The National Company Law Appellate Tribunal (NCLAT) stayed a five-year ban imposed by Competition Commission of India's (CCI) on data-sharing practices between WhatsApp and its parent Meta for advertising purposes.

What was the case about?

• In November, the CCI imposed a penalty of Rs 213.14 crore on social media major Meta for unfair business ways with respect to the WhatsApp privacy policy update done in 2021.

• The CCI directed Meta to cease and desist from anti-competitive practices.

• According to that CCI order, Meta and WhatsApp have also been asked to implement certain behavioural remedies within a defined timeline to address the anti-competition issues.

• The CCI directive imposed a ban on data sharing between WhatsApp and other Meta entities for advertising purposes, warning it may have to roll back some features.

• The regulator called for implementing various remedial measures, including barring WhatsApp from sharing data collected on its platform with other Meta companies or Meta company products for advertising purposes for five years.

• The CCI had concluded that WhatsApp’s 2021 privacy policy update unfairly compels users to agree to wide collection of data and its sharing within Meta group.

• Meta Platforms and WhatsApp had challenged this order before the NCLAT.

• The NCLAT stayed the Rs 213.14-crore penalty, subject to deposit of 50 per cent of the penalty amount (after taking into consideration 25 per cent already deposited), within two weeks.

• The tribunal observed that a ban of five years that was imposed may lead to the collapse of the business model which has been followed by messaging platform WhatsApp. It further noted that WhatsApp is providing its services to its users free of cost.

What is the NCLAT?

• The National Company Law Appellate Tribunal (NCLAT) was constituted under Section 410 of the Companies Act, 2013, for hearing appeals against the orders of National Company Law Tribunal (NCLT).

• It was established on June 1, 2016.

• It has two benches — one principal bench at New Delhi and the other in Chennai

• The NCLAT is the appellate tribunal for hearing appeals against the orders passed by NCLT(s) under Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC), with effect from December 1, 2016.

• The NCLAT is the appellate tribunal for hearing appeals against the orders passed by Insolvency and Bankruptcy Board of India under Section 202 and Section 211 of IBC.

• It is the appellate tribunal to hear and dispose of appeals against any direction issued or decision made or order passed by the Competition Commission of India, as per the amendment brought to Section 410 of the Companies Act, 2013, by Section 172 of the Finance Act, 2017, with effect from May 26, 2017.

• It is also the appellate tribunal to hear and dispose of appeals against the orders of the National Financial Reporting Authority.

Additional Read:

What is the role of Competition Commission of India (CCI)?

The Competition Commission of India (CCI) was established in October 2003 under the Competition Act, 2002 for the administration, implementation, and enforcement of the Act. The CCI became functional in March 2009.

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