Authors: Sambhawi Sanghmitra & Vijay Rohan Krishna
The authors are students at the Chanakya National Law University, Patna and National University of Study and Research in Law, Ranchi respectively
I. Introduction
With the adoption of the liberalization, privatization and globalisation model in 1991 and the resultant emanation of market rivalry, various regulatory bodies were vested with broad goals of facilitating fair competition in their respective sectors to create a thriving and dynamic market environment. Concurrent powers relating to the promotion of fair competition in the market were conferred upon the sectoral regulators and the Competition Commission of India (CCI) to facilitate complementarity but instead the same has become a source of constant jurisdictional conflicts between the two.
Lack of clear delineation of jurisdiction between these regulatory bodies and CCI has resulted in fading dissimilarity between ex-ante regulation and ex-post competition enforcement. However, it is pertinent to understand that the regulators are entrusted with broad objectives of promoting healthy competition by regulating the conduct of the market players in their respective sectors through ex-ante measures and structural remedies whereas, CCI’s end goal is to act against anti-competitive behaviour by employing mainly ex-post resolution and behavioural remedies.
This article delves into the efficacy of the judgement given by the Supreme Court in the case of Competition Commission of India v. Bharti Airtel Ltd. and the recommendations of the Competition Law Review Committee (CLRC) Report in resolving the jurisdictional tussle between the regulators and CCI and likewise addresses the existing lacunae in the current regime.
II. CCI v. Bharti Airtel Ltd.
In 2018, the Supreme Court was presented with an opportunity to settle the brewing jurisdictional fissures between CCI and TRAI. In this case, Reliance Jio Infocomm Limited (RJIL) had sought the intervention of TRAI stating that Airtel, Vodafone and Idea had intentionally ignored the interconnectivity agreement between them to augment the Point of Interconnections for RJIL. While TRAI was looking into the matter, RJIL approached CCI and thereupon CCI ordered an investigation against the respondent telecom operators and Cellular Operator Association of India for indulging in cartelisation.
Pursuant to the writ petition filed by the respondents, the Bombay High Court held that CCI had usurped TRAI’s jurisdiction and that it could have intervened only on the finality of proceedings before TRAI. Consequently, special leave petitions impugning the Bombay High Court’s decision were filed by RJIL and CCI. The Supreme Court dismissed the appeal and upheld the order of the Bombay High Court quashing the premature order passed by CCI. The Court held that once TRAI has decided on the jurisdictional aspects/facts of the case in the first instance, then the CCI could proceed with the question of violation of provisions of the Competition Act (the Act). The Court held that TRAI would have jurisdiction on all matters arising under the TRAI Act and after the findings returned by TRAI concluded that any of the parties have indulged in anti-competitive behaviour, then CCI can determine whether there has been a contravention of the relevant provisions of the Act. Therefore, the jurisdiction of CCI was not ousted but instead was deferred to a later stage.
Although the order recognized the specialization of CCI in competition-related matters, it made its jurisdiction contingent upon the prima facie conclusion of anti-competitive behaviour in the findings of TRAI who may lack the expertise to determine the same in some cases. The Court invoked the doctrine of harmonious construction but failed to imbibe it in practicality and the Court’s interpretation was more in the line of institutional deference than the sustenance of comity. It did not take into consideration the ill-effects of the decision including inefficient use of resources, increase in forum shopping and a lengthier process.
The aftermath of this decision was observed in the case of Star India Private Limited v. CCI, where the Bombay High Court quashed the order of investigation passed by CCI against Star, Sony and Indian Broadcasting Federation on the ground that the second petition filed by the Informant in TDSAT was still pending adjudication.
Pertinently, in the recent case of Monsanto Holdings Pvt. Ltd. v. CCI, the Delhi High Court held that CCI’s jurisdiction to examine alleged anti-competitive conduct in relation to rights granted under the Patents Act, 1970 was not barred. It was clarified that reliance could not be placed on the Bharti Airtel case to support the proposition that CCI’s jurisdiction was conditional upon the findings of any existent statutory regulator because in the Bharti Airtel case the disputes regarding POIs raised by RJIL fell squarely within the domain of TRAI and also because TRAI’s scope of regulation in the telecom industry is ‘all-pervasive’ and cannot be equated with the scope of regulation of the Controller of Patents which is restricted to granting patents and is not all-pervasive for the simple reason that patents are not an industry but merely conferment of intellectual property rights.
Therefore, although the Monsanto judgment clarified that the contingency of CCI’s jurisdiction on the findings of a regulator was to be determined by the extent of its scope of regulation in the respective industry yet making the jurisdiction of CCI conditional upon the findings of such regulator remains unfounded.
III. CLRC Report: Widening the Scope of Consultation
CLRC was constituted to recommend various amendments and facilitate a robust competition regime. Noting the sparse use of inter-regulatory consultation under Sections 21 and 21A of the Act, the Committee suggested that:
Since the current mechanism allowed the regulators or CCI to make a reference under the sections only in respect of an issue arising in the course of a proceeding, the scope of inter-regulatory consultation under the sections should be widened by enabling the regulators or the CCI to make references to each other on any issue related to the other’s governing statute.
CCI and the regulators should be allowed to enter into Memorandums of Understanding (MoUs) with each other.
However, the Draft Competition (Amendment) Bill did not incorporate provisions to enable both the entities to enter into MoU but only amended the proviso to Sections 21 and 21A to widen the scope of consultation between the regulators and CCI. The report did not even acknowledge the lacunae in the enforcement of the current consultative mechanism let alone remedying it.
IV. Legislative Ambiguity and the Way Forward
The confusion concerning jurisdictional thresholds is evident from the legislative framework and the same can be understood on the perusal of Sections 60, 61, 21 and 21A of the Act. Section 60 being a non-obstante clause gives the act an overriding effect whereas, Section 62 stipulates that the act should be read in consonance with other statutes. On the other hand, Sections 21 and 21A provide that upon reference to an issue raised in the course of a proceeding, the CCI or a regulator is bound to give its opinion within 2 months. In turn, the other entity is required to submit its findings in consideration of such opinion but compliance with such opinion is not mandatory.
Further, the sectoral regulators are not vested with adequate powers of competition enforcement and this significantly hampers their effectiveness when it comes to the protection of consumer welfare in competition matters. To top it all, the judgement given by the Supreme Court in CCI v. Bharti Airtel Ltd. is inconsistent with the aforementioned provisions in spirit since it makes the activation of CCI contingent upon the findings of the regulators which renders the scope of inter-regulatory consultation redundant and thus, fails to adequately demarcate the respective spheres of authority between the regulators and CCI.
In light of the above, the experience can be drawn from countries like Argentina, Turkey and France which follow the mandatory consultation mechanism according to which the sectoral regulators and the competition authorities have to solicit each other’s opinion in case there is an overlap of jurisdictions. The mandatory consultation process was also suggested by the National Committee on National Competition Policy and Allied Matters in 2011.
Although Section 21 and Section 21A of the Act embodies the consultative mechanism process between the sectoral regulators and CCI, the non-binding nature of the provision renders it inefficacious. Considering the existent legislative framework, substituting the word ‘may’ with ‘shall’ in Sections 21 and 21A of the Competition Act and making the opinion of CCI or the regulator binding upon the other will leverage the expertise of both the entities and will enable the initiation of a cooperative regime.
Under the mandatory consultation mechanism, the regulator or CCI will have to compulsorily refer to each other an issue falling under the other entity’s domain and the decision of the regulator or CCI in the matter would be binding upon the entity who made the reference. This mechanism will help the regulators and CCI to exercise their jurisdiction in their respective areas of specialisation and will also eradicate the issue of duplication in jurisdiction and forum shopping.
V. Conclusion
Therefore, the Supreme Court and the CLRC failed to seize the opportunity to introduce a process of effective collaboration between the regulators and CCI under the Indian Competition regime. The CCI Annual Report of 2018-19 stated that no reference was either made or received by CCI and the regulators in 2018-19 under Sections 21 and 21A of the Act which evidences that the absence of harmony between the regulators and CCI militates against the utilization of the consultative mechanism enshrined under the sections.
As discussed above, adoption of the mandatory consultation process will harmonise the discordant interface between the regulators and CCI without entailing too many amendments and will enable them to exercise their expertise in their respective spheres without encroaching on or attenuating each other’s powers which will leverage their collective proficiency.
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