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Jurisdictional conflict between CCI And TRAI

Authored by Kanishka Agarwal, Student at HNLU Raipur

Introduction

In this ever-increasing knowledge-intensive world, telecommunication has become one of the most important infrastructures for the establishment of a knowledge economy and the socio-economic development of a country. For a society driven by innovation and technology, the potential to reach telecom services to every part of the country is an integral part.

India is the second-largest telecommunication market with a teledensity of 90.23% and a subscriber base of 1189.28 million.[1]Taking into consideration the size of the telecom sector, the Government of India (G.O.I.) established the Telecom Regulatory Authority of India (TRAI) to regulate the telecom industry.

The advancement in technology combined with the enabling policy regime aided the growth of the telecom sector at the annual rate of 33% in the first decade of the 21st century.[2] This exerted immense pressure on the telecom service provider due to the competitive nature of the market. With the advent of Jio, other telecom operators suffered heavy losses; some succumbed, while only a few were able to survive in the market. Among them were Vodafone-Idea, and Airtel along with state-owned BSNL. With this, there arose a fear of disruption in competition. With the amalgamation of Vodafone and Idea, three operators emerged as the dominant players in the market i.e., Reliance Jio, Airtel, and Vodafone-Idea.

Although TRAI is the sole regulatory body for the telecom sector, the role of the Competition Commission of India (CCI) also comes into the picture as it is entrusted with the responsibility of sustaining fair competition in the economy. Therefore, occurrences of jurisdictional conflict between these two bodies are not surprising.

We shall discuss the scope of CCI and TRAI and will identify the root cause of jurisdictional conflict between these bodies with the help of appropriate judicial pronouncements in detail.

An Overview: CCI & TRAI

TRAI is a regulatory body established by the government under the Telecom Regulatory Authority of India Act, 1997. It is entrusted with the responsibility of providing a transparent and fair policy environment that facilitates fair competition while promoting a level playing field. It regulates the fixation and revision of tariffs for telecom services and encourages transparency in the allocation of the spectrum by adopting the auction process.[3] Further, it settles disputes through its Telecom Disputes Settlement and Appellate Tribunal (TDSAT) established under the TRAI Amendment Act, 2000.

Similarly, the CCI is a statutory body established under the Competition Act, 2002 the objective of which is to create and maintain fair competition in the market as it is the best way to provide goods and services at the most competitive prices to a common man.  Its mandate and duties include preventing abuse of dominant position, regulating combinations i.e., mergers and acquisitions, prohibiting anti-competitive agreement, eliminating practices that affect competition, and ensuring freedom of trade. All this provides a level playing field to producers and promotes the welfare of consumers.[4]

Conflict of Jurisdiction

There are various provisions mentioned under the Telecom Regulatory Act and Competition Law Act that led to jurisdictional conflicts.

Section 11(1)(iv) of the TRAI, Act,[5] promotes efficiency and facilitates competition in the operation of telecommunication services. This overlaps with the similar objective of the Competition Act, which is promoting, and sustaining competition. Hence, both of these bodies, through the provisions of their respective Acts – i.e., under Section 36(2) of Competition Act,[6] and Section 16(2) of the TRAI Act.[7]– enable their courts to discharge their functions with powers equivalent to civil courts under the Code of Civil Procedure.

Such similarities lead to frequent occurrences of jurisdictional conflicts which have defeated the very purpose of these special bodies which were created to expedite trials. Instead, it has placed a burden on higher courts to address and resolve such disagreements between these bodies.

The T.R.A.I. is a sector-specific regulator while CCI is a sector-agnostic regulator having a much wider scope and powers. Section 21, & 21A of the Competition Act shed light upon such powers. According to Section 21 of the Act,[8] if the decision in any proceedings before any statutory authority, is contradictory to the provisions of the Competition Act, then the statutory body may make a reference in the matter to the Competition Commission. Conversely, according to Section 21A[9] if the decision of the Commission is contrary to the provisions of the Act whose implementation is entrusted to statutory authority, then the Commission has to refer such proceedings to the respective statutory authority.

Recent Legal Developments

There are various judicial pronouncements concerning the jurisdictional conflict between these two bodies. Courts through these have attempted to resolves such conflicts.

A few of those significant cases are mentioned below:

  • In the case of Consumer Online Foundation v. Tata Sky Ltd. & Ors.,[10] it was contended that DTH service providers were violating Sections 3 & 4 of the Competition Act by limiting competition among themselves, forcing customers to buy bundled hardware, and erecting barriers to entry for new hardware manufacturers. It was also suspected that DTH service providers and set-top box manufacturers had entered into an exclusive deal. The court held that “DTH operators have contravened Section 3 & 4 of the Competition Act, but contentions were raised that this issue should be referred to the TRAI, as the regulations that are to be complied by the DTH service providers fall within the jurisdiction of TRAI” The purview of C.C.I. is wide and it deals with competitive agonists in different sectors of the market.
  • In the case of Vodafone India & Ors. v. Competition Commission of India & Ors.,[11] the Court stated that “TRAI Act and Competition Act are independent statutes, they shouldn’t exercise conflict of jurisdiction and are expected to discharge their jurisdiction and power in the light of their objective. Further, it was observed, the TRAI is responsible for settling the questions if any, of interpretation or clarification regarding contract clauses, unified license, interconnection agreements, quality of service regulations, and rights and obligations of telecom service providers, where, the Competition Act is not sufficient in itself to deal with issues which arise out of the provisions of TRAI Act.

Based on the above-made observations the Competition Commission of India is not competent to interpret contract policies or conditions of the telecom sector.  In fact, there can be no question of initiating proceedings under the Competition Act unless the T.R.A.I. settles the contract agreements, terms, and clauses, and other such related issues.

  • In the case of, Competition Commission of India v. Bharti Airtel & Ors.,[12] Reliance Jio filed an application to C.C.I. under Section 2 r/w Section 3, & 19 of the Competition Act, against the abuse of dominant position and alleged cartelization among Vodafone, Idea, Airtel, (ICO), and Cellular Operators Association of India (COAI). It was also contended that I.C.O is colluding against the new entrant i.e., Jio by denying a sufficient number of Points of Interconnection (PoI) and requested for Mobile Number Portability (MNP).

The COAI and ICO filed a writ petition in the Bombay High Court to quash CCI orders, where it was held that CCI has no jurisdiction in the given case. Later CCI appealed to the Supreme Court.  

The Apex Court set aside the orders passed by CCI and upheld the High Court’s ruling stating; “CCI is a sector-agnostic regulator and has no jurisdiction in such matter while TRAI is a sector-specific regulator with the expertise to deal with matters arising from the telecom sector.” Further, after conducting the requisite investigations, if TRAI concludes that anti-competitive acts exist within the area, then CCI can step in to enforce such necessary sanctions under the Competition Act of 2002. Hence, if TRAI takes any action that should have been taken by CCI it should be confined to the TRAI Act, 1997.

Analysis

Based on the above-mentioned cases, it can be inferred that time and again, issues regarding which body should have jurisdiction in a particular situation have surfaced.

According to the Tata Sky Ltd. case, where it was contended that the proceedings should be referred to TRAI, the Court had held that the activities of DTH service providers are violative of the provisions of the Competition Act. The Court did not go into further details regarding the separate functions and jurisdictions of these two bodies. In the Vodafone India case, however, the court clearly differentiated the responsibilities and domains of these two bodies but opined that the roles of these bodies are different and that they should work according to their objectives. Indeed, the objectives of these regulatory bodies are often overlapping. Where exactly one could possibly draw a line was still disputed until the landmark judgment of C.C.I. v. Bharti Airtel. In this matter, the court concluded that TRAI, with expertise in the telecom industry, should first examine the matter in the context of the telecom sector and if it believes that there are certain anti-competitive elements that appear in a particular case, then that case could be referred to C.C.I. Thus the Court assigned roles on a priority basis.

It may be argued that these judgments are sufficient to resolve jurisdictional conflict. However,  if we look into the larger picture, then it is clear there is a lack of consistency making it difficult to decide which particular pronouncement should be regarded as a precedent. Due to this conundrum, it is quite possible that in other such cases we might come across varying interpretations. Obviously, there is an urgent need to resolve such ambiguities. India can take examples from other countries and adopt any one option from amongst the prevalent approaches.

For example, the Office of Fair Trading and other sectoral regulators in the UK, follow the concurrent jurisdiction where the authorities appreciate competency and arrive at the best result possible through the consultative procedure.[13] Some countries follow an exclusive jurisdiction model where, if one of the bodies is given jurisdiction over the matter, the other authority will have no say in the issue. Some other countries follow cooperative jurisdiction where both authorities consult to arrive at a possible decision.

Apart from these, the legislature could perhaps expand the scope of Section 21, and 21A of the Competition Act, by including an enabling provision regarding the contradictory judgments of various regulatory bodies. It can list the situations and scenarios indicating the authority of C.C.I. over other regulatory bodies.

Conclusion

It is a fact that the jurisdiction of these bodies is overlapping giving rise to unnecessary conflicts, which in turn defeats the purpose of a regulatory body. The interplay between such bodies is significant. Certainly, any kind of turf wars and overlapping of jurisdictional issues are not healthy for the market.

Although ambiguities cannot be completely resolved, they can indeed be harmonized through the adoption of better regulatory design and improved lines of communication between TRAI and CCI.

References

[1] Telecom at a Glance, Department Of Telecommunications G.O.I., (Oct 14, 2019),  https://dot.gov.in/telecom-glance.

[2] Market Study on The Telecom Sector in India Key Findings and Observations, CCI G.O.I, (Jan 22, 2021), https://www.cci.gov.in/node/5663.

[3] A Twenty-Year Odyssey 1997-2017, TRAI G.O.I., (Sept 1, 2020),  https://www.trai.gov.in/about-us/history.

[4] About Competition Commission of India, CCI G.O.I, (May 24, 2019),  https://www.cci.gov.in/about-cci.

[5] The Telecom Regulatory Authority of India Act, 1997, § 11 (1)(c), No. 24, Acts of Parliament, 1997 (India).

[6] The Competition Act, 2002, § 36(2), No. 12, Acts of Parliament, 2003 (India).

[7] The Competition Act, 2002, § 16(2), No. 12, Acts of Parliament, 2003 (India).

[8] The Competition Act, 2002, § 21, No. 12, Acts of Parliament, 2003 (India).

[9] The Competition Act, 2002, § 21A, No. 12, Acts of Parliament, 2003 (India).

[10] Consumer Online Foundation v. Tata Sky Ltd. & Ors, 2011 Indlaw CCI 12.

[11] Vodafone India & Ors. v. Competition Commission of India & Ors. 2017 CompLR 965 (Bombay).

[12] C.C.I. v. Bharti Airtel, AIR 2019 SC 113.

[13] UK sector regulation and the concurrency regime, Lexis Nexis (2019)  https://www.lexisnexis.co.uk/legal/guidance/uk-sector-regulation-the-concurrency-regime.

*Disclaimer: The content of this article is intended to provide a piece of general information. The views are expressed by the Author solely and BFTLR may or may not subscribe to the views of the Author.

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