INTRODUCTION
The Competition Commission of India (CCI) was established in 2002 under the Competition Act 2002 repealing the Monopolies and Restrictive Trade Practices Act 1969 (MRTP) after the recommendation of the Raghavan Committee which is focused on fostering competition and preventing anti-competitive practices in the market and promote fair trade practices to protect the interest of consumers.
Before 1991, the Indian economy was a closed economy in which the companies were majorly owned and controlled by the government and the market too was under the control of the government. This situation where the government is also a regulator and owner of the market and companies, respectively does not give rise to the situation of anti-competitiveness as it is generally believed that the government works for the interest of consumers. Hence does not fall prey to anti-competitive and unfair trade practices.
However, the economic reforms of 1991 changed this situation as the government opened up the Indian economy and changed their role to mere regulator of the market which led to the increase of participation of private players in the markets. This change gives rise to the situation where there is a need for sectoral regulators.
WHY THERE IS A CLASH OF JURISDICTION
The increase in participation of private players gives rise to various sectoral issues such as anti-competitive practices, uneven distribution of resources, prioritization of profits over sustainability, overexploitation of resources, etc. To tackle these issues the government set up various sectoral-specific regulators such as the Telecom Regulatory Authority of India (TRAI), Petroleum and Natural Gas Regulatory Board (PNGRB), Securities and Exchange Board of India (SEBI), etc. These problems have also arisen in the competition arena where private players use unfair and anticompetitive measures to gain a dominant position in the market which led to the setting up of CCI in 2002.
The establishment of CCI led to a situation where both the sectoral regulator and competition commission have jurisdiction to try a case over competition matters. This is where the clash of jurisdiction happens between the Competition Commission and other sectoral regulators.
HOW CLASH OF JURISDICTION TAKES PLACE
As discussed above both competition commissions and sectoral regulators were set up at a different time but have similar or interconnected objectives. Both work for the development of economic activity by preventing dominant players from controlling the market. But even with the same objective, both have different legislative mandates. Because of this both the regulators treat the same issue with different approaches. Whereas the sectoral regulators deal with the structural and ex-ante issues, on the other hand, CCI deals with behavioral and ex-post issues. The clash happens when both the sectoral regulator and competition commission have jurisdiction to entertain the dispute and when the question arises related to what law and by whom it should be implemented. Since competition enforcement is a primary duty of the CCI, the same duty given to another regulator has created a scenario of clash of jurisdiction.
DIFFERENT ACTS WHERE CLASH OF JURISDICTION HAPPENS
- Telecom Regulatory Authority of India (TRAI)
TRAI was established in 1997 under the Department of Telecom to regulate the telecommunication industry in the country and protect the interests of investors and consumers. SECTION 38 of the TRAI Act,1997 gives powers to Telegraph authority to perform any role, function, or authority which is in addition to any other act. Additionally, SECTION 11 of the Act grants TRAI the authority to promote competition and efficiency in the operation of telecommunication services to support the growth of the telecommunication sector.
On the other hand, the preamble of the Competition Act, 2002 read with SECTION 18 of the Act gives power to CCI to promote and sustain competition. This section also entrusts the duty of the competition commission to sustain competition and protect the interests of the participants. If we read the provisions of both Acts simultaneously both Act gives the power to facilitate fair competition which gives rise to jurisdictional conflict between CCI and TRAI.
- Petroleum and Natural Gas Regulatory Board (PNGRB)
PNGRB is the regulator which regulates the oil and natural gas sector. It was established in 2006 under the PNGRB Act, 2006. SECTION 11 and SECTION 28 of the Act give power to PNGRB to issue directions and levy penalties to stop restrictive trade practices which was defined under SECTION 2 (ZI) of PNGRB Act, 2006. These Sections give power to PNGRB to enter the domain of competition which leads to jurisdictional conflict between CCI and PNGRB.
- ELECTRICITY ACT, 2003
Under the Electricity Act, 2003 SERC and CERC are the authorities that have been given the duty to ensure fair trade in the electricity sector. SECTION 60 of the act gives powers to take corrective action if a licensee or an electricity generating company enters into an anticompetitive agreement or enters into a combination to benefit its dominant position in the market which could hurt competition in the electricity sector. Other than that SECTION 174 of the Act also gives the overriding power to SERC and CERC which leads to jurisdictional overlap.
COURT VIEW ON CONFLICT RELATED TO CLASH OF JURISDICTION
The Supreme Court settled the issue of jurisdictional conflict in the case of Competition Commission of India v. Bharti Airtel Limited and Others. In this case the issue involved relates to CCI jurisdiction over a dispute where TRAI already has the jurisdiction. In this case, the court analyzed the objectives of both statutes and upheld the decision of the Bombay High Court that the CCI does not have jurisdiction to rule on certain issues of telecom sectors such as subscriber, test period, and reasonable demand. Further, the court opined that TRAI is a specialized body created by the government to deal with the telecom sector. Hence, whenever a jurisdictional conflict arises in the telecom sector TRAI is the first authority that shall exercise its jurisdiction as it is more competent to handle it due to its expertise in the telecom sector. Further, it can refer the issue to CCI if it feels that there is an anticompetitive practice involved in the dispute. According to the court, this will maintain a balance between TRAI and CCI. The court didn’t take away the CCI jurisdiction completely but tried to make a balance between the CCI and other sectoral regulators.
DIFFERENT APPROACHES ADOPTED TO DEAL WITH CLASH OF JURISDICTION
The overlap or clash in jurisdiction if not solved gives rise to a large number of disputes between CCI and other sectoral regulators over the point of jurisdiction which may also affect the ease of doing business within the country because the parties will remain confused in deciding appropriate forum in case of a dispute. This will directly harm the consumers who are the most important stakeholder in this regard.
To resolve this jurisdictional conflict at international level, different countries have adopted and developed different approaches to deal with and solve the problem of jurisdictional overlap. Some of them are given below: –
- CONCURRENT JURISDICTION
Under this approach, both competition law and sector-specific laws possess equal jurisdiction where both regulators decide their jurisdiction through consultation. The prime example of this is the European model where it is mandatory to have consultation between the competition authority and sectoral regulator whenever there is a dispute of jurisdiction between both regulators.
- EXCLUSIVE JURISDICTION
Under this approach, the sectoral regulator was given exclusive power to deal with competition law whenever an issue arises related to their particular sector. In this approach, the sectoral regulator has exclusive power to either follow or refuse the competition law. If this approach is followed it will defeat the Competition Commission’s powers and affect the power symmetry between the Competition Commission and the specific sectoral regulator.
- COOPERATIVE JURISDICTION
Under this approach, both the competition commission and other sectoral regulators take a collaborative approach where they voluntarily cooperate either formally or informally to resolve the jurisdictional dispute between both authorities. It can either be through a Memorandum of Understanding or informally through consultation.
CONCLUSION & SUGGESTIONS
As already discussed above the jurisdictional overlap between different sectoral regulators and CCI gives rise to different ambiguities due to which problem is faced by the stakeholders, companies that are coming under the jurisdiction of sectoral regulators or CCI, and consumers. All of them struggle to find the most suitable authority where they can file their application related to their grievances.
The best-suited approach to minimize these jurisdictional clashes is to adopt the cooperative approach where both CCI and other sectoral regulators must cooperate when they believe that their judgment may affect the jurisdiction of other forums or authorities. SECTION 62, SECTION 21 & SECTION 21 A of the Competition Act, 2002 also shows the principle of cooperative approach between the Competition Commission and other sectoral regulators where both sectoral regulator and Competition Commission can refer the issue to each other when either authority is of the view that their decision may go contrary to the provision of any other act.
Further, it is not necessary that the sectoral regulator primarily work as a watchdog for the competition arena, it may complement the role by framing coherent and consistent policy for their specific sectors. This can only be achieved when the sectoral regulator does not work towards anti-competitive regulatory measures but tries to encourage competition by tackling asymmetric information, reducing barriers to entry, setting standards for interoperability, and limiting the exploitation of behavioural biases.
This approach will balance the situation of jurisdictional conflict between CCI and other regulatory authorities and demarcate the roles performed by each sectoral regulator. This will ensure legal certainty by avoiding duplicity of competition enforcement and promote the integrity of CCI by preventing forum shopping by the dominant players in the market.
References:
https://www.oxfordreference.com/display/10.1093/acref/9780199234899.001.0001/acref-9780199234899-e-1212
https://callolcoca.com/wp-content/uploads/2012/11/Harmonising-Regulatory-Conflicts111.pdf
https://www.lakshmisri.com/insights/articles/regulatory-tussle-competition-commission-of-india-v-controller-of-patents-ors/
https://indiankanoon.org/doc/40899694/
https://www.grin.com/document/432160
Author Bio
