Better to buy than compete? - Business Guardian
Connect with us

Legally Speaking

Better to buy than compete?

Whether de-merger is the right solution or resorting to other remedies like compulsory licencing would be viable remains to be seen. However, in this process, one thing the authorities need to keep in mind is that the solution must cure the problem without compromising or disincentivising the innovation.




In the past 15 years, the social networking industry has certainly been one of the fastest-growing industries in the world. A recent study estimated that the global market for mobile social networking stood at 3.2 billion users in the year 2020 and is projected to reach a revised size of 4.9 billion users by 2027, growing at an annual growth rate of 6.5% over next seven years. The numbers depict how deeply personal social networking has penetrated our lives and hence the conduct of these booming service providers has also become more relevant than ever. Other than a host of data privacy concerns raised against these service providers, there have also been recent complaints of antitrust violations being flagged up against them.

Recently, two lawsuits have been filed by the US Federal Trade Commission (“FTC”) & governments of 48 US states and territories, accusing Facebook of eliminating competition by acquiring its competitors and resorting to anticompetitive trade practices. The lawsuit has once again brought the conduct and the present structure of the giant social media company under the scanner. Ian Conner, director of FTC’s Bureau of Competition, has remarked that “Facebook’s actions to entrench and maintain its monopoly deny consumers the benefits of competition. Our aim is to roll back Facebook’s anticompetitive conduct and restore competition so that innovation and free competition can thrive,” This complaint and the statement is particularly interesting as it suggests a significant shift in the United States’ antitrust policy. FTC, which generally follows a non-interventionist approach – unlike the CCI in India and the CMA in the UK, through this complaint seems to have heralded a new era where even the FTC wants to intervene and review the business practices in the digital world.

The FTC’s complaint also resembles very closely to the recent Competition and Markets Authority’s (“CMA”) report on Facebook. Both – the complaint and the report, highlights noteworthy anti-competitive practices adopted by Facebook.


Facebook, formed in February 2004, was one of the first personal social networks to gain significant popularity. In contrast to the limited functionalities of email and messaging, Facebook’s personal social network gained immediate popularity by providing a distinct and richer way for people to maintain personal connections. Generally, personal social networking providers e.g. Twitter, Facebook, Google+, have introduced a unique business model where on one side of the market – the social networking services, there is no monetory price for the services, but on the other side – the digital advertisement, the advertisers are charged heavily and are faced with take it or leave it situation. Facebook too monetizes its businesses by selling advertising that is displayed to users based on the personal data about their lives that Facebook collects. This business model has been highly profitable for Facebook, both in the market of social networking as well as in the display advertising. Advertisers pay billions – nearly $70 billion in 2019 – to display their “specific ads” to “specific audiences”, which is facilitated by Facebook using proprietary algorithms that analyse the vast quantity of user data it collects from its users.


FTC has filed a lawsuit before the District Court of Columbia alleging that Facebook has maintained its monopoly position by buying up companies that present competitive threats and by imposing restrictive policies that unjustifiably hinder actual or potential rivals that Facebook does not or cannot acquire. Facebook’s 2012 acquisition of Instagram for $1 billion and the 2014 acquisition of WhatsApp for $19 billion have been cited as attempts to illegally eliminate competition. Furthermore, the complaint highlights the exclusionary trade conditions imposed by Facebook on third-party applications for using its Application Programming Interfaces (APIs). The case has been filed under S. 2 of the Sherman Act, 15 U.S.C. §2, which the F.T.C imposes through S. 5 of the FTC Act. Section 2 of the Sherman Act penalizes companies for using anti-competitive means to acquire or maintain a monopoly. The suit has been petitioned for a permanent injunction to restrain Facebook from imposing anticompetitive conditions on access to APIs and data, along with a prayer for divestitures of assets, including Instagram and WhatsApp.


Under every antitrust regime, abuse of dominance investigation begins with defining the relevant market. The relevant market is essentially a tool to identify and define the boundaries of competition between firms. In the instant suit, the personal social networking service is defined as the relevant product market along with the United States as the relevant geographical market. Interestingly, an attempt has been made to define the relevant product market as narrowly as possible. Three key elements have been highlighted that make personal social networking services market distinct from the market for other forms of online services:

That the personal social networking services are built on a ‘social graph’ that maps the connections between users and their friends, family, and other personal connections. This social graph forms the foundation upon which users connect and communicate with their connections. Personal social networking providers use this social graph to inform what content they display to users in the shared social space and when.

That the personal social networking services include features that many users regularly employ to interact with personal connections and share their personal experiences in a shared social space, including in a one-tomany “broadcast” format.

That the personal social networking services include features that allow users to find and connect with other users, to make it easier for each user to build and expand their set of personal connections.

Further, the suit has specifically distinguished the market for personal social networking with; the market for specialized social networking services like LinkedIn as these services are designed for and are utilized by a narrow and specialized set of users primarily for sharing a narrow and highly specialized category of content;

the market for online video or audio consumptionfocused services such as YouTube, Spotify, Netflix as users employ these for passive consumption and posting of specific media content (e.g., videos or music) from and to a wide audience of often unknown users. These services are not used primarily to communicate with friends, family, and other personal connections.

the market for mobile messaging services as these do not feature a shared social space in which users can interact, and do not rely upon a social graph that supports users in making connections and sharing experiences with friends and family.


The second step in an ‘abuse of dominance’ investigation is to assess the market strength enjoyed by the enterprise. The strength of an enterprise is usually assessed through a variety of factors. The FTC’s complaint takes under consideration two important factors i.e. market share and entry barrier, to show that Facebook holds a dominant position in the relevant market. The suit alleges that Facebook has maintained a dominant share of more than 60% in the U.S. personal social networking market since the time of establishment, until the present day.

The suit also alleges that Facebook’s dominant position in the U.S. personal social networking market is resilient, due to significant entry barriers, like direct network effects and high switching costs. A strong network effect is a significant entry barrier because the personal social network is generally more valuable to a user when more of that user’s friends and family are already members, and hence a new entrant faces significant difficulties in attracting a sufficient user base to compete with Facebook. Therefore, even an entrant with a “better” product often cannot succeed against the overwhelming network effects enjoyed by a dominant personal social network.

Another significant entry barrier is in form of high switching costs, which means that the users are reluctant to shift to a new service provider because they have already built connections and develop a history of posts and shared experiences, which they would lose by switching to another personal social networking provider. Thus, significant entry barriers in the market facilitate Facebook’s continuing dominance.


FTC has accused Facebook of using its dominance and strength to deter, suppress and neutralise competition by either acquiring its competitors or by imposing anticompetitive conditions that automatically drive its competitors out of the market.

FTC has alleged that due to the strong network effect existing in the digital market, a competing product can only become relevant at moments of social transition, for instance, with the advent of smartphones, there was a significant transition in personal social networking because smartphones were portable and offered integrated digital cameras, making social networking with family and friends through taking, sharing, and commenting on photographs via a mobile app optimized for that activity increasingly popular. However, Facebook was struggling to provide a strong user experience for this kind of personal social activity. It was built and optimized for desktop use, not smartphones, and its performance with sharing photos on mobile devices was weak. Facebook feared that its personal social networking monopoly would be toppled by a mobilefirst, photo-based competitor emerging and gaining traction. It was soon clear that Instagram was just that competitor and thus Facebook decided to buy than to compete. In sum, Facebook’s acquisition and control of Instagram represent the neutralization of a significant threat to Facebook Blue’s personal social networking monopoly and the unlawful maintenance of that monopoly by means other than merits competition.

Similarly, FTC’s complaint throws light on another social transition that started around 2010 in consequence of the increased popularity of smartphones. Consumers shifted from using traditional shortmessage-service (“SMS”) to using text messaging via the internet through overthe-top mobile messaging apps (“OTT Mobile Messaging Services”). At that time, Whatsapp was emerging as an increasingly popular OTT mobile messaging app. As a result, Whatsapp posed a threat to make a move into the personal social networking market. Facebook’s leadership feared that Whatsapp would serve as a path for a serious competitive threat to enter the personal social networking market as a mobile messaging app as it had reached sufficient scale and just by adding additional features and functionalities, it could enter the personal social networking market at competitive scale and undermine or displace Facebook’s social networking monopoly. Therefore, Facebook neutralized yet another threat by acquiring Whatsapp.

This conduct of Facebook deprived users of the benefits of competition from an independent Instagram or Whatsapp, which had the potential to penetrate the U.S personal social networking market. Moreover, Whatsapp’s strong focus on the protection of user privacy and Instagram’s unique functionality could have provided an important form of product differentiation for them to be an independent competitive threat in personal social networking.

The third aspect of the FTC’s complaint stresses on the imposition of unfair trade conditions by Facebook on access to its valuable platform interconnections – APIs, that it makes available to third-party software applications. To communicate with Facebook ((i.e., send data to Facebook, or retrieve data from Facebook) third-party apps must use Facebook APIs. FTC has alleged that for many years, Facebook has made key APIs available to third-party apps only on the condition that they refrain from providing the same core functions that Facebook offers, including Facebook Blue and Facebook Messenger, and also refrain from connecting with or promoting other social networks. These conditions have helped Facebook maintain its monopoly in personal social networking, in two ways:

First, these restrictive conditions have deterred thirdparty apps that relied upon the Facebook ecosystem, from including features and functionalities that might compete with Facebook or from engaging with other firms that compete with Facebook. This deterrence, according to FTC, suppresses the emergence of threats to Facebook’s personal social networking monopoly.

Second, the enforcement of these conditions by terminating access to valuable APIs hinders and prevents promising apps from evolving into competitors that could threaten Facebook’s personal social networking monopoly.


Facebook has responded to these charges in an extensive post calling these lawsuits as revisionist history. Facebook’s defence can be divided into two parts:

On the acquisition of Instagram and Whatsapp, Facebook primarily contends that the FTC which had itself approved the mergers years ago, cannot now retroactively kill those mergers. Moreover, Facebook has pressed on the defence of ‘consumer benefit’. It argues that both the acquisitions have resulted in better products for consumers. Since the merger, Instagram has grown over a billion users worldwide due to improved features and better experiences. Meanwhile, Facebook has enabled Instagram to help millions of businesses engage their customers and grow. Similarly, Facebook made WhatsApp free worldwide, adding valuable new features like voice and video calling, and making it more secure by encrypting it end-to-end.

On the accusation about the imposition of anti-competitive conditions, Facebook maintains that it had created this platform for innovation on which millions of developers have created new apps, but there are certain thirdparty apps which unfairly duplicate services already being provided by Facebook. The objective behind the imposition of such conditions is to only avoid the use of Facebook’s platform to essentially replicate Facebook. Moreover, these restrictions are standard in the industry, where platforms give restricted access to other developers, while many do not provide access at all, but all of this is only to prevent duplication of core functions.


The FTC’s lawsuit has attracted a lot of academic discussion on powers of antitrust authorities globally to kill mergers retroactively, which they once approved. Under the US Antitrust regime, the Hart-Scott-Rodino Act provides a mechanism for agency review of and preconsummation challenges to reported mergers through a challenge under S. 7 of the Clayton Act. Moreover, nothing in the statute prohibits the agencies from challenging a reported merger at some later stage, including after merger review, merger clearance, and merger consummation. In fact, Section 7(A)(i) of the Hart-Scott-Rodino Act states that any action under this section shall not bar any proceeding or any action with respect to such acquisition at any time under any other section of this Act or any other provision of law. Thus, by the express terms of Section 7(A)(i), the fact that the agencies reviewed and cleared a reported merger does not preclude the agencies from challenging the transaction at a later date.

This problem is more complex under the Indian competition regime as there is nothing like Section 7(A)(i) under the Indian Competition Act. Moreover, under the Indian merger control regime, the transaction which meet the jurisdictional threshold provided under Section 5 constitues a combination and requires the approval of the CCI, while the trasnations which do not neet the threshold limits of S. do not require prior approval. The Indian problem can be analysed in three parts; first, whether the CCI can hear an ex-post challenge to a previously approved combination; second, whether the CCI can hear an ex-post challenge to an unnotified transaction; and third, whether the CCI has the power to grant a structural remedy in terms of causing the breakup of the merged firm or divestiture of the assets of the enterprise. In cases of previously approved mergers, the statute gives a categorical power to the CCI to conduct an expost review of such a merger. Under S. 20(1), Commission can inquire into whether a notified combination under S. 5 has caused or is likely to cause an appreciable adverse effect on competition in India. However, the proviso restricts such review only up to one year of consummation. The question then arises is whether the commission can hear an ex-post challenge after a year of consummation? The answer may lie in S. 3(1) of the Act since the provision specifically includes an acquisition agreement. Therefore, even after a year of consummation, nothing precludes the CCI from conducting an ex-post facto analysis of the acquisition agreement under Section 3. Needless to say, it has to be shown that such trasncation has caused AAEC in the marketSimilarly, for unnotified mergers, since no provision restricts an ex-post review, the CCI has valid powers under S. 3(1) to check the anti-competitive effect of such agreement at any point of time. In India, the problem with the FacebookInstagram-Whatsapp acquisition was that it was never notified as it didn’t fall under the threshold limit and therefore the commission couldn’t even conduct an ex-ante review. However, looking at the wide powers under S. 3(1), the commission today may certainly look at the acquisition agreements in light of the factors under S. 19(3) and pass necessary orders.

On the question of powers of the commission to break up the enterprises, S. 27 and S. 28 of the Indian Competition Act gives the commission vide enforcement powers to remedy the distorted competition in the market. S. 28 empowers the commission to direct division of an enterprise enjoying a dominant position to ensure that such an enterprise doesn’t abuse its dominant position. Moreover, S. 27(g) empowers the commission to pass any order or issue any direction to remedy the abuse of dominance. Thus, by using these unequivocal powers given to it by the statute, CCI can impose structural remedies on already consummated mergers, causing the breakup of the merged firm or divestiture of some of the acquired assets.


It is one thing to see if the antitrust authorities theoretically possess the power to divest assets of a firm, and totally another thing to see if the antitrust authorities would use such power to demerge an enterprise. Despite the antitrust authorities’ ability to challenge reviewed and cleared mergers after the fact and the pro-competitive benefits of such ex-post challenges, the cases of such demergers are extremely rare. That’s the reason why the Competition and Markets Authority (“CMA”), even after finding tech giants abusing their dominance, didn’t take the responsibility of breaking them up. Technical experts have also vehemently argued against breaking up these tech giants as demergers might be counter-productive. Facebook has spent years integrating Instagram and WhatsApp: weaving their ad systems, user profiles, databases and other technology with Facebook. What to the public appear as distinct products are one giant social network on the back end. Therefore, the problem might not be solved only at the grant of prayer for demerger, the Courts would have to play a pivotal role in facilitating such de-merger, keeping in mind the importance of the tech-giant for the US economy. A famous line by an economist is worth keeping in mind, “it is dangerous to apply twentiethcentury economic intuitions to twenty-first-century economic problems”. Whether de-merger is the right solution or resorting to other remedies like compulsory licencing would be viable remains to be seen. However, in this process, one thing the authorities need to keep in mind is that the solution must cure the problem without compromising or disincentivising the innovation. It would be interesting to see how the court goes about developing the remedy package if it holds Facebook abusive of its dominant position.

The Daily Guardian is now on Telegram. Click here to join our channel (@thedailyguardian) and stay updated with the latest headlines.

For the latest news Download The Daily Guardian App.

Legally Speaking

Supreme Court holds off on decision in Baba Ramdev contempt case



The Supreme Court has deferred its decision on a contempt notice issued against yoga guru Ramdev, his associate Balkrishna, and their company Patanjali Ayurved in connection with a case involving misleading advertisements. The bench, comprising Justices Hima Kohli and Ahsanuddin Amanullah, stated, “Orders on the contempt notice issued to respondents 5 to 7 (Patanjali Ayurved Ltd, Balkrishna, and Ramdev) are reserved.” The Uttarakhand State Licensing Authority (SLA) informed the court that manufacturing licenses for 14 products of Patanjali Ayurved Ltd and Divya Pharmacy have been suspended immediately. The Supreme Court noted that the counsel representing the firm had requested time to submit an affidavit detailing the actions taken to retract the advertisements of Patanjali products and to recall the medicines.

Highlighting the importance of public awareness and responsible influence, the court emphasized that Baba Ramdev wields significant influence and should employ it responsibly. It awaits an affidavit from Patanjali outlining the measures implemented to withdraw the existing misleading advertisements of the company’s products, with instructions for submission within three weeks.

During the proceedings, Indian Medical Association (IMA) President R V Asokan extended an unconditional apology to the bench for remarks made against the top court in a recent interview with news agency PTI. Justice Kohli conveyed to Asokan that public figures cannot criticize the court in media interviews. However, the court indicated its disinclination to accept the apology affidavit submitted by the IMA president at present. In an earlier hearing on May 7, the apex court had denounced Asokan’s statements as “very, very unacceptable.” The court reiterated its stance that celebrities and social media influencers are equally liable for the products they endorse, warning that if such products are found to be misleading, they could face repercussions.

The case stems from a plea filed in 2022 by the IMA alleging a smear campaign by Patanjali against the Covid-19 vaccination drive and modern medical systems. As the legal proceedings unfold, the Supreme Court continues to emphasize the importance of accountability and responsible conduct in advertising and public discourse. The case underscores the need for stringent regulations to curb misleading advertisements and ensure consumer protection. With the demand for transparency and ethical practices on the rise, the judiciary plays a pivotal role in upholding standards of integrity in commercial communications.

As the court awaits the submission of the affidavit from Patanjali, stakeholders across industries are keenly observing the developments, anticipating their implications on advertising practices and regulatory enforcement in the country.

Continue Reading


Australia fights Musk’s platform over control of online content



In a courtroom battle that underscores the complex interplay between global tech giants and national regulatory frameworks, Elon Musk’s X, formerly known as Twitter, finds itself at odds with Australian law over the removal of graphic content depicting a terrorist attack.

At the heart of the dispute lies a fundamental question: to what extent should a platform like X be compelled to adhere to the laws of a specific country when it comes to content moderation? The legal showdown commenced as the eSafety Commissioner of Australia sought the removal of 65 posts showcasing a harrowing video of an Assyrian Christian bishop being stabbed during a sermon in Sydney, classified as a terrorist incident by authorities.

Tim Begbie, representing the cyber regulator, argued that while X has policies in place to remove harmful content, it cannot claim unilateral authority to decide what is acceptable under Australian law. He contended that X’s resistance to globally removing the posts challenges the notion of reasonableness within the scope of Australia’s Online Safety Act.

X’s stance, guided by its mission to uphold free speech, underscores a broader philosophical debate surrounding the jurisdictional reach of national laws in the digital realm. The company maintains that while it has blocked access to the posts for Australian users, it refuses to implement global removal, asserting that the internet should not be governed by the laws of a single nation.

However, Begbie argued that geo-blocking, the solution proposed by X, is ineffective due to the widespread use of virtual private networks (VPNs) by a significant portion of the Australian population.

Amidst the legal wrangling, X’s lawyer, Bret Walker, contended that the company had taken reasonable steps to comply with Australian laws while balancing the principles of free expression. He emphasized the importance of allowing global access to newsworthy content, cautioning against the suppression of information on a global scale. The implications of such an approach, he argued, extend beyond Australia’s borders, potentially setting a precedent for censorship on a global scale.

As the case unfolds in the Federal Court, Judge Geoffrey Kennett has issued a temporary takedown order for the posts, extending it until June 10 pending a final decision. The outcome of this legal battle is poised to have far-reaching implications, not only for the regulation of online content in Australia but also for the broader discourse surrounding internet governance and free speech in the digital age.

Beyond the legal arguments, the case underscores the evolving dynamics between tech platforms and regulatory authorities, highlighting the challenges of reconciling competing interests in an increasingly interconnected world. With the proliferation of digital platforms and the rise of social media, questions surrounding content moderation, censorship, and the balance between freedom of expression and societal harm have come to the forefront of public discourse.

In the digital era, where information knows no borders and online platforms wield immense influence over public discourse, the case of X versus Australian law serves as a microcosm of the broader tensions between technology, governance, and individual rights. As societies grapple with the complexities of the digital age, the need for robust legal frameworks, ethical guidelines, and international cooperation becomes ever more apparent.

As the legal battle between X and Australian authorities unfolds, it underscores the intricate relationship between technology, law, and societal norms in the digital age. At stake is not just the removal of graphic content depicting a heinous act but also the broader principles of free speech, censorship, and the jurisdictional reach of national regulations in a globalized world.

The outcome of this case carries significant implications for the future of online content moderation and regulation. On one hand, proponents of free speech argue that platforms like X should have the autonomy to determine their content policies without being unduly influenced by the laws of individual countries. They contend that a global approach to content moderation ensures consistency and prevents the fragmentation of the internet along national lines.

On the other hand, proponents of regulation argue that national laws play a crucial role in safeguarding citizens from harmful content and upholding community standards. They assert that while platforms may operate globally, they must abide by the laws of the countries in which they operate, particularly when it comes to content that poses a threat to public safety or incites violence.

Amidst these competing interests, the case highlights the need for a nuanced approach to content moderation that balances the principles of free speech with the protection of users from harm. It also underscores the importance of international cooperation and dialogue in addressing cross-border challenges in the digital realm.

Beyond the legal realm, the case has broader implications for the future of internet governance and the regulation of online platforms. As technology continues to evolve at a rapid pace, policymakers around the world face the daunting task of crafting regulations that are effective, enforceable, and adaptable to the ever-changing digital landscape.

Moreover, the case raises important questions about the role of tech companies in shaping public discourse and influencing democratic processes. With social media platforms serving as key channels for information dissemination and political engagement, the decisions made by companies like X have far-reaching consequences for the functioning of democratic societies.

Ultimately, the resolution of this case will have significant implications not only for X and its users but also for the broader digital ecosystem. It will shape the future trajectory of online content moderation, influence regulatory approaches to technology platforms, and set precedents for how governments and tech companies interact in the digital age.

As the legal proceedings continue, stakeholders from across sectors will closely monitor developments, recognizing that the outcome of this case has the potential to reshape the digital landscape for years to come. Whether it leads to greater clarity in content moderation policies, a re-evaluation of regulatory frameworks, or a deeper understanding of the complexities of governing the internet, the case of X versus Australian law represents a pivotal moment in the ongoing debate over the future of online governance and free speech in the digital age.

Continue Reading

Legally Speaking

Supreme Court Framed Issues To Consider, Hearing In July 2024: Challenge To Surrogacy Law



SC seeks Centre’s reply on fresh pleas against CAA

The Supreme Court in the case Arun Muthuvel v. Union of India has elucidated the issues it will consider in a batch of petitions challenging provisions of the Surrogacy Regulation Act, 2021 and the Surrogacy Regulation Rules, 2022. The bench comprising of Justice BV Nagarathna and Justice AG Masih passed the order recording the following issues:

  1. Whether the prohibition of commercial surrogacy as stated under Section 4(ii)(b) and Section 4(ii)(c) of the Surrogacy (Regulation) Act, 2021 is constitutional?
  2. Whether the right of a couple to avail surrogacy being restricted to married couples between the age of 23 to 50 years and in case of female and between 26 to 55 years in case of male as it is being provided as stated under Section 4(iii)(c)(I) read with Section 2(1)(h) of the Surrogacy (Regulation) Act, is constitutional?
  3. Whether the right of a single woman to avail surrogacy being restricted to only widows or divorcees between the ages of 35 to 45 years as it is provided being under Section 2(1)(s) of the Surrogacy, the Regulation Act 2021, is constitutional?
  4. Whether the right of an intending couple to avail surrogacy being restricted to only those couples who do not have a surviving child as provided as stated under Section 4(iii)(c)(II) of the Surrogacy (Regulation) Act 2021, is constitutional?
  5. Whether individuals who initiated the process of availing surrogacy which being prior to the enactment of the Surrogacy, the Regulation Act, 2021 have any right to avail surrogacy in a manner which being beyond the scope of the Surrogacy (Regulation) Act, 2021, save for cases falling within the ambit of Section 53 of the Act?

The petitioner in the plea highlighted an additional issue which relates to exclusion of single men from the purview of Surrogacy Regulation Act.

Therefore, the lead petition in the matter has been filed by an infertility specialist from Chennai, Dr. Arun Muthuvel, through Advocate Mohini Priya and Advocate Ameyavikrama Thanvi.

Therefore, while highlighting various contradictions in the Surrogacy Regulation Act and the Assisted Reproductive Technology (Regulation) Act, 2021, thus, the petitioner in the plea points out that the twin legislations inaugurated a legal regime that was discriminatory and was violative of the constitutional rights of privacy and reproductive autonomy.

The Supreme Court in the case observed and has agreed to hear the petition wherein it challenges against the two Acts. In September last year, several other petitions and applications were filed wherein similar questions were raised, such as whether it was constitutional to exclude unmarried women from the ambit of the Surrogacy Act, or whether limiting the number of donations made by an oocyte donor under the ART Act would amount to unscientific and irrational restrictions.

The bench in the case observed and has expressed reservations about hearing the challenges to both the Acts simultaneously, as the linkage between the provisions of the two Acts could not be ascertained in the present matter. Further, the said court decided that issues wrt the Surrogacy Regulation Act will be heard first, followed by those which relate to the ART Act.

The court asked the parties to file written submissions on the foregoing issues. It has also been clarified by the said court that the petitioners need not restrict their submissions to the issues recorded by the court. Any ‘related’ issue may also be raised during the proceedings.

Accordingly, the court listed the matter for further consideration on July 30, 2024.

Continue Reading

Legally Speaking

SC ruling on spectrum allocation doesn’t affect satellites



SC seeks Centre’s reply on fresh pleas against CAA

The Supreme Court’s decision to reject the government’s application seeking clarification on administrative allocation of spectrum for non-mobile services is not expected to impact the allocation of satellite spectrum as outlined in the Telecom Bill, according to highly placed sources. In February 2012, the Supreme Court had upheld that auctions were the preferred method for allocating scarce public resources like telecom spectrum.

The Centre had filed a miscellaneous application in December last year seeking a clarification on the matter of administrative allocation of spectrum, which was mentioned in court last week. However, the SC registrar refused to accept the plea, arguing that it was seeking a review of the 2012 order and that there was no ‘reasonable cause’ to entertain it.

Government sources emphasized that this decision would not change the existing laws governing spectrum allocations for satellite communications, as clearly stated in the Telecom Bill. Sources clarified that the application did not seek to amend the 2012 judgment on 2G spectrum allotment nor did it seek permission for administratively allocating spectrum. Spectrum will continue to be auctioned for mobile services, while for the 19 specific use cases cited in the Telecom Bill, it will be allocated administratively.

The government had filed the miscellaneous application at the Supreme Court to explain its intentions before tabling the bill in Parliament, emphasizing that it was not seeking any permission from the court. The application aimed to seek appropriate clarifications from the court regarding the CPIL judgment in 2012, to establish a spectrum assignment framework that includes methods of assignment other than auction in suitable cases, to best serve the common good. In 2012, the SC had criticized the ‘first-come, first served’ method for spectrum allocation, known as the CPIL judgment, and had quashed the 2G spectrum allotted by the United Progressive Alliance government.

Since then, the government has been issuing spectrum administratively in certain cases where auctions are not technically or economically preferred or optimal. The Telecom Bill’s First Schedule lists satellite spectrum and 18 other sectors where administrative allocations will be compulsory, including law enforcement, public broadcasting, in-flight and maritime connectivity, the Indian Army and Coast Guard, and radio backhaul for telecom services. Government sources noted that all stakeholders were consulted on the issue, and the government was confident of its legal standing as outlined in the Telecommunications Act.

The SC, in a presidential reference, did not specify that all spectrum should be auctioned, only that for mobile services. The Supreme Court’s decision not to accept the government’s application seeking clarification on spectrum allocation for non-mobile services does not alter the framework outlined in the Telecom Bill. While auctions remain the preferred method for mobile services, administrative allocations will continue for specific use cases, including satellite spectrum, as delineated in the bill.

The rejection of the application underscores the importance of adherence to established legal procedures and the judiciary’s role in upholding regulatory frameworks. Moving forward, the government remains committed to transparent and efficient spectrum allocation, balancing the imperatives of economic efficiency and public interest in the telecommunications sector.

Continue Reading

Legally Speaking

Legal Victory for Ankiti Bose: Limits Imposed on Defamatory Content Regarding Former Zilingo Chief



A legal dispute has unfolded involving B2B fashion startup Zilingo, with former CEO Ankiti Bose on one side, and co-founder Dhruv Kapoor and former COO Aadi Vaidya on the opposing side.

A recent court decision in Delhi has brought focus to a legal dispute involving Ankiti Bose, the former CEO of Zilingo, a prominent technology platform. The court issued an ex parte order in Bose’s favor, instructing certain parties, including Zilingo co-founder Dhruv Kapoor and former COO Aadi Vaidya, to refrain from making defamatory statements against Bose. This decision underscores the importance of protecting reputational rights against unfair reporting.

The court’s ruling cited a prima facie case in Bose’s favor, acknowledging her legal right to safeguard her reputation from damaging remarks. It emphasized that failure to act promptly could lead to irreparable harm to Bose’s reputation. The order specifically bars Kapoor and Vaidya from making any further defamatory postings against the former CEO.

This legal action stems from a broader conflict within Zilingo, a B2B fashion startup that has faced financial struggles since its inception in 2015. Bose’s departure from the company was contentious, marked by allegations of misconduct and underperformance. She subsequently filed a First Information Report (FIR) accusing Kapoor and Vaidya of sexual harassment and business irregularities. In response, the accused have dismissed these claims as retaliatory, asserting that Bose’s actions were prompted by her dismissal from the company.

The litigation highlights the complexities of corporate disputes and the broader implications for individuals and businesses. Beyond the legalities, it reflects the challenges faced by startups navigating internal strife amidst financial difficulties. Zilingo’s trajectory, from inception to liquidation, encapsulates the turbulent landscape of the tech industry and underscores the importance of legal protections for individuals like Bose seeking to safeguard their professional standing amidst controversy. The court’s intervention serves as a reminder of the gravity of reputational issues in the modern corporate environment, particularly amidst the complexities of startup dynamics and leadership disputes.

Continue Reading

Legally Speaking

Supreme Court In Patanjali Case: Concerned With All FMCG/Drugs Companies Affecting Lives Of Children And Elderly Through Misleading Ads



The Supreme Court in the case Indian Medical Association v. Union Of India observed and has clarified against Patanjali over publication of misleading advertisements that it was not dealing with Patanjali as a standalone entity; rather, the Court’s concern, in public interest, extended to all those Fast Moving Consumer Goods, FMCGs or drugs companies which take consumers of their products for a ride through misleading advertisements. The bench comprising of Justice Hima Kohli and Justice Ahsanuddin Amanullah in its order stated that, this court must clarify that we are not here to gun for a particular party, or a particular agency or a particular authority.

This being the absolute Public Interest Litigation, PIL since it is in the larger interest of the consumers, the public to know which way they are going and how and why they can be misled and how […] is acting to prevent that misuse. Thus, at the end, this is also as we said a part of the process of rule of law. If that is violated, then it affects […].

The court in the case observed that the implementation of laws regulating misleading ads in relation to medicines require deeper examination, as the products are used for babies, school going children and senior citizens based on the ads: Further, the court stated that this court is of the opinion that the issue which relates to implementation of the relevant provisions of the Drugs and Magic Remedies Act and the Rules, the Drugs and Cosmetic Act and the Rules, and the Consumers Act and the relevant Rules needs closer examination in the light of the grievances raised by the petitioner…not just limited to the respondents before this court but to all similarly situated or placed FMCGs who have […] misleading advertisements, and taking the public for a ride…affecting the health of babies, school going children and senior citizens who have been consuming products on the basis of the said misrepresentation.

The court while taking into account the misleading ads issued in electronic media impleaded the Ministry of Information and Broadcasting, Ministry of Information Technology, and Ministry of Consumer Affairs. Therefore, the same was being done with a view to examine the steps taken by these Ministries to prevent abuse of Drugs and Magic Remedies (Objectionable Advertisements) Act 1954 (and the Rules), the Drugs and Cosmetic Act 1940 (and Rules) and the Consumer Protection Act. Accordingly, the court listed the matter for further consideration on May 07, 2024.

Background Of The Case:

The Court raps Uttarakhand authorities The said court also came down heavily on the State of Uttarakhand for the failure of its licensing authorities to take legal action against Patanjali and its subsidiary Divya Pharmacy. The bench also asked why it should not think that the authorities were ‘hand in glove’ with Patanjali or Divya Pharmacy.

The court in its order stated that it was ‘appalled’ to note that apart from ‘pushing the file’, the State Licensing Authorities did nothing and were merely trying to ‘pass on the buck’ to ‘somehow delay the matter.’ The court stated that the State Licensing Authority is “equally complicit” due to its inaction against Divya Pharmacy despite having information about t heir advertisements violating the Drugs and Magic Remedies (Objectionable Advertisements) Act.

Further, the court stated that it was refraining from issuing contempt notices to other officers. Further, the court directed that all officers holding the post of Joint Director of the State Licensing Authority, Haridwar between 2018 till date shall also file affidavits explaining inaction on their part.

Background of the Case:

The contempt case was initiated wherein the petition is filed by the Indian Medical Association against Patanjali’s advertisements attacking allopathy and making claims about curing certain diseases. On the Supreme Court reprimand, the Patanjali on last November had assured that it would refrain from such advertisements. The court in the case noted that the misleading advertisements continued, thus, the Court had issued contempt notice to Patanjali and its MD in February.

The court in march considering that reply to the contempt notice was not filed, the personal appearance of the Patanjali MD as well as Baba Ramdev, who featured in the press conferences and advertisements published after the undertaking, was ordered by the said Court. Therefore, the Patanjali MD filed an affidavit wherein it is stated that the impugned advertisements were meant to contain only general statements but inadvertently included offending sentences. Further, the court stated that the advertisements were bona-fide and that Patanjali’s media personnel was not ‘cognizant’ of the November order (wherein the undertaking was given before the Supreme Court).

The affidavit filed also contained an averment that the Drugs and Magic Remedies Act was in an “archaic state” as it was enacted at a time when scientific evidence regarding Ayurvedic medicines was lacking. On the last date of hearing, both Baba Ramdev and MD Balkrishna were physically present in Court. The court expressed its reservations about MD Balkrishna’s affidavit, calling it “perfunctory” and “mere lip service”. The court gave last opportunity to the alleged contemnors for filing a proper affidavit.

Continue Reading