it is perceived as a competitive advantage. The impugned conduct of data-sharing by WhatsApp with Facebook apparently amounts to degradation of non-price parameters of competition viz. quality which result in objective detriment to cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned data sharing provision may have exclusionary effects also in the display advertising market which has the potential to undermine the competitive process and creates further barriers to market entry besides leveraging, in violation of the provisions of Section 4(2)(c) and (e) of the Act. As per the 2021 update to the privacy policy, a business may give third-party service provider such as Facebook access to its communications to send, store, read, manage, or otherwise process them for the business. It may be possible that Facebook will condition provision of such services to businesses with a requirement for using the data collected by them. The DG may also investigate these aspects during its investigation. 20. A reading of the above would show that the respondent no. 1 has prima facie concluded that WhatsApp is dominant in the relevant market for Over-the-Top (OTT) messaging apps through smartphones in India; due to lack of/restricted interoperability between platforms, the users may find it difficult to switchover to other applications except at a significant loss; there is opacity, vagueness, open-endedness and incomplete disclosures in the 2021 Update on vital inform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for orderly and healthy growth of telecommunication infrastructure apart from protection of consumer interest. It is assigned the duty to achieve the universal service which should be of world standard quality on the one hand and also to ensure that it is provided to the customers at a reasonable price, on the other hand. In the process, purpose is to make arrangements for protection and promotion of consumer interest and ensure fair competition. It is because of this reason that the powers and functions which are assigned to TRAI are highlighted in the Statement of Objects and Reasons. Specific functions which are assigned to TRAI, amongst other, including ensuring technical compatibility and effective inter-relationship between different service providers; ensuring compliance of licence conditions by all service providers; and settlement of disputes between service providers. 25. The Supreme Court further held as under:- 103. We are of the opinion that as TRAI is constituted as an expert regulatory body which specifically governs the telecom sector, the aforesaid aspects of the disputes are to be decided by TRAI in the first instance. These are jurisdictional aspects. Unless TRAI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts in the present matter as mentioned in this judgment particularly in paras 72 and 102 above are determined by TRAI against the IDOs, the next question would arise as to whether it was a result of any concerted agreement between the IDOs and COAI supported the IDOs in that endeavour. It would be at that stage CCI can go into the question as to whether violation of the provisions of the TRAI Act amounts to abuse of dominance or anti-competitive agreements . That also follows from the reading of Sections 21 and 21-A of the Competition Act, as argued by the respondents. 105. The issue can be examined from another angle as well. If CCI is allowed to intervene at this juncture, it will have to necessarily undertake an exercise of returning the findings on the aforesaid issues/aspects which are mentioned in para 102 above. Not only TRAI is better equipped as a sectoral regulator to deal with these jurisdictional aspects, there may be a possibility that the two authorities, namely, TRAI on the one hand and CCI on the other, arrive at conflicting views. Such a situation needs to be avoided. This analysis also leads to the same conclusion, namely, in the first instance it is TRAI which s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he function that is assigned to CCI is distinct from the function of TRAI under the TRAI Act. The learned counsel for the appellants are right in their submission that CCI is supposed to find out as to whether the IDOs were acting in concert and colluding, thereby forming a cartel, with the intention to block or hinder entry of RJIL in the market in violation of Section 3(3)(b) of the Competition Act. Also, whether there was an anti-competitive agreement between the IDOs, using the platform of COAI. CCI, therefore, is to determine whether the conduct of the parties was unilateral or it was a collective action based on an agreement. Agreement between the parties, if it was there, is pivotal to the issue. Such an exercise has to be necessarily undertaken by CCI. In Haridas Exports, this Court held that where statutes operate in different fields and have different purposes, it cannot be said that there is an implied repeal of one by the other. The Competition Act is also a special statute which deals with anti-competition. It is also to be borne in mind that if the activity undertaken by some persons is anti-competitive and offends Section 3 of the Competition Act, the consequences th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tally ousted. In a nutshell, that leads to the conclusion that the view taken by the High Court is perfectly justified. Even the argument of the learned ASG is that the exercise of jurisdiction by CCI to investigate an alleged cartel does not impinge upon TRAI's jurisdiction to regulate the industry in any way. It was submitted that the promotion of competition and prevention of competitive behaviour may not be high on the change of sectoral regulator which makes it prone to regulatory capture and, therefore, CCI is competent to exercise its jurisdiction from the standpoint of the Competition Act. However, having taken note of the skilful exercise which TRAI is supposed to carry out, such a comment vis-a-vis TRAI may not be appropriate. No doubt, as commented by the Planning Commission in its report of February 2007, a sectoral regulator, may not have an overall view of the economy as a whole, which CCI is able to fathom. Therefore, our analysis does not bar the jurisdiction of CCI altogether but only pushes it to a later stage, after TRAI has undertaken necessary exercise in the first place, which it is more suitable to carry out. 27. A reading of the above judgment would clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Supreme Court or before this Court, but is much vaster in nature. 30. In State of Maharashtra and Anr. vs. Sarva Shramik Sangh, Sangli and Ors.; (2013) 16 SCC 16, the Supreme Court in relation to the Industrial Disputes Act, 1947, has observed as under:- 27. It is, however, contended on behalf of the appellant that the said undertaking was being run by the Irrigation Department of the first appellant, and the activities of the Irrigation Department could not be considered to be an industry within the definition of the concept under Section 2(j) of the ID Act. As noted earlier, the reconsideration of the wide interpretation of the concept of industry in Bangalore Water Supply and Sewerage Board (supra) is pending before a larger Bench of this Court. However, as of now we will have to follow the interpretation of law presently holding the field as per the approach taken by this Court in State of Orissa v. Dandasi Sahu (supra), referred to above. The determination of the present pending industrial dispute cannot be kept undecided until the judgment of the larger Bench is received. (Emphasis supplied) 31. Similarly, in P. Sudhakar Rao Ors. vs. U. Govinda Rao Ors., (2013) 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court only in form of applications being filed by the petitioner and intervener therein. It is not stated by the petitioner(s) herein if the Supreme Court has taken cognizance of these applications or passed any order thereon. As far as the petitions before this Court are concerned, the same are also at a preliminary stage. The petitioner(s) instead of filing any application in these petitions (before the Supreme Court or before this Court) seeking appropriate clarification/relief, have filed an independent challenge to the Impugned Order. The same, in my opinion, is not sustainable. 35. As far as the 2016 Update having been upheld by respondent no. 1 in Vinod Kumar Gupta (supra) or by this Court in Karmanya Singh Sareen (supra), it need only be noted that presently there is nothing on record to presume that the respondent no. 1 shall act contrary to the same. In any case, these orders are also pending challenge before the learned NCLAT and before the Supreme Court respectively. 36. As far as the submission of Facebook on its impleadment in the investigation is concerned, the same is only stated to be rejected. A reading of the Impugned Order passed by the respondent n ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
