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A TURF WAR BETWEEN CCI AND TRAI HAS MOVED THE SUPREME COURT

An information under Section 19 (1) of the Competition Act, 2002 (hereinafter referred to as “Act”), was filed by Reliance Jio Infocomm Limited (hereinafter referred to as “RJIL”) in 2016 before the Competition Commission of India (hereinafter referred to as “CCI”) against the Cellular Operators Association of India (hereinafter referred to as “COAI”), Vodafone India Limited, Bharti Airtel Limited and Idea Cellular Limited (hereinafter referred to as the “Opposite Parties”), alleging “cartelisation” by acting in concert and denying adequate Point of Interconnections to RJIL.

The information addressed an attempt by the above-mentioned telecom giants to frustrate RJIL’s new project/entry in the telecom market, which resulted in “congestion” and thus failure of calls of RJIL, on other operators’ networks. This alleged action in concert falls within the ambit of Sections 3 and 4 of the Act. CCI had passed an order under Section 26(1) of the Act on 21.04.2017, holding that there was prima facie contravention of Section 3(iii) (b) of the Act as the aforementioned telecom companies appeared to have entered into an agreement amongst themselves along with COAI, and have acted in a concerted manner to restrict RJIL’s entry into market and to further, deny the Point of Interconnections to the RJIL, thus, directing an inquiry by the Director General against the Opposite Parties.

The telecom companies challenged the above order passed by the CCI before the Bombay High Court. The show cause notices issued by Director General were also challenged.

The Bombay High Court in the case of Vodafone India Limited & Ors. v. The Competition Commission of India & Ors. [2017]144SCL580(Bom.), was of the opinion that the order passed by the CCI had caused great injustice, hardship and prejudice to the legal rights of the service providers. On the question of jurisdiction of the Telecom Regulatory Authority of India (hereinafter referred to as “TRAI”) or CCI, the court opined that the Act aims to ensure fair competition in the market and to avoid appreciable adverse effects on competition, while the Telecom Regulatory Authority of India Act, 1997 (hereinafter referred to as “TRAI Act”) regulates the telecommunication services, adjudicates the disputes and protects the interests of the service providers and the consumers. According to the court, the clauses under the agreements entered between the various service providers/Petitioners and RJIL require strict interpretation by the appropriate authority under the TRAI Act, for adjudication of the allegations raised and to determine the rights and obligations of the parties. If there is any non-compliance or breach of clauses, the dispute is required to be redressed before the appropriate Authority under whose control the rights and obligations are defined, and CCI is not the right forum for the same.

The Commission has overlooked Section 21(A) of the Act which empowers it to refer the matter to the competent authorities in case of any doubt or clarification of issues, and instead has ousted its jurisdiction to decide the contractual terms, rights and obligations between the service providers, arising out of the contracts they enter into, who are governed and regulated by the TRAI Act. It was not right on the part of CCI to have proceeded for inquiry and investigation, by expressing “prima facie opinion” under Section 26(1) of the Act.

In particular, in case of any dispute or any question of interpretation of contractual terms between the telecom service providers and RJIL, it will be dealt with and decided by the authorities under the TRAI Act and not by the CCI. Though, there is no conflict of jurisdiction of the two authorities, but the authority under the Act itself is not sufficient to decide and deal with such issues. Every aspect of telecommunication market is to be regulated and controlled by the concerned department under the TRAI Act. Thus, it was held that the CCI, overlooking the provisions of the TRAI Act, independently proceeded and directed for the investigation, which was held to be “perverse, illegal and impermissible” by the Bombay High Court.

This decision of the Bombay High Court declining the authority of CCI has now been challenged in five petitions before the Hon’ble Supreme Court by CCI and RJIL claiming that the CCI has the right to direct investigation into RJIL’s allegations under Section 26(1) of the Act, which is pending till date. Recently, TRAI has also filed an Intervening Application claiming that it has the ‘exclusive jurisdiction’ on the matters of telecom sector. Meanwhile, a stay has been granted to the investigation into the alleged actions of Bharti Airtel, Vodafone India and Idea Cellular/ Petitioners.