This article is written by Chandana, from The Tamil Nadu Dr Ambedkar Law University (SOEL). This is an article which deals with the drawing the line between Competition law and Telecom Sector.

Introduction

India is the second-largest telecom market in the world. Since the 1990s, Competition law has grown tremendously. The growth of competition law has been tremendous in terms of geographical regions as well as increasing the range of economic activities. The reason to introduce competition law is to promote the competition culture and process in the market. Joseph Stieglitz is the first person to implement competition law. The concept of competition law began in the 18th century and they were called restrictive trade practices, the law of monopolies, combination acts and restraint of trade. The first antitrust legislation, the Sherman Act, 1890 was the start of competition law in economies. Today almost 90% of countries have their competition law. 

Competition Law

• India has a history of Competitive markets. Article 38 and 39 of the Constitution of India states that the government shall secure and protect the society where the people will get social, economic and political justice and it shall also address all the organisation of the nation, state and direct its policy as:

1. ownership and control of material resources are so distributed as best to assist the common good.
2. the economic system should not operate in such a way as it creates in a concentration of wealth and means of common determinants.

• Before the evolution of Competition Act, 2002 the issues about the competition were governed by Monopolies and Restrictive Trade Practices Act, 1969.
• The preamble of MRTP Act, 1969 stated that the operation of the economic system should not result in the concentration of economic power to the common detriment.
• After the economic reforms in 1991, it became difficult to operate the economy based on the MRTP Act, 1991.
• In October 1999, the government of India constituted a high-level committee which was headed by Mr S.V. Raghavan, a retired senior central government officer.
• The committee was otherwise known as Raghavan Committee.
• In the committee, the following changes were recommended:

1. to advise a new and effective contemporary competition law;
2. to cope up with the international economic development;
3. to recommend a suitable legislative framework.

• After the recommendations of the committee, the committee got the consultations from stakeholders, an association of trade and industry and the general public.
• A competition law draft was presented to the government in November 2002 and a bill was introduced in the Parliament.
• The President gave assent to the bill and the Competition Act, 2002 was enacted by the Parliament of India.

Objectives of Competition Act, 2002 

• To prevent the practices which are having adverse effects on the competition.
• To promote and sustain competition in the market.
• To protect the interest of consumers.
• To ensure freedom of trade which is carried on by the other participants in the market.

Powers and functions of Competition Commission

• Eliminate anti-competitive practices

The competition commission has to eliminate the practices which hurt the competition.

• Enquiry into agreements and dominant position of the enterprise

According to  Section 19 of the Competition Act, 2002 commission can either by suo moto or by application filed by the aggrieved person with the commissioner can enquire into agreements which hurt competition or have a dominant position of the enterprise.

• Enquiry into combination by a commission

As per Section 20 of the Competition Act, 2002 commission either upon its knowledge or information received that combination has arisen as per Section 5 of the Competition Act, 2002 may conduct an enquiry into such combination.

• Power to pass interim orders

As per Section 33 of the Competition Act, 2002 commission may pass interim order that is to restrain the party from carrying on such act till the final orders whenever he feels there is a contravention of the provisions.

• Reference by statutory authority

As per Section 21 of the Competition Act, 2002 if the party thinks that the decision taken by the statutory authority is contrary to the provision of the act then the party is allowed to refer to the commission.

Telecom Regulatory Authority of India (TRAI)

Telecom sector was first introduced in India in 1851. The Telecom Regulatory Authority of India was established by the Central Government under the Telecom Regulatory Authority of India Act, 1997. TRAI was established to regulate the telecom sectors including the fixation or revision of tariffs for telecom services.

Objective of TRAI

Important objectives of TRAI are:

• To provide a fair and transparent policy environment.
• To promote fair competition.

Establishment of TRAI

As per Section 3 of the Telecom Regulatory Authority of India Act, 1997:

• The Telecom Regulatory Authority of India was established by the Central Government under the Telecom Regulatory Authority of India Act, 1997. 
• TRAI was established to regulate the telecom sectors including the fixation or revision of tariffs for telecom services.

Functions of TRAI

As per Section 11 of the Telecom Regulatory Authority of India Act, 1997:

• Can make recommendations either on the suo motu or on the request from the licensor on the following matters:

1. The need and timing for the introduction of a new service provider;
2. Terms and conditions of the licence to a service provider;
3. The authority to revoke the license if there is non-compliance of terms and conditions of license;
4. If there are any technological improvements in services provided by the service providers;

• The authority shall discharge the following functions:

1. Ensure compliance of terms and conditions of the license;
2. Ensure the technical compatibility.

Sectoral regulators

Before the establishment of sectoral regulators activities such as entry, price, location, telecommunication services, oil exploration, and so on were regulated only by the government-owned companies. There was an absolute monopoly in the industry. With the introduction of economic reforms in 1991, there was dire need to establish sectoral regulators, and this led to setting up of sectoral regulators. 

Drawing a thick line between competition law and telecom sector

In this case, the Supreme court tried to draw a line between the competition commission and telecom sector.

The Preamble of Competition Commission of India as per the Competition Act, 2002 is “to promote and sustain the competition in the market of India”.

The Preamble of Telecom Regulatory Authority of India Act, 1997 is “to promote and ensure orderly growth of the telecom sector”. As Competition Commission of India and TRAI share the same objective they differ in their mandate and approach. The differences lead to conflicts of jurisdiction between both the Acts. In this case, the Supreme court resolved the jurisdiction between CCI and TRAI.

Case example

An application was filed by Reliance Jio Infocomm Limited under Section 19(1) of the Competition Act, 2002 to Competition Commission. Section 19(1) of the Competition Act, 2002 states in case if any enterprise or association of person enters into any agreement which results in causing the adverse effect on competition, the competition commissions may enquire into such matters. Reliance alleged that the Bharti Airtel, Idea Cellular Limited and Vodafone India Limited ( IDO’s) were abusing their dominant position as per Section 3 of Competition Act, 2002 and Cartelisation as per Section 4 of Competition Act, 2002. And these companies were supported by the Cellular Operators Association of India for colluding with those companies and denying the access of sufficient number of Points of Interconnection (POL) to Jio. CCI found that there was a prima facie case of cartelisation IDO’s and COAI. Further CCI authorised the director general to carry out the investigation and DG issued notices to IDO’s and COAI. A writ petition was filed before the Bombay High Court by the IDO’s and COAI to quash the orders of CCI and to stop DG from further investigation because CCI did not have the jurisdiction to decide the case and as TRAI was already seized of the matter. The CCI then appealed the issue to the Supreme Court.

Issues relating to the case

1. Whether CCI has jurisdiction to decide the case, considering the points of interconnection is a technical issue?
2. Whether the writ petition filed by the IDO’s and COAI is maintainable?

Judgment relating to the case

The Bombay High Court set aside the order found up CCI and Supreme court upheld the order of Bombay High Court and also recognised that TRAI is the sector-specific regulator and it has the expertise to deal with the issues arising from the telecom sector and in which CCI has no jurisdiction in matters of telecom sectors. After necessary findings, if TRAI concludes that within the domain there are anti-competitive practices, then CCI can come into the picture to enforce its decisions as per the relevant provision under the Competition Act, 2002. If at all TRAI takes any action which is supposed to be taken by CCI then the TRAI power would be limited to the applicability of Telecom Regulatory Authority of India Act, 1997. And thus the jurisdiction of CCI is not completely barred it is only pushed at the later stage. By clearly setting out the powers of both the authorities, they have a balance between their powers. The Supreme court said that TRAI has three important functions as per the Telecom Regulatory Authority of India Act, 1997 and they are:

• TRAI has to resolve various disputes which may arise between the service providers.
• TRAI has to ensure the technical compatibility and regulating relationship between the providers.
• TRAI has to ensure the license conditions are complied by the service providers.

Analysis of the following case

• If any matter comes before the authorities on the question of the telecommunication industry, TRAI will be given the preference to decide the issue and then CCI will follow on.
• Before coming to the final determination on the jurisdiction issue, TRAI has to get CCI opinion.

The Ministry of Corporate Affairs in 2011 formed a high power committee on National Competition Policy and allied matters and recommended that Competition Act, 2002 should be amended in such a way as to provide mandatory consultation between the CCI and TRAI when any issue which relates to sectoral regulatory overlaps.

Overlapping of jurisdiction between CCI and different regulators

1. Section 11(1)(iv) of Telecom Regulatory Authority of India Act, 1997 asserts that it can facilitate competition and promote efficiency in the operation of telecommunication services to facilitate the growth in such services. The Competition Act, 2002 has a similar objective and there arises overlap of jurisdiction.
2. Insurance Regulatory and Development Authority (Scheme of Amalgamation and Transfer of General Insurance Business) Regulation, 2011 gives the authority to IRDA to regulate combinations in the insurance sector which is overlapping with the jurisdiction of CCI.

Difference between competition law and telecom sector

Telecom sector	Competition law
The sectoral regulatory informs the businesses what to do and how to price the products.	The competition authorities the business what not to do.
The sectoral regulatory usually focuses on the specific secretary of the economy.	On the other hand, the competition authority focuses on the entire economy.
The sectoral regulatory is ex-ante that means it addresses the behavioural issues even before the problem arises.	The competition authority is ex-post, it means it addresses the behavioural issues only after the problem arises except in the case of mergers.
The sectoral regulatory mainly focus on the orderly development of a sector which ensures consumer welfare.	The competition authority ensures consumers welfare by preventing the unfair transfer of wealth.

Conclusion

The absence of clear dividing lines between promoting competition and checking anti-competitive practices leads to conflicts as we have seen in the above case. The legislatures while enacting the framework under Competition Act, 2002 and Telecom Regulatory Authority of India Act, 1997 failed to establish the power and role of competition commission and sectoral regulatory. Both these bodies have to formulate boundaries for themselves and ensure that they manage to create a pro-consumer business-friendly model for the telecom sector.

References

• http://neconomides.stern.nyu.edu/networks/ShermanClaytonFTC_Acts.pdf
• https://indiankanoon.org/doc/555882/
• http://www.mca.gov.in/MinistryV2/competitionact.html
• http://ijlt.in/wp-content/uploads/2015/09/TRAI-Act-1997.pdf
• https://taxguru.in/corporate-law/irda-scheme-amalgamation-transfer-general-insurance-business-regulations-2011.html

---

LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join: