Supreme Court on Jurisdictional Conflicts between the CCI and TRAI

[Rajvansh Singh is a 3rd year student at National Law University Odisha] 

Conflict in Jurisdiction

The preamble of the Competition Act, 2002 read with section 18 of the legislation delegates to the Competition Commission of India (the “CCI”) the duty of “promoting and sustaining competition” in the Indian economy. This implies that the CCI will have principal jurisdiction to regulate conditions of competition in the relevant market of India. Whereas, the objective of Telecom Regulatory Authority of India Act, 1997 (the “TRAI Act”) is to nurture conditions essential for the growth of telecom industry. Section 11 of the TRAI Act delegates power to the Telecom Regulatory Authority of India (“TRAI”) to “facilitate competition and promote efficiency in the operation of telecommunication services so as to facilitate growth in such services”.

The objectives of both legislation, when read together, intend to create an environment that may facilitate fair competition. In fulfilling the concerned objective, the jurisdiction of TRAI and the CCI overlap. Although the watchdogs (the CCI and TRAI) share a common goal, they differ in their mandate and approach. The difference in approach adopted by the CCI and TRAI towards a similar objective leads to cases of jurisdictional conflicts.

The difference in approach can be understood from the following example. While regulating tariff rates, TRAI aims to keep the tariffs reasonable for the benefit of consumer. On the other hand, this could be viewed by the CCI as a case of predatory pricing, which in turn forecloses the door of the market for a potential service provider. In the given situation, parties often invoke the jurisdiction of a body convenient for them.

In Star India v. Sea T.V. Network, an attempt was made to clarify the jurisdictional conflict. It was held that the Monopolies and Restrictive Trade Practices (MTRP) Commission, the predecessor of the CCI, has no mandate to exercise its jurisdiction over a dispute that pertains to violation of any provision the TRAI Act, even though the provision involves an issue of monopoly and restrictive trade practices. Further, in Consumer Online Foundation v. Tata Sky (para 27), Dish TV challenged the jurisdiction of the CCI as the matter was already in the hands of the Telecom Disputes Settlement and Appellate Tribunal (“TDSAT”) and TRAI. On this, the CCI opined that though TRAI is the market regulator, the field of competition in the market falls within the exclusive jurisdiction of the CCI. After reading the judgement, it seems that the CCI did not opine conclusively on the issue of jurisdictional conflict.

Resolving the Jurisdiction

On 5 December 2018, a two-judge bench of the Supreme Court in Competition Commission of India v. Bharti Airtel Limited and Others addressed and settled the issue of the ongoing jurisdictional battle between the CCI and TRAI.

Factual Matrix

Reliance Jio filed an application under section 19(1) of the Competition Act before the CCI alleging an anti-competitive agreement to deny point of interconnection having been formed by Airtel, Vodafone, Idea (i.e., incumbent dominant operators or “IDOs”). After hearing the parties, the CCI issued a notice to the IDOs as, on a prima facie view, a case exists and an investigation is required.

The CCI’s action was contested by the IDOs before the High Court of Bombay on the ground that the CCI did not have the jurisdiction to deal with the matter as TRAI was already seized of the matter. The High Court, while allowing the challenge, held that the exercise of jurisdiction by the CCI is erroneous, as TRAI being a telecom watchdog is well equipped to deal with the said issues. It was also held that order is not an administrative order; thus the CCI should have waited for the final decision of TRAI before reaching any finding. The CCI and Reliance Jio further challenged the judgement before the Supreme Court.

Issues

The Supreme Court identified two major issues:

(a) Whether the CCI can exercise its jurisdiction when TRAI is already vested with the same?

(b) Whether a writ petition filed against the order passed under section 26(1) of the Competition Act can be admitted before the High Court

For the current post, the author will deal only with the first issue.

Judgement

The Supreme Court analysed the objective of the statues and upheld the decision of High Court of Bombay. Further the Supreme Court opined as follows:

– The matter on hand is related to the telecom sector which is monitored under the TRAI Act. In the first instance, TRAI shall be allowed to deal with and decide the “jurisdictional aspects” as it is more competent to handle it. When the final determination is done by TRAI and there are findings that show that the party is involved in anti-competitive practices, the jurisdiction of the CCI can be activated to look into the said matter in accordance with the relevant provisions of the Act. Going by this way, a balance will be maintained between TRAI and the CCI.

– If the CCI is allowed to interfere at the time when TRAI is seized of the matter, there is a possibility that the authorities, namely TRAI and the CCI may subscribe to a contradictory view. Thus, it is imperative to avoid having a concurrent jurisdiction.

– The jurisdiction of the CCI is not ousted completely; it is a matter of supremacy as to which authority should exercise jurisdiction first. If an agreement has an adverse effect on the competition within the relevant market of the country, the CCI will exercise its jurisdiction, as it is a tailor-made authority to deal with such issues. The jurisdiction to deal with such issues should not be disputed at any point of time.

Analysis and Concluding Remarks

On a plain reading of the judgement, the author is of the view that although the said judgement resolves the jurisdictional tussle and constructs a balance between the two authorities, it has created its own set of controversies. There are several infirmities mentioned below that should have been answered to avoid uncertainty in near future.

– According to the judgement, TRAI shall be the first authority to exercise jurisdiction whereas the CCI will always have a follow on jurisdiction in matter related to telecommunication industry. Further, the jurisdiction of the CCI cannot be invoked unless TRAI makes its “final determination”. On this, the author is of the view the abovementioned principle is against the legislative intent behind section 21 of the Competition Act. This is because the said provision allows statutory authorities to refer a matter to the CCI, if the issue in hand is contrary to any of the provisions that Act. Thus, considering section 21, TRAI can make a reference to the CCI prior to the “final determination” being made.

– The said judgement unambiguously holds that “jurisdictional fact” has to be decided by TRAI and on a mandatory basis it has to be accepted by the parties and the CCI. The author is of the opinion that the Competition Act places investigative powers in the hands of Director General to determine several jurisdictional aspects of the matter, which are imperative for the CCI to exercise its jurisdiction.

The judgement has to be appreciated as it has adopted a pragmatic approach and is a step towards certainty, which is indispensable for the growth of any economic law in the country.  However, the author is of the view that the judgement does not entirely put an end to the fight for regulatory supremacy. Resolution is possible only if the CCI and TRAI join hands to coordinate and consult with each other in matters that involve questions of competition and telecom laws. For example, in Canada, the competition authority and the relevant sectoral authority sign memoranda of understanding, which effectively set out the roles of both.

Further, section 21 of the Competition Act is of much assistance in the said issue. TRAI can refer the matter or seek the CCI’s opinion, and after considering the same TRAI can pronounce the final judgement.

Rajvansh Singh 

About the author

Add comment

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Recent Posts

Topics

Recent Comments

Archives

web analytics