In 2009, the Indian government implemented provisions under the Competition Act of 2002 for prohibition of anti-competitive agreements and abuse of dominant positions in India. [1] More recently, antitrust litigation has picked-up in India as the general public has become aware of various issues such as price fixing, cartel formation, tying arrangements and predatory pricing. [2]
On June 1, 2017, the Competition Commission of India (CCI) passed an order on a complaint between Fight for Transparency Society (Society) and WhatsApp Inc. (WhatsApp) alleging abuse of a dominant position by indulging in predatory pricing. In particular, Society alleged that WhatsApp had stopped charging any fees from its subscribers and that it implemented changes to their services agreement requiring users to share account details and other information with Facebook.
Predatory pricing is the practice of the sale of goods or the provision of services at a price which is below the cost of those goods or services, with a view to reduce competition or eliminate competitors.
For an enterprise to be considered to be abusing a dominant position, first it must be established that the enterprise is “dominant” in the relevant market in India. “Dominance” of an enterprise can be established if it enjoys a position of strength that enables it to operate independently of competitive forces prevailing in the relevant market, or enables it to affect its competitors or consumers or the relevant market in its favor. [3] In the present situation CCI determined that WhatsApp is installed on 96% of smartphone devices in India. Thus, the criterion for dominance has been achieved.
However, CCI also determined that there are several other communications apps in India such as Hike, Messanger and Viber which are available free of cost or at a very low price. CCI also concluded that there was a very low barrier to a subscriber choosing to switch to any of these alternative platforms.
CCI held that: 1) simply being dominant is not a contravention of the law. There must be a showing that the dominant position has been abused; and 2) merely offering a service for free does not constitute predatory pricing. Instead, consumer preferences and the practice of competitors have to be considered as part of the analysis.
[1] Section 4(1) of the Competition Act of 2002 prohibits an enterprise from abuse of its dominant position.
[2] Section 4(2) of the Competition Act of 2002, inter alia, provides that imposing unfair or discriminatory price in sale of services, including, predatory pricing, shall be considered as abuse of dominant position.
[3] Section 19(4) of the Competition Act of 2002.
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