BATCH 2019-24

SYNOPSIS
Topic

“Competition Law in Telecom Sector in

India: A Jurisdictional Tussle in light of
Monopoly Competition”
Telecommunications Law

Submitted to: Submitted by:

Ms. Divyanshi Shrivastava, Aaditya Popat
ASSISTANT PROFESSOR (TL) B. A. LLB Hons.,
FACULTY OF LAW, ROLL NO- 91901040011
MARWADI UNIVERSITY

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 Introduction
The growth and development of the telecommunication industry in India has been
tremendous. With new and cheaper technologies being adopted almost every year, in this
industry India is on its path of becoming an electronics manufacturing hub of the world. With
an addition of 18 million subscribers every month and contributing to nearly 2% of the Indian
GDP, the Indian telecom industry is considered to be the largest telecom markets in the
world. Driven by wireless communication, the telecommunications industry is recognized as
a key to the rapid growth and modernization of the economy and an important tool for socio-
economic development for India.

Minister of State for Communications and IT, Mr. Milind Deora, in a written reply to the
Rajya Sabha on November 23, 2012 had stated that, “communications industry has been
growing at an annual average growth rate of 31.07 percent during the last three years with the
total number of telephone connections rising to 95.14 crores at the end of March 31, 2012.
The total number of telephone connections has increased to 951.35 million as on March 31,
2012, from 429.73 million as on March 31, 2009, the industry grew at 44.57 percent in 2010,
36.22 percent in 2011 and 12.40 percent in 2012. The annual average growth rate during the
last three years is 31.07 percent.”

This project is directed to study the Telecom sector in India. With a brief overview of the
Telecommunications Industry in India, this project looks into the market structure, and the
prominent market players and the competition practices, among them that is prevalent in
India. This project also provides a brief examination of the impact of Policy and Regulatory
Decisions on the growth of the Telecommunication industry. This project also throws light
upon the various competition issues among the players. Due to the presence of a strong
regulatory body, the conflict that may arise between such authorities and the Competition
Commission of India has also been studied. The recent mergers and acquisitions that this
industry has seen has also been looked into. Due to the vastness of the amount of data
available, it has been challenging to compile the relevant data and process the available
information, and represent it towards the completion of the project.

OVERVIEW OF THE TELECOMMUNICATION INDUSTRY IN INDIA

The Indian telecommunications sector is the second largest wireless network in the world
after China. From a situation where this sector was dominated by the Department of
Telecommunications, the sole government operator, in the early 1990s, now there are a

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number of private operators elbow to elbow in mobile telephony, international long distance,
internet service provision and other segments of telecommunications. The pace of growth and
achievements in terms of statistics have been quite spectacular. From a tele-density 1 of 0.22
at the time of independence, India achieved a very modest teledensity of 1.94 by 1998, the
decade of introduction of liberalization. Since then India has achieved a teledensity of 18.74
overall and a rural teledensity of 6 by April 2007.

Some of the metros have achieved a teledensity over 50. According to the Department of
Telecommunications Annual Report 2010-11, Indian telecom network has 787.29 million
connections as on 31st December 2010 with 752.20 million wireless connections. Wireless
telephones are increasing at a faster rate. The share of wireless telephones as on 31st
December 2010 was 95.54% of the total phones. There are now 212 million telephone
subscribers with 41 million fixed-access and 171 million mobile subscribers. Over 6 million
subscribers have been added per month for the last six months and India has the fourth largest
network after China, USA, and Russia.

There are currently 8.5 million internet subscribers with 2.43 million broadband subscribers.
The sector has attracted a total of $ 3.89 billion foreign investment in the period April 1991
till March 2007. Mobile call prices are reputed to be among the lowest in the world providing
support to the benefits of competition. Over the last decade and particularly over the last five
years, India has registered an impressive growth in this sector with a total of 846.32 Million
Telecom subscribers, comprising of 811.59 Mobile subscribers & 34.73 wire line subscribers.
The Indian Tele-density now stands at 70.89%.

The Telecommunications Industry in India used to be a monopoly regime up until it

underwent massive structural reform with the establishment of an independent regulatory
mechanism. The reform process began in the 1980s with the entry of private players in 1984,
in the manufacturing of customer premise equipment and corporatization of domestic telecom
operations in two metros: Delhi and Mumbai; and the establishment of a corporation for
international services in 1986 and of the Telecom Commission with full government powers
in 1989[iii]. The policy initiatives taken during the 1990s constituted the transition from
monopoly to competition.

During this period, beginning with the deregulation of the sub-sector of value-added services
in July, 1992, followed by the issuance of two major policy instruments: the National
1
R.U.S. Prasad, The Impact of Policy and Regulatory Decisions on Telecom Growth in India,Working Paper
No. 361, Stanford Center for International Development, July 2008.

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Telecom Policy, 1994 (NTP94) and the New Telecom Policy 1999 (NTP99), with these
initiatives, conversion from a monopoly to competition was successfully accomplished. With
the process of liberalization Telecom manufacturing was delicensed in 1991 and value-added
services were declared open to the private structure in 1992 following which the radio
paging, cellular mobile, and other value-added services were gradually opened to the private
sector.

The entry of private service providers brought with it the inevitable need for government
regulation. With effect from 20th February 1997 by an act of Parliament called the Telecom
Regulatory Authority of India Act, 1997, the Telecom Regulatory Authority of India (TRAI)
was established, to regulate telecom services, including fixation of tariffs for telecom services
which were earlier vested in the central government. By an ordinance, effective from 24th
January 2000 the TRAI act was amended to establish a Telecommunications Dispute
Settlement and Appellate Tribunal (TDSAT) to take over the adjudicatory and disputes
functions from TRAI.

Certain Competition issues in the Telecom Sector in India are as follows:

 Unbundling of Cooper Local Loop

 Access to Optical Fiber Network
 Carrier Access Selection
 Provision of Internet based Voice Calls in the Domestic Segment
 No provision for number portability in the fixed line segment.
1.1. Review of literature
 Legal Frameworks and Regulatory Challenges: Researchers like Singh (2015) have
delved into the legal frameworks governing competition in the Indian
telecommunications sector. They have explored the Competition Act of 2002 and its
application in the context of telecom, analyzing the regulatory challenges faced by the
Competition Commission of India (CCI) in addressing anti-competitive practices
within the industry.
 Market Dynamics and Competition Impact: Studies conducted by Raj (2017) have
investigated the impact of competition laws on market dynamics within the Indian
telecom sector. These works have explored how regulatory interventions and

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 competition policies have shaped the industry landscape, fostering innovation,
enhancing consumer choice, and encouraging investments.
 Jurisdictional Tussles and Regulatory Overlaps: The jurisdictional challenges and
regulatory overlaps in the telecom sector have been a key focus of research. Scholars
like Gupta (2018) have examined the conflicts arising between sector-specific
regulators like the Telecom Regulatory Authority of India (TRAI) and general
competition regulatory bodies like the CCI. These studies delve into the complexities
of resolving jurisdictional disputes and ensuring effective enforcement of competition
laws.
 Impact on Consumers and Market Competition: Researchers such as Sharma (2019)
have investigated the impact of competition laws on consumers in the telecom sector.
These studies analyze how anti-competitive practices, such as predatory pricing and
monopolistic behavior, affect consumers' choices and pricing structures. They also
explore the role of competition regulations in safeguarding consumer interests and
promoting fair market competition.
 Case Studies and Legal Precedents: Case studies and analyses of legal precedents
have been instrumental in understanding the nuances of competition law in the Indian
telecom sector. Works by Chopra (2016) have examined landmark cases, highlighting
the legal arguments, challenges faced, and outcomes. These studies provide valuable
insights into the evolving jurisprudence of competition law in the context of
telecommunications.
 Regulatory Reforms and Policy Implications: Researchers like Kumar (2020) have
focused on the regulatory reforms and policy implications in the telecom sector. They
analyze how changes in competition laws and policies impact market players,
investments, and the overall growth of the industry. These studies offer
recommendations for regulatory reforms, aiming to strike a balance between market
competition, consumer welfare, and industry sustainability.
1.2. Statement of problem

The telecommunications sector in India is witnessing a rapid evolution marked by

technological advancements, market expansions, and increasing consumer demands. Within
this dynamic environment, a significant problem emerges at the intersection of competition
law and regulatory jurisdiction. The problem statement revolves around the challenges posed
by jurisdictional tussles among regulatory authorities, particularly the Telecom Regulatory

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Authority of India (TRAI) and the Competition Commission of India (CCI). These challenges
raise critical concerns:

 Conflicting Jurisdictions: The overlapping mandates of TRAI and CCI create a

complex web of jurisdictional conflicts. TRAI, as the sector-specific regulator, aims
to ensure fair play and market efficiency, while CCI, as the general competition
authority, oversees broader competition issues. The conflict arises when their
regulatory domains intersect, leading to ambiguity in decision-making and
enforcement processes.
 Inconsistent Enforcement of Competition Laws: The lack of clarity in jurisdiction
often results in inconsistent enforcement of competition laws within the telecom
sector. This inconsistency raises questions about the effectiveness of competition
regulations in curbing anti-competitive practices, ensuring market competitiveness,
and safeguarding consumer interests uniformly across the industry.
1.3. Objectives
 To analyze the jurisdictional conflicts between the TRAI and Competition
Commission of India
 To evaluate the effectiveness of Regulatory Responses
 To examine anti-competitive practices
 To assess the impacts on Market Competition and Consumer Welfare
 To investigate legal and policy ambiguities
 To explore international best practices.
1.4. Hypothesis

The following hypothesis has been defended in the research project:

 Hypothesis 1: Regulatory Overlaps Impact Market Competition

It is hypothesized that regulatory overlaps and jurisdictional conflicts between TRAI and CCI
lead to market distortions, hindering healthy competition within the Indian
telecommunications sector. These conflicts create legal uncertainties, allowing anti-
competitive practices to thrive, thus negatively impacting market competitiveness.

 Hypothesis 2: Inconsistent Enforcement Affects Consumer Welfare

This hypothesis suggests that inconsistent enforcement of competition laws due to

jurisdictional tussles affects consumer welfare in the telecom sector. In regions where

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conflicting regulations persist, consumers may experience limited choices, higher prices, and
reduced service quality due to the absence of consistent competition enforcement, thereby
harming consumer interests.

1.5. Research methodology

The method adopted here is “Doctrinal method” of acquiring information. Doctrinal method
allows the researcher to carry out a detailed historical research (history of law, for e.g.),
whereby the information has been gathered with the use of secondary sources with
established facts and figures, thus aiding in acquiring a better conceptual clarity.

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 Chapter 2

Historical Regulatory Framework of Telecom Sector in India

The regulatory and policy framework encompassing the communications sector in India
comprises a number of statutes, rules, regulations, guidelines, etc, laid down by the
government of India. The primary statutes regulating the sector include:

 the Indian Telegraph Act 1885 (the Telegraph Act);

 the Indian Wireless Telegraphy Act 1933 (the Wireless Act);

 the Telecom Regulatory Authority of India (TRAI) Act 1997 (the TRAI Act);

 the telecoms policy amended from time to time, the latest being the National Digital
Communications Policy 2018 (the NDCP 2018), which was approved in September
2018;

 the Broadband Policy 2004; and

 the Information Technology Act 2000 (the IT Act).

The Telegraph Act is the primary legislation underlying the telecommunications regulatory
framework for India and prescribing various powers of the government to operate and
regulate telecoms services in the country. Under the current regime, the task of granting
licences and approvals to telecoms players for providing telecoms services in India has been
assigned to the Department of Telecommunications, the Ministry of Communications and
Information Technology (DoT). The DoT formulates and implements the telecoms licensing
regime, under which licences and approvals are granted to corporations to carry out telecoms
services.

The Wireless Act was formulated and implemented to regulate wireless communication and
the possession of the concerned wireless telegraphy apparatus. It has been explicitly
stipulated that the possession of any apparatus, appliance, instrument or material used or
capable of use in wireless communication requires a licence from the DoT to that effect. A
penalty has been prescribed for possession without the requisite licence.

In 1997, the government passed the TRAI Act and set up TRAI as the regulatory authority for
the telecoms and broadcasting sector with the power to make policy recommendations on
related issues. The TRAI Act also provides for the adjudication of disputes between the

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telecoms licensees and the DoT through the Telecom Disputes Settlement and Appellate
Tribunal (TDSAT).

The DoT is responsible for formulating Policy Frameworks aimed at accelerating the growth
of the telecommunication services. Recognising that provision of world class
telecommunications infrastructure is the key to rapid socio-economic growth of the country,
the government has been announcing its telecom policy statements at regular intervals since
the onset of market liberalisation in the country in the early 1990s. In effect, post-
liberalisation the Indian telecom sector has been shaped by five policy statements:

 National Telecom Policy 1994;

 New Telecom Policy 1999;

 Broadband Policy 2004;

 National Telecom Policy 2012 (NTP 2012); and

 National Digital Communications Policy 2018.

The NDCP 2018 seeks to unlock the transformative power of digital communications
networks - to achieve the goal of digital empowerment and well-being of the people of India;
and towards this end, attempts to outline a set of goals, initiatives, strategies and intended
policy outcomes. The NDCP 2018 aims to accomplish the following Strategic Objectives by
2022:

 provisioning of Broadband for All;

 creating four million additional jobs in the digital communications sector;

 enhancing the contribution of the digital communications sector to 8 per cent of

India’s GDP from approximately 6 per cent in 2017;

 propelling India to the Top 50 Nations in the ICT Development Index of ITU, from
134 in 2017;

 enhancing India’s contribution to Global Value Chains; and

 ensuring digital sovereignty

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The vision of the government as stated in the NDCP 2018 is to fulfil the information and
communication needs of citizens and enterprises by establishment of a ubiquitous, resilient,
secure and affordable digital communications infrastructure and services; and in the process,
support India’s transition to a digitally empowered economy and society. In pursuit of
accomplishing the above-mentioned objectives by 2022, the NDCP 2018 envisages three
missions:

 Connect India: creating robust digital communications infrastructure to promote

‘Broadband for All’ as a tool for socio-economic development, while ensuring service
quality and environmental sustainability;

 Propel India: enabling next generation technologies and services through investments,
innovation and intellectual property rights (IPR) generation to harness the power of
emerging digital technologies, including 5G, AI, IoT, cloud and big data to enable
provision of future ready products and services; and to catalyse the fourth industrial
revolution (Industry 4.0) by promoting investments, innovation and IPR; and

 Secure India: ensuring sovereignty, safety and security of digital communications to

secure the interests of citizens and safeguard the digital sovereignty of India with a
focus on ensuring individual autonomy and choice, data ownership, privacy and
security, while recognising data as a crucial economic resource.

Apart from the above-mentioned legislation, the Foreign Direct Investment (FDI) Policy, as
amended from time to time, lays down the foreign investment and ownership restrictions for
the sector. The government prescribes the threshold limits of investment, entry routes and
other conditions for such investment under the FDI Policy, as amended from time to time.
The FDI Policy segregates various services on the basis of foreign investment allowed,
regulated and prohibited. Presently, with regard to the foreign investment in entities engaged
in the telecoms services, although FDI up to 100 per cent is permitted for most of the
telecoms services, certain service-specific conditions and entry restrictions for the investment
coming from outside India may apply. Any amount of investment beyond 49 per cent in the
telecoms entity would require the prior approval of the government. In November 2017 the
DoT issued internal standard operating procedures for scrutiny of FDI cases in the DoT as
well as a checklist.

Authorisation/licensing regime

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The licensing regime for the provision of the telecoms sector witnessed a sea change in 2013
with the introduction and implementation of the ‘unified licence regime’. The unified licence
regime has been implemented primarily with the objective of ‘one nation, one licence’, as
envisaged under the NTP 2012. It replaces the earlier regime where the players were required
to obtain separate licences for different telecoms services in India, such as internet services,
national long-distance (NLD) services, international long-distance (ILD) services and so on.

The unified licence regime for the first time allows telecoms operators to offer all telecoms
services under one licence, subject to separate service authorisation for the provision of
different telecoms services, covered by the unified licence. The unified licence covers within
its ambit all the fixed, mobile and satellite services and communication both on wireline and
wireless media with full mobility, limited mobility and fixed wireless access. The service
authorisations covered by the unified licence are:

 access service;

 internet service;

 NLD service;

 ILD service;

 global mobile personal communication by satellite service;

 public mobile radio trunking service;

 very small aperture terminal closed user group service;

 Indian national satellite system mobile satellite system reporting service; and

 resale of international private leased circuit service.

The service areas for each of the service authorisations have also been defined. The unified
licence is granted for a period of 20 years from the effective date of the licence. The general,
operating, monitoring, financial and security conditions for each of the service authorisations
have been divided into the general unified licence conditions (applicable irrespective of the
service authorisation) and the specific service authorisation-related conditions (applicable
only if the said authorisation has been granted). Apart from freeing up the spectrum from the
licence, the unified licence also bars cross-holding in different telecommunications
companies.

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With regard to the official fees, the charging heads have been defined separately under the
unified licence with different limits for entry fees, net worth, paid-up capital, bank guarantees
and processing fees. However, where a licensee is applying for more than one service
authorisation, the unified licence sets out the upper limits for such financial implications. The
prescribed upper limits are also the amounts applicable in cases of the licensee applying for
all the services covered by the unified licence. These have been fixed at 250 million rupees
each for the minimum equity and net worth of the licensee company, 150 million rupees for
the entry fees and 100,000 rupees for the application processing charges. For the provision of
the services, an amount of 2.2 billion rupees has been fixed as the performance bank
guarantee and 440 million rupees as the financial bank guarantee. In addition, 8 per cent of
the adjusted gross revenue (AGR) shall be annually charged from the service providers as the
licence fee, which includes the levy for universal service obligations, currently 5 per cent of
AGR. However, it should be noted that the mechanism for computation of AGR has been
specified for different service authorisations.

In addition to the unified licence, the DoT has also prescribed a registration process for
infrastructure provider entities wishing to do business in India. This registration process
covers the providers of telecoms infrastructure such as dark fibre, right of way, duct space
and tower. The financial requirement for the registration includes a small processing fee and
does away with the entry fees and bank guarantee. The infrastructure providers engaging in
India would have an easier entry as they would merely have to register themselves rather than
obtaining a licence.

To provide telecoms services in India, the players would require the unified licence and
spectrum would have to be secured separately through the auction process. The auction of the
2G spectrum and the licences awarded in 2008 were quashed by the Supreme Court of India
on the grounds of unconstitutionality; however, many of these quashed licences have been re-
auctioned. Separately, the auction of 3G and BWA spectrum was held in 2010 and licences
were issued. The last auction was conducted in September-October 2016; it was India’s
biggest sale of airwave spectrum. The total of 2,354.55MHz of spectrum offered for sale
divided in seven bands, of a value amounting to 5.63 trillion rupees. It was the first time that
the DoT had auctioned spectrum in the 700MHz band. However, only 965MHz of spectrum
worth 65,789.12 million rupees could be successfully sold. No bids were made for the
700MHz and 900MHz band. It can be deduced that the Indian telcos prefer short-range
penetration over the long range.

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Recognising the potential of Internet of Things (IoT) and Machine to Machine (M2M),
emphasis was laid down in the NTP 2012 as: ‘To facilitate the role of new technologies in
furthering public welfare and enhanced customer choices through affordable access and
efficient service delivery. The emergence of new service formats such as Machine-to-
Machine (M2M) communications (eg, remotely operated irrigation pumps, smart grid, etc)
represent tremendous opportunities, especially as their roll-out becomes more widespread.’

However, the above recommendations of TRAI have not been fully completely incorporated
in to respective policies and guidelines. In this regard, DoT issued a set of instructions dated
16 May 2018, for implementing restrictive features for SIMs used only for M2M
communication services and related Know Your Customer (KYC), security and other
instructions relating to provisioning of M2M services in India by the licensed telecom service
providers.

TRAI: EMERGENCE IN THE FIELD OF TELECOM SECTOR

The entry of private service providers brought with it the inevitable need for independent
regulation. The Telecom Regulatory Authority of India (TRAI) was, thus, established with
effect from 20th February 1997 by an Act of Parliament, called the Telecom Regulatory
Authority of India Act, 1997, to regulate telecom services, including fixation/revision of
tariffs for telecom services which were earlier vested in the Central Government. TRAI's
mission is to create and nurture conditions for growth of telecommunications in the country
in a manner and at a pace which will enable India to play a leading role in emerging global
information society. One of the main objectives of TRAI is to provide a fair and transparent
policy environment which promotes a level playing field and facilitates fair competition.

In pursuance of above objective TRAI has issued from time to time a large number of
regulations, orders and directives to deal with issues coming before it and provided the
required direction to the evolution of Indian telecom market from a Government owned
monopoly to a multi operator multi service open competitive market. The directions, orders
and regulations issued cover a wide range of subjects including tariff, interconnection and
quality of service as well as governance of the Authority.

The TRAI Act was amended by an ordinance, effective from 24 January 2000, establishing a
Telecommunications Dispute Settlement and Appellate Tribunal (TDSAT) to take over the

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adjudicatory and disputes functions from TRAI. TDSAT was set up to adjudicate any dispute
between a licensor and a licensee, between two or more service providers, between a service
provider and a group of consumers, and to hear and dispose of appeals against any direction,
decision or order of TRAI.

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 Chapter 3

Jurisdictional Tussle between Competition Commission and TRAI

Ever since economic liberalization and deregulation in the 1990s, most developing countries,
including India, have decided to opt for independent economic regulatory agencies and an
independent competition authority. The first is required to inter alia promote competition in the
regulated sector while the latter is required to check anti-competitive practices across the whole
economy. The absence of clear dividing lines between promoting competition and checking
anticompetitive practices lead to conflicts as we now see in the call made by the Competition
Commission of India2 (CCI) on the Telecom Regulatory Authority of India (TRAI) to stand down.

This happened on charges of predatory pricing and abuse of dominance on Reliance Jio by Bharti
Airtel, Vodafone India and Idea Cellular. The best way out is for the prime minister’s office or the
NITI Aayog to get the two regulators to sit down and sort out the turf issues for good rather than
allowing one to flex its authority on the other. Economic or sector regulatory agencies were
established in the developing world for many service sectors after privatization and/or competition
was introduced in the sector. These regulatory agencies were mainly established in the telecom,
electricity, water and insurance sectors.

All service sector regulators were required to regulate the sector in terms of standards of service,
tariffs and interconnection, and to do so by ensuring that competition and consumer interests are
protected and promoted. When these services were only in the public sector, it was the government
that regulated them in the form of fixing tariffs, standards and so on. Simultaneously, competition
laws were also introduced to check anticompetitive practices across all economic sectors and
agencies established to regulate the market. This often leads to an overlap between a sector
regulator and the competition authority and conflicts. Since the sector regulators came before the
economy-wide competition authorities, they did not pay heed to the new kid on the block. One such
case is the tariff issue in the telecom sector, where TRAI and the CCI are having a face off. Such types
of turf and overlap issues between the CCI and sector regulators are not healthy for the market.
After all, the CCI is an economy-wide regulator to curb market malpractices while TRAI is a sector
regulator to ensure orderly growth and maintenance of service standards in the telecom and
broadcasting sectors in the country.

TRAI & CCI

2
Gulveen Aulakh, Competition Commission of India raps telecom regulator for stepping into its turf, (July
2017)

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The Indian telecom sector has witnessed continual activity in the recent years, with the entry
of new players such as Reliance Jio, consolidation between existing players such as Vodafone
and Idea Cellular and the exit of incumbent players such as Telenor and Tata Teleservices.
This constant transformation has intensified the battle between industry players to garner
market shares and attract consumers. In addition to competing in the marketplace, telecom
operators have also been fighting legal battles on competition issues such as cartelization and
predatory pricing as well as on telecom issues such as interconnection. Given that the issues
at the core of these matters relate to both competition and telecom laws, a turf war has arisen
between the Telecom Regulatory Authority of India (TRAI) and the Competition
Commission of India (CCI) re jurisdiction. Notably, CCI had, through a letter to TRAI last
year, highlighted its competence to look into matters relating to predatory pricing. The letter
was a result of a consultation paper issued by TRAI in February 2017 on anti-competitive
concerns in tariffs by Telecom Service Providers (TSPs)3.

In his letter, the CCI Chairperson stipulated that “issues and questions for consultation
relating to delineation of relevant market, assessment of dominance and predatory pricing”
are “issues of determination for the Commission”. 4 Responding to CCI, TRAI stressed that it
had the experience and capability to examine all matters, including competitive issues, falling
within the purview of tariffs5. In line with its assertion, pursuant to the Telecommunication
Tariff (Sixty-third Amendment) Order, 2018 (the Amendment Order), TRAI has recently
amended the Telecommunication Tariff Order, 1999 (the Tariff Order), to regulate tariffs
offered by TSPs on the basis of competition law principles. Through the amendment, TRAI
has introduced concepts of “significant market power” and “predatory pricing” in the Tariff
Order.

According to TRAI, such regulatory powers are set out under the Telecom Regulatory
Authority of India Act, 1997 (the TRAI Act), which requires it to take “measures to facilitate
competition and promote efficiency in the operation of telecommunication services so as to
facilitate growth in such services”.

To further this mandate of facilitating competition, TRAI in its Amendment Order has
provided guidance on non-predation, through the insertion of the following definitions:

3
http://www.trai.gov.in/sites/default/files/Consultation_paper_03_17_feb_17_0.pdf, accessed on 02/11/2023
4
The Hindu Business Line Available at: https://www.thehindubusinessline.com/info-tech/turf-war-
ragesbetween-cci-and-trai-over-telecom-tariffs/article9791247.ece
5
PTI, Trai tells CCI it has power to settle competitive telecom tariff issues (7 August, 2017)

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1.1. “Non-predation” has been defined as not indulging in predatory pricing by a service
provider having significant market power;
1.2. “Significant market power” has been defined as a TSP holding a market share of at
least 30% in the relevant market, which is to be determined on the basis of either
subscriber base or gross revenue. The Amendment Order simultaneously recognizes
that the concept of ‘SMP’ flows from the concept of ‘dominance’ under competition
laws;
1.3. “Predatory pricing” has been defined as the provision of a telecommunication service
in the relevant market at a price which is below the average variable cost, with a view
to reduce competition or eliminate the competitors in the relevant market—
Interestingly, the Amendment Order also refers to the definition of “predatory
pricing” under the Competition Act, 2002 (the Competition Act) to emphasise that
intent is the key;
1.4. “Relevant market” has been defined as the market which may be determined by TRAI
with reference to the relevant product market for distinct telecommunication services
(such as Wireline Access Service, National Long-Distance Service, International
Long-Distance Service) and the relevant geographical market;
1.5. “Relevant product market” has been defined as the market in respect of a distinct
telecommunication service for which the licensor grants licence to the TSP;
1.6. “Relevant geographic market” has been defined as a market comprising the respective
licence service area for which the licensor grants licence to the TSPs to provide
distinct telecommunication services.

In addition to requiring the TSPs to conduct a self-check of tariffs at the time of reporting it
to TRAI in order to ensure that there is no predation, the Amendment Order also confers suo
motu powers on TRAI to examine tariffs to determine the occurrence of any predatory
pricing, thus extending its jurisdiction to ex-post abusive conduct. In case of predation, a
penalty not exceeding INR 50 lakhs per tariff plan for each service area can be imposed by
TRAI.

Conflict in Jurisdiction

The preamble of the Competition Act, 20026 read with section 18 of the legislation delegates
to the Competition Commission of India (the “CCI”) the duty of “promoting and sustaining

6
The competition act, 2002 (12 of 2003)

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competition” in the Indian economy. This implies that the CCI will have principal jurisdiction
to regulate conditions of competition in the relevant market of India. Whereas, the objective
of Telecom Regulatory Authority of India Act, 1997 7 (the “TRAI Act”) is to nurture
conditions essential for the growth of telecom industry. Section 11 of the TRAI Act delegates
power to the Telecom Regulatory Authority of India (“TRAI”) to “facilitate competition and
promote efficiency in the operation of telecommunication services so as to facilitate growth
in such services”.

The objectives of both legislations, when read together, intend to create an environment that
may facilitate fair competition. In fulfilling the concerned objective, the jurisdiction of TRAI
and the CCI overlap. Although the watchdogs (the CCI and TRAI) share a common goal,
they differ in their mandate and approach. The difference in approach adopted by the CCI and
TRAI towards a similar objective leads to cases of jurisdictional conflicts.

The difference in approach can be understood from the following example. While regulating
tariff rates, TRAI aims to keep the tariffs reasonable for the benefit of consumer. On the other
hand, this could be viewed by the CCI as a case of predatory pricing, which in turn forecloses
the door of the market for a potential service provider. In the given situation, parties often
invoke the jurisdiction of a body convenient for them.

In Star India v. Sea T.V. Network8, an attempt was made to clarify the jurisdictional conflict.
It was held that the Monopolies and Restrictive Trade Practices (MTRP) Commission, the
predecessor of the CCI, has no mandate to exercise its jurisdiction over a dispute that pertains
to violation of any provision the TRAI Act, even though the provision involves an issue of
monopoly and restrictive trade practices.

Further, in Consumer Online Foundation v. Tata Sky 9 (para 27), Dish TV challenged the
jurisdiction of the CCI as the matter was already in the hands of the Telecom Disputes
Settlement and Appellate Tribunal (“TDSAT”) and TRAI. On this, the CCI opined that
though TRAI is the market regulator, the field of competition in the market falls within the
exclusive jurisdiction of the CCI. After reading the judgement, it seems that the CCI did not
opine conclusively on the issue of jurisdictional conflict.

7
Telecom Regulatory Authority of India Act, 1997
8

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Resolving the Jurisdiction

On 5 December 2018, a two-judge bench of the Supreme Court in Competition Commission

of India v. Bharti Airtel Limited and Others 10 addressed and settled the issue of the ongoing
jurisdictional battle between the CCI and TRAI.

Factual Matrix

Reliance Jio filed an application under section 19(1) of the Competition Act before the CCI
alleging an anti-competitive agreement to deny point of interconnection having been formed
by Airtel, Vodafone, Idea (i.e., incumbent dominant operators or “IDOs”). After hearing the
parties, the CCI issued a notice to the IDOs as, on a prima facie view, a case exists and an
investigation is required. The CCI’s action was contested by the IDOs before the High Court
of Bombay on the ground that the CCI did not have the jurisdiction to deal with the matter as
TRAI was already seized of the matter.

The High Court, while allowing the challenge, held that the exercise of jurisdiction by the
CCI is erroneous, as TRAI being a telecom watchdog is well equipped to deal with the said
issues. It was also held that order is not an administrative order; thus, the CCI should have
waited for the final decision of TRAI before reaching any finding. The CCI and Reliance Jio
further challenged the judgement before the Supreme Court.

Issues

The Supreme Court identified two major issues:

 Whether the CCI can exercise its jurisdiction when TRAI is already vested with the
same?
 Whether a writ petition filed against the order passed under section 26(1) of the
Competition Act can be admitted before the High Court For the current post, the
researcher will deal only with the first issue.

Judgement

The Supreme Court analysed the objective of the statues and upheld the decision of High
Court of Bombay11. Further the Supreme Court opined as follows:

10

11

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– The matter on hand is related to the telecom sector which is monitored under the TRAI Act.
In the first instance, TRAI shall be allowed to deal with and decide the “jurisdictional
aspects” as it is more competent to handle it. When the final determination is done by TRAI
and there are findings that show that the party is involved in anti-competitive practices, the
jurisdiction of the CCI can be activated to look into the said matter in accordance with the
relevant provisions of the Act. Going by this way, a balance will be maintained between
TRAI and the CCI.

– If the CCI is allowed to interfere at the time when TRAI is seized of the matter, there is a
possibility that the authorities, namely TRAI and the CCI may subscribe to a contradictory
view. Thus, it is imperative to avoid having a concurrent jurisdiction.

– The jurisdiction of the CCI is not ousted completely; it is a matter of supremacy as to which
authority should exercise jurisdiction first. If an agreement has an adverse effect on the
competition within the relevant market of the country, the CCI will exercise its jurisdiction,
as it is a tailor-made authority to deal with such issues. The jurisdiction to deal with such
issues should not be disputed at any point of time.

Analysis and Concluding Remarks

On a plain reading of the judgement, the Researcher is of the view that although the said
judgement resolves the jurisdictional tussle and constructs a balance between the two
authorities, it has created its own set of controversies. There are several infirmities mentioned
below that should have been answered to avoid uncertainty in near future. According to the
judgement, TRAI shall be the first authority to exercise jurisdiction whereas the CCI will
always have a follow-on jurisdiction in matter related to telecommunication industry. Further,
the jurisdiction of the CCI cannot be invoked unless TRAI makes its “final determination”.
On this, the author is of the view the abovementioned principle is against the legislative intent
behind section 21 of the Competition Act. This is because the said provision allows statutory
authorities to refer a matter to the CCI, if the issue in hand is contrary to any of the provisions
that Act.

Thus, considering section 21, TRAI can make a reference to the CCI prior to the “final
determination” being made. The said judgement unambiguously holds that “jurisdictional
fact” has to be decided by TRAI and on a mandatory basis it has to be accepted by the parties
and the CCI. The author is of the opinion that the Competition Act places investigative
powers in the hands of Director General to determine several jurisdictional aspects of the

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matter, which are imperative for the CCI to exercise its jurisdiction. The judgement has to be
appreciated as it has adopted a pragmatic approach and is a step towards certainty, which is
indispensable for the growth of any economic law in the country. However, the author is of
the view that the judgement does not entirely put an end to the fight for regulatory
supremacy. Resolution is possible only if the CCI and TRAI join hands to coordinate and
consult with each other in matters that involve questions of competition and telecom laws.
For example, in Canada, the competition authority and the relevant sectoral authority sign
memoranda of understanding, which effectively set out the roles of both. Further, section 21
of the Competition Act is of much assistance in the said issue. TRAI can refer the matter or
seek the CCI’s opinion, and after considering the same TRAI can pronounce the final
judgement.

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 Chapter 4

Reliance Jio: A Case Study

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 Chapter 5

Suggestions and Conclusion

As competition in the Indian telecom sector continues to rise steeply, the market players are
bound to raise similar disputes against each other in the future. Also, as the Competition Act,
2002 is a penal statute that allows imposition of significant penalties, raising a complaint
about a violation of this statute turns out as an attractive option for the rival market players.
The significant implication of the CCI‟s decision in Bharti Airtel v. Reliance Jio is that in the
future it may not be possible for the market players in the telecom sector to successfully make
allegations that fall within the ambit of section 4 of the Act with respect to abuse of dominant
position.

This is because, for a section 4 violation, the enterprise must be in a „dominant position‟ in
the relevant market. To overcome this problem, the Government should make an effort for
uplifting the public telecom sectors like BSNL, MTNL etc.

To control the cartelization and abuse of dominant position, it can be suggested that
unbundling of services and infrastructure will bring in healthy competition in the telecom
sector. In my view, segregation of services in different layers will reduce the outsourcing cost
and will allow more players to enter the market. This will also help to reduce the situation of
abuse of dominant position by any single operator.

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