Brief Summary

Competition Law — Interim relief — Application for interim relief under section 49C of the Competition Act — Applicants sought to prevent respondents from off-boarding them from WhatsApp's business messaging platform pending investigation by the Competition Commission — Applicants alleged anti-competitive conduct by respondents, asserting that they were competitors in the market for government messaging services — Respondents contended that they were enforcing contractual terms and denied any anti-competitive behavior — Tribunal found that applicants established a prima facie case of a prohibited practice, warranting the granting of interim relief to prevent irreparable harm while the investigation is ongoing.

Comprehensive Summary

Summary of Judgment

1. Introduction

This was an interim relief application determined by the Competition Tribunal of South Africa under section 49C of the Competition Act 89 of 1998. The applicants, GovChat Proprietary Limited and Hashtag Letstalk Proprietary Limited, sought urgent temporary protection pending the outcome of a complaint lodged with the Competition Commission. The respondents were Facebook Inc., WhatsApp Inc., and Facebook South Africa Proprietary Limited.

The application arose from the respondents’ stated intention to “off-board” the applicants from the WhatsApp paid business messaging platform / WhatsApp Business API, which would prevent the applicants from continuing to provide certain messaging services over WhatsApp. The applicants asked for an order preventing off-boarding either pending the Commission’s determination of the complaint or for six months, whichever occurred first.

The matter had notable procedural features. It was initially enrolled before proof of a Commission complaint had been provided, and it proceeded under an interdict number until the complaint was lodged and the interim relief case number (IR165Nov20) was allocated. A joinder application resulted in Facebook South Africa (Pty) Ltd being joined. The Tribunal recorded that certain procedural and jurisdictional objections raised by the respondents were largely resolved before or at the hearing, and it did not address them in detail in the reasons.

The dispute concerned the application of competition law to the respondents’ enforcement of WhatsApp’s business rules and the alleged use of those rules to exclude the applicants from markets in which they operated or planned to expand, particularly in the context of government messaging services during the Covid-19 pandemic.

2. Material Facts

It was undisputed that the applicants’ use case had been integrated on the WhatsApp platform through an arrangement involving InfoBip Africa (Pty) Ltd, an authorised WhatsApp Business Service Provider (BSP), and that the respondents sought to off-board the applicants from the WhatsApp Business API. It was also not disputed that the applicants provided messaging-related services to government departments, including at the time of the hearing services connected to the Covid-19 response, such as public information and functionality linked to symptom tracking/testing and social relief of distress grant applications.

The applicants’ business model involved providing messaging services across multiple channels, including SMS, USSD, and WhatsApp, and using a WhatsApp Business Account (WABA) to provide services to multiple government departments. The applicants alleged that the respondents demanded that the applicants cease servicing multiple departments through a single WABA and instead required each government client to obtain its own WABA. The applicants characterised the respondents’ conduct as an “open first-close later” strategy, involving initial access and later removal once the third party became an actual or potential competitive threat.

The respondents characterised the matter primarily as one of enforcing contractual terms governing the WhatsApp Business API, including limitations on redistribution of WhatsApp services and additional requirements where government entities were involved. The respondents alleged that the applicants had flouted these requirements, including by creating the impression of official status, collecting sensitive personal information, and servicing multiple government departments through one WABA, with inadequate visibility for WhatsApp as to the relevant government entities. The respondents also alleged that the applicants had previously been rejected and had bypassed requirements through the use of GovChat’s wholly owned subsidiary, #LetsTalk.

Certain facts were disputed, and the Tribunal indicated that they could not be resolved without further investigation by the Commission. These disputes related to two periods. The first concerned GovChat’s earlier interaction via Praekelt Consulting (Pty) Ltd and the respondents’ claim that GovChat’s access had been part of a government programme put “on ice,” leading to rejection and removal, versus the applicants’ claim that their use case had been understood as approved and not merely test-based. The second concerned the InfoBip period, where the respondents alleged that #LetsTalk had misled InfoBip and concealed links between #LetsTalk and GovChat, whereas the applicants relied on the InfoBip agreement and surrounding circumstances to contend they reasonably understood their use case to be permitted.

The Tribunal placed weight on material indicating that InfoBip appeared to have been aware that the applicants were involved in government-facing Covid-19 projects, and it noted the absence of supporting evidence from InfoBip explaining why it contracted on terms that contemplated third-party clients. The Tribunal concluded that, while the underlying factual disputes required investigation, it was clear that the applicants believed, with at least some objective basis, that their arrangement with InfoBip entitled them to operate as they had been doing.

The applicants also relied on instances of alleged selective enforcement of WhatsApp’s rules. They referred to examples involving other entities and projects providing government-related services via WhatsApp, including Praekelt-related services, and other implementations that, on the applicants’ case, appeared similar to what the respondents claimed was impermissible for the applicants. A further significant factual feature was that the respondents made direct approaches to government departments that were the applicants’ clients, advising that GovChat/#LetsTalk would be shut down for non-compliance and offering to work directly with government through approved BSPs.

3. Legal Issues

The Tribunal was required to determine, on an interim basis, whether it was reasonable and just to grant interim relief under section 49C, having regard to the statutory factors and the Tribunal’s approach to interim relief. The central issues were whether the applicants had established a prima facie case of a prohibited practice, whether there was a need to prevent serious or irreparable damage, and whether the balance of convenience favoured granting relief.

On the prohibited practice requirement, the core competition-law questions were whether WhatsApp was dominant in a relevant market and whether the threatened off-boarding constituted exclusionary conduct, framed chiefly as a refusal to supply scarce services contrary to section 8(1)(d)(ii), and also potentially as an exclusionary act under section 8(1)(c). The Tribunal had to assess market definition, dominance, and the nature of the alleged exclusionary effects, while recognising that interim relief does not involve final findings on the merits.

The dispute therefore concerned a combination of law (the meaning and elements of sections 49C and 8), fact (market characteristics, conduct, and comparisons), and the application of law to fact (whether the evidence supported a prima facie contravention and interim protection). The balancing under section 49C involved an evaluative judgment as to what was “reasonable and just,” especially given the public-interest dimensions linked to Covid-19 related services.

4. Court’s Reasoning

The Tribunal set out that section 49C requires a holistic assessment of three interrelated factors: evidence of the alleged prohibited practice (the analogue of a prima facie right), the need to prevent serious or irreparable harm, and the balance of convenience. It emphasised that it was not required to make definitive findings of contravention at this stage. Applying the approach described in York Timbers Limited v South African Forestry Company Limited, the Tribunal assessed the applicants’ allegations together with those respondent allegations that could not be disputed, and considered inherent probabilities to determine whether a prohibited practice would likely be established at a later hearing.

Market definition and dominance

The Tribunal distinguished between WhatsApp’s messaging platform and Facebook’s broader social media offerings, and it focused its competition analysis on WhatsApp’s messaging platform. It accepted, on a prima facie basis, a relevant market for OTT messaging applications via smartphones in South Africa, distinguished from SMS, MMS, and USSD on the basis of technical and functional differences, including multimedia functionality and end-to-end encryption, and the requirement of internet connectivity. It also considered the significance of penetration and usage.

The Tribunal noted that the applicants’ claims about WhatsApp’s extensive use in South Africa were not disputed by the respondents. On that basis, it found that WhatsApp was at least prima facie dominant in the market for OTT messaging applications via smartphones in South Africa, within the framework of dominance and market power in sections 7 and 1(1) of the Act.

The Tribunal further interpreted the applicants’ “secondary market” for government messaging services as, in substance, a narrower market for government messaging services over OTT applications, rather than a broad market incorporating all possible channels. Within that narrow segment, the Tribunal recognised the role of authorised BSPs and noted that various participants appeared to render services over the WhatsApp platform rather than over other OTT applications. It also accepted, at a prima facie level, the relevance of a further narrow segment concerning mobile payment solutions services for government departments rendered over OTT applications, where the parties were described as potential competitors.

Section 8(1)(d)(ii): refusal to supply scarce services

The Tribunal identified the key elements for section 8(1)(d)(ii), as amended, including dominance, refusal to supply, scarcity of the goods or services, and economic feasibility. It noted that the 2018 amendments extended the reach of section 8(1)(d)(ii) from refusal to supply scarce goods to competitors, to refusal to supply scarce goods or services to competitors or customers, and it treated that expansion as material given that the applicants were customers of WhatsApp via BSP arrangements, and also competitors (or potential competitors) in adjacent markets.

On scarcity, the Tribunal reasoned that whether OTT platforms are characterised as “goods” or “services,” they could be considered scarce in the relevant sense because they could not easily be duplicated without significant capital investment. It also placed weight on switching costs and on the importance of network effects and reach, particularly for government-to-citizen services during Covid-19. The Tribunal accepted evidence that the applicants had invested substantial resources in developing a bespoke use case on WhatsApp, making substitution difficult in the short term.

On economic feasibility, the Tribunal noted that the respondents did not suggest supply was infeasible due to creditworthiness or capacity constraints.

On refusal to supply, the Tribunal treated the threatened off-boarding, coupled with the alleged imposition of requirements and selective enforcement, as capable of constituting an effective refusal to deal. It considered the applicants’ examples said to demonstrate inconsistent application of the rules. It also placed significance on the respondents’ direct approaches to the applicants’ government clients, offering to work directly with government through certain authorised BSPs, and the Tribunal found these circumstances supported an inference of foreclosure at least on a prima facie basis.

The Tribunal connected this to the competition-law concept, reflected in its discussion of Competition Commission v Telkom SA Ltd, that a refusal to supply may be constructive or effective where supply is denied in substance by imposing unreasonable or exclusionary conditions. It accepted, for interim purposes, that the selective application of rules and the direct engagement with the applicants’ clients supported a prima facie conclusion that the respondents sought to foreclose the applicants in downstream or adjacent markets, leveraging WhatsApp’s dominance in the upstream OTT market.

It further observed that the respondents had not put up evidence of pro-competitive gains to outweigh the prima facie anti-competitive effects, which was relevant given the rule-of-reason structure of section 8(1) and the shifting burden framework described with reference to Competition Commission v South African Airways (Pty) Ltd.

Section 8(1)(c) and interim relief factors

Although the Tribunal’s main analysis proceeded under section 8(1)(d)(ii), it stated that the same assessment was also relevant to section 8(1)(c), and it accepted that the applicants had made out a prima facie case of exclusionary conduct and anti-competitive effects for interim purposes.

Turning to irreparable harm and balance of convenience, the Tribunal treated the impact of off-boarding as serious both for the applicants’ competitive position and for the public, given the Covid-19 functions being supported. It accepted that shifting to alternatives would involve time, cost, and potentially reduced reach, especially in light of WhatsApp’s penetration. It could not identify real prejudice to the respondents if interim relief were granted pending the Commission process. The Tribunal concluded that the balance of convenience strongly favoured the applicants and that interim relief would avoid serious and irreparable harm, including public-interest harm during the pandemic.

The Tribunal also reiterated that interim relief under the Act is directed at protecting competition and the public interest, not merely private interests, and it weighed the circumstances accordingly.

5. Outcome and Relief

The Tribunal granted interim relief under section 49C. It interdicted and restrained the respondents from off-boarding the applicants from their WhatsApp Business Account pending the conclusion of a hearing into the applicants’ complaint lodged with the Commission or six months from the date of the order, whichever occurred first.

The Tribunal further ordered that the respondents must not engage in conduct that directly or indirectly undermined the applicants’ relationships with their clients for the purpose of achieving the same outcome as off-boarding. The applicants were correspondingly restrained from onboarding new clients or users to the WABA, and from launching, expanding, or selling new use cases to existing clients or users during the interim period. These constraints reflected the Tribunal’s incorporation of the earlier “interim-interim” arrangement into the final interim relief framework.

No order as to costs was made, with the Tribunal noting the respondents’ cooperative stance during the proceedings.

Cases Cited

Papercor CC v Finwood Papers (Pty) Ltd and Others [2000] ZACT 44.

Nqobion Arts Business Enterprise CC and Business Place Joburg & BeEntrepreneuring [2006] ZACT 24.

Natal Wholesale Chemists (Pty) Ltd and Astra Pharmaceuticals (Pty) Ltd (98/IR/Dec00) [2001–2002] CPLR 363 (CT).

York Timbers Limited v South African Forestry Company Limited (15/IR/Feb01) [2001] ZACT 19 (9 May 2001).

Anchor Zedo Outdoor CC v Passenger Rail Agency of South Africa (017616) [2013] 2 CPLR 496 (CT).

Business Connexion (Pty) Ltd v Vexall (Pty) Ltd; The Competition Commission (182/CAC/Mar20) [2020] ZACAC 4 (15 July 2020).

Competition Commission v South African Airways (Pty) Ltd (18/CR/Mar01) [2005] ZACT 50 (28 July 2005).

Babelegi Workwear And Industrial Supplies CC v The Competition Commission of South Africa (186/CAC/JUN20) [2020] ZACAC 7 (18 November 2020).

Competition Commission v Telkom SA Ltd (Case No. 11/CR/Feb04, decision dated 7 August 2012) [2012] 2 CPLR 334 (CT).

Nedschroef Johannesburg (Pty) Ltd v Teamcor Ltd and Others (95/IR/Oct05) [2006] ZACT 7 (1 February 2006).

Replication Technology Group (Pty) Ltd v Gallo Africa Ltd [2008] 1 CPLR 77 (CT).

Harshita Chawla v WhatsApp Inc and Facebook Inc, Competition Commission of India, Case No. 15 of 2020.

Facebook/WhatsApp, European Commission, Case COMP/M.7217 (3 October 2014).

Commission Decision of 17 May 2017 imposing fines under Article 14(1) of Council Regulation (EC) No. 139/2004 for the supply by an undertaking of incorrect or misleading information, Case No. M.8228 (17 May 2017).

Legislation Cited

Competition Act 89 of 1998 (as amended), including sections 1(1), 7, 8(1)(c), 8(1)(d)(ii), and 49C.

Competition Amendment Act 18 of 2018 (published under Government Notice No. 644 in Government Gazette No. 42231 of 14 February 2019), as referenced in relation to amendments to section 8(1)(d)(ii).

Council Regulation (EC) No. 139/2004, as referenced in relation to the European Commission decision cited.

Rules of Court Cited

No specific rules of court were cited in the reasons beyond the Tribunal’s reliance on the statutory framework in section 49C of the Competition Act 89 of 1998 and the Tribunal’s established approach in prior Tribunal and Competition Appeal Court decisions.

Held

The Tribunal held that the applicants established a prima facie case that WhatsApp was dominant in a relevant market for OTT messaging applications via smartphones in South Africa. It further held, on a prima facie basis, that the respondents’ threatened off-boarding of the applicants, when assessed together with alleged selective application of platform rules and direct approaches to the applicants’ clients, amounted to an effective refusal to supply within the meaning of section 8(1)(d)(ii), and also disclosed a prima facie case of exclusionary conduct under section 8(1)(c).

The Tribunal held that the applicants also demonstrated the need to prevent serious or irreparable harm, including harm affecting the public interest in the context of Covid-19 related government services, and that the balance of convenience favoured granting interim relief. Interim relief was therefore granted preventing off-boarding for the defined interim period, coupled with reciprocal limitations on both sides, and with no order as to costs.

LEGAL PRINCIPLES

Section 49C interim relief requires a holistic assessment of whether it is reasonable and just to grant relief, having regard to the evidence of the alleged prohibited practice, the need to prevent serious or irreparable harm, and the balance of convenience. The Tribunal does not make final findings on contravention at interim stage; it determines whether a prima facie case has been established.

In evaluating whether there is evidence of a prohibited practice for interim relief purposes, the Tribunal applies the approach articulated in York Timbers Limited v South African Forestry Company Limited, considering the applicant’s allegations together with respondent allegations that cannot be disputed and assessing inherent probabilities to determine whether the applicant should succeed at a later merits hearing.

Dominance is assessed with reference to a defined relevant market, consistent with sections 7 and 1(1) of the Competition Act 89 of 1998. In digital platform contexts, the Tribunal accepted that technical and functional differences, together with evidence of usage and penetration, may justify narrower market delineation for interim relief analysis.

Section 8(1)(d)(ii), as amended, extends to refusals to supply scarce goods or services to both competitors and customers, and the Tribunal treated this extension as material where a complainant is positioned in a vertical relationship with the dominant firm while also competing (or potentially competing) in adjacent markets.

A refusal to supply may be constructive or effective where the dominant firm’s conduct, including the imposition of onerous or selectively enforced conditions, operates in substance to deny supply or to foreclose a downstream competitor, as reflected in the Tribunal’s discussion of Competition Commission v Telkom SA Ltd.

Where a dominant firm’s conduct is assessed under the rule-of-reason structure of section 8(1), the Tribunal applied the established understanding that exclusionary conduct must be evaluated for anti-competitive effects, and that under section 8(1)(d) the respondent may be required to show pro-competitive gains that outweigh anti-competitive effects once the elements of the subsection are satisfied, as discussed with reference to Competition Commission v South African Airways (Pty) Ltd.

GovChat Proprietary Limited and Another v Facebook Inc. and Others (Reasons) (IR165Nov20) [2021] ZACT 115 (11 March 2021)