In the month of November 2024, a lot has happened on the anti-trust front. The Competition Commission of India ("CCI") has slapped a penalty of INR 213.14 Crores on Meta for abuse of dominance in relation to its 2021 WhatsApp privacy policy update. The CCI has also launched an investigation against Google for abuse of dominance in relation to listing of gaming apps on the Play store and discriminatory conduct towards real money games as compared to Daily Fantasy Sports and Rummy games. Additionally, the National Restaurant Association of India has approached Hon'ble Delhi High Court against CCI for exclusion from the confidentiality ring. On the merger control front, CCI has granted approval with modification(s) to acquisition of STT GDC Pte. Ltd by Ruby Asia Holdings II Pte. Ltd. and Singtel Interactive Pte. Ltd. The CCI has also approved investment by a subsidiary of Google's parent company Alphabet Inc. in Flipkart Private Limited, amongst other approvals.
To keep our readers updated with the Indian Competition Law, in this edition we provide a quick snapshot on newly introduced Deal Value Threshold, followed by a brief of orders passed by Delhi High Court, anti-trust orders passed and combinations approved by CCI, as well as other upcoming events.
I. Deal Value Thresholds (DVT): When Triggered
In September 2024, the Ministry of Corporate Affairs, Government of India ("MCA") notified the newly introduced Deal Value Thresholds ("DVT") for the purposes of filing a merger control notification with the CCI, with effect from September 10, 2024. The provisions related to DVT are stipulated under Section 5(d) of the Act and were inserted in the Competition Act, 2002 ("Act") vide the Competition (Amendment) Act, 2023. Prior to the said notification, Section 5 of the Act provided only for financial/jurisdictional thresholds in terms of value of assets and turnover of the parties to the combination. With the introduction of DVT, the parties are now required to evaluate the notifiability of a transaction to the CCI in terms of both financial/jurisdictional thresholds as well as DVT.
In terms of Section 5(d) of the Act, for a transaction to qualify for notification under DVT it is required to meet the following two requirements:
1st requirement: the value of transaction exceeds INR 2000 crores.
2nd requirement: the target entity (enterprise) whose shares/assets are being acquired has substantial business operations ("SBO") in India.
Determination of Value of Transaction: In terms of Explanation (d) of Section 5 of the Act and Regulation 4(1) of the Competition Commission of India (Combinations) Regulations, 2024 ("Combination Regulations"), the value of transaction would include every valuable consideration, direct or indirect, immediate or deferred, cash or otherwise. It would also include – any consideration for inter-connected steps & transactions; considerations agreed for any covenants, undertaking, obligations or restriction; any amount payable within 2 years (from the date on which transaction comes into effect) for any arrangement(s) entered into as a part of the transaction or incidental thereto including but not limited to technological assistance, IP licensing, product usage rights, supply of raw materials, branding, marketing etc.; consideration paid by acquirer or its group for any acquisition of shares of the same target in the preceding two years of the trigger event; in case of call options or open offer, value would include full assumption of exercise of the option and full subscription to the open offer; any consideration payable (based on best estimate of the board) for any future outcomes under the transaction documents etc. However, the value of transaction would not include transaction costs such as fees payable for legal advice, to investment banks, to regulators, to statutory authorities etc.
Assessment of SBO: In terms of Regulation 4(2) of the Combination Regulations, the target would deem to have SBO in India if:
If target provides digital services – the target has more than 10% of its global business users or end users in India;
If the target does not provide digital services – In case target does not provide digital services, then either of the following two conditions are met:
i. the gross merchandise value ("GMV") of the target for the period of 12 months preceding the relevant date in India is – (i) 10% or more of its global GMV, and (ii) more than INR 500 Crores; OR
ii. the turnover of the enterprise during the preceding financial year in India is – (i) 10% or more of its total global turnover derived from all the products and services, and (ii) more than INR 500 Crores.
A transaction under DVT is required to be notified to the CCI only when the value of transaction exceeds INR 2000 crores and the target entity has SBO in India, provided the transaction is not otherwise exempted under the Act and other applicable regulations.
Quite significantly, besides the DVT being an independent and exclusive determinant for Combination filings over and above the existing financial/jurisdictional threshold under Section 5 of the Act, the 'De Minimis' exemption under Competition (Minimum Value of Assets or Turnover) Rules, 2024 does not apply to a DVT. Essentially, if a proposed Combination meets the statutorily prescribed threshold of a DVT, the notification to the CCI is imminent; even if the transaction might have otherwise qualified for the 'De Minimis' exemption.
II. Orders passed by High Courts
i. National Restaurant Association of India approaches Delhi High Court against Competition Commission of India.
National Restaurant Association of India Vs. Competition Commission of India & Ors. (W.P.(C) 15475/2024) The National Restaurant Association of India ("NRAI") has approached Hon'ble Delhi High Court against order dated 14.10.2024 passed by CCI. NRAI has submitted that CCI has wrongly excluded it from the confidentiality ring. The Hon'ble Delhi High Court vide order dated 06.11.2024, has directed to issue notice(s) to the respondents and has directed the parties to file counter affidavits and Rejoinder in the matter.
In 2022, NRAI has approached the CCI against Zomato Limited and Bundl Technologies Private Limited (Swiggy) for alleged violation of Section 3(4) of the Act. The CCI vide its order dated 04.04.2022 directed the Director General ("DG") to investigate the matter.
III. Orders Passed and Combinations Approved by the Competition Commission of India
i. Competition Commission of India orders investigation against Google for abuse of dominance in an information filed by Winzo Games Private Limited.
In Re: Winzo Games Private Limited And Google LLC & Ors. (Case No. 42 of 2022)
The CCI vide order dated 28.11.2024 directed the DG to investigate against Google LLC; Alphabet Inc.; Google India Private Limited; and Google India Digital Services Private Limited (Collectively referred as "Google") for alleged abuse of dominance in relation to Google's app store, payment and advertisement policies and violation of Section 4(2)(a)(i), 4(2)(b) and 4(2)(c) of the Act.
The informant, Winzo Games Private Limited, a digital gaming and technology company that offers Real Money Games ("RMGs") to consumers, alleged that Google has abused its dominance in the relevant markets of – i) Market for licensable OS for smart devices in India and ii) Market for app store for Android smart mobile OS in India. Based on the allegations levelled by the informant, CCI defined a third relevant market – Market for online search advertising services in India. In reference to its past decisions regarding Google's conduct in these relevant markets, CCI stated that Google is dominant in these markets.
Specific allegations made by the Informant and CCI's prima facie view:
The informant made following specific allegations regarding abusive conduct of Google:
A. Listing of RMG Apps on the Play Store: The informant alleged that Google, through its arbitrary and one-sided Developer Distribution Agreement ("DDA") and Developer Program Policies ("DPP"), restricts the listing of third-party gaming apps on its Play Store that offer users the facility to place real money for stake in 'games of skill'. The informant stated that said conduct of Google amounts to denial of market access under Section 4(2)(c) of the Act and unfair/discriminatory conditions in sale of real money game service resulting in contravention of Section 4(2)(a)(i) of the Act. In this regard, CCI referred to the ruling of the Hon'ble Supreme Court declaring a business activity of game of skill as valid and noted that the distinction of the same with 'game of chance' requires an examination. CCI took note of the fact that the Informant has already sought a relief before Hon'ble Delhi High Court to declare in its favour that the games offered by it are 'game of skill' and such declaration would entitle the Informant to host its games in the Google play store. The CCI further noted that Ministry of Electronics and Information Technology ("MEITY") has proposed to regulate online RMGs by way of a self-regulatory body that when established will address the ambiguities. In view of the same, CCI stated that it does not find it appropriate to intervene in the matter on the said issue, at this stage.
B. RMG Pilot: The informant alleged that Google updated its DDA and DPP policies wherein it commenced a Pilot Program to allow placement of only two types of RMGs in its Play Store i.e., Daily Fantasy Sports ("DFS") and Rummy. The Informant alleged that the same amounts to discriminatory conduct, placing unfair conditions and restrictions upon other RMG services in violation of Section 4(2)(a)(i), Section 4(2)(b)(i) and Section 4(2)(c) of the Act. In this regard, CCI noted that selection of sub-categories of RMG apps for the pilot program may raise competition concerns if it is based on a non-objective and arbitrary criterion and that a direct access to end-users via dominant Play Store provides a significant competitive edge to DFS and Rummy apps.
C. Google Ads Policy Permitting Advertisements for Only DFS and Rummy Gaming Applications: The informant alleged that Google has updated its advertisement policy to allow only DFS and Rummy app advertisers to host advertisements using Google Ads. Informant stated that prior to this restriction, it was able to bid and continuously use its registered trademark 'WinZo' on Google Search and Ads but post pilot project, the competitors of the informant can run Ad campaigns using its trademark. In this regard, CCI noted that inability to access Google's search advertising platform can undermine an app's ability to compete effectively and can potentially diminish the market visibility of apps and hinder its ability to expand its user base. Thus, the same amounts to denial of market access and violates Section 4(2)(c) of the Act.
D. Google's Warnings on Sideloading RMG Apps: The informant also alleged that due to Google's policies, other apps offering RMGs are available for download only from their websites and when a user attempts to download these apps, Google displays malware warnings. The informant alleged that the said conduct of Google amounts to creation of entry barrier for app developers and is violative of Section 4(2)(a)(i) and 4(2)(b)(i) of the Act. In this regard, CCI noted that Google has submitted that such warnings are displayed by it in compliance with the regulatory guidelines issued by RBI and NPCI, however, as per the informant such warnings are not displayed in Rummy and DFS applications listed on the Play Store. Therefore, the same requires an investigation if such conduct adversely affect competitive landscape.
ii. Competition Commission of India imposes a penalty of INR 213.14 Crores on Meta for abuse of dominance in relation to its 2021 Privacy Policy Update
In Re: Updated Terms of service and Privacy Policy for WhatsApp users (Suo Motu Case No. 01 of 2021); In Re: Prachi Kohli against WhatsApp LLC (Case No. 05 of 2021); In Re: Internet Freedom Foundation against WhatsApp LLC & Meta Platforms, Inc. (Case No. 30 of 2021).
The CCI vide order dated 18.11.2024 has imposed a penalty of INR 213.14 Crore upon Meta Platforms Inc. for abuse of dominance and violation of Section 4(2)(a)(i), 4(2)(c) and 4(2)(e) of the Act and issued a cease-and-desist order and directed Meta and WhatsApp to implement certain remedies.
In 2021, WhatsApp updated its privacy policy and terms of service for its users which required the users to mandatorily accept the same in entirety to retain their WhatsApp account information. The new policy of WhatsApp also provided as to how it will share personalized user information with Meta Facebook Inc. and its subsidiaries (collectively referred as "Meta").
The CCI, in its scrutiny, noted that under the previous privacy policy, users were given the option to decide to share their data with Facebook (now Meta) which was absent in the latest policy update. In this regard, the CCI concluded that this 'take-it-or-leave-it' policy update constitutes an imposition of unfair conditions and is in contravention of the Act. On the sharing of data between Meta companies, the CCI held that it creates an entry barrier for rivals of Meta and results in the denial of market access in the online display advertising market. The CCI also held that Meta has leveraged its dominant position in the OTT messaging app market through smartphones to protect its position in the online display advertising market. To address the anti-competitive harm identified, the CCI in its order further directed the Meta group to ensure that WhatsApp will not share user data with other Meta companies for advertising purposes for five years.
iii. Competition Commission of India closes information against M/s S B Telecommunications.
In Re: Harish Kumar and M/s S B Telecommunication & Ors. (Case No. 38 of 2023)
The CCI vide order dated 11.11.2024 closed information filed against – M/s S B Telecommunication ("OP 1"); M/s Indulge Sign & Graphics ("OP 2"); and M/s Adtek Print & Media Pvt. Ltd. ("OP 3") for alleged bid-rigging in various tender(s) issued by Bareilly Nagar Nigam ("BNN"). The informant further alleged that BNN had fixed the terms and conditions of the tender(s) and extended the last date of Earnest Money Deposit ("EMD") to favour a particular company and exclude others. The informant alleged that BNN changed the turnover criteria of one of the tenders issued by it without publishing any notice in the newspaper or communication to the public and extended the last date of uploading the tender without issuing a fresh tender. The informant further submitted that OP 1 and OP 2 are dummy companies of OP 3 and that only 3 firms i.e., OP 1, OP 2 and OP 3 participated in the tender. It was further alleged that OP 3 was awarded the tender and was supposed to deposit 10% of EMD and 50% of tender amount within 15 days but were paid only after 75 days. Informant also alleged that BNN had not placed its e-tender notification dated 05.05.2022 on its website while all tenders from 16.08.2014 to 23.09.2022 were uploaded.
Basis the information filed, and the reply received from BNN, the CCI opined that the allegations made under the information are misconceived and a prima facie case is not made out under the provisions of Section 3(3) of the Act. CCI noted that setting tender terms and conditions is largely within the domain of the procurer and generally does not call for any interference within the provisions of the Act and passed order under Section 26(2) of the Act.
iv. Competition Commission of India closes information against Greenbay Infrastructure Pvt. Ltd.
In Re: Anurag Gupta & Rashmi Gupta and Greenbay Infrastructure Pvt. Ltd. (Case No. 20 of 2024)
The CCI vide order dated 19.11.2024 closed an information filed against Greenbay Infrastructure Pvt. Ltd. ("OP") for delay in delivery of possession of plots purchased by the informant. The informant alleged that OP has violated the provisions of Section 3 & 4 of the Act by indulging in unfair trade practices such as raising exorbitant demands towards farmer's compensation without disclosing the actual payment amount; not issuing Confirmation'/ Buyer – Builder Agreement to the informant; not renewing the RERA registration etc. It was submitted by the informant that it had initially booked plots in OP's project 'Curiocity' which was later abandoned by the OP, and then new plots were allotted to it in another project named 'Greenbay Golf Village' which was under farmer's dispute.
The said information was closed by the CCI under Section 26(2) of the Act as no competition concerns were raised by the issues agitated by the informant before it.
v. Combinations Approved by Competition Commission of India
I. CCI approved acquisition of the Standard unsecured personal loans portfolio in India of Standard Chartered Bank, India branch (transferor) by Kotak Mahindra Bank Limited.1
II. CCI approved subscription of certain compulsorily convertible preference shares and the acquisition of equity share capital of the Rebel Foods Private Limited by Jongsong Investments Pte. Ltd.2
III. CCI approved acquisition of additional securities of DMI Finance Private Limited ("DMI Finance") by MUFG Bank Ltd. such that its shareholding will increase to 20.0% of the share capital of DMI Finance, on a fully diluted basis. 3
IV. CCI approved the acquisition of 100% shares and sole control of Schenker Aktiengesellschaft by DSV Holding Germany GmbH.4
V. CCI approved the investment of Shoreline International Holdings LLC ("Acquirer"), a subsidiary of Google's parent company Alphabet Inc., in Flipkart Private Limited ("Target") through subscription of shares. CCI also approved an arrangement between an affiliate of the Acquirer and Target's subsidiary for the provision of additional cloud services.5
VI. CCI approved the acquisition of 100% of the issued shares of the target companies, namely, Fosroc Top One Limited; Fosroc Top Two Limited; and Fosroc Supply FZE by Starcin Holding France SAS.6
Combinations Approved with Modification
VII. CCI approved with modification acquisition of certain shareholding in STT GDC Pte. Ltd., by Ruby Asia Holdings II Pte. Ltd. and Singtel Interactive Pte. Ltd.7 A detailed order of the CCI is yet to be published in public domain.
Deemed Approvals:
VIII. 2726247 Ontario Inc. and OMERS Infrastructure Asia Holdings Pte. Ltd. received deemed approval of CCI to acquire additional unitholding(s) in Interise Trust (formerly IndInfravit Trust) and shareholding in Investment Managers Limited[8].
IV. Mark Your Calendar: Upcoming Events!
- Pharma Competition Law Conference scheduled on Dec 3, 2024, in
Brussels (click here)
- The TECH Antitrust Conference scheduled on Jan 16, 2025, in
Palo Alto (click here)
- Cartels Workshop- An Advanced Seminar- scheduled on Jan 23, 2025 in Brussels (click here)
Footnotes
1 C-2024/10/1199
2 C-2024/10/1194
3 C-2024/10/1193
4 C-2024/10/1192
5 C-2024/10/1191
6 C-2024/10/1190
7 C-2024/07/1168
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
