Introduction
India’s booming telecom sector is a vital engine of economic growth and social progress. But ensuring a fair and competitive market requires a delicate balance between regulation and competition law. At the center of this dance are two powerful bodies: the Competition Commission of India (CCI) and the Telecom Regulatory Authority of India (TRAI).[1] Both play crucial roles, but their mandates can sometimes overlap, leading to a jurisdictional tug-of-war.
This overlap creates a complex landscape for telecom companies and consumers alike.[2] Unclear boundaries can lead to delays, conflicting decisions, and uncertainty in the market.[3] On the one hand, robust competition law, enforced by the CCI, is essential to prevent anti-competitive practices and ensure a level playing field.[4] On the other hand, TRAI’s expertise in the intricacies of the telecom sector allows it to design regulations that foster efficient infrastructure development and service delivery.[5]1
In this paper, I will examine the potential for conflict, analyze the Supreme Court’s attempt to clarify jurisdictional boundaries, and concluding with suggesting better coordination between these two key regulators.
Purpose of Regulation and Competition
The purpose of both regulation and competition is to facilitate efficient working of the market.[6] However, the scope of regulation is broader than that of competition law. Regulation may be aimed at fixing different types of market failures, ensuring safety and quality of products and services, ensuring consumer interest, and furthering special public interests such as redistribution.[7] In comparison, the mandate of competition law is to prohibit the negative effects on consumer welfare arising from the market power of enterprises.[8] Thus, the limited overlap between regulation and competition law is to check market failures due to the exercise of market power. To this end, even the tools of antitrust and regulation may differ.[9] At times, regulation achieves consumer welfare by directly capping the prices.[10] On the other hand, antitrust seeks to protect and promote consumer welfare by facilitating and protecting competition amongst market players.[11]
Overlap Problem
Applying both regulatory and competition laws simultaneously can lead to a host of issues. A primary concern is the potential for these two frameworks to issue contradictory rulings.[12] For example, a regulatory authority might approve a certain market behavior that the competition authority later deems anti-competitive.[13] This not only weakens the legitimacy of both legal systems but also creates a state of uncertainty in the law.[14] Moreover, having two concurrent legal remedies can encourage ‘forum shopping,’ where parties choose the most advantageous forum to advance their interests.[15] There’s also the risk that a company could be penalized by both authorities for the same conduct, leading to excessive enforcement that can dampen market activity.[16] This is particularly troubling in India’s telecom industry, which is already struggling with a massive debt burden of 7.8 lakh crore and various policy challenges that negatively impact its financial stability.[17]
Conflict of Jurisdiction
The Competition Act of 2002, as articulated in its preamble[18] and further expounded in Section 18[19], entrusts the Competition Commission of India (CCI) with the mandate to foster and maintain competitive practices within the Indian marketplace. This confers upon the CCI the primary authority to oversee and regulate the competitive landscape within the pertinent market sectors of India.[20] Conversely, the Telecom Regulatory Authority of India Act of 1997 delineates its core aim as the cultivation of an environment conducive to the advancement of the telecommunications sector. In accordance with Section 11 of the TRAI Act, the Telecom Regulatory Authority of India (TRAI) is empowered to engender competition and enhance operational efficiency within the telecommunications services, thereby propelling the sector’s growth.[21]
When the objectives of the Competition Act and the TRAI Act are interpreted in concert, they reveal a unified intent to cultivate a milieu that promotes equitable competition. In the pursuit of this shared objective, the regulatory domains of the Telecom Regulatory Authority of India (TRAI) and the Competition Commission of India (CCI) intersect. Despite a mutual aspiration to foster fair competition, the CCI and TRAI are distinguished by their distinct mandates and methodologies. This divergence in strategy between the two regulatory bodies, when addressing analogous goals, precipitates instances of jurisdictional contention.
The variance in regulatory tactics is exemplified by the approach to tariff regulation. The Telecom Regulatory Authority of India (TRAI) endeavors to moderate tariffs to ensure consumer affordability. Conversely, the Competition Commission of India (CCI) may perceive such tariff adjustments as indicative of predatory pricing practices, potentially obstructing market entry for prospective service providers. Consequently, stakeholders frequently resort to engaging the jurisdiction of the regulatory entity that aligns with their strategic interests.
Supreme Court on Overlap
On the 5th of December, 2018, a bench comprising two justices of the Supreme Court delivered a judgment in the case of Competition Commission of India vs. Bharti Airtel Limited and Others[22], which effectively resolved the persisting contention over jurisdiction between the Competition Commission of India (CCI) and the Telecom Regulatory Authority of India (TRAI).[23]
FACTS
Reliance Jio initiated a complaint with the Competition Commission of India (CCI) under Section 19(1) of the Competition Act, accusing Airtel, Vodafone, and Idea—collectively known as incumbent dominant operators (IDOs)—of forming an anti-competitive pact to block points of interconnection.[24] The CCI, after preliminary hearings, deemed that there was sufficient cause to investigate and thus notified the IDOs.[25] However, the IDOs disputed the CCI’s authority to intervene in this matter before the Bombay High Court, arguing that the Telecom Regulatory Authority of India (TRAI) was already addressing the issue.[26] The High Court sided with the IDOs, stating that the CCI’s involvement was misplaced given TRAI’s capacity to handle such telecom-related concerns.[27] The High Court also noted that the CCI should have deferred its decision until TRAI had made a conclusive ruling. In response, both the CCI and Reliance Jio escalated the matter to the Supreme Court for further adjudication.[28]
ISSUE
(a) Whether the CCI can exercise its jurisdiction when TRAI is already vested with the same?[29]
JUDGEMENT
The Supreme Court analyzed the objective of the statues and upheld the decision of High Court of Bombay. Further the Supreme Court opined as follows:
- The current issue pertains to the telecommunications sector, which falls under the purview of the TRAI Act.[30] Initially, it is appropriate for TRAI to address and resolve the “jurisdictional aspects” due to its specialized competence in this field.[31] Once TRAI concludes its assessment and identifies any anti-competitive behavior, the CCI’s authority may be invoked to examine the matter in line with the pertinent sections of the Act.[32] This approach ensures a harmonious balance between the functions of TRAI and the CCI.[33]
- Should the CCI intervene while TRAI is already examining the issue, there’s a risk of conflicting decisions from the two bodies. Therefore, it’s crucial to prevent overlapping jurisdictional claims.[34]
- The CCI’s jurisdiction is not entirely excluded; rather, it’s a question of which authority should take precedence.[35] The CCI is designated to act when an agreement negatively impacts market competition, as it is specifically equipped to handle such matters.[36] The authority to address these concerns should remain uncontested.[37]
Analysis of Judgement
The Supreme Court’s judgment in the case of Competition Commission of India vs. Bharti Airtel Limited has indeed settled the jurisdictional conflict between the CCI and TRAI to a certain extent.[38] However, it has also given rise to several controversies and points of contention, like-
1. Primary Jurisdiction of TRAI: The judgment stipulates that TRAI will be the initial authority to exercise jurisdiction over matters related to the telecommunications industry. This has raised concerns that the judgment contradicts the legislative intent of Section 21[39] of the Competition Act, which permits statutory authorities to refer matters to the CCI even before a “final determination” is made by TRAI.[40]
2. Follow-on Jurisdiction of CCI: The CCI’s jurisdiction is portrayed as secondary, contingent upon TRAI’s final determination. Accordingly, this approach undermines the CCI’s mandate, as the Competition Act empowers the CCI to independently investigate issues pertaining to anti-competitive practices.
3. Mandatory Acceptance of TRAI’s Decision: The judgment asserts that the “jurisdictional fact” must be decided by TRAI and must be mandatorily accepted by the parties and the CCI.[41] This has been viewed as potentially limiting the CCI’s ability to exercise its investigative powers, which are crucial for its functioning as per the Competition Act.
Conclusion
The complex interplay between the Competition Commission of India (CCI) and the Telecom Regulatory Authority of India (TRAI) has been a cause for concern in the telecom sector. While both aim to foster a healthy market, their overlapping jurisdictions can lead to confusion and delays. The Supreme Court’s judgement in the CCI vs. Bharti Airtel case attempted to clarify the jurisdictional boundaries. It established TRAI as the primary authority for telecom-related issues, with the CCI’s jurisdiction following TRAI’s “final determination.”[42] However, this approach has its critics who argue it weakens the CCI’s independence and investigative powers. The path forward lies in collaboration between these two crucial regulators. Learning from models like Singapore, where The Singapore Competition Act empowers the Competition and Consumer Commission of Singapore (CCCS) to sign cooperation agreements with other sector regulators, comprising clauses on information sharing, consultation, etc..[43] Open communication and clearly defined responsibilities for each body will ensure a smoother regulatory landscape, ultimately benefiting both businesses and consumers in India’s booming telecom sector.
[1] AZB & Partners, ‘Jurisdictional Conflicts: Reconciling the Mandates of the Telecom Regulator and the Competition Commission’ (AZB & Partners, 13 June 2018) <https://www.azbpartners.com/bank/jurisdictional-conflicts-reconciling-the-mandates-of-the-telecom-regulator-and-the-competition-commission/> accessed 26 April 2024 – addresses the overlapping jurisdictions between the Telecom Regulatory Authority of India (TRAI) and the Competition Commission of India (CCI) in the telecom sector. It discusses the challenges posed by the presence of multiple regulators with different mandates, leading to jurisdictional conflicts and protracted legal proceedings. The paper highlights a specific instance where TRAI, the sectoral regulator for telecom services, and CCI, a sector-agnostic regulator for competition, clashed over regulatory authority.
[2] Ibid (n 1)
[3] Ibid (n 1)
[4] Ibid (n 1)
[5] Ibid (n 1)
[6] CUTS International, ‘HARMONISING REGULATORY CONFLICTS: Evolving a Cooperative Regime to Address Conflicts Arising from Jurisdictional Overlaps between Competition and Sector Regulatory Authorities’ (CUTS International & Indian Institute of Corporate Affairs, New Delhi) <https://cuts-ccier.org/pdf/Synthesis_Report-Harmonising_Regulatory_Conflicts.pdf> accessed 26 April 2024 – provides a comprehensive analysis of the jurisdictional overlaps between competition authorities and sector regulatory authorities. It emphasizes the need for a cooperative regime to manage conflicts arising from these overlaps.
[7] Ibid (n 6)
[8] Ibid (n 6)
[9] Ibid (n 6)
[10] Ibid (n 6)
[11] Ibid (n 6)
[12] Vikas Kathuria, ‘Conflict between Regulation and Competition Law in the Indian Telecom Sector’ (2018) Economic and Political Weekly – The paper focuses on the case filed by Reliance Jio against incumbent telecom operators before the Competition Commission of India (CCI) and the Telecom Regulatory Authority of India (TRAI), alleging anti-competitive practices. Kathuria argues that competition law should intervene only in “gap” cases where the regulatory regime fails to protect consumer welfare. The article suggests that when regulatory and competition agencies reach conflicting decisions, a third body should resolve the issue with a binding decision on both agencies.
[13] Ibid (n 12)
[14] Ibid (n 12)
[15] Ibid (n 12)
[16] Ibid (n 12)
[17] Ibid (n 12)
[18] The Competition Act, 2002, Preamble
[19] The Competition Act, 2002, s. 18
[20] Ibid (n 18 & 19)
[21] The Telecom regulatory Authority of India Act, 1997, s. 11
[22] Competition Commission of India v Bharti Airtel Ltd [2018] AIR 2019 SC 113
[23] Ibid (n 23)
[24] Ibid (n 23)
[25] Ibid (n 23)
[26] Ibid (n 23)
[27] Ibid (n 23)
[28] Ibid (n 23)
[29] Ibid (n 23)
[30] Ibid (n 23)
[31] Ibid (n 23)
[32] Ibid (n 23)
[33] Ibid (n 23)
[34] Ibid (n 23)
[35] Ibid (n 23)
[36] Ibid (n 23)
[37] Ibid (n 23)
[38] Ibid (n 23)
[39] The Competition Act, 2002, s. 21
[40] Ibid (n 39)
[41] Ibid (n 23)
[42] Ibid (n 23)
[43] Ritima Singh, ‘CCI v. TRAI: Regulatory Framework for Better Coordination and Interoperability’ (2023) 4(1) Competition Commission of India Journal on Competition Law and Policy 77 – Singh proposes a potential framework to enhance the interoperability between CCI and TRAI, drawing from international best practices. The paper suggests that effective mutual cooperation and consultation are essential for strengthening market competition and calls for a more active use of the existing regulatory architecture to achieve this goal.
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