2025 (7) TMI 223 - HC - Law of Competition

Anti-competitive conduct - Jurisdiction - authority to entertain and decide the complaint filed by the respondent Asianet Digital Network Private Limited (ADNPL) (a wholly owned subsidiary of Asianet Satellite Communications Limited)/ Informant - TRAI (Telecom Regulatory Authority of India)/ TDSAT (Telecom Disputes Settlement and Appellate Tribunal) or the Competition Commission of India (CCI) has the authority. Whether the TRAI Act is a special statute and the Competition Act is said to be a general statute dealing with the anti-competitive practices or whether both these statutes are special statutes for the subject matters of telecom and broadcasting services as well as the anti-competitive practices? - HELD THAT - The CCI is entrusted with duties powers and functions to deal with three kinds of anti-competitive practices and to eliminate such practices which are having adverse effect on the competition for which the CCI has been given ample power in this regard. This Court is of the considered view that the CCI is a special Act to inquire into any allegations regarding the three kinds of anti-competitive practices including misuse of the dominant position by a market player in the relevant market. The relevant market has been defined in both its product and geographic dimensions. The objective is to identify the competitors that can constrain those undertakings behaviour and prevent them from behaving independently of effective competitive pressure. Thus it would not be proper to say that the Competition Act is general but it is a special Act which deals with anti-competitive practices as defined under the Act itself. The CCI is a sectoral regulator so far as it relates to the curbing of anti-competitive practices in India is concerned. The TRAI Act has been enacted to bring the quality of telecom services to world standards to provide a wide range of services to meet the consumers demand at a reasonable price and to ensure the participation of companies registered in India as well as value added telecom services and making arrangements/provisions for protection and promotion of consumer interest and ensuring fair competition. To protect the interests of service providers and consumers of the telecom sector to ensure technical compatibility and effective inter-relationship between different service providers and to ensure compliance with license conditions by all the service providers a sectoral regulator i.e. TRAI has been constituted under the TRAI Act. Considering the above this Court is of the view that both the Competition Act and the TRAI Act are special legislation in their respective field. There may be some overlapping while discharging the functions by the CCI and the TRAI in respect of the telecom market in India is concerned but there is no provision under the TRAI Act to deal with the three anti-competitive practices as mentioned above including misuse of the dominant position of a market player as defined under Section 4 of the Competition Act. Whether the CCI would not have the jurisdiction to entertain the information of the ADNPL regarding the allegation of misuse of the dominant position by the SIPL in the relevant market as defined under Section 4 of the Competition Act? - HELD THAT - When the allegations are regarding the misuse of the dominant position by the SIPL the petitioner in the relevant market as defined under Section 4 of the Competition Act predominantly it is the CCI which will have the jurisdiction to determine the said issue of misuse of the dominant position and not the TRAI. However if there are allegations of non-compliance with the license conditions or violation of the Regulations framed by the TRAI it would be the TRAI which shall examine the said allegations and not the CCI. Both the authorities operate in different and distinct fields and some overlapping of the jurisdiction will not oust the jurisdiction of one sectoral regulator at the expense of the other. The CCI which is the sectoral regulator for dealing with anti-competitive practices in the relevant market and misuse of the dominant position will have the jurisdiction to deal with the said allegation and not the TRAI. If there are allegations regarding violation of the terms of the license conditions or the provisions of the Regulations framed by the TRAI the TRAI being the sectoral regulator of the field would assume jurisdiction to deal with those allegations. There is no conflict insofar as the jurisdiction of the two sectoral regulators is concerned. Whether the TRAI being the sectoral regulation in respect of the telecom and broadcasting services should first examine the allegation and the ADNPL should have filed the complaint before the TRAI/TDSAT and not have approached the CCI at the first instance? - When the information contains the allegation of misuse of the dominant position in the relevant market as well as the violation of the Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) Regulations 2017 (for short Interconnection Regulations 2017 ) and the Telecommunication (Broadcasting and Cable) Services (Eighth) (Addressable Systems) Tariff Order 2017 (Collectively New Regulatory Framework) the CCI should direct the informant the ADNPL to approach the TRAI and once the jurisdictional facts are determined by the TRAI then only the CCI should proceed with the matter if it is so required? - HELD THAT - The order passed under Section 26 of the Competition Act does not have civil consequences and it is an order in rem. The petitioners will have an opportunity to address their arguments before the CCI even regarding its jurisdiction. This Court therefore at this stage of the proceedings before the CCI does not want to scuttle the proceedings and the CCI itself is competent to deal with the jurisdictional issue as well. The present writ petitions so far as the Order dated 28.02.2022 passed by the Competition Commission of India under Section 26 of the Competition Act is concerned are dismissed.

Summary

The core legal questions considered by the Court in this matter revolve around the jurisdictional interplay between the Telecom Regulatory Authority of India (TRAI) and the Competition Commission of India (CCI) concerning allegations of anti-competitive conduct in the broadcasting sector. Specifically, the issues include:

(i) Whether the TRAI Act is a special statute governing telecom and broadcasting services and the Competition Act is a general statute dealing with anti-competitive practices, or whether both statutes are special in their respective domains, including anti-competitive practices;

(ii) Whether the CCI has jurisdiction to entertain the complaint alleging abuse of dominant position by a broadcaster against a multi-system operator (MSO) under Section 4 of the Competition Act;

(iii) Whether the TRAI, as the sectoral regulator for telecom and broadcasting services, should be the first authority to examine such allegations, implying that the complainant should have approached TRAI or the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) instead of the CCI;

(iv) Whether, in cases involving both alleged misuse of dominant position and violation of TRAI's regulatory framework, the CCI should defer to TRAI for determination of jurisdictional facts before proceeding with the matter.

Issue-wise detailed analysis:

Issue (i): Nature of the TRAI Act and the Competition Act - Special or General Statutes

The Court examined the legislative intent and statutory frameworks of both the TRAI Act 1997 and the Competition Act 2002. The Competition Act aims to establish a Commission to prevent practices adversely affecting competition, promote competition, and protect consumer interests. Section 60 of the Competition Act provides that its provisions have overriding effect over inconsistent laws.

The TRAI Act was enacted to regulate telecommunication services, including broadcasting and cable services since 2004, ensuring orderly growth, consumer protection, and fair competition within the telecom sector. The TRAI is a sectoral regulator with powers to regulate interconnection, licensing conditions, and quality of service.

The Court found that both Acts are special statutes in their respective fields. The Competition Act is not a mere general law but a special statute dealing with anti-competitive practices across sectors, including telecom and broadcasting. The TRAI Act is a special statute regulating telecom and broadcasting services, including competition aspects within its regulatory scope.

Thus, while there may be some overlapping jurisdiction, each statute governs distinct aspects: TRAI regulates licensing, interconnection, and compliance with sector-specific regulations, whereas CCI addresses anti-competitive agreements, abuse of dominance, and combinations affecting competition in relevant markets.

Issue (ii): Jurisdiction of CCI to entertain allegations of abuse of dominant position

The complaint before CCI alleged that the broadcaster (SIPL) abused its dominant position by offering discriminatory discounts and sham marketing agreements to a competitor MSO (KCCL), thereby denying market access to the complainant MSO (ADNPL). The allegations invoked Sections 4(2)(a)(ii) and 4(2)(c) of the Competition Act relating to unfair/discriminatory pricing and denial of market access.

The Court noted that the TRAI's regulatory framework (Interconnection Regulations 2017) capped discounts and mandated non-discriminatory treatment of distributors. However, the complaint alleged circumvention of these regulations via marketing agreements not regulated by TRAI.

The Court held that allegations of abuse of dominant position in the relevant market fall squarely within the jurisdiction of the CCI. TRAI's powers do not extend to investigating abuse of dominance or anti-competitive conduct under the Competition Act. While TRAI may regulate licensing conditions and interconnection, the CCI is the expert authority to investigate anti-competitive practices and impose penalties under the Competition Act.

Therefore, the CCI has jurisdiction to entertain and investigate the complaint regarding abuse of dominance, even if the conduct alleged also involves breach of TRAI regulations.

Issue (iii): Whether TRAI should be the first forum to examine the dispute and the complainant should have approached TRAI/TDSAT first

The petitioners contended that since the allegations pertain to violation of TRAI's Interconnection Regulations, the complaint should have first been filed before TRAI or TDSAT, as TRAI is the sectoral regulator with exclusive jurisdiction over broadcasting services.

The Court observed that while TRAI has jurisdiction over licensing conditions and interconnection disputes, the present complaint involves allegations of abuse of dominant position and anti-competitive conduct, which is outside the regulatory scope of TRAI. The regulatory framework of TRAI does not cover commercial or marketing agreements post-interconnection, which are the subject matter of the complaint.

The Court further noted that the CCI is competent to decide on its own jurisdiction and that the complainant is not estopped from approaching CCI even if it had earlier approached TRAI or TDSAT for different reliefs.

Thus, the Court held that the complainant was not obliged to first approach TRAI or TDSAT before filing the complaint before CCI, as the issues raised are distinct and fall within CCI's domain.

Issue (iv): Whether CCI should defer to TRAI for determination of jurisdictional facts before proceeding

The petitioners urged that since the complaint involves alleged violations of TRAI regulations, CCI should have directed the complainant to approach TRAI first and await determination of jurisdictional facts by TRAI before proceeding.

The Court examined the Supreme Court's judgment in Competition Commission of India v. Bharti Airtel Limited, which held that where jurisdictional facts fall within the domain of a sectoral regulator, that regulator should first decide those facts before CCI proceeds. However, that case involved interconnection disputes squarely within TRAI's licensing conditions.

In the present case, the complaint concerns marketing agreements and alleged abuse of dominance beyond the scope of TRAI's regulatory regime. The Court observed that no jurisdictional facts require prior determination by TRAI to oust CCI's jurisdiction.

Further, the Court emphasized that the order under Section 26(1) of the Competition Act directing investigation is administrative in nature and does not affect rights or impose penalties. The parties have the opportunity to raise jurisdictional objections before CCI during the inquiry process.

The Court declined to interfere with the CCI's order directing investigation and held that CCI is competent to decide its jurisdiction at the earliest stage of proceedings.

Additional Legal Reasoning and Precedents

The Court relied extensively on precedents elucidating the jurisdictional boundaries between sectoral regulators and CCI, including:

• The Supreme Court's judgment in Bharti Airtel case (2019), which emphasized comity between TRAI and CCI, with TRAI deciding jurisdictional issues related to licensing and interconnection first, and CCI dealing with competition law violations thereafter.
• The Delhi High Court's WhatsApp LLC judgment, which held that overlapping jurisdiction does not oust CCI's power and parallel inquiries by different authorities in their spheres are permissible.
• The Competition Commission of India v. Steel Authority of India Limited judgment, clarifying that orders under Section 26(1) are administrative and do not require prior notice or hearing.
• The Bombay High Court's Aamir Khan Productions judgment, which held that CCI has jurisdiction to determine jurisdictional facts and that writ courts should not interfere prematurely with show cause notices or investigation orders.
• The Kerala High Court's decision in All India Digital Cable Federation v. TRAI, which struck down regulations requiring disclosure of placement and marketing agreements, recognizing the sensitive commercial nature of such agreements and the limited regulatory scope of TRAI in this regard.

Key Evidence and Findings

The complaint detailed that the broadcaster SIPL provided discounts exceeding the maximum permissible under TRAI regulations (up to 50% instead of 15%), by entering into sham marketing agreements with KCCL, a competitor MSO. These agreements involved advertising payments for a 'test' channel with negligible viewership, effectively circumventing the regulatory discount cap.

The CCI found prima facie that such conduct placed the complainant MSO at a disadvantage, distorted the level playing field, and amounted to abuse of dominant position under the Competition Act. The Director General's investigation was ordered to probe these allegations further.

Data showed that the complainant's subscriber base declined while the competitor's grew, consistent with the alleged discriminatory pricing and denial of market access.

Application of Law to Facts

The Court applied the legal principles distinguishing the roles of TRAI and CCI. It recognized that TRAI's regulatory framework governs interconnection and licensing conditions, including discount caps. However, the alleged sham marketing agreements and discriminatory pricing fall outside TRAI's regulatory ambit and within CCI's jurisdiction to address abuse of dominance and anti-competitive conduct.

The Court held that CCI's jurisdiction is not ousted merely because the conduct may involve breach of TRAI regulations. Both authorities operate in their spheres, and overlapping jurisdiction does not preclude CCI from proceeding.

The Court also noted that the complainant was not required to approach TRAI first, as the issues raised are distinct and fall within CCI's exclusive powers under the Competition Act.

Treatment of Competing Arguments

The petitioners argued for exclusive jurisdiction of TRAI, asserting that the complaint essentially challenged non-compliance with TRAI's regulatory framework, which is a complete code. They contended that CCI's order directing investigation without notice violated principles of natural justice and was premature.

The Court rejected these arguments, holding that CCI's order under Section 26(1) is administrative and does not require prior notice or hearing. The petitioners have the opportunity to raise jurisdictional and substantive objections during the inquiry before CCI.

The petitioners' reliance on prior TDSAT orders and confidentiality orders was noted, but the Court found no estoppel against the complainant approaching CCI for distinct reliefs under the Competition Act.

The respondents, including CCI and the complainant, argued that marketing agreements post-interconnection are outside TRAI's regulatory scope and squarely within CCI's jurisdiction. The Court accepted this position, supported by precedents and statutory interpretation.

Conclusions

The Court concluded that:

1. Both the TRAI Act and the Competition Act are special statutes in their respective domains; the Competition Act is not a mere general law but a sectoral statute for competition matters.

2. The CCI has jurisdiction to entertain and investigate allegations of abuse of dominant position and anti-competitive conduct in broadcasting services, even if the conduct involves breach of TRAI regulations.

3. The complainant was not required to approach TRAI or TDSAT before filing the complaint with CCI, as the issues raised are outside TRAI's regulatory ambit.

4. The CCI's order under Section 26(1) directing investigation is administrative, does not affect rights, and does not require prior notice or hearing; jurisdictional objections can be raised and decided by CCI during the inquiry.

5. There is no necessity for CCI to defer investigation until TRAI determines jurisdictional facts, as no such jurisdictional facts fall within TRAI's exclusive domain in this case.

The writ petitions challenging the CCI's order directing investigation were dismissed, with liberty granted to the petitioners to raise jurisdictional objections before the CCI.

Significant holdings and core principles established:

"The Competition Act is a special Act which deals with anti-competitive practices as defined under the Act itself. The CCI is a sectoral regulator, so far as it relates to the curbing of anti-competitive practices in India is concerned."

"Allegations of abuse of dominant position in the relevant market fall squarely within the jurisdiction of the CCI. The TRAI's powers do not extend to investigating abuse of dominance or anti-competitive conduct under the Competition Act."

"The order passed under Section 26(1) of the Competition Act is an administrative direction to one of its own wings departmentally and is without entering upon any adjudicatory process. It does not effectively determine any right or obligation of the parties to the lis."

"Overlapping jurisdiction between TRAI and CCI does not oust the jurisdiction of either authority. Parallel inquiries by two different authorities in their respective spheres of adjudication are not uncommon."

"The CCI is competent to decide its own jurisdiction at the earliest stage of proceedings and no prior determination by TRAI is necessary where the issues fall outside TRAI's regulatory regime."