Introduction

A two-judge bench of The Supreme Court of India (‘SC’), on 5th December, 2018 resolved the conflict of jurisdiction between Competition Commission of India (‘CCI’) and Telecom Regulatory Authority of India (‘TRAI’) and the interplay of roles of the two regulators. CCI is a sector-agnostic regulator authorised to “promote and sustain competition in markets of India”. Whereas, TRAI is sector specific regulator delegated to “promote and ensure orderly growth of telecom sector”. The legislative intent behind both the legislations is to ensure fair-competition in the market of India. Though both the regulators have a common goal, they differ in their inquiry procedure and mandates.

Background

In 2017, Reliance Jio Infocomm Limited filed an application under Section 19(1) of the Competition Act, 2002 which states that the commission may inquire into certain agreements and dominant position of enterprise, alleging abuse of dominant position and cartelization by Bharti Airtel, Idea Cellular Limited, Vodafone India Limited (collectively, the ‘IDOs’) and the Cellular Operators Association of India for the violation of section 3 & section 4 of the Act, which states that there should not be any agreement which is likely to cause appreciable adverse effect on the competition within India[1]& another which states that no enterprise or group shall abuse its dominant positionrespectively[2]. Jio alleged that the cartel restricted it to enter into the telecom market by denying the sufficient number of Point of Interconnection (‘PoI’) to it. Further, Jio filed an application before TRAI to look into the conduct of IDO and the COAI.

CCI’s Order on the above application was challenged before The Bombay High Court (‘The High Court’). The High Court on 21st September, 2017 set aside CCI’s Order and held that the CCI had no jurisdiction in the matters of telecom sector as in the instant case the matter was also referred to TRAI the telecom sector regulator. Further, The High Court held that the TRAI a sector specific regulator and it is technically well equipped to deal with the said issues in the telecom sector. Furthermore, the prima facie Order passed by the CCI was not an administrative order and therefore the CCI should have waited for the final decision of the TRAI before passing a prima facie Order against the anti-competitive practices. CCI and Jio aggrieved by the impugned Order of The High Court challenged it before The SC by way of special leave petition.

Facts

In December 2016, RJIL filed a case with CCI under Section 19(1) (a) of the Competition Act, 2002 („the Act‟ hereinafter) against three major Cellular Operators namely Bharti Airtel, Vodafone and Idea Cellular („Incumbent Dominant Operators’ or ‘IDO‟ hereinafter) for cartelisation. It further asserted that the Cellular Operators‟ Association of India (COAI) – an industry association of mobile telecom operators, was aiding the IDOs in formation of the alleged cartel. RJIL alleged that the IDOs were colluding against the new entrant by:

a) Denying point of interconnections (PoIs, physical interfaces between two different carriers), which is a mandatory requirement for offering telecommunication services. Further, the IDOs were consciously attempting to downgrade the services of RJIL by only offering one-way POIs (from incumbents to RJIL) instead of giving two-way POIs and preventing RJIL subscribers from making calls across different service providers; and

 b) Denying requests for mobile number portability (MNP) so their customers do not switch to RJIL‟s network.

Issues

1. Whether the writ petitions filed before the High Court of Bombay maintainable?
2. Whether the High Court could give its finding on merits?

Argument Advanced

1. Whether the writ petitions filed before the High Court of Bombay were maintainable?

Here comes the scope of judicial interference under Article 226 of the Constitution. As per the RJIL as well as CCI, the High Court could not have entertained the writ petition against an order passed under Section 26(1) of the Competition Act which was a pure administrative order and was only a prima facie view expressed therein, and did not result in serious adverse consequences. It was submitted that the finding of the High Court that such an order was quasi-judicial order is not only erroneous but it is contrary to the law laid down in the case of Steel Authority of India Limited. The respondents, on the other hand, have submitted that the judgment in the above case had no application in the instant case as it did not deal with the sector that is regulated by a statutory authority. Moreover, such an orderwas quasi-judicial in nature and cannot be treated as an administrative order since it was passed by the CCI after collecting the detailed information from the parties and by holding the conferences, calling material details, documents, affidavits and by recording the opinion. It was submitted that judicial review against such an order is permissible and it was open to the respondents to point out that the complete material, as submitted by the respondents, was not taken into consideration whichresulted in an erroneous order, which had adverse civil consequences inasmuch as the respondents were subjected to further investigation by the Director General.

Thus, even when we do not agree with the approach of the High Court in labelling the impugned order as quasi-judicial order and assuming jurisdiction to entertain the writ petitions on that basis, for our own and different reasons, we find that the High Court was competent to deal with and decide the issues raised in exercise of its power under Article 226 of the Constitution. The writ petitions were, therefore, maintainable.

2. Whether the High Court could give its findings on merits?

Once we hold that the order under Section 26(1) of the Competition Act is administrative in nature and further that it was merely a prima facie opinion directing the Director General to carry the investigation, the High Court would not be competent to adjudge the validity of such an order on merits. The observations of the High Court giving findings on merits, therefore, may not be appropriate.

At the same time, since we are upholding the order of the High Court on the aspect that the CCI could exercise jurisdiction only after proceedings under the TRAI Act had concluded/attained finality, i.e. only after the TRAI returns its findings on the jurisdictional aspects which are mentioned above by us, the ultimate direction given by the High Court quashing the order passed by the CCI is not liable to be interfered with as such an exercise carried out by the CCI was premature. The result of the discussion would be to dismiss these appeals, subject to our observations on certain aspects. Ordered accordingly.

Ruling by the Supreme Court

The SC did not grant leave to petitioners and upheld the decision of The High Court. The SC recognized that the TRAI is the sector-specific regulator and has the expertise to deal with the issues in the telecom sector, which arise from the Telecom Regulatory Authority of India Act, 1997. Further, the TRAI is empowered to look into the jurisdictional issue first and then if there is evidence to prove that the anti-competitive practice exists, the jurisdiction of the CCI can be enforced according to the relevant provisions of the Competition Act. Also, if the TRAI takes an action against the anti-competitive practice of the parties, the decision would be limited to the applicability of the Telecom Regulatory Authority of India Act, 1997.

The SC further held that the CCI is delegated with an important role to curb anti-competitive practices in the relevant markets of India and this responsibility delegated to CCI should not be washed away completely and “the ‘comity’ between the CCI and TRAI is to be maintained”. Therefore, the jurisdiction of the CCI is not outset completely with regard to the telecom sector but the CCIs jurisdiction is pushed out to the later phase, once the issue is decided by the TRAI.

Conclusion

The tussle between the Competition Commission of India and TRAI or other sector-specific regulatory sectors has raised serious jurisdictional concerns. The Apex Court of India has addressed this concern in the case of Competition Commission of India v Bharti Airtel[3]. In the United Kingdom, the regulatory sectors and OFT i.e. Office of Fair-Trading work together to make the best possible measures in this regard. The OFT and other sectoral regulators can themselves decide whether to follow the Competition Act or to go with other specific sectoral statutes[4]. In essence, they follow the cooperative approach where both the authorities sit together and find the best possible way out from the situation, however, OFT does reserve the right to have a final say in the matter. Along with the above judgement of the Hon’ble Supreme Court, if India adopted some elements of the U.K system, the tug of war between the different sectoral regulators could come to an end.

References

[1] Telecom Regulatory Authority of India Act, 1997, No. 24, Acts of Parliament, 1997.

[2] The Competition Act, 2002, No. 12, Acts of Parliament, 2003, §19.

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

[4] The Competition Act 1998 (Concurrency) Regulations, 2000 (U.K.).