Apex Court Refuses To Stay TDSAT Order Rejecting TRAI Predatory Pricing Rule

The Supreme Court agreed to hear telecom regulator TRAI’s appeal against a telecom tribunal’s order that quashed its rules on predatory pricing and discounted offers.

However, it refused to stay the TDSAT’s order that ruled against TRAI, which under the predatory pricing tariff rule had barred telecom operators with over 30 percent market share from offering services at a price below the average cost of service, intended to reduce competition or eliminate the competitors. Under the February 16 tariff rule, telcos had to provide services to all subscribers availing the same tariff plan in a non-discriminatory manner.

A bench led by Justice RF Nariman refused to stay the Telecom Disputes Settlement and Appellate Tribunal’s (TDSAT) December 13 order that quashed Trai’s predatory pricing order and gave relief to Bharti Airtel and Vodafone Idea, which had alleged that the rules would benefit new entrants and their rival Reliance Jio Infocomm. However, the bench stayed the TDSAT order to the extent of remand.

TRAI in its appeal before the apex court said the tribunal had exceeded its jurisdiction by setting aside its tariff order, and thereby virtually dismantled the statutory framework for tariff assessment in force since 1999 and places consumers at the mercy of service providers. “The impugned judgment seriously acts against the interest of the consumers and deserves to be interfered with and ought to be set aside”, it said, adding that “the tribunal has erred in taking the view that it would not be necessary for telecom service providers to disclose details of segmented offers and if there is any other sensitive information which they feel would affect their business interests, they would be at liberty to withhold such information by offering a written explanation to TRAI.”

TRAI, through Solicitor General Tushar Mehta, argued that the tribunal’s order granted liberty to private operators to withhold information of segmented offers and discounts provided to existing customers, which is against the objectives of transparency and non-discrimination.

Moreover, the verdict quashes the operator’s requirement to disclose such discounts to the regulator which has created an anomalous situation where Trai’s power to regulate tariffs has been made redundant, TRAI stated.

Senior counsel Gopal Jain, appearing for Airtel, argued that the TRAI’s decision would have essentially enabled movement of the existing subscriber to a rival, thus disturbing level-playing field conditions.

While Reliance Jio’s senior counsel AM Singhvi supported Trai, saying that the apex court should stay the TDSAT order, senior counsel Neeraj K Kaul, appearing for Vodafone Idea, opposed any grant of stay, saying the TDSAT has just remanded the matter to TRAI.

In February, TRAI had sought to introduce the concept of “significant market power (SMP)”, “non predation” and had also permitted non reporting of “segmented offers/discounts” by telecom service providers. It had directed telcos to transparently disclose segmented offers and set the penalty for violations at `5000 for each day of delay, subject to a maximum of `2 lakh.

While Airtel and Idea approached TDSAT against the Trai rules, Vodafone challenged them in the Madras High Court, alleging that the order would result in an unfair advantage to Reliance Jio, as it took away their flexibility to compete and retain customers in a circle in which they were significant market players.—Finacial Express