Clipping the Powers of the CCI: Reflections from the Bharti Airtel Case

[Vrinda Aggarwal and Advik Rijul Jha are Fourth Year Law Students (BA-LLB) at Jindal Global Law School, Sonipat, Haryana]

On 5 December 2018, the Supreme Court held that when there is a conflict between the jurisdiction of the Competition Commission of India (CCI) and the Telecom Regulatory Authority of India (TRAI), the latter is to prevail. Under section 18 of the Competition Act, 2002, the CCI has been vested with mandate of an extraordinarily broad nature, namely: ‘eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade (…) in markets in India’. Owing to its width, the mandate of the CCI tends to overlap other sectoral regulators. Resolution of this conflict becomes specifically delicate since most sectoral regulators were empowered to look into sector specific competition related matters prior to the promulgation of the Competition Act.[1]

Background

In 2016, Reliance Jio Infocom Limited (RJIL) filed a case against members of Incumbent Dominant Operators’ – IDOs, which consisted of Vodafone India Limited (Vodafone), Bharti Airtel Limited (Airtel), Idea Cellular Limited (Idea), Telenor (India) Communications Private Limited (TICPL), Videocon Telecommunications Private Limited (VTPL) – for denying Points of Interconnection (POI) and Mobile Number Portability. RJIL contended that this constituted a violation of the Competition Act as it amounted to cartelisation. The said case was first filed in the TRAI which held that the IDOs had violated the Standards of Quality of Service (QoS) of Basic Telephone Service [Wireline] and Cellular Mobile Telephone Service Regulations, 2009. It recommended an imposition of Rs. 50 Crores penalty on each member of the IDO for the said violation. The said members approached the Delhi High Court to challenge the said order of the TRAI.

In parallel, the matter was adjudicated by the CCI which held that a prima facie case was made out against the members of the IDO under section 3 of the Competition Act and ordered for an investigation. It was held that their conduct, which was violative of the Telecom Norms, amounted to anti-competitive practice. On the question of complementary jurisdiction between the TRAI and the CCI, it was held that the two forums were independent and ought to exercise jurisdiction in tandem with the objects of their respective parent legislation.  On the question of POIs, the CCI held that every majority decision did not amount to cartelisation and there ought to be positive constructive evidence of anticompetitive practice.

The said order was challenged before the Bombay High Court, which held that the said matter related most closely to the provisions concerning the TRAI and, therefore, the CCI ought to be bound by the finding of the TRAI. Aggrieved by this decision of the Bombay High Court, the CCI later knocked on the doors of the Supreme Court to settle the relationship between the TRAI and the CCI once and for all.  

Arguments Advanced

RJIL contended that the CCI and the TRAI were two separate bodies which were constituted through distinct legislation, neither of which were aimed at amending the other.[2] Despite the foregoing, it was argued that the Competition Act had an overriding effect owing to its all-encompassing language.[3] To counter the said contention, the cellular operators based their arguments upon the language of the statement of objects.[4]

Holding

After, analysing the statement of objects of the two statutes, the Supreme Court held that the TRAI was lex specialis in the said matter and that the CCI must wait for its findings before ordering for investigation.

Impact of the Ruling

The Competition Act mandated the CCI to deliberate matters pertaining to anti-competitive practices. Such a mandate is sector insensitive. However, the Supreme Court, through the said judgment, has tied the hands of the CCI in initiating investigations or deliberating over matters concerning conspiracy and the like. Further, it has encouraged forum shopping, leaving the CCI with its neck down each time its jurisdiction is stepped upon by another sectoral regulator. The Court could have taken a middle path by laying down a procedure for two or more regulators to work in comity when the matter agitated before them concerns all their expert intervention.

The judgment of the Supreme Court is a steep departure from existing jurisprudence concerning the said matter. Consider the following examples:

1. Ericson v CCI[5] – This matter concerned a jurisdictional conflict between the CCI and the Patent Act.

The case concerned Ericsson’s Standard Essential Patents (SEPs) for which Ericsson had tried to negotiate a Patent Licencing Agreement (PLA) with Micromax and Intex on FRAND terms, i.e. fair, reasonable and non-discriminatory terms, but its efforts were unsuccessful. Subsequently, Ericsson initiated infringement proceedings alleging that the products manufactured and dealt with by Micromax and Intex violate its patents and that Ericsson was entitled to royalties in respect of the SEPs held by it. Micromax and Intex on the other hand contended that Ericson engaged in abuse of dominant position by demanding an unfair royalty from Micromax and Intex. Here, the Delhi High Court observed that even though the Patents Act is lex specialis, in the absence of an irreconcilable conflict between the two legislation, the jurisdiction of the CCI to entertain complaints for abuse of dominance in respect of patent rights cannot be ousted.

2. CCI v. Fastway Transmissions Pvt. Ltd

Overruling a previous COMPAT decision in Prakash Agrawal v Dakshin Haryana Bijli Vitram Nigam and Ors[6], which held that the tribunal created under the Electricity Act, 2003 was better suited to deliberate over matters which fall at the intersection of the two Acts, the Supreme Court held that considering the developmental stage of the country it was more appropriate for the CCI to enjoy jurisdiction over matters which may also concern specific sectors.

The conflict among regulators has been fairly foreseeable for legislators across the world. A case in point could be Australia, where the courts have unequivocally held the importance for its competition courts to enjoy unhampered jurisdiction thereby overriding the powers of any other sectoral regulators. This jurisprudence has been met by legislative efforts to further empower the Australian Competition and Consumer Commission by broadening its mandate. It is time that the Indian legislators rise to this critical development which clips the powers of the CCI, which can hamper the functioning of fair and equitable market forces across industries. Primacy needs to be given to the CCI in all competition law matters as it possesses the requisite know-how to evaluate anti-competitive conduct and reduce the risk of regulatory capture and lobbying to which industry regulators are susceptible while ensuring consistency in the application of rules across sectors, as inconsistency in application can lead to chaos. This needs to be done while keeping other sectoral regulators in the loop, and the CCI should use their expertise in the subject matter to aid their investigation and subsequent enforcement. A legislative amendment to this effect may be the best way forward.

Vrinda Aggarwal & Advik Rijul Jha

[1] Telecom Regulatory Authority of India Act 1997, section 11(1)(a)(iv); Electricity Act 2003.

[2] Haridas Exports v. All India Float Glass Manufacturers’ Assn. & Ors. (2002) 6 SCC 600.

[3] Section 60, Competition Act 2002.

[4] Telecom Regulatory Authority of India Act, 1997.

[5] Telefonaktiebolaget Lm Ericsson v Competition Commission of India & Anr., (2016) W.P(C) No. 464 of 2014

[6] Anand Prakash Agrawal v Dakshin Haryana Bijli Vitram Nigam, available at https://indiankanoon.org/doc/107822389/.

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