Facebook Jio Deal : Analysing Competition Law Issues


On 23rd April 2020, Facebook announced the acquisition of 9.99 per cent stake in Jio Platforms by Jaadhu Holdings LLC, an indirectly wholly-owned subsidiary of Facebook. In the press release, Facebook mentioned that this deal aims to enhance the reach of JioMart, Jio’s e-commerce platform, to small businesses and kirana stores in every part of the country through Facebook-owned WhatsApp’s new feature WhatsApp pay, a new payment platform and this would also give a head start to the WhatsApp’s new feature and, it will become trouble-free for WhatsApp to increase its market share in the digital payment market. This deal will prove a win-win situation for both the enterprises and allow Facebook-owned WhatsApp to earn a significant market share in the digital payments market of the country.

This article will highlight whether the acquisition of stake by Facebook in Jio Platforms is contrary to any provisions of the Competition Act, 2002 and harming the effective competition in the country.


Section 4 of Competition Act, 2002 lays down provisions relating to abuse of dominance which clearly states that a dominant entity should not use its position of strength to cause harm to the competitors and consumers in the markets of the country. The Competition Act, 2002 in section 19(4) has laid down certain factors which help in determining whether an entity is dominant in a relevant market or not. Before determining whether the deal between Facebook and Jio Platforms can lead to the practice of abuse of dominance by the two entities, it is essential to know whether Facebook’s WhatsApp pay and Jio Platform’s JioMart are dominant in their relevant market or not.

Facebook’s WhatsApp and Jio Platforms being dominant entities in their relevant market are capable of using their position of strengths to harm their competitors and can even create entry barriers for new entrants in the market of the country. However, the dominance of WhatsApp and Jio Platforms are irrelevant in this deal as they operate in different markets as compared to WhatsApp Pay and JioMart respectively.

JioMart is an online grocery service which provides delivery services of grocery and essential items from nearby kirana stores of the country. JioMart currently operates in only three places of the country i.e. Navi Mumbai, Thane and Kalyan. The relevant market of JioMart seems to be an online grocery delivery service. It is pertinent to note that JioMart in this market has less than 5% market share and also is a new player in this market. It can affect neither the competition nor the competitors in the online grocery service market of the country. Hence, after analysing the factors mentioned in section 19(4) of the Competition Act, 2002, it can be concluded that JioMart is not a dominant player in its relevant market.

WhatsApp Pay is an e-commerce payment system started by WhatsApp which provides online payment facility to the customers. WhatsApp Pay has not got permission from the Indian government to start its services in the Indian online payment market. Even if, WhatsApp Pay gets permission to function in the country, it would be a new entrant in the market and does not have enough market share to become dominant in the market.

Hence, it can be concluded that both JioMart and WhatsApp Pay are not dominant in their relevant markets, thus, the question of abuse of dominance does not arise. Also, if we take the condition that WhatsApp Pay will be used by JioMart to promote its services, then also, both the entities are not dominant and the question of abuse of dominance does not arise.

According to Competition Act, 2002, if an entity is not dominant in its relevant market then it cannot cause abuse of dominance.

Hence, it can be concluded that the deal of Jio Platform and Facebook does not violate section 4 of the Competition Act, 2002.


Section 5 of the Competition Act, 2002 explains combination to determine to which combination, the act is applicable. This section has threshold limits for the combination and the combinations which exceed the threshold limit are required to follow the procedure mentioned in section 6 of the Competition Act, 2002. Section 6(1) of the act states that an enterprise or person should not enter into a combination if the combination causes Appreciable Adverse on Competition (AAEC). Section 6(2) of the act states that if an enterprise or person proposes to enter into the combination and exceeds the threshold limit then it need to notify about the combination to the CCI within 30 days of the trigger event. The CCI then look into the proposed combination and determine whether there can be AAEC or not.

The deal between Jio Platforms and Facebook exceeds the threshold limit mentioned in section 5 of the Competition Act, 2002 and hence, they are required to notify their combination under section 6(2) of the act to the CCI. The main question is whether the combination of Jio Platform and Facebook causes or likely to cause Appreciable Adverse Effect on competition or not. Section 20(4) of the Competition Act, 2002 lays down certain factors which help in determining whether the proposed combination of Jio Platform and Facebook causes or likely to cause AAEC in India or not.

The factors laid down in section 20(4) of the act describes and check whether there is a horizontal or vertical overlap because of the combination or not. A careful look on the deal of Jio Platforms and Facebook and the press release of Facebook shows that there cannot be a horizontal overlap as the aim of the deal is to enhance the business activities in different markets i.e. WhatsApp Pay and JioMart. However, there is a possibility in the near future that the other services of both the entities collude with each other and cause harm to the competition in the relevant markets.

Facebook and Jio Platforms has many services which operate at the same level of the market. The services include:

Market Jio Platforms Facebook Platforms
Social Media Jio Chat Facebook, Instagram
Digital Payment Jio Money What’s App Pay
Entertainment JioSaavn, Jio TV, JioCinema Facebook Watch
Ecommerce Marketplace Ajio, JioMart Facebook

CCI need to keep a check on the possible activities of the two entities to ensure that there is no horizontal overlap of services that will cause harm to the other competitors in the relevant markets.

It is quite obvious that the deal of Facebook and Jio Platforms has a vertical overlap as JioMart in order to extend its services to reach Kirana stores will be using the services of WhatsApp and WhatsApp Pay. Despite the fact that both the services of the respected entities are in its beginning phase, there is a probability that this collusion can deter the competition in the relevant market of JioMart and also has the capability of driving out the other competitors of the market. The agreement between the two entities can provide an unfair advantage over the other competitors.

Jio Platforms and Facebook have earlier also indulged in unfair practices and deter the competition in the market. Jio Platform in 2017 has used the concept of predatory pricing and Facebook has been indulged in using the data in an unfair manner. CCI need to carefully monitor the activities of Jio Platforms and Facebook and should refrain both the entities to use the combination in a manner that affect the competition, competitors and consumers.


The goal of Competition Act, 2002 is to ensure the free flow of trade and prevent the entities from deterring competition in the market. In the 21st century, the concept of consumer welfare cannot be left behind in any of the scenarios. The power of the CCI provided by the Competition Act, 2002 is limited to an extent. Indian Competition Law does not penalise attempt to become a dominant entity and this is the biggest drawback.

In the current deal, Facebook and Jio Platforms through its services WhatsApp Pay and JioMart respectively will attempt to become dominant in their relevant market by using unethical business practices. However, CCI cannot put an end to such practices due to lack of provisions in the Competition Act, 2002. The time for a change has arrived and the Indian Legislature should insert such provisions in the act in order to empower the CCI to regulate such unfair practices in the country.

This article has been written by Bhavya Kala, 2nd-year student at Rajiv Gandhi National University Of Law, Punjab.

Also Read – Competition Law – Abuse of Dominant Position

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