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It is important to understand that such conduct can be used for “leveraging”- i.e., using a position of strength in a relevant market to acquire or reinforce a position of strength in another relevant market. Leveraging amounts to abuse of dominance under Section 4(2)(e) of the Competition Act. The collection, processing and commercial use of data can create significant competitive advantages for enterprises leading to productivity and efficiency gains. At the same time, the acquisition and utilization may also raise potential Competition Law concerns.

However, there has been a gradual change in this arguably conservative approach with competition regulators recognizing the impact on the competitive process posed by increased data concentration. Competition regulators have now come to realize that privacy issues simply by virtue of their nature cannot be excluded from the purview of competition law, notably when it is being implemented by a business for which data serves as a primary input for its goods and services.

​The German Competition Authority has taken the enforcement lead in this regard by initiating proceedings against Facebook on allegations that it has violated data protection laws by not informing individuals of its data collection and use practices.

​Similarly, Facebook has paused collecting Whatsapp data from users in the UK, following a reported government probe into the company’s privacy policy. France’s privacy watchdog has also issued formal notice to WhatsApp, asking the popular mobile messaging app to stop sharing user data with the parent company Facebook within a month. European Union has also set up a privacy taskforce to ensure Facebook/Whatsapp’s compliance with the EU privacy law. Interestingly, the letter sent by the EU Working Group to Whatsapp asserts thatThe means by which WhatsApp sought to introduce its updated terms of service and privacy policy has, however, effectively resulted in WhatsApp adopting a “take it or leave it” approach in which users either signal their ‘consent’ to the sharing of data or they are unable to avail themselves of WhatsApp’s messaging service”. This assertion is concomitant with the basic competition law principle that the dominant enterprise is an unavoidable trading partner for its customers.​​

COMPETITION LAW: A TOOL FOR DATA PROTECTION IN INDIA IN THE DIGITAL AGE?

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The right to privacy as a fundamental right under Article 21 of the Constitution has been recently recognized[1] by the Supreme Court of India. One of the many facets of the right to privacy identified by the Hon’ble Supreme Court is informational privacy, which pertain to privacy issues arising out of the collection and dissemination of electronic data. This facet of the right to privacy assumes particular significance in the digital age, which is dominated by data businesses like Facebook, Google etc.   


Data businesses offer ‘free’ or low-cost digitalized services in return for personal information. The data which includes the detection of unique patterns of consumer behavior and insights gleaned therefrom is subsequently monetized by displaying advertisements relevant to the user’s activity. However, this acquisition of a user’s personal information for commercial exploitation may possibly lead to a conflict with the fundamental right to privacy.

​​At present, India has no data protection law or framework committed to the regulation of some of the practices mentioned above. Hence, it becomes necessary to probe whether the existing legislative framework, including the Competition Act, 2002, may be used to protect citizens in the meantime.

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At first glance, the argument that competition law can be used as an instrument of data protection may seem far-fetched, considering that the mandate of competition law is to protect, preserve and promote competition between enterprises in the market. However, it should not be forgotten that the Competition Commission of India is also empowered to remedy exploitative conduct by a dominant enterprise. A conscious and deliberate violation of a users’ privacy by a dominant enterprise for commercial gain, can possibly constitute an “abuse of dominant position” under the Competition Act. 

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Traditionally, competition regulators worldwide have been reluctant to view data protection and privacy through the prism of competition law. In the merger decision in Facebook/Whatsapp, the European Commission explicitly held that “Any privacy-related concerns flowing from the increased concentration of data […] do not fall within the scope of the EU competition law rules but within the scope of the EU data protection rules”.

​​The CCI itself in a recent case against Whatsapp Inc. registered its reluctance to examine the right to privacy from a competition standpoint despite holding Whatsapp to be in a dominant position in the relevant market for 'instant messaging services using consumer communication apps through smartphones'.

​It was alleged that following the amendment to its privacy policy, Whatsapp’s users have been forced to share their account details and other information with ‘Facebook in order to continue availing the services of ‘Whatsapp’. It was alleged that the information/data which is shared by ‘Whatsapp’ to ‘Facebook’ is thereafter used by Facebook for targeted advertisements. 

​Most notably, the CCI noted that Whatsapp provides the option to its users to ‘opt out’ of sharing user account information with ‘Facebook’ within 30 days of agreeing to the updated terms of service and privacy policy. However, since the CCI had already held Whatsapp to be dominant, this argument should not have been accepted.

Taking heed of this this altered approach to data protection by competition regulators, the CCI may also initiate similar proceedings against dominant enterprises for violation of privacy in the future. Adopting such a progressive approach to competition law enforcement, in addition to alleviating the concerns of the citizens regarding the absence of a data protection law, can also enable the CCI to expand its scope to tackle new forms of anti-competitive behavior in the digital era.

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[01 Jan 2018]  [Anand Sree & Danish Khan]

In light of the recent recognition of Right to Privacy as a fundamental right in India, we dvelve upon the implications on the Competition Law regime in India


© 2018 Talking Competition. All rights reserved.Disclaimer-The thoughts and opinions mentioned in the present article are those of the author and may not necessarily reflect the views of the Talking Competition Team. The present opinion should not be construed as legal advice. For more information, please contact Danish Khan [danish@competitionlaw.co.in]. The present article is protected by Copyright Law(s).