Brief Facts
The Writ Petitions in the Bombay High Court were filed by the various Telecom Service Providers (TSPs) against the order of the Competition Commission (Impugned Order) dated April 21, 2017 (u/s 26(1), Competition Act, 2002). The Complaints before the CCI[1] were filed against Cellular Operators Association of India (COAI), Vodafone India Limited (VIL), Bharti Airtel Limited (BAL), Idea Cellular Limited (ICL), Telenor (India) Communications Private Limited (TICPL), Videocon Telecommunications Private Limited (VTPL) and Aircel Limited (AL) by Reliance Jio Infocomm Limited (“RJIL”).
The informants alleged that the PetitionersTSPs engaged in “cartelisation” by “action in concert” by delaying and denying adequate Point of Interconnections (POIs), even during the test phase/period. This was alleged to be an attempt to thwart the RJIL’s new project/entry in the telecom market as that action resulted into failures of calls of RJIL on others Networks. The CCI, in its majority opinion, found a prima facie contravention of Section 3(iii)(b) as the ITO’s appeared to have entered into an agreement among themselves through the platform of COAI and did not find their actions to be unilateral in nature. Hence, the CCI issued a direction to the DG to investigate the matter in accordance with Section 26(1) of the Competition Act, 2002. The minority opinion, however, did not find the case to be a prima facie contravention and hence opined that it should be closed in accordance with Section 26(2).
Orders under 26(1) are not mere administrative orders
The issue in this regard was whether the impugned order would constitute a mere ‘administrative order’ and if the same should result in the Court’s refusal to entertain the Writ Petition under Articles 226 and 227. The arguments raised that suggest that the order under section 26(1) is not adjudicatory and merely administrative in nature and that prima facie opinion does not determine any rights of the party, were held to be untenable by the Court. The Court reasoned by stating that the Commission collected detailed information by holding the conferences, calling material details, documents, affidavits and by recording the opinion and referred the matters for further inquiry and investigation to DG. Hence, in light of this, it could not be termed as a ‘mere administrative order’ or ‘not an adjudicatory order’. Further, the Court held that there is no total bar in entertaining such a Writ Petition, specifically when the case is made out of great injustice, perversity, illegality, hardship and prejudice to the legal rights of the service providers or the enterprises, apart from nonapplication of mind to the telecommunication laws.
Binding nature of Telecommunications Regulation
This issue arose with regards to the whether the CCI has the power to adjudicate and interpret the specific provisions of the TRAI Regulations. The court held that TRAI, being the sectoral regulator, has all technical expertise to deal and decide of the issues required for the telecom Sector. Further, it reiterated that the TRAI Act and the Regulations read together is complete code.[2]
The court expressly stated that the jurisdiction of the CCI would only, potentially, arise if the position of law and the terms and conditions are settled by the telecommunication authority and the High Court.[3] Further, it held that all disputes where there is delay and denial in providing reasonable POIs; whether there is an obligation to provide one way POI instead of two 2 way POIs; whether there is breach of such obligations; whether the test phase extends only to business partners or employees; whether cards could be supplied for testing quality of network and not for testing the market and; whether this amounts to creation of subscriber base, all these are issues to be decided by the authorities and tribunals (TDSTD) and not by the High Court or by the Commission under the Competition Act.
Role of Association (COAI)
“Every majority decision is not cartelisation”.
The issue arose as a result of letters sent by the COAI to the DOT and TRAI regarding the policy of POIs that affected RJIL. The Court held that simply because the Association was in majority regarding this decision does not mean that the same amounts to cartelisation. The offering of “free services” to millions by RJIL was unprecedented in the telecommunication industry. The court stated that there was no doubt that innovation by a new entrant is welcome, but owing to the “grey area” of law and lack of clarity with respect to agreements etc., the role of the Association to deal with the matter does arise in a representative capacity.
The Court noted that the representations made by the association cannot be regarded as anti-competitive or collusive in nature. There was uncertainty regarding the “subscribers” and the provisions for such a unusually high demand for POI’s during the “test phase” is not provided for under any agreement, practice, obligation, regulations etc. The Court considered the contentions made suggesting that the Association acted as a cartel to thwart RJIL’s entry into the market and held that ‘cartelisation’ must be seen from the facts and circumstances of each case (relying on CCI v. Coordination Committee of Artistes and Technicians of West Bengal Film and Television).[4] The authors also believe that the representations made to the Government or regulatory Authorities cannot be stated to be with intention to thwart the entry of RJIL. The whole purpose and object of associations is to further the interests of its members and their role in market development.
Summary of Conclusions
The telecommunication Sector/Industry/Market is governed, regulated, controlled and developed by the Authorities under the Telegraph Act, the Telecom Regulatory Authority of India Act (TRAI Act) and related Regulations, Rules, Circulars, including all government policies. All the “parties”, “persons”, “stakeholders”, “service providers”, “consumers” and “enterprise” are bound by the statutory agreements/contracts, apart from related policy, usage, custom, practice so announced by the Government/Authority, from time to time.
The questions of interpretation or clarification of provisions of contracts, regulations etc. are to be settled by the Authorities/TDSAT. The authority under the Competition Act, has no jurisdiction to decide and deal with the various statutory agreements, contracts, including the rival rights/obligations, of its own.
The Competition Act and the TRAI Act are independent statutes. The statutory authorities under the respective Acts are to discharge their power and jurisdiction in the light of the object, for which they are established. There is no conflict of the jurisdiction to be exercised by them. But the Competition Act itself is not sufficient to decide and deal with the issues, arising out of the provisions of the TRAI Act and the contract conditions, under the Regulations.
Impugned order dated 21 April 2017, passed by the Competition Commission of India (CCI) proceeded on wrong presumption of law and usurpation of jurisdiction, unless the contract agreements, terms and clauses and/or the related issues are settled by the Authority under the TRAI Act, there is no question to initiating any proceedings under the Competition Act as contracts/agreements go to the root of the alleged controversy, even under the Competition Act.
Impugned order dated 21 April 2017 and all the consequential actions/notices of the Director General under the Competition Act are not mere “administrative directions”.
Every majority decision cannot be termed as “cartelisation”. Even exfacie service providers and its Association COAI, have not committed any breaches of any provisions of the Competition Act.
This post has been authored by Aparimita Pratap, a fourth year student and Lakshya Thukral, a third year student of the West Bengal National University of Juridical Sciences.
[1] Case No. 81 of 2016 and Case No. 83 of 2016
[2] Union of India v. Tata Teleservices (Maharashtra) Ltd.
[3]“The underlying principle is that by erroneously assuming existence of such jurisdictional fact, no Authority can confer upon its jurisdiction which it otherwise does not possess.” Arun Kumar v. Union of India (2007) 1 SCC 732.
[4] CCI v. Coordination Committee of Artistes and Technicians of West Bengal Film and Television
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