|
Getting your Trinity Audio player ready...
|
Overview
WhatsApp has been the subject of a new antitrust probe by India’s competition watchdog. With its new privacy policy, the Competition Commission of India (CCI) claims WhatsApp is abusing its dominant role in the market to compel users to share their information with its parent company, Facebook.
According to the CCI, in a world where data is becoming increasingly significant, it is appropriate to investigate whether excessive data collection is impeding the development of a healthy competitive climate in the market. This article shall try to analyse whether sharing of such personal data with its parent company Facebook will amount to abuse of dominance and will it attract the eyes of Competition Commission of India.
Introduction
The word “competition” is ambiguous. Although competition laws differ from country to country, almost all competition law regimes have some central requirements. There are three broad categories that can be used to categorise them. The first consists of arrangements or coordinated activities between otherwise unrelated competitors in order to minimise competition. The second set of anti-competitive practises stems from a single company gaining a dominant position in a market. Mergers and acquisitions are the third form of controlled anti-competitive conduct.
The premises on which the MTRP Act[1] rested are unrestrained interaction of competitive forces, maximum materials progress through the rational allocation of economic resources. The encompassed both the production and distribution of goods and services. But nevertheless, the criticism that arose against the statue is that it is restrictive of the growth. Further, the regulatory framework in the case didn’t nor prohibit illegal practices but merely controlled it which eventually restricted the growth of the companies or industries. The MRTP act was based on behavioural and reformist doctrines, further it believed that the mere deterrence approach isn’t the right to make an industry or company abide to its rules and regulations.
With the shifting perspectives of ‘real competition’ in the globalised economy, it became critical for India to adopt a competition policy structure in which the aim is shifted from preventing monopolies to promoting free competition among market participants. From a wider viewpoint, the amendments may be seen as an effort by the Indian legislature to align Indian competition laws[2] with those of other leading jurisdictions around the world. As previously mentioned, in the liberalised period, it was also critical to eliminate existing trade barriers and restrictions that hampered competition in India.
As a result, a new bill was introduced in Parliament. Parliament passed the Competition Bill in 2001, which became the Competition Act of 2002. It was signed by India’s President on January 13, 2003, and published in the Indian Gazette on January 14, 2003. The regulations relating to anticompetitive agreements and misuse of dominant position were informed on May 20, 2009, and the Competition Act was partly introduced. The combination regulations were also notified in May 2011 and went into effect on June 1, 2011.
The Competition Act of 2002 aims to maintain competition, protect consumers’ interests, and ensure free trade in India’s markets. It fosters a healthy competitive culture that encourages the company to be equal, competitive, and forward-thinking. This benefits consumers and promotes economic development[3].
One of the biggest game changers in the Indian regulatory space was the enactment of the Competition Act, 2002 (the Act), the key legislation regulating competition law in India, and the creation of the Competition Commission of India (CCI)1 as its chief enforcement authority. India’s competition law, like that of other mature jurisdictions, regulates anticompetitive behaviour, misuse of dominance and unilateral conduct, and combinations.
The Act seeks to limit any conduct that could jeopardise consumer welfare or an individual’s (or individuals’) ability to compete freely and reasonably in the market. As a result, the Competition Act will focus on three wide areas: (a) cartelizing behaviour by companies, (b) misuse of dominant position, and (c) mergers and acquisitions. Cartels can be described as a group of people working together to achieve a common goal to drive prices higher than warranted under competitive conditions.
Raghavan Committee[4] inter alia recommended repealing of the MRTP Act and enacting a modern competition law to meet the challenges, if any, of trade liberalization. The Raghavan Committee found that the MRTP Act was too narrow in scope and didn’t meet the needs of competition law in today’s competitive environment. One of the main reasons for the MRTP Act’s ineffectiveness was its lack of resources.
Moreover, Article 19(1) (g) of the Indian Constitution grants all Indian people the right to practise any profession or engage in any occupation, trade, or industry, subject to the condition that the state, in the public interest, imposes fair restrictions on that freedom through appropriate legislation.Article 301 of the Indian Constitution, when read in conjunction with Articles 302 and 304(b), empowers the Parliament to enact appropriate legislation to limit freedom of trade throughout the country. As a result of the above, the Parliament has the authority to place fair limits on businesses’ ability to engage in unrestricted trade and commerce.
Discussion
The regulation of abuse of dominance is enshrined under section 4 of the Act. The substantive test and benchmark for analysis under the Act is to prohibit practices that have an appreciable adverse effect on competition in India. The Act prohibits the abuse of a dominant position by any ‘enterprise or group’, and defines dominant position as a position of strength enjoyed by an enterprise in the relevant market in India that enables it to:
Section 4 of the Act regulates the enforcement of exploitation of supremacy. The Act’s practical test and review benchmark is to ban activities that have a significant negative impact on competition in India. The Act forbids any ‘enterprise or party’ from abusing a dominant position, and defines a dominant position as a position of power enjoyed by an enterprise in the relevant market in India that enables it to operate independently of the competitive forces existing in the relevant market and affect its competitors or consumers of the relevant market in its favour.
In India, dominance is determined by a qualitative evaluation of the current market dynamics and the relative role of strength held by the market participant. A three-step study involving the determination of the appropriate sector, the assessment of dominance, and the assessment of abusive conduct of a dominant enterprise or group is needed when assessing the abusive conduct of a dominant enterprise or group.
There is no simple market share test, and the CCI must weigh a variety of factors when determining supremacy under the Act, including the size and resources of the company, the size and importance of rivals, economic strength, customer reliance on the enterprise, market structure, entry barriers, and so on. The Act prohibits abuse of dominance by an ‘enterprise or group’. For the purposes of the Act, a person or a department of the government engaged in any activity relating to the production, storage, supply, distribution, acquisition or control of articles or goods, or the provision of services, would constitute an enterprise.
The Act is neutral and applicable to private undertakings just as government bodies and offices, acting in their business limit or business occupied with economic exercises. Therefore, in any event, when a public works division welcomes tenders for the honor of agreement for the development of streets or scaffolds, for instance, the public works office would establish a venture given that it interfaces with the more extensive market of street and extension development administrations. The CCI’s authority, however, does not apply to the government’s formulation of policies (as this does not come within the realm of commercial or economic activity) or the government’s sovereign functions.
The former Competition commission of India have time and again clarified that ‘profit motive’ is not a sine qua non for qualifying as an enterprise. The Competition commission of India has also recognised the applicability of the provisions of section 4 of the Act in markets that do not reflect the traditional buyer-consumer relationship. The Indian Competition Commission has repeatedly stated that a profit motive’ is not a requirement for qualifying as an enterprise. The Indian Competition Commission has also recognised the applicability of section 4 of the Act in markets that do not represent the conventional buyer-seller relationship.
Assessment of Dominance
The CCI considers the factors mentioned in section 19(4) of the Act when deciding supremacy. Although the CCI recognises that market shares are “the most critical criterion/yardstick in the evaluation of dominance,” there is no clear-cut market share measure, and the CCI often takes a holistic approach to determining dominance.
Reaffirming this view, in the case of in Mr Ramakant Kini v Dr L H Hiranandani Hospital, The CCI explained that the market share of an entity is “only one of the factors that determines whether an enterprise is dominant or not, but that factor alone cannot be definitive evidence” of its dominance in the relevant market for the provision of maternity services by super speciality and high-end hospitals within a distance of 12km from the Hiranandani Hospital, while assessing the dominance of Hiranandani Hospital in the relevant market for the provision of maternity services by super speciality and high-end hospitals within a distance of 12km.
Going a step further, in the case of Meru Travels Solutions Pvt Ltd v CCI, by admitting an appeal from the CCI’s order dismissing an allegation of Uber’s alleged misuse of superiority, the court expressly stated that the CCI should have taken into account the broader picture in the radio taxi service sector in terms of financing, global trends, comments made by industry leaders, the availability of financial capital, and the existence of attractive discounts.
Furthermore, the availability of financial capital, as well as the presence of discounts and rewards associated with the business model adopted, are strong supporting reasons to indicate that the question of supremacy should be viewed from a viewpoint that is not limited to the enterprise’s market share[5].
Other factors that the CCI has recently considered when assessing dominance include the presence of rivals, such as in Flipkart, where the CCI considered Amazon as a major competitor; and market reliance, such as in Sony/Star21, where the CCI observed that no distributor could deliver a viable channel portfolio to its customers without including Sony and Star channels, reaffirming their dominance.
Case of WhatsApp
The Suo motu case by the Competition Commission of India (CCI) to dispatch an examination concerning WhatsApp’s new privacy strategy is a praiseworthy confident exercise of its legal part as a gatekeeper of Indian consumers privileges and guaranteeing a free unhindered competition on the lookout. When Facebook-possessed WhatsApp, it created an immense ruckus by singularly requesting that its clients acknowledge new terms permitting it to impart more private data to parent Facebook for publicizing and business purposes. What added to the shock was had India been a part of the GDPR, they would not have the option to do it, it would be prohibited under their General Data Protection Regulation (GDPR), raising solid interest for criticalness in comparable Indian information assurance law.
It is important to understand the trade-off between allowing access and protecting customer privacy while considering regulations for large technology companies in India[6]. Non-price competition can be used to encroach on privacy and tamper with personal data. Non-price criteria in a digital economy, as CCI correctly observed, can have a huge effect on market competition. As businesses seek data aggregation, the degree to which a customer can “freely agree” to a dominant player’s behaviour is critical. It was a “take it or leave it” proposition in the case of WhatsApp’s latest privacy policy, which was illegal on many counts and the consumer being widely dependent on the app had no choice but to agree. Further, the Facebook being a parent company is acting as a direct and immediate beneficiary of the new updates and in these circumstances substantially encroaching the privacy of its Users.
When a corporation gathers data for one reason and then pressures users to consent to the data being used for other reasons, privacy erosion can be extremely harmful to. When a low standard of data security is coupled with the act of cross-linking data through services provided by group companies for instance WhatsApp and facebook, a vicious cycle will emerge in which a dominant player collects vast amounts of personal data while restricting freedom of choice.
When a customer is unable to leave or has simply given away too much information, he or she becomes vulnerable to abuse. Perhaps more dangerously, social media sites have the ability to secretly exploit consumers and influence their behaviour. From the standpoint of a free market, this may also set in motion an irreversible phase market barrier, in which large technology firms with big data would push smaller start-ups out or simply buy them out in killer acquisitions. The barrier to entry for emerging technology companies without existing pools of customer data can be so strong that even the brightest among our innovators can’t get in.
Conclusion
The Competition Law is relatively new to India and it will take time to have settled jurisprudence on principles of competition law. Statements regarding privacy may be descriptive or normative, depending on whether they are used to explain how people interpret and respect privacy circumstances and conditions, or whether they are used to mean that there should be restrictions on the use of information or information processing. These criteria or restrictions usually include personal information about people or data processing methods that may have an effect on individuals.
In a normative context, informational privacy refers to a person’s non-absolute moral right which have direct or indirect control over (1) personal information, (2) cases in which others could obtain personal information, and (3) technology that can be used to generate, process, or disseminate personal information. In the context of the present article, it can be said that the WhatsApp is enjoying the dominant position in the market has clearly violated the customer private date by sharing it with its parent company Facebook. And the stand of What’s App and the Facebook on this matter should definitely invite a strong action from the Competition Commission of India.
Sources:
- Department-Related Parliamentary Standing Committee on Home Affairs, Ninety-Third Report on the Competition Bill, 2001.
- Raghavan High Level Committee, Report on Competition Law and Policy, 2000.
- Hovenkamp, H., Federal Antitrust Policy-The Law of Competition and its Practice 339 (3rd ed., 2005)
- T. T. Ram Mohan, Competition Policy Dilemmas, Economic & Political Weekly (July 15, 2000)
- Kumkum Sen, Old Wine in New Bottle – 2011 Competition Policy, Business Standard (New Delhi) August 29, 2011
- Statement of Objects and Reasons (July 24, 2001) (…provides for the establishment of a quasi-judicial body to be called the Competition Commission of India (hereinafter referred to as CCI) which shall also undertake competition advocacy for creating awareness and imparting training on competition issues)
- Competition Act, 2002
- T. Ramappa, Competition Law In India: Policy, Issues, And Developments 6 (2009).
References:
[1] Marginal & Restrictive Trade Practices Act, 1969.
[2] Department-Related Parliamentary Standing Committee on Home Affairs, Ninety-Third Report on the Competition Bill, 2001.
[3] T. Ramappa, Competition Law In India: Policy, Issues, And Developments 6 (2009).
[4] Raghavan High Level Committee, Report on Competition Law and Policy, 2000
[5] Hovenkamp, H., Federal Antitrust Policy-The Law of Competition and its Practice 339 (3rd ed., 2005)
[6] T. T. Ram Mohan, Competition Policy Dilemmas, Economic & Political Weekly (July 15, 2000)
