HC sets aside cartelisation probe against top 3 telcos on Jio plaint

In a relief to the older or 'incumbent' telecom firms, the Bombay High Court on Friday set aside an order passed by the Competition Commission of India (CCI) directing a probe by its director general against the top three cellular operators over allegations of cartelisation by new entrant Reliance Jio.

A bench of Justices Anoop Mohta and Bharati Dangre rejected arguments by Reliance Jio and held "All the writ petitions are maintainable."

Reliance Jio Infocomm had complained to the CCI that the cellular operators had "ganged up" to prevent it from building its customer base by delaying and denying its request for points of interconnection (PoIs), alleging that it amounted to anti-competitive action through cartelisation. The PoIs facilitate calls between consumers of different cellular operators as well as mobile number portability.

Idea Cellular, Vodafone, Bharati Airtel and the Cellular Operators Association of India (COAI) had moved the HC to challenge a majority decision of the CCI passed on 21 April in response to Jio's complaint of cartelisation and abuse of dominant position by them. The operators had denied allegations of anti-competitive conduct. They argued that CCI "ignored undisputed facts" and its order was "self-contradictory" and didn't even arrive at an opinion of abuse of dominant position.

"Every majority decision - a decision taken by a majority of cellular operators - cannot be termed as 'cartelisation'," held the HC, upholding arguments made by the cellular operators. "Even ex-facie service providers and its association COAI have not committed any breaches of any provisions of the Competition Act."

Accepting the stand of the existing top three cellular operators, the HC significantly held that interpretation or clarification of any "contract clauses", "unified licence", "interconnection agreements", "quality of service regulations", "rights and obligations" arising from these regulations have to be decided by the telecom tribunal TDSAT and not under the Competition Act.

"The Competition Act itself is not sufficient to decide and deal with the issues arising out of the provisions of the TRAI Act and the contract conditions under the regulations," said the bench, adding that "The Competition Act governs anti-competitive agreements and issues about 'abuse of dominant position and combinations'."

The HC ruling, which experts say is a landmark verdict on the powers of the CCI, said that the commission had "proceeded on wrong presumption of law and usurpation of jurisdiction".

The court said, "unless the contract agreements" and related PoI issues are settled by the authority under the TRAI Act, there is no question of initiating any proceedings under the Competition Act as contracts/agreements go to the root of the alleged controversy, even under the Competition Act. The commission has no power to deal and decide on the alleged "delay", "denial", and "congestion" of PoIs unless they are first settled finally by the TDSAT under the TRAI Act.

The HC said the CCI could not direct a probe based on "vague information" and the CCI order was passed based on "irrelevant considerations, while ignoring relevant material and law". The HC rejected an argument by the CCI that it was only an "administrative direction".