This article has been written by Pranav Tomar and Umang Chaturvedi, 3rd year B.A. LL.B. (Hons.) students at Rajiv Gandhi National University of Law, Punjab.
Developments in the past decade have made India the world’s second largest telecommunication market with 1.20 bn. users. Additionally, it is the second largest country with active internet subscribers. In the past, the country’s telecom sector was governed by the Department of Telecommunications (‘DoT’). After economic liberalisation in 1991, the National Telecom Policy, 1994 (‘NTP’) created an inevitable need for the establishment of an independent regulator, which led to the formation of Telecom Regulatory Authority of India (‘TRAI’) under the TRAI Act, 1997.
When new players in the picture in the late 2000s, a need to promote fair play and balance the competition in market arose in the market. The entrance of MNCs and private players led to the revocation of the Monopolies and Restrictive Trade Practices Act, 1969, which was substituted by the Competition Act, 2002. The Act lays the foundation of the Competition Commission of India (‘CCI’) as a watchdog that monitors the acts adversely affecting the competition and regulates the market, thereby protecting interests of existing enterprises.
Overlapping of sectors – Ex post & Ex ante
TRAI regulates the telecommunication sector and fixes and revises tariffs for telecom services. It also settles sectoral disputes through its redressal mechanism Telecom Disputes Settlement and Appellate Tribunal (‘TDSAT’), which became functional by the TRAI (Amendment) Act, 2000. While TRAI is bestowed with the duty to “facilitate competition and promote efficiency in the operation of telecommunication services so as to facilitate growth in such services”, CCI is delegated with the duty of “promoting and sustaining competition” for the greater good. When read simultaneously, the language of both the Acts indicates a common rationale behind their existence, which is for fair play and a level playing field. Section 36(2) of the Competition Act, 2002 and section 16(2) TRAI Act, 1997 both enable their respective courts to discharge functions with the same powers as civil courts under the Code of Civil Procedure, 1908.
With multiple similarities, the only logical line drawn between deciding the jurisdiction is that while CCI’s broad purview is regulating competition in favour of national interest and the economy at large, TRAI is restricted and limited to technicalities of telecom operators only. Occurrence of such conflicts frequently will defeat the purpose of special bodies which are formed for speedy trial and instead burden the higher courts to resolve such conflicts amongst the tribunals. While CCI refers to the matters as ex post intervention and ensures rights of new entrants by providing them favourable conditions, TRAI on an ex ante basis manifests the promotion of competitive environment in the industry.
The Conflict of Jurisdiction
CCI has the power to take suo moto cognizance of any matter which tends to cause adverse effect on the competition in the country and has the exclusive jurisdiction where there is a hint of abuse of dominance, anti-competitive activities or combinations of enterprises. Section 21 of the Competition Act states that a “statutory authority may make reference to CCI in any case where the decision is contrary to the provisions of the Act.” Section 21A works vice versa and requests “CCI to make reference to the statutory authorities” in similar issues. These provisions are just a few arrows in the quivers to shed some light on how broad are the powers of the Commission.
Competition Commission of India v. Bharati Airtel explains coinciding jurisdiction and similar conflicts in the most appropriate manner. In the matter, a plea against Airtel, Vodafone and Idea was filed by Reliance that raised a question regarding indulgence in anti-competitive practices and cartel-formation by the former. The CCI conducted the investigation under section 26 of the Act but it was quashed by the Bombay High Court. The court declared that as the parties belonged to the telecom sector, the initial investigation ought to be done by TRAI instead of CCI. The CCI could investigate the matter once TRAI concluded its proceedings. Later in an appeal, the Supreme Court rejected the High Court’s reasoning and held that both CCI and TRAI were regulators that worked in completely contrasting fields, and stated that both the authorities dealt with different aspects of the same issue. The CCI deals with the issue of anti-competitive practices under section 3 of the Act, whereas, TRAI looked at the issues of license agreement and service regulations. The Supreme Court held that CCI could investigate simultaneously with the case being pending before TRAI. The Court in this case tried to build a harmonious construction between the Authorities in adjudicating disputes. In cases of conflicting opinions, section 21 & 21A of the Competition Act shall come into picture to take reference. There existed the conflicts of coinciding jurisdictions prior to the aforementioned matter. A similar approach was used in the matter of Consumer Online Foundation v. Tata Sky Ltd where CCI concluded that “even though TRAI is the special regulator, competition in the market is within the exclusive jurisdiction of CCI.”
The solution provided by the Apex court has not been fruitful and is more ambiguous and vague. The suggested methods depend on various factors that determine the categorisation of the issues in different fields according to the jurisdictions. The reference mechanism mentioned under section 21 in the Act is merely a toothless tiger that is rarely used by the authorities and hence defeats the intent of the legislature. Moreover, this system of cooperation leads to duplicity of cases and also gives the parties to collude the investment ground of the sectors.
A parallel from foreign jurisprudence can be drawn to find a solution that is to adopt either the Exclusivity Model or the Concurrency Model. The former suggests that exclusive jurisdiction shall be decided based on the questions of law. In this case, either of the authority will be given jurisdiction to decide the case and the other authority will not have any merit whatsoever. Whereas, the latter model suggests that in cases of overlapping of issues, both the authorities shall work in harmony. Section 21 of the Act indicates the intent of the legislature being tilted towards the Concurrency Model, which attracts cooperations from different sectors to adjudicate disputes. Logically, it states that each authority shall focus only on the issues which they are responsible for. For instance, TRAI has a duty to oversee the economic regulations (i.e. licensing, tariffs, service regulations, etc.) of the telecom sector, adjudicate the issues of cases that suit to its advantage and cooperate with other authorities in the issues to their advantage. It is difficult to maintain these watertight compartments but can be achieved through structural and institutional cooperation between the regulators. Structural cooperation suggests that the overlapping of parties or cases shall be communicated between the regulators to ensure that the matter is adjudicated efficiently and institutional cooperation suggests that there shall be exchange of technical expertise in between the regulators to settle the dispute.
The conundrum of jurisdiction between regulated sectors is not new to the world. Various countries have adopted different adjustments to manage the interests of all their sectors. The global jurisprudence focuses on two factors for successfully resolving the jurisdictional issues. At first, the regulators shall focus on more cooperation amongst themselves. This would ensure that there is no duplicity of cases or any leverage to the party to toss between the regulators. The authorities shall decide amongst themselves about who is best suited to deal with the issues. Secondly, institutional cooperation shall efficiently reduce the hassles between the authorities. There should be exchange of technicalities between them to ensure that disputes are adjudicated in accordance with the procedure. Telecom and Competition Authorities are governing an emerging field that would lead to instability if both the regulators do not work in collaboration.