The High Court of Delhi recently comprising of a bench of Justice Navin Chawla observed that the order passed U/S.26(1) of the Act is purely administrative in nature and does not entail any consequence on the civil rights of the petitioner(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 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. (Whatsapp LLC V. Competition Commission Of India & Anr. And Connected Matters)
Facts of the case
The petitions have been filed by Watsapp LLC and Facebook INC challenging the order dated passed by respondent U/S.26(1) of the Competition Act, 2002 forming a prima facie opinion of the violation of Section 4 of the Act by the petitioners, and directing the Director-General of the respondent no.1 to cause an investigation to be made into the WhatsApp 2021 Update to its Terms and Privacy Policy.
Contention of the Parties
The counsel for the petitioner submitted that the 2021 Update does not in any manner negate the choice of the user made under the 2016 Update and is aimed at providing users with further transparency. It is further asserted that the 2021 Update does not expand WhatsApp’s ability to share data with Facebook and does not impact the privacy of personal messages. 2021 Update has been challenged in several judicial fora, including before this Court and the Supreme Court for which applications are pending before the Supreme Court. Thus respondent no. 1 has wrongly taken suo moto action and passed the Order.
On the other hand, the learned Additional Solicitor General appearing for 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.
Courts Observation & Judgment
The bench remarked, “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 information categories; concentration of data in WhatsApp and Facebook itself may raise competition concerns; data-sharing amounts to degradation of non-price parameters of competition.
It cannot, therefore, be said that the issues raised by the respondent no. 1 are beyond its jurisdiction under the Act or that there is a total lack of jurisdiction in the respondent no.1. In fact, this has not even been pleaded by the petitioner(s) before this Court.
The question, therefore, would be as to whether the respondent no.1 should, in deference to the petitions pending before the Supreme Court and before this Court, not have taken suo moto cognizance and directed an investigation to be made by the Director General.
Though some of the issues may substantively be in issue before the Supreme Court and this Court in the above-referred petitions, in my opinion, there cannot be an inviolable rule, nor is one pleaded by the petitioner(s), that merely because an issue may be pending before the Supreme Court or before the High Court, the Commission would get divested of the jurisdiction that it otherwise possesses under the Act.”
The court discussed the scope and ambit of an order passed U/S.26(1) of the Act, which has been authoritatively explained by the Supreme Court in the case of Competition Commission of India v. Steel Authority of India Ltd, the following observations were made, “At the stage of forming a prima facie view, as required under Section 26(1) of the Act, the Commission may not really record detailed reasons, but must express its mind in no uncertain terms that it is of the view that prima facie case exists, requiring the issuance of direction for investigation to the Director General. Such view should be recorded with reference to the information furnished to the Commission. Such opinion should be formed on the basis of the records, including the information furnished and reference made to the Commission under the various provisions of the Act, as aforereferred. However, other decisions and orders, which are not directions simpliciter and determining the rights of the parties, should be well reasoned analysing and deciding the rival contentions raised before the Commission by the parties.”
The court also made reference to the judgment passed by the Supreme Court in the case of P. Sudhakar Rao & Ors. vs. U. Govinda Rao & Ors, wherein the following observations were made, “ that the pendency of a similar matter before a larger Bench did not prevent the Supreme Court from dealing with the issue on merit.;”
The bench remarked, “In the present case, the issue as to whether the 2016 Update/2021 Update announced by WhatsApp in any manner infringes upon the Right of Privacy of the users guaranteed under Article 21 of the Constitution of India is pending adjudication before the Supreme Court and this Court. The question regarding the 2016 Update/2021 Update not giving an option to opt-out is also an issue before the Supreme 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 the above-mentioned petitions 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, I may only note the submission of the learned ASG appearing for the respondent no. 1 that the scope of inquiry before the respondent no. 1 is not confined only to the issues raised before the Supreme Court or before this Court, but is much vaster in nature.”
Considering the facts of the case and keeping in mind the provisions of law applicable. The Court held, “though the above-mentioned judgments are in relation to issues pending before the larger bench of the Supreme Court, in my opinion, they show that even during such pendency, the other courts may and should continue to decide the cases and applying the law as it then prevails. This is so, as mere pendency of a reference before the larger bench does not denude the other courts of their jurisdiction to decide on the lis before them. Similarly, merely because of the pendency of the above proceedings before the Supreme Court and before this Court, the respondent no. 1 cannot be said to be bound to necessarily hold its hands and not exercise the jurisdiction otherwise vested in it under the statute.
Maybe, it would have been prudent for the respondent no.1 to have awaited the outcome of the above-referred petitions before the Supreme Court and before this Court, however, merely for its decision not to wait, the Impugned Order cannot be said to be without jurisdiction or so perverse so as to warrant to be quashed by this Court in exercise of its extra-ordinary jurisdiction.
I may also note that the challenge to the WhatsApp 2021 Update has been raised before 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.”
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SOURCE ; .latestlaws.com/
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