Home / Companies / News /  Plea filed against Facebook, WhatsApp at NCLAT

Bengaluru: After the Competition Commission of India (CCI) rejected the petition against WhatsApp Inc. and Facebook Inc. abusing their dominant position in the social messaging space to enter the Unified Payments Interface (UPI) payments market, the petition has moved to National Company Law Appellate Tribunal (NCLAT) with the appellant now appearing for a fresh admission of the case.

Advocate Harshita Chawla is appealing against CCI’s dismissal with a fresh hearing in front of the Appellate Court dated for 21 December. Based on the hearing and arguments of both parties, NCLAT will decide whether the case requires a fresh admission, and trial.

This is the latest addition to a string of legal trials which the social media major is facing in the Supreme Court, objecting over data privacy issues.

The CCI-case against WhatsApp and Facebook was first petitioned by Chawla in March stating that the above entities might be leveraging their dominance in the instant messaging market by bundling their payment app WhatsApp Pay with their messaging service; and are in violation of Section 4 of the Indian Competition Act, 2002. Further, automatic installation of WhatsApp Pay, along with WhatsApp, may create an unfair advantage for the entity, Harshita Chawla’s petition argued.

Mint has seen a copy of the order regarding this fresh appeal with NCLAT.

Individuals aware of the matter said that if the Appellate Tribunal accepts the admission of a case, it may look at the scope of enquiry taken on by CCI, and whether the supported material submitted during the petition were thoroughly investigated.

“The tangible connection between messaging and payments might be difficult to prove for the petitioner, since CCI has already ruled ‘against’ WhatsApp leveraging its dominant position in the messaging market. Additionally, while the intent is in the right place, it might be premature for a case to be taken up in anticipation, basis a personal judgment that WhatsApp may abuse its dominant position, since no clear examples are presently currently in the market," said a senior lawyer, on condition of anonymity.

The person said Google’s payment app Google Pay being pre-installed and bundled with the Android operating system (OS) and its dominance in the Indian OS market still calls for an investigation. CCI had ordered for a probe on this matter earlier this month.

In August, CCI did not merit allegations with respect to abuse of dominance, in case of WhatsApp, since it observed that the messaging giant was not explicitly forcing the user to use WhatsApp Pay exclusively on its platform. The fact that a user has to “separately register" for WhatsApp Pay and accept its terms of service and privacy policy meant ‘opting’ into the service, CCI commented.

WhatsApp didn’r respond to queries. Chawla declined to comment.

“In relation to the case before NCLAT, we should not engage in conjecture because the maintainability of the appeal has still not been adjudged upon […] it is pertinent to note that WhatsApp has received the necessary approvals from RBI and NPCI and the regulators would have conducted proper checks and tackled the issues of data localisation and data security prior to granting approvals (in relation of which 2-3 matters that are pending against Whatsapp in the Supreme Court)," said Abhay Vohra, Partner at Burgeon Law, which advises startups and venture funds.

Earlier this month, WhatsApp Pay got a green light from National Payments Corporation of India (NPCI), to go live on UPI, capping its maximum registered user base to 20 million. NPCI also capped the market share of all third-party app providers to 30% for UPI transactions.

India’s antitrust watchdog also said in August that WhatsApp was not implicitly influencing consumer choice, with its ‘actual conduct’ yet to ‘manifest’ in the market. WhatsApp Pay was available to “less than 1%" of WhatsApp users in India in its beta version, then.

CCI has also recognised that both companies “undeniably deal" with customer-sensitive data, which could be misused and “may raise potential antitrust concerns" in the future.

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