M O OT C O URT E XE R CI S E

P R OB L E M

Neha Maria Antony || Semester X || 1448

Parties:

 Abracadabra Inc. (‘ABCD’) is a large multi-national company headquartered in New

Delhi, India. ABCD has steadily grown since its inception in 1999 to become one of
the leading tech companies of the world (often counted among the ‘Big Three’ of tech
companies) and has diversified their business interests over the years. ABCD is the
parent company for several notable tech based apps and products including the popular
social media applications ‘Fingerprint Eraser,’ ‘Scrolling Unlimited’ and ‘Slow Mind
Death.’ Collectively, these applications command a user base of almost 83% of the
internet using population of India.
 Dabra Abraca is a former employee of ABCD who was instrumental in ABCD’s rise to
the top but was later sidelined owing to certain internal politics. She later resigned in
2015 and is now focused on bringing public attention to issues such as cybercrimes,
data privacy etc.
 ‘BRIGHT & GLOW Skin Clinic’ established in 1985, is a major dermatological clinic
which is primarily concentrated in South India.
 ‘MAGIC MAKEOVER’ (‘MM’) is a small venture started by three college friends who
try to assist in the marketing and sale of niche beauty products, primarily through social
media.
 ‘BEAUTY WITHIN’ is a small collective of individuals who work on a broad range of
issues revolving around the beauty industry and tries to break the notions of ‘beauty
standards’ and discourages use of makeup and other such products.

ABCD’s entry into the cosmetics and skincare market in India

ABCD pursued aggressive strategies to branch out and establish inroads into sectors outside of
the tech domain. Such diversification was often done through the acquisition of companies in
different markets or by creation of subsidiaries which could operate therein. In 2021, ABCD
acquired ‘GLOW’ which was a rising player in the cosmetics and skincare market in India and
later acquired ‘BRIGHT,’ another such player in the same industry (collectively marketed
under the name ‘BRIGHT GLOW’) subsequently acquiring a substantial market share in the
relevant market therein. ABCD pursued strategies of not interfering in the business decisions
of these acquired companies or providing them overt assistance, financial or otherwise, as they
did not have much expertise in the said industry.

Data Privacy Concerns Raised by Dabra Abraca

ABCD soon began using data sourced from its social media applications to deliver targeted
advertisements and push their cosmetics and skin care products to their users. The
advertisements were displayed at an alarming frequency and were often targeted to the specific
concerns that users had which ABCD was able to pin-point with startling accuracy in light of
the vast amounts of consumer data they had access to. It is notable that ABCD had an internal
Data Protection Policy and that compliance reports were periodically submitted to the relevant
authorities which cited no misuse of customer data.

Dabra Abraca filed an information before the Competition Commission of India, citing the
irreparable harm that was being done to consumers by the gross misuse of their data by ABCD.
Further, Ms. Abraca alleged that using the dominant position in the social media sector to
influence their growth in the skincare and cosmetics industry was violative of the provisions
of the Competition Act, 2002, particularly section 4(2)(e) which speaks of use of dominant
position in one relevant market to enter into, or protect, other relevant market. ABCD had
countered this highlighting that they had not directly entered into the different markets and
only indirectly, which according to ABCD, fell outside the scope of the provision. Further, they
argued that their services in various markets were independent of each other and the ads were
displayed only based on search engine usage and not any other factor.

Abuse of Dominance Concerns raised by MM

Advertisement strategies employed by ABCD placed BRIGHT GLOW above other search
results, allowing them to be prioritised in rankings, given more visibility etc. Consequently, in
the last quarter of 2021, BRIGHT GLOW saw a jump in their market share, acquiring almost
60% of the market share. This period also saw several small players being pushed out of
business and being forced to shut down. Some of these businesses also included clients of MM
who had been working in the social media advertising for these players who had been affected
by BRIGHT GLOW’s growth.

MM therefore filed an information before the CCI alleging that ABCD had evidently abused
its dominant position violating section 4 of the Competition Act of 2002, especially section
4(2)(c) dealing with practices resulting in denial of market access. Notably, MM also
highlighted several documents and communications which revealed that post the introduction
of BRIGHT GLOW in the market, ABCD brought in a slew of measures including a steep hike
of in advertising costs for other skincare and cosmetics products.

While this is unconfirmed, MM, along with a collective of other like minded persons in the
field had done an open talk session, a social media campaign and invited beauty influencers to
speak against ABCD which caused ABCD to drop in terms of market value and large scale
bonfires where BRIGHT GLOW inventory was ransacked and burned.

Concerns Raised by BRIGHT & GLOW Skin Clinic

‘BRIGHT & GLOW Skin Clinic’ (‘B&G Skin Clinic’) had signed an advertising agreement
with ABCD in 2015 which would enable ads relating to B&G Skin Clinic and such other
advertising services as offered by ABCD in relation to its social media platforms. It has been
agreed in the agreement that all disputes would be settled by mediation. B&G Skin Clinic had
periodically renewed the contract as they were happy with ABCD’s ad services. However, post
the entry of BRIGHT GLOW into the market, any searches for B&G Skin Clinic on the social
media platforms, search engines, or associated applications owned by ABCD, would show
results only for BRIGHT GLOW. ABCD claims that their algorithm is what decides the same
and none of the said results were under their control. The agreement also had a clause absolving
ABCD from any liability arising from negative consequences in relation to their advertising
and search ranking algorithms. Further, the AlphabetPedia (the multilingual free online
encyclopedia written and maintained by ABCD which was used by nearly 93% of internet
users) page for B&G Skin Clinic was found altered to give prominence to BRIGHT GLOW.
Notably, any user with a free account can edit Alphabetpedia pages.

Aggrieved by the same, B&G Skin Clinic decided to approach the CCI in order to air its
grievances, along with pursuing alternate remedies for breach of contractual terms and acting
in bad faith.

Public Interest Concerns raised by Beauty Within

‘BEAUTY WITHIN’ is a small collective of individuals who believe that beauty comes from
within and that products marketed as make-up, skin care or cosmetics, were negatively affected
by the advertisement, marketing, and sale of products such as those put out by BRIGHT
GLOW. They filed an information before the CCI alleging that the dominant position of ABCD
was being misused to negatively impact consumers and called on the CCI’s mandate to protect
the interests of consumers as per the Preamble as well as section 18 of the Act. Among other
things, they highlighted the harmful chemicals used in BRIGHT GLOW products including
microplastics and the environmental impact caused by the manufacturing process and the
packaging etc which utilised large amounts of plastics. On the other hand, BRIGHT GLOW
counters these allegations stating that they use naturally sourced ingredients, and have detailed
sourcing guidelines which are published on the relevant websites. Further ABCD claims that
the products sold by BRIGHT GLOW were all aimed at skincare, and not makeup which would
allow consumers to improve the health of their skin and not push them to any negative
inferences as claimed by the Informants.

All these proceedings were clubbed together and sought to be heard on __________ by the
CCI.