Conundrum Between CCI and TRAI: Jurisdictional Overlap
Author: Aman Gupta
Chanakya National Law University
ISSN: 2582-3655
Abstract
The commercial structure of India is complex in its procedure and to function properly under the purview of law is also one of the significant concerns of law.Competition is essential in a free market economy to serve the ultimate consumer with the best but an unchecked competition might lead to inefficiency and monopoly. The Competition Commission of India (CCI) and The Telecom Regulatory Authority of India (TRAI) is an anti-thesis to this uncalled consequence.CCI keeps a check on anti-competitive practices across Indian organizations whereas TRAI is a sectoral regulator restricted with the concerns of the telecom sector. These regulators serve a common purpose to promote the orderly growth of competition as well as the economy of the country. Nevertheless, CCI and TRAI are two swords in the same scabbard when it comes to exercising jurisdiction with regard to disputes arising over the telecom sector. A thin line of demarcation is the need of the hour with regard to the jurisdictional overlaps between them. This article analyses the regulatory role of these bodies with emphasis on their jurisdiction overlaps. It outlines the steps taken by the Hon’ble Supreme Court in settling the tussle between both the regulatory bodies over their jurisdictional conflict by taking a wiggle room. This article also studies the impact created by this conundrum on the Indian Telecom sector.
- Introduction
Competition is essential for the growth of an economy. Fair and free-market policies tagged with competitive markets provide for overall growth by fostering productivity and innovation. Organized and regulated competition processes enable market players to cut costs by use of technological and logistical innovation and gain sales thereby making profits. Efficient and fair markets are essential for catalyzing private sector development and economic growth.[1]The competitive process and the development process are too intertwined to be indistinguishable.
The Competition Commission of India (CCI) and The Telecom Regulatory Authority of India (TRAI) interplays a role of responsibility amongst each other where the former is a statutory body to check disruptive competition in the Indian economy and the latter is a sectoral regulator.[2]There has been a riddling effect regarding the functional demarcation between these organizations. The TRAI’s role is to set the ex-ante rules of the game i.e. to prevent the development of the market at the cost of depleting interests of the sector or its consumers[3] while the CCI primarily performs an ex-post function of checking anti-competitive agreements[4] and abuse of dominance.[5]
The Telecom Dispute Settlement Appellate Tribunal (TDSAT) enacted under the Telecom Regulatory Authority of India (Amendment) Act, 2000 regulates the telecommunication sector and the service providers to ensure that any infrastructure should be optimally utilized and thereby contributes to the overall growth of the industry. TDSAT, established under section 14 of the Act, provides for a forum to adjudicate the disputes and dispose of the appeals to safeguard the overall interests of the service providers and the consumers.
- Jurisdictional Overlaps
CCI itself has been established with the objective as uttered in the preamble to the Competition Act, 2002 “to prevent practices having adverse effect on competition, to promote and sustain competition, protect the interests of consumers and ensure freedom of trade in markets in India…” as well as under section 18 of the same. On the other hand, the Telecom Regulatory Authority of India Act, 1997, (TRAI Act) mandates to take “measures to facilitate competition and promote efficiency in the operation of telecommunication services”.[6]Even the Act establishes an appellate tribunal to be known as the Telecom Disputes Settlement and Appellate Tribunal (TDSAT)[7] to regulate the telecommunication services. Further, the statutory provision of section 60 of the Competition Act allows the Act an overriding status and at the same time consists of a provision under section 62 which states that “application of other laws is not barred” which creates an overlap in itself. Jurisdictional overlap leads to a difference in outcomes.
The tension escalated between the regulatory jurisdictions of both the bodies when the chairman of CCI, DevenderSikri, sent a two paged letter dated July 21, 2017, to TRAI chairman R. S. Sharma addressing that issue of authority to regulate matters relating to predatory pricing and competition within the telecom sector lies in their exclusive domain. The letter also pointed out to the inherent nature of the Competition Act, 2002 and the practices of international anti-trust matters which the telecom regulator intends to act upon authoritatively fall under the jurisdiction, authority, and expertise of the Competition Commission of India. Maintaining its position, TRAI asserted that it has all the powers to examine and regulate tariff-related matters and that may even extend to consequently regulating competition.[8]Reliance Jio’s entry into the market with free services was alleged to be against the rule of ‘predatory pricing’ and in violation of the TRAI’s tariff rules under section 11 of the TRAI Act which was challenged before TDSAT and the same matter being raised before the CCI, alleging a violation of section 4 of the Competition Act.[9] Moreover, in the Consumer Online Foundation v. Tata Sky Ltd. &Ors.[10], Dish TV contended that CCI could not claim its jurisdiction over the concerned matter because TRAI and TDAST were already vested with the “jurisdiction and responsibility to govern and regulate the telecommunication industry covering telecom, broadcasting and, cable TV services…” The CCI held that any matter that raises competition concerns would fall within the purview of the Competition Act, thereby enabling CCI to exercise its jurisdiction. These multiplicities of proceedings may lead to a waste of time as well as resources.[11]
- Settling the Tussle of Jurisdictional Overlap
Reliance Jio entered the market with considerably reduced data prices and it proceeded to cause a revolution in the telecommunications industry. The prices caused a competitive windstorm and garnered the attention of both the CCI and TRAI. Jurisdictional overlapping was evident but the dispute caused by the pricing policies of the telecommunications market caused friction between the authorities, which had to be settled and jurisdictional lines had to be demarcated by the Supreme Court in Competition Commission of India v. BhartiAirtel.[12]
With its entry in July 2016, Reliance JioInfocomm Limited (‘RJIL’) demanded Points of Interconnection (PoIs) which is a point of demarcation where the exchange of traffic takes place between two carriers and the Telephone Company and the CMRS Provider interconnect their respective networks thereby establishing the technical interface and points for an operational division of responsibility. PoIs, the usage of which is regulated by the terms of interconnection agreements provided by TRAI, was therefore requested from the ‘Incumbent Dominant Operators’ (IDOs) i.e. a cartelization of three major telecom operators namely BhartiAirtel, Vodafone and Idea Cellular.[13]
The said IDOs provided Jio with the PoIs but complaints were made on account of the inadequacy of the number of PoIs provided which resulted in call drops and other connection problems such as unstable and low data transfer speed among others to the subscribers of the Jio network. Therefore, RJIL alleged that the IDOs had adopted anti-competitive practices through the inadequate sharing of PoIs. Similarly, the IDOs contended that it was the offer of free calls to its subscribers which were causing a surge in call drops and no complaint rested on the violation of interconnection agreements which were prescribed by TRAI. Consequently, complaints were made to the agency on account of anti-competitive behaviour by the IDOs which then passed a resolution holding the IDOs in charge of anti-competitive behaviour and in breach of the licensing conditions. Recommendations were subsequently made to the Department of Telecommunications (DoT) for imposing penalties on the IDOs. The recommendation for penalties was challenged by the IDOs in the Delhi High Court which resulted in a reallocation of the issue to TRAI for consideration.
RJIL sought to seek the authority of CCI against the IDOs and henceforth filed complaints regarding anti-competitive practices. Order of CCI was later challenged in the Bombay High Court, which set aside the order. The matter thus came to the Supreme Court for consideration. The prominent issue which was decided in the appeal was whether the Competition Commission of India had no jurisdiction in light of the Telecom Regulatory Authority of India Act, 1997 and the authorities and regulations made thereunder?
The provisions of both the acts constituting and empowering the CCI and TRAI were analyzed. The functions and the objectives of instituting such bodies were observed to specify the areas of operation and exercise of their authorities. It was held that the TRAI was established for the regulation of a particular sector and the CCI’s power extends to monitoring and curbing anti-competitive activities by market players. Therefore, an area of operation was drawn for both authorities. On one hand, there is TRAI which is a sectoral regulator and can exercise its powers to enable an environment for orderly growth of telecommunication infrastructure whilst promoting the interests of service providers and consumers in a balanced manner and on the other hand, CCI has the authority to restrict the anti-competitive practices in order to ensure that competition in the market is sustained while inculcating features like free entry and exit, freedom of trade among others.
The court also observed that the dispute was around the interconnection agreements which were provided by TRAI for PoIs and, therefore, its interpretation will be imperative for the resolution of the matter. It was held that the sector regulator, TRAI had the foremost prominence over matters related to the telecommunications market. However, jurisdiction is not exclusive and the CCI may enter when it observes that the market players have created an agreement to block a new entrant or whether the conduct of the parties was unilateral or was the result of an agreement. Therefore, it is only when the sector regulator concludes its probe and comes up with its findings, the CCI will possess any authority. TRAI’s order that the IDOs were in breach of the interconnection agreement would give jurisdictional basis to the CCI for an exploration into the matters of cartelization or anti-competitive practices. If TRAI had determined that the IDOs were in breach of the interconnection agreements, it would constitute jurisdictional facts based on which the CCI could exercise its jurisdiction. As TRAI had not concluded with any such judgments, there was no jurisdictional premise to form any jurisdiction for CCI.
- Impact on the Indian Telecom Sector
Indian Telecom Sector has come up with vast concerns in recent times and has witnessed new developments. It continues to rise steeply and market players would continue to approach for settlement of grievances or disputes. The competition issues in the telecom sector may vary from case to case basis.The TRAI could have taken decisions which stands in conflict with CCI but now after the Supreme Court’s judgment in Competition Commission of India v. BhartiAirtel[14], TRAI would be the first authority to exercise its jurisdiction and initiate the proceedings in the matter concerning telecom operators and only after its verdict CCI could conduct its investigation and exercise its jurisdiction. It relieves TRAI from the issues concerning the conflict of decisions. The anti-competition clauses under the Competition Act foster the telecom sector to get rid of the abuse of the dominant positions of the telecom operators and assists in sustaining and promoting the competition in the market.[15] New challenges of competition regulation and enforcement aid and abet sector’s dynamics to evolve and face tussles over the nitty-gritty of the telecom sector.
- Conclusion
The Indian Telecom Sector and the Competition Commission of India are under an urgent need of mandate and clarity amongst their provision for the efficient functioning of the telecom sector. The situation of potential overlaps must be subjugated by avoiding tussles and creating an effective co-operative mechanism. The provision of section 21 under the Competition Act which provides for consultation between the CCI and sectoral regulator must be binding and mandatory rather than being just an optional clause. The statutory delimitation of jurisdiction and functions of CCI and TRAI as well as CCI’s participation in TRAI’s consultation process would mitigate the overlaps. Therefore, legislative intervention would balance the interplay between the CCI and TRAI and would bring clarity in the functional demarcation between these two authorities.
[1]Nick Godfrey, Why is Competition Important for Growth and Poverty Reduction?,Global Forum on International Investments, (March 27, 2008, 09:44 PM), https://www.oecd.org/investment/globalforum/40315399.pdf.
[2]Id.
[3]SmritiParsheera, Challenges of Competition and Regulation in the Telecom Sector, 38 EPW 45, 49 (2018).
[4] The Competition Act, 2002, No. 12, Acts of Parliament, 2003 (India).
[5] Id., Section 4.
[6] The Telecom Regulatory Authority of India Act, 1997,No. 24, Acts of Parliament, 1997 (India).
[7] Id., Section 14.
[8]Amrit Raj, CCI to TRAI: Consult us on Predatory Pricing Issues, Live Mint (July 28, 2017, 03:40 AM), https://www.livemint.com/Industry/uzSqE22Uk4Lgt1jX8PjCOJ/CCI-to-Trai-Consult-us-on-predatory-pricing-issues.html.
[9]BhartiAirtel Ltd. v. Reliance Industries Ltd., 142 SCL 0294 (2017).
[10]CCI Case No.2/2009.
[11]SushrutiTripathi, Interface Between the Jurisdiction of the Competition Commission of India (CCI) and The Telecom Regulatory Authority of India (TRAI), Society of International Trade and Competition Law (Nov.,6, 2013, 4:35 PM), https://nujssitc.wordpress.com/2013/11/06/interface-between-the-jurisdiction-of-the-competition-commission-of-india-cci-and-the-telecom-regulatory-authority-of-india-trai/.
[12](2019) 2 SCC 521.
[13]Mohana Roy, TRAI or CCI – Supreme Court settles the Jurisdictional Tussle, Ksk (Dec., 13, 2018, 3:14 PM), https://ksandk.com/competition/3137/.
[14](2019) 2 SCC 521.
[15]VarunKannan, Competition Law Issues in the Indian Telecom Sector: Analysis of Recent Developments, IndiaCorpLaw (July 26, 2019, 8:00 PM), https://indiacorplaw.in/2019/07/competition-law-issues-indian-telecom-sector-analysis-recent-developments.html.