2024 has been a notable year for competition law in India. The Government of India and the Competition Commission of India (CCI) materially revamped the Competition Act, 2002 (Competition Act) and related regulations to modernise India's competition regime. On the enforcement side, the CCI cleared a significant backlog of matters, and passed headline grabbing orders in several cases. Throughout the year, the CCI closed approximately thirty-six cases at the threshold stage, publicly directed investigations in eleven matters and published final orders (under Section 27 of the Competition Act) in four cases.
While the CCI largely kept up with its promise to tackle anti-competitive practices in digital markets, the High Courts played a pivotal role in ensuring that the CCI's investigations and decisions are fair and follow due process. Some of these key decisions that have further helped in shaping the landscape of competition law in India are summarised below:
In re: Updated Terms of Service and Privacy Policy for WhatsApp Users (CCI)
In a first-of-its-kind decision, the CCI found that Meta (through WhatsApp) had abused its dominant position in relation to WhatsApp's 2021 privacy policy update (2021 Update). This is the first time that the CCI has considered privacy as a non-price factor of competition, blurring the line between the mandate of competition and data protection / privacy laws.
In the final order, the CCI held that: (i) it had jurisdiction to examine the 2021 Update (despite the Supreme Court and the Delhi High Court examining the legality of the same policy in parallel); (ii) the Meta group (through WhatsApp) was dominant in the market for 'over-the-top (OTT) messaging apps through smartphones in India' and Meta held a 'leading position' in the 'online display advertising in India' market; (iii) the 2021 Update amounted to 'imposition of an unfair condition' as users were compelled to accept expanded data collection and sharing terms without any opt out; (iv) the sharing of WhatsApp user data between Meta Companies led to denial of market access for competitors in the online display advertising market; and (v) Meta leveraged its dominance in OTT messaging to online display advertising.
The CCI also imposed a penalty of INR 213.14 crore, taking into account several mitigating factors demonstrated by the defendants (marking the first time the CCI has applied the new CCI (Determination of Monetary Penalty) Guidelines, 2024 since their notification). Importantly, the CCI also directed WhatsApp and Meta to comply with certain far-reaching remedies, including: (i) a ban on WhatsApp sharing user data with other Meta companies for advertising purposes; and (ii) not making sharing of user data with other Meta companies (for purposes other than providing WhatsApp services) as a condition precedent for users to access the WhatsApp service in India.
While Meta and WhatsApp have appealed the CCI's decision before the National Company Law Appellate Tribunal (NCLAT), the CCI's decision could have a strong and long-lasting impact on how technology companies interact with their users and shape the landscape of the digital sector going forward.
Indian Broadcasting and Digital Foundation & Another v. Alphabet Inc. & Others (CCI)
Based on a complaint filed by an association representing OTT and video on demand application providers, the CCI issued an order prima facie holding that Google had abused its dominant position in relation to the service fee / commission it levied on the Google Play Store and directed a detailed investigation by the Director General (DG) into the matter.
The CCI found Google's imposition of a service fee / commission only on 3% of the app developers listed on the Google Play Store (without providing any additional services to such app developers) is discriminatory. Additionally, the CCI found that the rate of service fee / commission being charged by Google substantially exceeds its costs for providing these services. Therefore, it held that its service fee / commission is excessive as well. The CCI further held that such discriminatory and excessive service fee is causing dire harm to app developers as well as users.
The CCI's order reiterates that, while the CCI typically refrains from interfering in pricing related issues, in cases where the market forces are not sufficient to regulate pricing (owing to a super-dominant player), the CCI may interfere.
Notably, despite the CCI's strong findings in the investigation order, the CCI did not grant any interim protection to app developers against Google's actions. The CCI's order rejecting the interim relief is currently under challenge before the NCLAT.
Winzo Games Private Limited v. Google LLC and Others (CCI)
Adding another speedbump to Google's operations in India, the CCI issued an order prima facie holding that Google had abused its dominant position by selectively listing real-money-gaming apps on the Google Play Store and directed an investigation by the DG into the matter.
The CCI found that: (i) Google has been selective, ambiguous, and non-transparent about allowing some apps to be eligible for a pilot program and not others; (ii) the scope and duration of a pilot plays a critical role in determining its competitive impact; indefinitely extended pilots can exacerbate existing market distortions, continuing a competitive edge granted to selected players while creating entry barriers for others; and (iii) a pilot program should be implemented in a controlled and phased manner with clear limitation on geographic scope and limits to the number of downloads permitted during the pilot. The CCI also recognized that while pilot programs typically offer a balanced way to introduce new practices in a controlled manner, their implementation by a dominant player like Google demanded higher scrutiny. Based on these findings, the CCI opined that Google's conduct was unfair, discriminatory, limited the restriction of services in the market and led to denial of market access to certain app developers.
Notably, the CCI also chose not to investigate certain issues which it believed had been previously investigated, and some allegations which it believed would require examination under an upcoming framework regulated by Information Technology Act, 2000.
The order is significant as it highlights the CCI's vigor to continue to venture into areas of abuse of dominance in digital markets, and at the same time, exercise its jurisdiction cautiously to not intervene in issues that are subject matter of upcoming legislation (though its order against Meta in light of the upcoming data regulations is interesting).
The Informant has also filed an application seeking interim relief against Google in relation to the allegations set out above, and the CCI is yet to publish an order adjudicating on such relief.
Kalpit Sultania v. IREL (India) Ltd (CCI)
In another significant decision, the CCI dismissed allegations against IREL, despite the DG returning a finding that IREL had abused its dominant position in the market for beach sand sillimanite (BSM) in India. Notably, this appears to be the first order issued under the newly incorporated Section 26(9) of the Competition Act, which empowers the CCI to close an information despite the DG finding a violation of the Competition Act. This section was incorporated to fill a lacuna in Section 26 of the Competition Act, as earlier, there was no express provision under which the CCI could close a matter where the DG found a violation of the Competition Act.
The informant alleged that the defendant, a government undertaking had indulged in: (i) excessive pricing for sillimanite; (ii) discriminatory pricing by offering lower rates to limited customers; and (iii) arbitrary practices while deciding the supply conditions of BSM in India.
Despite the DG finding in the informant's favour, the CCI while dismissing the matter observed that: (i) the "high" costs of sillimanite was actually based on the entire costs incurred in the manufacturing process for sillimanite; (ii) the lower prices offered to some customers was based on the volume of the product they agreed to offtake and / or longstanding relationships with such customers; and (iii) the supply conditions were based on factors such as quantity and consumer relations.
The CCI's decision is significant as it reinforces that a dominant entity's conduct may not compulsorily be abusive under Section 4 of the Competition Act and should be examined in light of the objective justifications offered by the enterprise.
No appeal has been filed against this decision as on the date of publishing this article.
Extreme Infocom Pvt Ltd v. National Internet Exchange of India (CCI)
The CCI continued to assert its jurisdiction in the telecom sector holding that a party's obligation to comply with the provisions of the Competition Act are "independent of the obligation to comply with the provisions of TRAI Act / Regulations".
In this case, the defendant, an internet-exchange not-for-profit organisation submitted a preliminary objection stating that the Informant's allegations before the CCI squarely fell within the adjudicatory domain of the Telecom Regulatory Authority of India (TRAI). The defendant however submitted that the CCI could exercise jurisdiction only if the TRAI concluded that the defendant's conduct had violated competition law as well, as held by the Supreme Court's in CCI v. Bharti Airtel (Bharti Airtel).
The CCI dismissed the preliminary objection and held that Bharti Airtel was specific to the peculiar facts of that case and cannot be inferred in all cases where the CCI was exercising its jurisdiction in sectors which was also regulated by a sectoral regulator. The CCI further clarified that Bharti Airtel does not imply that in every case of overlap of jurisdiction with the sectoral regulator, the CCI will have to withhold acting and await examination by the sectoral regulator.
No appeal has been filed against this decision as on the date of publishing this article.
India Glycols Limited v. India Sugar Mills Association and Others (CCI)
The CCI found that several ethanol producers, associations and oil companies (together, defendants) had not engaged in collusive tendering or associated anti-competitive behaviour. Surprisingly, this decision followed a September 2018 order of the CCI finding that the defendants had in fact breached the Competition Act. This was appealed to the NCLAT which set aside the order on grounds of violation of natural justice and directed the CCI to conduct a fresh hearing.
The CCI rejected several findings in the DG's 2015 report that individual sugar mills had fixed prices and allocated quantities in breach of the Competition Act. Cases of identical or similar pricing could be explained without leading to an inference of cartelisation, for example where the sugar mills were geographically close. In relation to a few instances of identical pricing, the CCI pointed to the need for price parallelism to be supported by plus factors before breach could be established which were lacking in this case. The CCI also held that limited instances of identical freight rates could not lead to an inference of cartelisation and expressly gave the "benefit of the doubt" to the producers concerned.
The CCI also held that the DG had wrongly found that trade associations had facilitated cartelisation. The meetings that were called by the defendants' association attracted few attendees and appeared to have been intended to discuss a policy change regarding ethanol blended petrol. The defendants' attendance at a pre-bid meeting reflected the novelty of this meeting.
The CCI additionally reiterated that issuing of a joint tender for procuring ethanol by the oil companies was not anti-competitive. As public sector undertakings, such joint tendering was justified on commercial and operational grounds and had not been found to have resulted in an appreciable adverse effect on competition.
No appeal has been filed against this decision as on the date of publishing this article.
JCB India and Another v. CCI and Another (Delhi High Court)
In a landmark decision, a division bench of the Delhi High Court upheld the finality of alternative dispute resolution methods and terminated the ongoing proceedings before the CCI considering the private settlement between the informant and the defendant.
While the informant and the defendant were engaged in settlement negotiations over an Intellectual Property (IP) dispute, the informant approached the CCI to seek intervention under the Competition Act. The Informant alleged that the defendant was engaged in bad faith litigation, and that this amounted to denial of market access in contravention of the abuse of dominance provisions of the Competition Act. The CCI found merit in the allegations made by the Informant and directed a detailed investigation into the matter.
In 2021, the informant and the defendant settled their dispute through court mandated mediation and approached the Delhi High Court to terminate the proceedings pending before the CCI. The CCI argued against such termination, as it should have the jurisdiction to examine whether the terms of the settlement were unfair / anti-competitive, just as litigation could be abusive / predatory.
The Delhi High Court did not agree with the CCI. Likening the threat of CCI intervention to the Sword of Damocles, it reasoned that allowing the CCI's investigation into the terms of the settlement would affect the sanctity of the settlement process. It observed that there was a need to promote alternative dispute mechanisms which were not only faster and more cost effective for businesses, but also relieved pressure on the judicial system.
The Delhi High Court was also concerned about the CCI potentially reviewing the terms of the settlement and held that this would be outside the CCI's jurisdiction. Acknowledging the importance of IP rights in promoting innovation, the judgment urged the CCI to ensure that it exercised its powers in a manner which complemented other regulatory bodies.
Notably, the Supreme Court refused to interfere with the Delhi High Court's decision in appeal. However, the questions of law pertaining to the matter were left open.
MRF Limited v. CCI and Others (Madras High Court)
In a key decision, the Madras High Court allowed two writ petitions challenging: (a) the order of the CCI impleading seven tyre companies to an ongoing investigation; and (b) the notice from the DG directing an impleaded party to furnish certain information relevant to the investigation.
The investigation in this case, which was initiated in 2019, was originally directed against only one tyre manufacturer. During the investigation, the DG reached out to other tyre companies and sought responses from them as "third parties" to the investigation. Subsequently, the CCI acquiesced to the DG's request to widen the ambit of the investigation to also investigate seven other tyre companies.
One defendant challenged this impleading order before the Madras High Court primarily on the ground that its status in the investigation was changed from a "third party" to an "opposite party", without any prior notice or opportunity to be heard.
Quashing the impleading order and other related directions of the CCI, the Madras High Court held that third parties and opposite parties to a proceeding before the CCI cannot be treated at par. Further, an enterprise is entitled to know the status under which its participation is sought in statutory proceedings as the legal rights and consequences of participation will vary according to the party's status in the proceedings. The Madras High Court importantly held that a party must be granted a sufficient opportunity to contest its inclusion / impleadment as an opposite party in a case and it must be put to sufficient notice.
This decision is currently pending in appeal before the Division Bench of the Madras High Court.
Star Cement Limited v. CCI and Others (Gauhati High Court)
In a notable decision, the Gauhati High Court quashed an order of the CCI directing an investigation and a subsequent order imposing a penalty on defendant for failing to comply with the directions of the DG.
The CCI directed an investigation on the ground that the defendant and two other enterprises in the North-eastern States: (a) simultaneously raised prices in August 2016 without any corresponding increase in input costs or demand-supply mismatch in the market; (b) were not passing on the benefits of subsidies for cement production; and (c) charged higher prices than they charged in neighbouring states.
Despite these findings, the Gauhati High Court found that the CCI had failed to make out a prima facie case against the defendants. It found that the three companies had raised their prices by differing amounts and the end prices also differed. Where there was no uniform increase in price, there could be no agreement directly or indirectly determining the sale price. It found that the subsidies were granted as an incentive to the companies and were not to be passed on to customers. It also considered the third ground to be misplaced as prices to the wholesaler were fixed subject to a discount which the wholesaler was free to pass on to the customer. In any case, it could not be a factor in arriving at a finding of an adverse effect on competition.
This decision is currently pending in appeal before the Division Bench of the Gauhati High Court.
Geep Industries (India) Pvt. Ltd. and Others v. CCI (Delhi High Court)
Emphasising the need to follow the prescribed manner in levying interest on the penalty imposed by the CCI, the Delhi High Court set aside an order of the CCI demanding interest on penalty from a defendant.
Following a 2018 decision of the CCI finding the opposite party in violation of Section 3 of the Competition Act, the NCLAT stayed the CCI's decision during the pendency of the appeal. Ultimately, the NCLAT upheld the CCI's findings, however, reduced the amount of penalty imposed on the defendant.
Shortly after, the CCI issued demand notices to the defendant to deposit the penalty amount with simple interest at the rate of 1.5% for every month or party of a month from the data of the CCI's decision (and not from the date of the NCLAT's decision).
On challenge before the Delhi High Court, the defendant submitted that interest on penalty could only be levied if there was a delay in payment, after service of a demand notice, in accordance with the CCI's regulations. Given that the CCI did not issue the demand notice after the expiry of the time mentioned in the CCI's order, it did not have the authority to direct the opposite party to pay interest.
Agreeing with the defendant, the Delhi High Court set aside the CCI's order, and clarified that the procedure prescribed for interest on penalty under the CCI's regulations was mandatory and not directory. Given that the CCI had failed to serve the demand notice on the defendant after the time period mentioned in the CCI's final order, no interest could be levied on the payment of penalty.
This decision is currently pending in appeal before the Division Bench of the Delhi High Court.
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