TELECOM SECTOR AND COMPETITION LAW: INTERPLAY OF THE ROLES OF CCI AND TRAI



From the stage of monopolies to the stage of the competition, the telecom sector is rapidly developing. As far as economical growth is concerned, it is one of the fastest-growing sectors. It involves the significant intervention of innovation and competition and because of this reason, the questions arise regarding the role and function of the telecom and competition authorities in the cases of concurrent issues. 
The nation has witnessed multiple allegations against the private operators by the telecom regulator (TRAI) on grounds of cartel formation, predatory pricing, [1], and abuse of dominance.
The Apex Court, in 2018 ruled on the roles and responsibilities of the two regulators - TRAI and CCI. [2] CCI is a regulator that works in multiple sectors that are tasked with protecting and promoting the competition in India. While performing this task, CCI regulates the conduct in the sectors that are already having sector-specific regulators such as TRAI in the telecom sector. TRAI is a regulator exclusively regulating the telecom sector.

The Issue
In 2017, Reliance Jio Infocomm Limited (RGIL) approached the CCI against the other service providers, accusing them of forming a cartel and thereby denying market entry to Jio. Further, it was alleged that Jio was denied points of interconnection which led to calling failures between Jio and other service providers. RGIL had previously approached the TRAI against the misconduct of other providers. 

Procedural History
Initially, RGIL approached TRAI regarding the denial of the required points of interconnections. TRAI found the other providers guilty and imposed a fine of Rs 50 crores against them. The providers moved to the High Court against the fine imposed. 
CCI, by a 3:2 majority, held the providers guilty of ‘cartelization’. CCI also held that the offense of cartelization is a violation of S. 3 of the Competition Act, 2002, and was therefore held to be beyond the jurisdiction of TRAI. The latter was held to be responsible in the cases where norms and quality of the service are in question or in the cases where there is a contractual breach. [3]
The order passed in CCI was challenged in the Bombay HC. The BHC set aside the order on the grounds that CCI lacked the jurisdiction on the matter and TRAI which is the exclusive regulator had already seized the matter.  The court held that the Telecommunication sector is governed by the Telegraph Act, TRAI Act, etc. and therefore the issues relevant to the telecommunication market is in the jurisdiction of telecom authorities like TDSAT and TRAI. Further, it was held that the Competition Act and TRAI Act have independent objectives, therefore, establishing that the case is beyond the jurisdiction of CCI.[4] BHC held that there was no violation under the Competition Act. CCI and Jio approached the SC against the order of BHC.

Supreme Court’s Verdict
The SC held TRAI to be an of a regulator of specialized nature and thereby the appropriate authority in such cases. [5] It was held that TRAI has three-fold functions:
  • Ensuring technical compatibility and regulating relationships between the providers
  • Ensuring the abidance to the license conditions by all providers
  • Dispute settlements arising between the service providers
The SC also held CCI to be a competent body in competition analysis and the responsibility given to the CCI cannot be taken away. The TRAI and CCI should work in ‘comity’ with each other. Therefore, both the regulators can exercise jurisdiction in the telecommunication sector with the jurisdiction of CCI being secondary in nature. The primary jurisdiction is conferred upon TRAI as it is a regulator specialized for the telecommunication sector.  The SC did the ‘balancing act’ where neither CCI nor TRAI is excluded from the jurisdiction. 

The interface between Sector Regulation and Competition 
Sector regulation and competition enforcement, both work towards a common goal of ensuring a healthy market. Sector regulation deals with market failures, quality of products, etc. to safeguard customer welfare whereas competition enforcement aims at shielding the interest of the customer from the competition in markets. There can however be certain cases the issues fall in the domain of both.
As per S. 11 of the TRAI Act, the authority has a function of making recommendations so as to facilitate competition in markets. S. 21 and 21A of the Competition Act mentions that CCI can refer to other statutory bodies and vice-versa. 
These provisions, however, are not binding on either of the regulators. There are no clarifications in the cases of overlaps between the two. Moreover, there is no mention of the sequence of the jurisdiction in such events in any of the statutes. 

Maintaining Comity
In the judgment, the SC held that the powers and responsibilities assigned to TRAI and CCI are to meet a common object of a healthy market and safeguard of the customer. The court held the jurisdiction of TRAI to be primary in order to decide on the technical aspects of the matter after which CCI can decide on the matter. In this manner, both the regulators are to work harmoniously.

Approaches used in other countries
Broadly, there are three models that can be used to address the problem. The first is the exclusivity model under which either of the bodies is given exclusive rights to deal with the issue. [6] The second model is a concurrent model where both the authorities have the jurisdiction to deal with the issue and reach a decision through the process of consultation. The third model is the model of cooperation. Herein, law enforcement is allocated between the authorities, and mechanisms are devised in case any dispute arises. Different states have adopted different models depending upon their legal conditions, structure, etc. 

Conclusion
It is clear from the above analysis that both CCI and TRAI aim at ensuring fair competition. The problem arises in their approach to handling matters. TRAI emphasizes on quality of products, services, managing market failures, etc.; the CCI aims at protecting the consumer from anti-competitive practices of organizations. The judgment is a step towards reducing jurisdictional conflicts between CCI and TRAI, however, no clear demarcation of subject matter has been given.

Suggestions    
India can be benefitted from the comprehensive view of sectoral regulators like TRAI. This can be done by identifying the potential areas of conflict in the legislations. A system of consultation between TRAI and CCI appears to be the most feasible and effective option. As observed the consultation between the two is of discretionary nature. It should, however, be considered to be made mandatory. This would ensure minimum friction between the two regulators and the reconciliation of their orders. It is for therefore necessary to amend the pertinent statutes wherein both CCI and TRAI have to consult each other in cases of jurisdictional disputes. 

References
[1]  Competition Commission of India vs. Bharti Airtel Limited and Others, (2019) 2 SCC 521.
[2]  Bharti Airtel Ltd v. Telecom Regulatory Authority of India, TDSAT, Telecom Appeal/1/2018.
[3]  Case no. 81 of 2016 and Case no. 83 of 2016.
[4] Vodafone India Limited and Ors. vs. The Competition Commission of India and Ors., [2018] 143 CLA 429 (BOM)
[5] Supra 1
[6] Ibid.

No comments:

Post a comment

Pages