Mandatory Consultation as a Recourse to Settle the Tussle between TRAI and the CCI

[Rohan Bhargava and Nishtha Khandelwal are 3rd year students at Dr. Ram Manohar Lohiya National Law University]

With the advancement in the technology and the advent of multiple private players in the telecommunication sector, there arose a requirement for a sectoral regulatory body to deal with various issues arising in the market. In India, the telecom sector is governed by the Telecom Regulatory Authority of India (TRAI), whose main functions include regulating telecom services, including fixation or revision of tariffs for telecom services which were earlier vested in the Central Government. The TRAI has been vested with the powers to formulate ex-ante regulations to ensure and provide a fair and transparent policy environment which promotes a level playing field and facilitates fair competition. Section 11 of the TRAI Act delegates power to TRAI to “facilitate competition and promote efficiency in the operation of telecommunication services so as to facilitate growth in such services”.[i]

In exercising its power to regulate competition amongst the market players, the activities of TRAI may overlap with the functions of the Competition Commission of India (CCI) that was established under the Competition Act, 2002 with an aim to “keep an eye on the anti-competitive agreements or activities undertaken by the market players”.[ii] Such overlapping functions of the CCI and TRAI are apparent from the dispute between the two institutions in the case of alleged predatory pricing by Reliance Jio and the famous case of CCI v Bharti Airtel. The authors are of the view that a process of “mandatory consultation” between the regulatory bodies would ensure proper regulation of the telecom sector.

The aim and objective of both the legislations is to ensure that the market is free of any anti-competitive effects, but the approach undertaken by the bodies has a stark difference. The TRAI may well be able to deal with issues related to the technicalities in the telecom sector while CCI is a better and well-equipped body to deal with antitrust issues. The Supreme Court in the Bharti Airtel case has demarcated the jurisdictions of the bodies.

Supreme Court on Jurisdictional Conflicts

Reliance Jio filed a complaint under the TRAI Act as well as the Competition Act alleging that the incumbent dominant operators (IDOs) (Bharti Airtel, Idea and Vodafone) had formed a cartel wherein they had agreed not to provide adequate interconnection points, thereby indulging in anti-competitive practices. The CCI passed an order in the favor of Reliance Jio. The aggrieved parties filed a writ petition in the Bombay High Court challenging the order of the CCI on the grounds that it lacked jurisdiction to investigate into the matter, and that the matter falls within the exclusive jurisdiction of the TRAI. The Bombay High Court passed an order in the favor of the petitioner stating that the CCI lacked jurisdiction to investigate into the matter. The CCI, aggrieved by the order, appealed against the decision in the Supreme Court.

One of the primary issues in the case before the Supreme Court was whether the CCI had jurisdiction to investigate in view of the TRAI Act, 1997 wherein TRAI has been given the same jurisdiction. The IDOs argued that TRAI is an “expert body that can even deal with the anti-competitive aspects of telecom sector” that are specifically assigned to TRAI in section 11 of the TRAI Act. Further, it was contended that the TRAI Act is a special legislation that prevails over the provisions of the Competition Act as the Competition Act is a general legislation. Moreover, the TRAI Act is a complete code in itself which regulates the telecom sector in its entirety, including the aspects of competition. The CCI, on the other hand, argued that it has the sole authority to investigate if the conduct of the parties was unilateral or was a collective action based on any agreement through the lens of the Competition Act.

The Supreme Court observed that since the matter pertains to the telecom sector that is specifically regulated by the TRAI Act, TRAI would first deal with the technical matters pertaining to its jurisdiction. Later, if TRAI is of the opinion that there exists a prima-facie case pertaining to anti-competitive activities against the parties, the matter can be referred to the CCI for investigation going by the criteria laid down in the relevant provisions of the Competition Act. The judgment of the Supreme Court did not oust the jurisdiction of the CCI, but pushed it to a later stage after TRAI has undertaken the necessary exercise in the first place.

Analysis and Concluding Remarks

In cases concerning overlapping jurisdiction, there can be a situation when both the CCI and TRAI arrive at conflicting judgments and such a situation, as observed by the Supreme Court in its judgement, needs to be avoided. The impact of the judgment would be that the CCI could take cognizance of the issue only after the investigation by TRAI is complete and it has given a final verdict. Later when the CCI investigates independently, it can arrive at a different conclusion from that of TRAI that makes the problem of conflicting judgments inevitable for issues involving anti-competitive activities in the telecom sector. Therefore, the judgment fails to solve the problem of overlapping jurisdictions and makes the judicial process even lengthier.

The authors are therefore of the view that a better approach towards resolving the jurisdictional conflict between TRAI and the CCI would be to develop a formal mechanism for consultation between the CCI and the sectoral regulators for solving matters related to the telecom industry. This can be achieved by ensuring that while dealing with a case, if TRAI is of the opinion that the market players have indulged in anti-competitive activities, it mandatorily refers the issue to CCI for its opinion according to section 21 of the Competition Act. The opinion provided by the CCI must be binding upon TRAI. This practice would ensure appropriate channelization of the issues at hand to the appropriate forum to obtain corrective action at the earliest without any duplication of efforts. The process of mandatory consultation between competition regulator and sector regulators is followed in other jurisdictions like that of Argentina, France, and Turkey. Certain European Union member states such as Spain and Ireland have attempted to resolve the overlapping issues by providing for “mandatory consultation” between the competition authority and sector specific regulatory bodies under both competition law and sector regulatory laws.

Incidentally, the Committee on National Competition Policy and Allied Matters in 2011 recommended amending the Competition Act to provide for “mandatory consultation” on the issues involved in overlapping jurisdictions between the CCI and sector regulator. However, the policy is yet to come to surface.

Implications on the Telecommunication Sector

For some time now, the tussle between TRAI and the CCI has been going on as to who is a better-equipped body to deal with the issues pertaining to anti-competitive activities in the telecom sector. While TRAI might not possess an overall view of the economy, the CCI might fail in realizing the intricacies of the telecom sector. Therefore, it is pertinent that both the bodies must go hand-in-hand in dealing with anti-trust issues in the telecom sector. This would ensure minimum friction between the telecom regulator and the antitrust commission. This will also be in line with the approach of the Supreme Court to follow a harmonious approach to resolve future conflicts between the regulators.

The adoption of such a harmonious approach between TRAI and the CCI would facilitate growth and healthy competition in the telecom sector. Moreover, any disputes arising in the telecom sector in future would be settled in a well-considered manner ensuring speedy justice and legal certainty. This would further prevent any redundancy in the judgments pronounced, thereby making the judicial process effective with optimal usage of the resources.

Rohan Bhargava & Nishtha Khandelwal

[i] Telecom Regulatory Authority of India Act, 1997, § 11(1)(a)(iv).

[ii] The Competition Act, 2002.

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