Drawing the attention of Trai, the CCI chairman said the fair trade regulator has the mandate to not only promote and sustain trade, but also check practices that adversely impact competition in the market across sectors.
In a development that can have implications on the extent of Trai’s sphere of influence in determining issues such as predatory pricing and abuse of market dominance, the Competition Commission of India (CCI) has told the sector regulator that assessing such aspects are its “exclusive” domain.
Drawing the attention of Trai chairman RS Sharma on the consultation paper, regulatory principles of tariff assessment, CCI chairman Devender K Sikri said the fair trade regulator has the mandate to not only promote and sustain trade, but also check practices that adversely impact competition in the market across sectors, including telecom. Sikri, in the letter, which was seen by FE, said CCI’s observations are limited to the chapter on anti-competitive behaviour in tariff orders in the consultation paper issued by Trai.
“The discussion in the chapter relates to anti-competitive behaviour in the form of predatory pricing by dominant enterprises. The chapter sets out a range of issues and questions for consultation relating to delineation of relevant market, assessment of dominance and predatory pricing. As per the provisions of the Competition Act, these are issues for determination by the commission,” Sikri pointed out. Trai had floated the consultation paper in February and discussed the issues with the telecom operators and the stakeholders in an open house in May. It is now in the process of coming out with its regulations and recommendations.
It assumes importance as the issues that were discussed — promotional offers, predatory pricing and market dominance — form core of the dispute between Bharti Airtel, Vodafone India and Idea Cellular on one side and the new entrant Reliance Jio on the other. While Airtel and Idea have challenged Jio’s promotional offers before the TDSAT, Vodafone has moved the Delhi High Court.
Sikri said the Competition Act defines relevant market – product and geography – and lists factors that are to be considered while identifying these factors. “This exercise, regardless of the sector, is the exclusive remit of the competition authority, which has the technical capacity and the supporting statutory framework to carry it out,” he added. Calling Sharma’s attention to the issue of the extent of jurisdiction of the both regulators, the CCI Chairperson said that sector regulator deals with “structural conditions for competition and orderly growth” by dealing with issues that can impact growth and fair play in the market.
On the other hand, the competition regulator intervenes to address adverse effects of competition rising from “anti-competitive” behaviour of enterprises, which also includes predatory pricing. “We apprehend that apart from affording the stakeholders the opportunity of forum-shopping, divergence in definition or interpretation of issues/principles/concepts, which are integral to competition assessment will create unnecessary confusion amongst the stakeholders and add to their compliance cost,” Sikri indicated.
He also pointed out that CCI believes that Trai may not have the “wherewithal for determination of these issues, as such issues do not afford themselves to blanket prescriptions and blunt instrument of regulation”. Sikri pointed out that CCI, through years of work and enforcement, has built an in-depth understanding of the ever evolving markets including telecom, which has been further matured by its participation in global competition network meetings and engagements.
“Thus, in our opinion, the appropriate legal-economic instrument and the framework for such an analysis to conclusively establish abuse, including predatory pricing is the competition law of the country,” he added. Sikri, however, said that CCI can hold a consultation with Trai on the issue as the Competition Act allows mutual consultation between the competition authority and a sector regulator on subjects that may be at the intersection of regulation and intersection.