This article has been written by Sharen Joel, pursuing a Diploma in General Corporate Practice: Transactions, Governance and Disputes and has been edited by Oishika Banerji (Team Lawsikho).
It has been published by Rachit Garg.
Table of Contents
The Telecom Regulatory Authority of India (TRAI) was established by the Telecom Regulatory Authority of India Act of 1997 to regulate the telecommunications sector. Earlier, the telecommunication sector was looked after by the Central Government. After the passing of the Act, the TRAI was vested with the power to promote and develop the telecommunications sector in India, fix or revise the tariffs, and be a part of the global information society. The TRAI’s motive is to promote competition in the telecommunication sector and work for the betterment of the consumers. The Competition Commission of India (CCI) was established by the Central Government in 2003 with the aim to promote and sustain competition, fair trade practices in the economy, and eliminating monopolies in the market. Both the TRAI and the CCI aim at promoting healthy competition in the economy. While TRAI deals only with the telecommunication sector, CCI covers all the businesses in its ambit. TRAI comes into the picture ex-ante, i.e., before the issue has arisen. However, the CCI is mandated to join once the issue has arisen or ex-post the issue. The issue arises because both authorities are given the power to check the competitive practice. Although, there is an invisible line of demarcation as the TRAI promotes sectoral competition while the CCI checks anti-competitive practices in the market. This article aims to make the readers aware about the conflict between TRAI and CCI.
The root cause of the conflict
Section 18 of the Competition Commission of India Act, 2002 states the duties of the Commission as follows:
“18. Duties of Commission.—Subject to the provisions of this Act, it shall be the duty of the Commission to eliminate practices having an adverse effect on competition, promote and sustain competition, protect the interests of consumers, and ensure freedom of trade carried on by other participants, in markets in India: Provided that the Commission may, for the purpose of discharging its duties or performing its functions under this Act, enter into any memorandum or arrangement, with the prior approval of the Central Government, with any agency of any foreign country.”
It is clear from this section that the Competition Commission of India (CCI) has the power to curb anti-competitive practices from the market and prioritise consumer welfare. Further, Section 21 and Section 21 A add to the confusion by sanctioning the cooperation between the sectoral authority and the CCI.
Section 21 provides that if any issue is raised by the party in any proceeding before the statutory authority regarding the decision of such statutory authority, it would be contrary to or violative to any provision of the Competition Act, 2002. In such circumstances, the statutory authority is authorised to make a reference to the CCI in respect of such an issue. The reference to be made is not mandatory but discretionary on the part of the statutory authority. Clause 2 of Section 21 states that on receipt of such reference, the commission shall after hearing the parties, give its opinion to the statutory authority on such issue and the statutory authority shall pass an order as it deems fit. Provided that the commission shall give its opinion to the statutory authority within sixty days of the reference.
Section 21 A states the same rule, the only difference is that the issue is raised in proceedings before the competition commission and the reference is made to the statutory authority. The reference made by the CCI to the statutory authority may be suo moto and can proceed without the request of the parties. The point that needs to be highlighted is that Section 21 A makes it obligatory for the CCI to consider the opinion of the statutory authority before reaching its final decision. Section 21 and Section 21 A, show the intent of the act to maintain cooperation between the competition commission and other sectoral authorities. Nevertheless, such cooperation is not circumscribed and is left unambiguous.
Section 60, on the other hand, sets out that the provision of the Competition Act, 2002, will have superseding effect notwithstanding, anything inconsistent with any other law in force. These provisions do not clear the stance as to what will happen in cases of conflict between the competition commission and other statutory authorities.
On the other hand, in Section 11(1)(a)(iv) of the Telecom Regulatory Authority of India Act of 1997, the TRAI is entrusted with the function to facilitate competition and promote efficiency in the telecom sector. Section 14 of the act provides that the monopolistic trade practice, unfair trade practice, and restrictive trade practices which are subject to the Monopolies and Restrictive Trade Practices Act of 1969 are not subjected to the jurisdiction of the Appellate Tribunal established under the TRAI act. The Monopolies and Restrictive Trade Practices Act was abolished and replaced by the Competition Act of 2002. Yet, no amendments have been made to the TRAI act to date. This creates doubt as to the domain of the TRAI act and the CCI act in matters of competition and unfair trade practices in the telecom sector.
Cases studies relating to jurisdictional conflict
In Star India vs. Sea TV Network (2006), efforts were made to highlight the issue concerning the conflict in jurisdiction between the TRAI and CCI. It was held by the Telecom Disputes Settlement Tribunal that the MRTP or the CCI has no authority to deal with disputes related to TRAI.
The issue of jurisdiction again came into question in the case of Consumer Online Foundation vs. Tata Sky (2011). The complaint was filed against the DTH (Direct to Home) Services providers for limiting the competition and providing the services and pieces of equipment to the customer. The customer subscribing to the DTH service must purchase four products, i.e. Antenna, receiver, set-top box, and smart card. When the customer switches from one DTH subscription to another, they have to repurchase all the pieces of equipment. The supply of equipment by DTH service providers restricts the new manufacturers to enter the market and thus, contravenes the provisions of Section 3 and Section 4 of the Competition Act, 2002, which lays down the ground rules for curbing anti-competitive practices relating to the production, supply, storage, and distribution of services and limitations on the use of dominant positions by enterprises in the market, respectively.
The dispute at hand has already been taken care of by the Telecom Dispute Settlement Appellate Tribunal. Dish TV contested the jurisdiction of the Competition Commission. It was held that the CCI has full authority and command over competition-related matters in the market.
Adjudication of the dispute by the Supreme Court of India
The matter of jurisdictional conflict finally came up to the Supreme Court of India in the case of the Competition Commission of India vs. Bharti Airtel Ltd (2018).
In the present case, Reliance Jio filed information under Section19(1) of the Competition Act before the CCI alleging the anti-competitive practices by the three major telecom operators, namely, Bharti Airtel Ltd., Vodafone India ltd., Idea Cellular. These three major telecom operators are the Incumbent Dominant Operators (IDOs) in the telecom sector. Allegations were made against the Cellular Operators Association of India (COAI).
The CCI took cognizance of the matter in dispute and opined that it is a prima facie case and directed further investigation into the matter. It observed that the IDOs entered into an agreement via the platform of COAI to not provide Point of Interconnections (POIs). Four writ petitions were filed by the IDOs and the COAI in the Bombay High Court following the decision of the CCI. In the writ petitions, it was prayed that the order of the CCI must be quashed as it did not have the jurisdiction to deal with the matter concerned.
Bombay High Court of September 21, 2017, quashed the order of the CCI and observed that the Telecom sector is governed, ruled, and maintained by the authority under the Telegraph act, TRAI act, related regulations, and government policies. It further stated that issues concerning the clash between the interpretation of clauses in the agreement of telecom companies are settled by the TRAI and not the CCI.
The Honourable Supreme Court held that all aspects of the development of telecommunication markets are dealt with under the TRAI act and CCI has no jurisdiction over such matters. Adopting the doctrine of harmonious construction, the honourable court adjourned the matter by stating that in telecom disputes TRAI has jurisdiction in the first instance and the CCI has follow-up jurisdiction. For instance, if the TRAI is of the opinion that the telecom companies are indulging in anti-competitive practices it can refer the case to the CCI.
On a plain reading of the judgments, it appears that the dispute has finally been resolved; however, on close analysis of the case it appears that there are certain issues that will pose a tussle between the two authorities in the coming time. The court held that the TRAI will have first jurisdiction and CCi will only have follow-up jurisdiction and the TRAI can only refer matters to CCI after arriving at the final conclusions. It is contravening the provisions of Section 21 of the Competition act that lays down the statutory authority and can make a reference to the CCI if the issue at hand is against any provision of the Competition act. As per Section 21, the statutory authority is not required to reach a final conclusion before referring the matter to CCI. The more practical approach would be if both authorities join forces and cooperate with each other. The TRAI before reaching the final decisions can seek assistance from the CCI and take the CCI perspective into account to reach a conclusion.
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