Despite Supreme Court Weighing In, TRAI-CCI Friction Looks Far From Over

Competition has been shown to be useful up to a certain point and no further, but cooperation, which is the thing we must strive for today, begins where competition leaves off,” Franklin D. Roosevelt once said.

It’s the kind of quote one would expect the Competition Commission of India (CCI) to rattle off in one of its orders reprimanding predatory behavior.

But, as luck would have it, it’s a message the anti-monopoly body has itself had to hear lately, from none less than the Supreme Court of India.

A similar message went out to the Telecom Regulatory Authority of India (Trai), which also received a rather hard rap on the knuckles from the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) for attempting to encroach upon CCI’s turf.

For some time now, CCI and Trai have been at loggerheads over who is best placed to rule on anti-competitive behavior in the telecom sector.

The orders by the Supreme Court and TDSAT are, therefore, extremely helpful in bringing perspective to the debate.

Having said that, this is not an issue that is going away in a hurry. It’s still not very clear where the role of the sectoral regulator ends and where the CCI steps in in competition-related matters.

However, first, there are great insights and helpful takeaways from the Supreme Court order earlier this month on the jurisdiction of CCI in areas where the sectoral regulators are also seized of competition-related matters.

The case at hand related to the charge that incumbent telcos colluded and denied points of interconnect (POIs) to the relatively new entrant, Reliance Jio Infocomm Ltd. The incumbents took issue with the fact that CCI was investigating the case, though Trai was already seized of the matter.

The court made it clear that Trai is the competent authority to rule on the technical aspect of whether POIs were denied. It wasn’t keen on CCI jumping in at this technical stage, preferring that competition-related matters are best left for later.

“In the first instance, it is Trai which should decide these jurisdictional issues, which come within the domain of the Trai Act as they not only arise out of the telecom licences granted to the service providers, (but also because) the service providers are governed by the Trai Act and are supposed to follow various regulations and directions issued by Trai itself,” the order dated 5 December states.

However, on matters related to competition, it said CCI is the competent authority, and added that this is an area Trai isn’t equipped to deal with.

“It is within the exclusive domain of the CCI to find out as to whether a particular agreement will have appreciable adverse effect on competition within the relevant market in India. Obviously, all the aforesaid functions not only come within the domain of the CCI, Trai is not at all equipped to deal with the same. Even if Trai also returns a finding that a particular activity was anti-competitive, its powers would be limited to the action that can be taken under the Trai Act alone. It is only the CCI which is empowered to deal with the same anti-competitive act from the lens of the Competition Act,” the order states.

TDSAT went further and reprimanded Trai for taking upon itself responsibilities of CCI. “(Trai) cannot assume or create for itself a quasi-judicial role in a competition regime of its own creation,” it said in its 13 December order.

Coming back to the Supreme Court order, it seemingly makes a neat demarcation, leaving technical issues to Trai and competition-related issues to CCI. However, things don’t always fall so neatly into the two buckets. Who’s to say where the boundary for technical issues ends? “This is not the end of the drawing of boundaries between Trai and CCI, as it can be disputed what really is technical,” says a partner at a law firm who specializes in competition law.

Even other experts in competition law have said this can’t be taken as a precedent across sectors and across different scenarios. As the Supreme Court itself said, and TDSAT reiterated, the way forward is for Trai and CCI to work in “comity”.

Needless to say, this is easier said than done. After all, how does one move from competition to comity?

Smriti Parsheera, a policy researcher at the National Institute of Public Finance and Policy, suggests in an article in the Economic and Political Weekly that comity in practice would involve a memorandum of understanding (MoU) between Trai and CCI. “A voluntary memorandum of understanding between Trai and CCI would include CCI’s participation in Trai’s consultation processes; review of regulatory provisions to assess their impact on competition; mandatory (non-binding) references on areas of mutual interest and mechanisms for sharing of knowledge and information between the authorities,” she says.

Given the acrimony of the past and considering the fact that underlying issues aren’t exactly resolved, policymakers would do well to ensure that cooperation between CCI and sector regulators is formalized, either through such MoUs or other means. – Live Mint