High Court Strikes Down CCI’s Cartelisation Probe In Reliance Jio Case
The Bombay High Court struck down the antitrust regulator’s April order to probe Reliance Jio Infocomm Ltd.’s allegations of cartelisation against its older rivals.
It said the Competition Commission of India does not have the jurisdiction to order a probe when there is a sector-specific regulator—in this case the Telecom Regulatory Authority of India. “The Competition Act itself is not sufficient to decide and deal with the issues arising out of the provisions of the TRAI Act,” the court said.
Reliance Jio now has the option to appeal against the order or approach TRAI.
The court appears to have taken an overly conservative view of the CCI’s jurisdiction, said Samir Gandhi, partner at law firm AZB & Partners. “This might undermine the CCI’s role as a market watchdog in many regulated sectors such as electricity, insurance and banking. This is contrary to the CCI’s purpose—which is to look at a given conduct through an antitrust lens, and not that of a sectoral regulator.”
On the other hand, the ruling that any investigation by the CCI must only be commenced based on “relevant” evidence and that not all “majority decisions” can be viewed as actions of a cartel would be quite correct, Gandhi said.
In November, Reliance Jio had filed a complaint alleging that the incumbents—Bharti Airtel Ltd., Vodafone India Ltd. and Idea Cellular Ltd.—were abusing their dominant position to prevent it from accessing points of interconnection. Such points connect users of one operator with subscribers of another mobile phone services provider.
The company representatives refused to comment on the high court verdict when contacted by BloombergQuint over the phone.
The court order gives importance to a sectoral regulator by providing it an opportunity to identify the issues that companies in that space face before the CCI analyses the behaviour of a player, said Abir Roy, partner at law firm Lakshmikumaran & Sridharan. “The high court has recognised that the sectoral regulator should have the first right to determine how a player should function in the market.”
The ruling comes after the telecom regulator on Tuesday reduced the interconnect charges paid by operators on cross-network calls by more than half to 6 paise a minute and decided to abolish them from 2020. Multiple brokerages, including Morgan Stanley, CLSA and Goldman Sachs, said Reliance Jio stands to gain as, being a smaller operator with free voice calls, it was a net payer of such charges. Its rivals like Bharti Airtel, Vodafone and Idea Cellular stand to lose revenue.