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2025 Supreme(Online)(NCLAT) 25
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Justice Ashok Bhushan (Chairperson) , Hon'ble Mr. Arun Baroka (Member (Technical)) ,
WhatsApp LLC – Appellant
Versus
Competition Commission of India – Respondent
280/ND/2025 IA
The court held that actual anti-competitive effects must be established for a violation under Section 4 of the Competition Act, and stayed the five-year ban imposed by the CCI.
Headnote:(A) Competition Act, 2002 - Sections 4 and 27(a) - Appeal against the order of the Competition Commission of India imposing a penalty of Rs.213.14 Crores for breach of competition laws - The Commission found WhatsApp LLC to have abused its dominant position by failing to identify actual anti-competitive effects, relying instead on potential effects - The Supreme Court upheld the Commission's jurisdiction to investigate violations under the Act. (Paras 10, 17, 18)
(B) Interim Relief - The court stayed the five-year ban on sharing user data for advertising purposes imposed by the Commission, while directing compliance with other provisions regarding data sharing. (Paras 17, 18)
Facts of the case:
WhatsApp LLC challenged the CCI's order dated 18.11.2024, which found it in breach of Section 4 of the Competition Act, 2002, and imposed a monetary penalty. The CCI's findings were based on WhatsApp's 2021 privacy policy update and its implications for user data sharing.
Findings of Court:
The court stayed the five-year ban on data sharing for advertising purposes but required compliance with other directives from the CCI.
Issues: The main issues included whether the CCI had jurisdiction to impose penalties related to privacy policy violations and the nature of anti-competitive effects.
Ratio Decidendi: The court ruled that the CCI acted within its jurisdiction under the Competition Act, and the findings of potential anti-competitive effects were insufficient for a violation under Section 4.
Result: The five-year ban was stayed, and the appellant was directed to deposit 50% of the penalty.
O R D E R
(23rd January, 2025)
Ashok Bhushan, J.
IA No.280 of 2025 has been filed in Competition Appeal (AT) No.01 of 2025 filed by WhatsApp LLC praying to stay the effect and operation of the impugned order dated 18.11.2024 passed by the Competition Commission of India (CCI) and to pass any other order that it deems fit and proper in the facts and circumstances of the case.
2. We have heard Learned Counsel for the Appellant and Counsel appearing for the CCI on 16.01.2025 on which date both the Appeals were admitted and parties were heard on the interim relief.
3. Before we enter into respective submissions of the parties on the application for interim relief, a brief background of the facts giving rise to these Appeals are to be noted.
3.1. WhatsApp LLC published its Terms of Service and Privacy Policy in 2012. In April, 2016, WhatsApp announced its end-to-end encryption system for all types of WhatsApp messages and calls. On 20.02.2018, WhatsApp updated its Terms of Service and Privacy Policy of 2016 which was challenged in Delhi High Court by Writ Petition- “Karmanya Singh Sareen vs. Union of India”. WhatsApp announced 2021 Terms of Service and Privacy Policy (2021 I.A No. 280 of 2025 IN Competition App. (AT) No. 1 of 2025 Competition App. (AT) No. 2 of 2025 update) applicable to users of India and several other countries. On 19.01.2021, CCI took suo moto cognizance of 2021 update and registered Suo Moto Case No.01 of 2021. CCI passed an order on 19.01.2021 under Section 19(1) seeking information from WhatsApp LLC and Meta Platforms. WhatsApp challenged the proceeding initiated by CCI by means of Writ Petition in Delhi High Court “WhatsApp LLC vs. CCI” which Writ Petition came to be dismissed by a learned Single Judge, LPA was also dismissed on 25.08.2022 and SLP against the order dated 25.08.2022 also came to be dismissed by the Hon’ble Supreme Court on 14.10.2022 filed by Meta Platforms. The Director General initiated investigation against WhatsApp 2021 update and submitted a report. WhatsApp sent a letter to the Ministry of Electronics and Information Technology on 22.05.2021 undertaking that it will not limit the functionality of how WhatsApp works for users who have not yet accepted the 2021 update and will continue to display the update to users who have not accepted the 2021 update from time to time and will maintain the same until data protection law comes into effect.
3.2. Two cases were also subsequently clubbed with the suo moto case being Case Nos.05 of 2021 and 30 of 2021. On 11.08.2023, Digital Personal Data Protection Act 2023 received presidential assent and was published in the Official Gazette of India (the Act has not yet been enforced). After hearing the parties and other interveners, the CCI passed an order on 18.11.2024 (impugned in the present Appeals) holding breach of Section 4(2) of the Competition Act, 2002. The Commission in exercise of powers under Section 27(a) of the Act issued various directions in consequence of contravention of I.A No. 280 of 2025 IN Competition App. (AT) No. 1 of 2025 Competition App. (AT) No. 2 of 2025 the provisions of Section 4 of the Act. The Commission also imposed monitory penalty of Rs.213.14 Crores on the Meta directed to deposit the penalty within 60 days. The Commission further directed for making necessary changes within period of three months. WhatsApp and Meta aggrieved by the said order have come up in these Appeals.
4. We have heard Shri Kapil Sibal, Shri Mukul Rohtagi and Shri Arun Kathpalia, Learned Senior Counsel for the Appellants, Shri Samar Bansal, Learned Counsel has appeared for CCI and Shri Abir Roy, Learned Counsel for Respondent No.3.
5. The submissions advanced by Learned Senior Counsel appearing in both the Appeals being almost similar, we refer to submissions as submissions on behalf of the Appellant.
6. Counsel for the Appellant in support of the Appeal contends that the Commission failed to identify actual anti-competitive effects and instead relied on
