COMPETITION COMMISSION OF INDIA versus BHARTI AIRTEL LIMITED AND OTHERS

COMPETITION COMMISSION OF INDIA

BHARTI AIRTEL LIMITED AND OTHERS

(Civil Appeal No. 11843 of 2018)

DECEMBER 05, 2018

[A. K. SIKRI AND ASHOK BHUSHAN, JJ.]

Competition Act, 2002: ss.14, 19, 21, 21A and 26 – RJIL filedinformation under the Act alleging anti-competitive agreement/cartel having been formed by three major telecom operators (IDOs)along with COAI – Grievance of RJIL was that the IDOs intentionallyignored its request to augment Point of Interconnection (POIs) foraccess, National Long Distance and international Long Distanceservices, as the capacity already provided to it was causing hugePOI congestion resulting in call failures on its network – Apartfrom IDOs, certain allegations were made against COAI also – Itwas alleged that IDOs were denying mobile number portability(MNP) requests of customers who wanted to switch to RJIL competingservice and that COAI was acting at the behest of IDOs against theinterest of competing member i.e. RJIL and not for the common interestof industry and consumers as whole – CCI held that prima faciecase existed and an investigation was warranted and directedDirector General to cause investigation in the case – Jurisdictionof CCI to deal with the matter was challenged by IDOs and COAI –Held: As the TRAI is constituted as an expert regulatory body whichspecifically governs the telecom sector, the said aspects of thedisputes are to be decided by the TRAI in the first instance – Theseare jurisdictional aspects – TRAI, being specialised sectoralregulator and also armed with sufficient power to ensure fair, non-discriminatory and competitive market in the telecom sector, is bettersuited to decide the said issues – The concepts of “subscriber”,“test period”, “reasonable demand”, “test phase and commercialphase rights and obligations”, “reciprocal obligations of serviceproviders” or “breaches of any contract and/or practice”, arisingout of TRAI Act and the policy so declared, are the matters withinthe jurisdiction of the Authority/TDSAT under the TRAI Act only –Once that exercise is done and there are findings returned by the

ATRAI which lead to prima facie conclusion that IDOs have indulgedin anti-competitive practices, CCI can be activated to investigatethe matter going by the criteria laid down in relevant provisions ofCompetition Act – Telecom Regulatory Authority of India Act, 1997– Telegraph Act, 1885 – Telecommunication – Jurisdiction.

BCompetition Act, 2002: Salient features of the Act, discussed.Competition Act, 2002: Competition Commission of India(CCI) – Duties and functions – The CCI is entrusted with duties,powers and functions to deal with three kinds of anti-competitivepractices – These are: (a) where agreements are entered into byCcertain persons with view to cause an appreciable adverse effecton competition; (b) where any enterprise or group of enterprises,which enjoys dominant position, abuses the said dominant position;and (c) regulating the combination of enterprises by means of mergersor amalgamations to ensure that such mergers or amalgamationsdo not become anti-competitive or abuse the dominant position whichDthey can attain – The purpose of CCI is to eliminate such practiceswhich are having adverse effect on the competition, to promote andsustain competition and to protect the interest of the consumers andensure freedom of trade, carried on by the other participants, inIndia – For the purpose of conducting an inquiry, the CCI isEempowered to call any person for rendering assistance and/orproduce the records/material for arriving at even the prima facieopinion.Competition Act, 2002: s.26(1) – Writ petition against orderunder s.26(1) of 2002 Act – Maintainability of – RJIL filedFinformation under the Act alleging anti-competitive agreement/cartelhaving been formed by three major telecom operators (IDOs) alongwith COAI – CCI exercised its right under s.26 and held that primafacie case existed and an investigation was warranted into the matterand directed Director General to cause investigation in the case –In writ petition, High Court was called upon to decide as to whetherGthe jurisdiction of the CCI was entirely excluded or to what extentthe CCI could exercise its jurisdiction in these cases when the mattercould be dealt with any another regulator, namely, the TRAI – Held:When such jurisdictional issues arose, the writ petition would clearlybe maintainable – Constitution of India – Art.226 – Judicial review.

Competition Act, 2002: s.26(1) – Whether the High Courtcould give its findings on merits – Held: Once the order under s.26(1)of the 2002 Act is held to be administrative in nature and that it wasmerely prima facie opinion directing the Director General to carrythe investigation, the High Court was not competent to adjudge thevalidity of such an order on merits – The observations of the HighCourt giving findings on merits, therefore, were not appropriate –At the same time, since the order of the High Court is upheld on theaspect that the CCI could exercise jurisdiction only after proceedingsunder the TRAI Act had concluded/attained finality, the ultimatedirection given by the High Court quashing the order passed by theCCI is not liable to be interfered with as such an exercise carriedout by the CCI was premature.

Telecom Regulatory Authority of India Act, 1997: Salientfeatures of the Act, discussed.

Disposing of the appeals, the Court

HELD : 1.1 The Competition Act, 2002 deals with threekinds of practices which are treated as anti-competitive and areprohibited. These are: (a) where agreements are entered intoby certain persons with view to cause an appreciable adverseeffect on competition; (b) where any enterprise or group ofenterprises, which enjoys dominant position, abuses the saiddominant position; and (c) regulating the combination ofenterprises by means of mergers or amalgamations to ensurethat such mergers or amalgamations do not become anti-competitive or abuse the dominant position which they can attain.The CCI is entrusted with duties, powers and functions to dealwith three kinds of anti-competitive practices. The purpose is toeliminate such practices which are having adverse effect on thecompetition, to promote and sustain competition and to protectthe interest of the consumers and ensure freedom of trade, carriedon by the other participants, in India. For the purpose ofconducting such an inquiry, the CCI is empowered to call anyperson for rendering assistance and/or produce the records/material for arriving at even the prima facie opinion.[Paras 67, 68][551-B-C; 558-A-C]

AExcel Crop Care Limited v. Competition Commission ofIndia and Another (2017) 8 SCC 47 : [2017] 5 SCR901 – relied on

1.2 While inquiring into any alleged contravention anddetermining whether any agreement has an appreciable adverseBeffect on competition, factors which are to be taken intoconsideration are mentioned in sub-section (3) of Section 19.These include creation of barriers to new entrants in the market,driving existing competitors out of the market and foreclosureof competition by hindering entry into the market. All theseactivities have connection with the ‘market’. The word ‘market’Chas reference to ‘relevant market’. As per sub-section (5) ofSection 19, such relevant market can be relevant geographicmarket or relevant product market. The instant case relates totelecommunication market. [Para 69][558-C-E]2.1 The telecom market is regulated by the statutory regimeDcontained in the TRAI Act. Under the said Act, TRAI isestablished as regulator which exercises control/supervisionand also provides guidance to the telecom/mobile market. Thisstatutory body is required to function as per the provisions of theTRAI Act as well as the Rules and Regulations framed thereunder.EAdditionally, the telecom companies are also governed bylicence agreements entered into between the CentralGovernment and such service providers, for providing telephone/telecommunication services to the customers/subscribers.[Para 71][559-C-D]

F2.2 Some of the features which govern thetelecommunication industry are: (a) To protect the interest ofthe service providers and consumers of the telecom sector andto permit and ensure technical compatibility and effective inter-relationship between different service providers and for ensuringcompliance of licence conditions by all the service providers,GTRAI was constituted under the Telecom Regulatory Authorityof India Act, 1997. TRAI is recommendatory/advisory andregulatory body discharging the functions envisaged under sub-section (1) of Section 11 of the said Act. TRAI, inter alia, ischarged with ensuring fair competition amongst service

providers, including fixing the terms and conditions of entireactivity between the service providers and laying down thestandards of Quality of Service (QoS) to be provided by eachservice provider. In exercise of its functions, TRAI has issueddetailed Regulations for telecom services, including fixation andrevision of tariffs (Tariff Order), fixation of Inter-connect UsageCharges (IUC), prescription of quality of service standards, etc.(b) The Telecom Service Providers, which include therespondents as well as RJIL, provide telecommunication accessservice and are PAN India Telecom Service Providers. They aregoverned by the Cellular Mobile Telephone Service (CMTS)/Unified Access Service Licence (UASL) issued by theTelecommunications Department, Government of India undersection 4 of the Telegraph Act. (c) The Central Government hasthe exclusive privilege of establishing, maintaining and workingtelegraphs under the Telegraph Act and the Central Governmentis authorised to grant licence on such terms and conditions andin consideration of such payment as it thinks fit to any person toestablish, maintain or work as telegraph within any part of thecountry. By virtue of Section 4 of the Telegraph Act, serviceprovider is duty bound to enter into licence agreement with theformer for unified licence, with authorisation for provision ofservices, as per the terms and conditions prescribed in theSchedule. As condition of the said licence, the licensee agreesand unequivocally undertakes to fully comply with the terms andconditions stipulated in the licence agreement without anydeviation or reservation of any kind. The licence is governed bythe provisions of the Telegraph Act, the Indian WirelessTelegraphy Act, 1933, the TRAI Act and the InformationTechnology Act, 2000, as modified or regulated from time to time.[Para 73][565-G-H; 566-A-G]

2.3 The interconnection agreement, inter alia, provides forthe following clauses: (a) to meet all reasonable demand for thetransmission and reception of messages between the interconnectsystems; (b) to establish and maintain such one or more POIs asare reasonably required and are of sufficient capacity and insufficient numbers to enable transmission and reception of themessages by means of applicable systems; and (c) to connect

Aand keep connected to the applicable systems. By virtue of thelicence, the licensee is obligated to ensure quality of service asprescribed by the licensor or TRAI and failure on their part toadhere to the quality of service stipulated by TRAI would makethe licensor liable to be treated for breach of the terms andconditions of the licence. In order to render effective services,Bit is mandatory for the licensee to interconnect/provide POIs toall eligible telecom service providers to ensure that calls arecompleted to all destinations and interconnection agreement isentered into between the different service providers whichmandates each of the party to the agreement to provide to theCother interconnection traffic carriage and all the technical andoperational quality service and time lines, i.e. the equivalent tothat which the party provides to itself. [Para 74][567-A-C, F-H;568-A-B]

3.1 With the advent of globalisation/liberalisation leadingDto free market economy, regulators in respect of each sector haveassumed great significance and importance. It becomes theirbounden duty to ensure that such regulator fulfils the objectivesenshrined in the Act under which particular regulator is created.Insofar as the telecom sector is concerned, the TRAI Act itselfmentions the objective which it seeks to achieve. It not onlyEexercises control/supervision over the telecom service providers/licensees, TRAI is also supposed to provide guidance to thetelecom/mobile market. ‘Introduction’ to the TRAI Act itselfmentions that due to tremendous growth in the services it wasconsidered essential to regulate the telecommunication servicesFby regulatory body which should be fully empowered to controlthe services, in the best interest of the country as well as theservice providers. TRAI is, thus, constituted for orderly andhealthy growth of telecommunication infrastructure apart fromprotection of consumer interest. It is assigned the duty to achieve

the universal service which should be of world standard qualityGon the one hand and also to ensure that it is provided to thecustomers at reasonable price, on the other hand. In theprocess, purpose is to make arrangements for protection andpromotion of consumer interest and ensure fair competition.[Paras 78, 79][570-B-D; 571-E]H

Modern Dental College and Research Centre and Othersv. State of Madhya Pradesh and Others (2016) 7 SCC353 – followed

3.2 Specific functions which are assigned to TRAI, amongstother, include ensuring technical compatibility and effective inter-relationship between different service providers; ensuringcompliance of licence conditions by all service providers; andsettlement of disputes between service providers. In the instantcase, dispute raised by RJIL specifically touches upon theseaspects as the grievance raised is that the IDOs have not givenPOIs as per the licence conditions resulting into non-complianceand have failed to ensure inter se technical compatibility thereby.Not only RJIL raised this dispute, it even specifically approachedTRAI for settlement of this dispute which arose betweenvarious service providers, namely, RJIL on the one handand the IDOs on the other, wherein COAI is also roped in.[Paras 79, 80][571-F-H; 572-A]3.3 As the TRAI is constituted as an expert regulatorybody which specifically governs the telecom sector, the saidaspects of the disputes are to be decided by the TRAI in the firstinstance. These are jurisdictional aspects. Unless the TRAIfinds fault with the IDOs on the said aspects, the matter cannotbe taken further even if it is assumed that the CCI has thejurisdiction to deal with the complaints/information filed beforeit. RJIL has approached the DoT in relation to its allegedgrievance of augmentation of POIs which in turn had informedRJIL that the matter related to inter-connectivity between serviceproviders is within the purview of TRAI. RJIL thereafterapproached TRAI; TRAI intervened and issued show-causenotice and post issuance of show-cause notice and directions,TRAI issued recommendations on the issue of inter-connectionand provisioning of POIs to RJIL. The sectoral authorities are,therefore, seized of the matter. TRAI, being specialised sectoralregulator and also armed with sufficient power to ensure fair, non-discriminatory and competitive market in the telecom sector, isbetter suited to decide the said issues. After all, RJIL’s grievanceis that inter-connectivity is not provided by the IDOs in terms ofthe licenses granted to them. TRAI Act and Regulations framed

Athereunder make detailed provisions dealing with intenseobligations of the service providers for providing POIS. Theseprovisions also deal as to when, how and in what manner POIsare to be provisioned. They also stipulate the charges to berealised for POIs that are to be provided to another serviceprovider. Even the consequences for breach of such obligationsBare mentioned. [Para 83][573-F-H; 574-A-C]

4. The High Court was right in concluding that till thejurisdictional issues were straightened and answered by the TRAIwhich would bring on record findings on the said aspects, theCCI is ill-equipped to proceed in the matter. Having regard toCthe said nature of jurisdiction conferred upon an expert regulatorpertaining to this specific sector, the High Court is right inconcluding that the concepts of “subscriber”, “test period”,“reasonable demand”, “test phase and commercial phase rightsand obligations”, “reciprocal obligations of service providers”Dor “breaches of any contract and/or practice”, arising out of TRAIAct and the policy so declared, are the matters within thejurisdiction of the Authority/TDSAT under the TRAI Act only.Only when the jurisdictional facts in the instant matter aredetermined by the TRAI against the IDOs, the next questionwould be whether it was result of any concerted agreementEbetween the IDOs and COAI supported the IDOs in thatendeavour. It would be at that stage the CCI can go into thequestion as to whether violation of the provisions of TRAI Actamounts to ‘abuse of dominance’ or ‘anti-competitiveagreements’. [Para 84][574-D-F]F5. Whether TRAI has the exclusive jurisdiction to dealwith matters involving anti-competitive practices to the exclusionof CCI altogether because of the reason that the matter pertainsto telecom sector?

5.1 The CCI is to determine whether the conduct of theGparties was unilateral or it was collective action based on anagreement. Agreement between the parties, if it was there, ispivotal to the issue. Such an exercise has to be necessarilyundertaken by the CCI. The Competition Act is also specialstatute which deals with anti-competition. If the activityHundertaken by some persons is anti-competitive and offends

Section 3 of the Competition Act, the consequences thereof areprovided in the Competition Act. Section 27 empowers the CCIto pass certain kinds of orders, stipulated in the said provision,after inquiry into the agreements for abuse of dominant position.Moreover, it is within the exclusive domain of the CCI to findout as to whether particular agreement will have appreciableadverse effect on competition within the relevant market in India.For this purpose, CCI is to take into consideration the provisionscontained in the Competition Act, including Section 29 thereof.Sections 45 and 46 also authorise the CCI to impose penalties incertain situations. Obviously, all these functions not only comewithin the domain of the CCI, TRAI is not at all equipped to dealwith the same. Even if TRAI also returns finding that particularactivity was anti-competitive, its powers would be limited to theaction that can be taken under the TRAI Act alone. It is only theCCI which is empowered to deal with the same anti-competitiveact from the lens of the Competition Act. If such activities offendthe provisions of the Competition Act as well, the consequencesunder that Act would also follow. Therefore, contention of theIDOs that the jurisdiction of the CCI stands totally ousted cannotbe accepted. Insofar as the nuanced exercise from the standpoint of Competition Act is concerned, the CCI is the experiencedbody in conducting competition analysis. Further, the CCI ismore likely to opt for structural remedies which would lead thesector to evolve point where sufficient new entry is inducedthereby promoting genuine competition. This specific andimportant role assigned to the CCI cannot be completely wishedaway and the ‘comity’ between the sectoral regulator (i.e. TRAI)and the market regulator (i.e. the CCI) is to be maintained.[Paras 89, 90][576-C-G; 578-B-F]

Haridas Exports v. All India Float Glass Manufacturers’Assn. & Ors. (2002) 6 SCC 600 : [2002] 1 Suppl. SCR

229 – relied on

5.2 The primacy has to be given to the respectiveobjectives of the two regulators under the two Acts. At the sametime, since the matter pertains to the telecom sector which isspecifically regulated by the TRAI Act, balance is maintained bypermitting TRAI in the first instance to deal with and decide the

ABCDEF

Ajurisdictional aspects which can be more competently handled byit. Once that exercise is done and there are findings returned bythe TRAI which lead to the prima facie conclusion that the IDOshave indulged in anti-competitive practices, the CCI can beactivated to investigate the matter going by the criteria laid downin the relevant provisions of the Competition Act and take it toBits logical conclusion. The CCI could not have dealt with thismatter at this stage itself without availing the inquiry by TRAI.Also, insofar as the telecom sector is concerned, jurisdiction ofthe CCI under the Competition Act is not totally ousted.[Paras 91, 92][578-G-H; 579-A-B]

C6. Whether the writ petitions filed before the High Courtof Bombay were maintainable?

In the case of Steel Authority of India Limited, nature of theorder passed by the CCI under Section 26(1) of the CompetitionAct was gone into. The Court, in no uncertain terms, held thatDsuch an order would be an administrative order and not quasi-judicial order. The case set up by the respondents was that theCCI did not have the jurisdiction to entertain any such requestor information which was furnished by RJIL and two others. Thequestion, thus, pertained to the jurisdiction of the CCI to dealEwith such matter and in the process the High Court was calledupon to decide as to whether the jurisdiction of the CCI is entirelyexcluded or to what extent the CCI can exercise its jurisdictionin these cases when the matter could be dealt with by anotherregulator, namely, the TRAI. When such jurisdictional issuesarise, the writ petition would clearly be maintainable. Thus,Falthough the view of the High Court that the impugned orderwas quasi-judicial order is not accepted, the High Court wascompetent to deal with and decide the issues raised inexercise of its power under Article 226 of the Constitution.The writ petitions were, therefore, maintainable.G[Paras 94, 96, 97][580-C-D; 582-B-C; 583-F]7. Whether the High Court could give its findings onmerits?

Once it is held that the order under Section 26(1) of theCompetition Act is administrative in nature and further that itwas merely prima facie opinion directing the Director Generalto carry the investigation, the High Court was not competent toadjudge the validity of such an order on merits. At the same time,since it is held that the order of the High Court on the aspectthat the CCI could exercise jurisdiction only after proceedingsunder the TRAI Act had concluded/attained finality, i.e. only afterthe TRAI returns its findings on the jurisdictional, the ultimatedirection given by the High Court quashing the order passed bythe CCI is not liable to be interfered with as such an exercisecarried out by the CCI was premature. [Paras 98, 99][583-G-H;584-A-B]

Barium Chemicals Ltd. and Another v. Company LawBoard and Others AIR 1967 SC 295 : [1966] SCR 311– relied on

State (NCT of Delhi) v. Sanjay (2014) 9 SCC 772 :[2014] 9 SCR 1063 ; Solidaire India Ltd. v. FairgrowthFinancial Services Ltd. & Ors. (2001) 3 SCC 71 : [2001]1 SCR 932 ; Union of India and Another v. Associationof Unified Telecom Service Providers of India andOthers (2011) 10 SCC 543 : [2011] 14 SCR 657 ;Competition Commission of India v. Steel Authority ofIndia Limited and Another (2010) 10 SCC 744 : [2010]11 SCR 112 ; Competition Commission of India v.Coordination Committee of Artistes and Technicians ofWest Bengal Film and Television & Ors. (2017) 5 SCC17 : [2017] 5 SCR 1 ; Begum Sabiha Sultan v. NawabMohd. Mansur Ali Khan & Ors. (2007) 4 SCC 343 :[2007] 5 SCR 36 ; State of Punjab v. Labour Court,Jullundur & Ors. (1980) 1 SCC 4 : [1980] 1 SCR953 ; Ashoka Marketing Ltd. & Anr. v. Punjab NationalBank & Ors. (1990) 4 SCC 406 : [1990] 3 SCR 649 ;Bhavnagar University v. Palitana Sugar Mill (P) Ltd.& Ors. (2003) 2 SCC 111 : [2010] 11 SCR 112 ;Competition Commission of India v. Steel Authority ofIndia Ltd. & Anr. (2010) 10 SCC 744 : [2007] 10 SCR656 ; Carona Ltd. v. Parvathy Swaminathan & Sons(2007) 8 SCC 559 : [2007] 10 SCR 656 – referred to

From the Judgment and Order dated 21.09.2017 of the High Courtof Judicature at Bombay in WP No. 7173 of 2017.

With

Civil Appeal Nos. 11846, 11844-45, 11852 and 11847-51 of 2018.

P. S. Narasimha, ASG, Prashanto Sen, Dr. Abhishek Manu Singhvi,Ramji Srinivasan, Amit Sibal, Darius J. Khambata, Soli K. Cooper,P. Chidambaram, Gopal Jain, Navroz Seervai, Siddharth Luthra, Sr. Advs.H

Arjun Krishnan, Dhruv Malik, V. C. Shukla, Ankur Suingh,Sumit Srivastava, Sarvesh Mishra, Udayan Verma, Kamlendra,Rahul Tanwani, K. R. Sadiprabhu, Ritin Rai, Raghav Shankar, HitenSampat, Vishnu Sharma, Nakul Nayak, Aabhas Kshetarpal, Ms. KritikaBharadwaj, Tushar Bhardwaj, Avishkar Singhvi, Nidhiram Sharma, SrijanSinha, Naveen Hegde, Jayant Malik, Amit Bhandari, Avinash Amarnath,Marezban P. Bharucha, Ms. Alka Bharucha, Ms. Swathi Girimaji, AreenDe, Vipul Wadhwa, Harsh Kaushik, Atul Dua, Ms. Chinmayee Chandra,Ankush Walia, Param Tandon, Anju Berry, Aashish Gupta,Aditya Mukherjee, Ms. Sugnadha Rohatgi, S. S. Shroff, Sanjay Kapur,Ms. Megha Karnwal, Ms. Mansi Kapur and Ms. Shubhra Kapur, Advs.for the appearing parties.

The Judgment of the Court was delivered by

A. K. SIKRI, J. 1. Leave granted.

2. Reliance Jio Infocomm Limited (hereinafter referred to as‘RJIL’) has filed information under Section 19(1) of the CompetitionAct, 2002 (hereinafter referred to as the ‘Competition Act’) before theCompetition Commission of India (for short, ‘CCI’) alleging anti-competitive agreement/cartel having been formed by three major telecomoperators, namely, Bharti Airtel Limited, Vodafone India Limited andIdea Cellular Limited (Incumbent Dominant Operators) (hereinafterreferred to as the ‘IDOs’). Similar Informations under Section 19 of theCompetition Act were also filed by one Mr. Ranjan Sardana, CharteredAccountant, and Mr. Justice Kantilal Ambalal Puj (Retd.). These wereregistered by the CCI as Case Nos. 80-81, 83 and 95 respectively. Asper Section 26 of the Competition Act, on receipt of such an information,the CCI has to form an opinion as to whether there exists prima faciecase or not. If it is of the opinion that there exists prima facie case,the CCI directs the Director General to cause an investigation to bemade into the matter. Apart from the IDOs, certain allegations werealso made against the Cellular Operators Association of India (for short,‘COAI’). The CCI issued notice to these parties and after hearing theRJIL, the aforesaid cellular companies and COAI, it passed commonorder dated April 21, 2017 in all these cases (by clubbing them together)holding view that prima facie case exists and an investigation iswarranted into the matter. It, accordingly, directed the Director Generalto cause investigation in the case.

DEFG

AIntroduction:

3. Four writ petitions came to be filed by the Bharti Airtel Limited,Vodafone India Limited, Idea Cellular Limited and COAI respectively.The prayed for quashing of the aforesaid order and consequential action/proceedings on the ground that the CCI did not have any jurisdiction toBdeal with such matter. Show-cause notices were issued pursuant towhich the CCI as well as RJIL filed their counter affidavits. The materwas heard and vide judgment dated September 21, 2017 the High Courthas allowed these writ petitions and quashed/set aside the order datedApril 21, 2017 passed by the CCI and consequently notices issued bythe Director General of the CCI have also been quashed. We mayCreproduce the conclusions and operative portion of the order passed bythe Bombay High Court here itself, which are as under:

“130. Conclusions:

a) All the Writ Petitions are maintainable and entertainable. ThisDCourt has territorial jurisdiction to deal and decide the challengesso raised against impugned order (majority decision) dated 21 April2017, passed by the Competition Commission of India (CCI) underthe provisions of Section 26(1) of the Competition Act, 2002 incase Nos. 81 of 2016, 83 of 2016 and 95 of 2016 and all theconsequential actions/notices of the Director General under SectionE41 of the Competition Act arising out of it.

b) The telecommunication Sector/Industry/Market is governed,regulated, controlled and developed by the Authorities under theTelegraph Act, the Telecom Regulatory Authority of India Act(TRAI Act) and related Regulations, Rules, Circulars, includingall government policies. All the “parties”, “persons”,“stakeholders”, “service providers”, “consumers” and “enterprise”are bound by the statutory agreements/contracts, apart from relatedpolicy, usage, custom, practice so announced by the Government/Authority, from time to time.

c) The question of interpretation of clarification of any “contractclauses”, “unified license”, “interconnection agreements”, “qualityof service regulations”, “rights and obligations of TSP betweenand related to the above provisions”, are to be settled by theAuthorities/TDSAT and not by the Authorities under theCompetition Act.

d) The concepts of “subscriber”, “test period”, “reasonabledemand”, “test phase and commercial phase rights and obligations”,“reciprocal obligations of service providers” or “breaches of anycontract and/or practice”, arising out of TRAI Act and the policyso declared, are the matters within the jurisdiction of the Authority/TDSAT under the TRAI Act only.

e) The Competition Act and the TRAI Act are independentstatutes. The statutory authorities under the respective Acts areto discharge their power and jurisdiction in the light of the object,for which they are established. There is no conflict of thejurisdiction to be exercised by them. But the Competition Actitself is not sufficient to decide and deal with the issues, arisingout of the provisions of the TRAI Act and the contract conditions,under the Regulations.

f) The Competition Act governs the anti-competitive agreementsand its effect – the issues about “abuse of dominant position andcombinations”. It cannot be used and utilized to interpret thecontract conditions/policies of telecom Sector/Industry/Market,arising out of the Telegraph Act and the TRAI Act.

g) The Authority under the Competition Act has no jurisdiction todecide and deal with the various statutory agreements, contracts,including the rival rights/obligations, of its own. Every aspects ofdevelopment of telecommunication market are to be regulatedand controlled by the concerned Department/ Government, basedupon the policy so declared from time to time, keeping in mind theneed and the technology, under the TRAI Act.

h) Impugned order dated 21 April 2017 passed by the CompetitionCommission of India (CCI) under the provisions of Section 26(1)of the Competition Act, 2002 and all the consequential actions/notices of the Director General under Section 41 of the CompetitionAct proceeded on wrong presumption of law and usurpation ofjurisdiction, unless the contract agreements, terms and clausesand/or the related issues are settled by the Authority under theTRAI Act, there is no question to initiating any proceedings underthe Competition Act as contracts/agreements go to the root of thealleged controversy, even under the Competition Act.

i) The Authority, like the Commission and/or Director General,has no power to deal and decide the stated breaches including of“delay, “denial”, and “congestion” of POIs unless settled finallyby the Authorities/TDSAT under the TRAI Act. Therefore, thereis no question to initiate any inquiry and investigations under Section26(1) of the Competition Act. It is without jurisdiction. Even atthe time of passing of final order, the Commission and the Authority,will not be in position to deal with the contractual terms andconditions and/or any breaches, if any. The uncleared and vagueinformation are not sufficient to initiate inquiry and/or investigationunder the Competition Act, unless the governing law and the policyof the concerned “market” has clearly defined the respective rightsand obligations of the concerned parties/persons.

j) Impugned order dated 21 April 2017 and all the consequentialactions/notices of the Director General under the Competition Act,therefore, in the present facts and circumstances, are not mere“administrative directions”.

k) Impugned order dated 21 April 2017 and all the consequentialactions/notices of the Director General under the Competition Actare, therefore, illegal, perverse and also in view of the fact that ittakes into consideration irrelevant material and ignores the relevantmaterial and the law.

l) Every majority decision cannot be termed as “cartelisation”.Even ex-facie service providers and its Association COAI havenot committed any breaches of any provisions of the CompetitionAct.

131. Hence the following

ORDER

a) Impugned order dated 21 April 2017, passed by the CompetitionCommission of India (CCI) under the provisions of Section 26(1)of the Competition Act, 2002 in case Nos. 81 of 2016, 83 of 2016and 95 of 2016 and all the consequential actions/notices of theDirector General under Section 41 of the Competition Act, areliable to be quashed and set aside, in exercise of power underArticle 226 of the Constitution of India. Order accordingly.

b) All the Writ Petitions are allowed.

c) There shall be no order as to costs.

d) In view of the above, nothing survives in Civil Application(Stamp) No. 17736 of 2017 in Writ Petition No. 7164 of 2017 andthe same is also disposed of. No costs.”

4. Gist of the aforesaid order, as per the High Court, is that insofaras the telecom sector/industry/market is concerned, same is governed,regulated, controlled and developed by the authorities under the IndiaTelegraph Act, 1885 (hereinafter referred to as the ‘Telegraph Act’),the Telecom Regulatory Authority of India Act, 1997 (for short, ‘TRAIAct’), and as well as the related Regulations, Rules, Circulars, etc.Therefore, the question of interpretation or clarification of any “contractclauses”, “unified license”, “interconnection agreements”, “quality ofservice regulations”, “rights and obligations of TSP between and relatedto the above provisions”, are to be settled by the Authorities/TelecomDisputes Settlement and Appellate Tribunal (TDSAT) and not by theAuthorities under the Act. It has also held that the Competition Act andthe TRAI Act are independent statutes and the statutory authorities underthe respective Acts are to discharge their power and jurisdiction in thelight of the objectives for which they are established. The CompetitionAct is itself not sufficient to decide and deal with the issues arising outof the provisions of the TRAI Act etc. Thus, the CCI has no jurisdictionto decide and deal with the various statutory agreements, contracts,including rival rights/obligations, of its own. The issues arising out ofcontract agreements, terms and clauses and/or the related issues are tobe settled by the authority under the TRAI Act in the first instance andunless these issues are decided, there is no question of initiating anyproceedings under the Act. In nutshell, it is held that insofar as contracts,etc. which are regulated by the TRAI Act are concerned, in the firstinstance, it is the authority under the TRAI Act which has to decidethese questions. Once there is determination of the respective rightsand obligations under these licenses by the authority under the TRAIAct, which provided an information to the effect that the particular actappears to be anti-competitive, only thereafter the CCI gets jurisdictionto go into the question of such anti-competitive practice. Primarily themessage behind the decision of the High Court is that jurisdictional factsare to be decided by the authorities under the TRAI Act which has theexclusive jurisdiction to determine those issues as the TRAI is thestatutory authority established for this very purpose, and unless there is

Aa determination of these facts, the machinery under the Competition Actcannot be invoked. To put it otherwise, the judgment proceeds to decidethat it was premature for the CCI to entertain the Information for wantof determination of such issues that fall within the domain of the TRAIAct.

B5. It is obvious that the RJIL is not happy with the aforesaidoutcome. Even the CCI feels aggrieved. CCI has impugned this decisionby filing four special leave petitions, while the other one has been filedby the RJIL.

6. The material facts which are absolutely essential to determineCthe controversy, eschewing the unnecessary details, may now berecapitulated.

Factual Background:

With the decision of the Government of India, more than 25 yearsago, ushering into era of globalisation and liberalisation, lot of avenuesDopened up. It led to the privatisation of business in many sectors whichwere, hitherto, monopolistic domain of the Government. These includedaviation, insurance, telecommunication etc. With the opening of theindustrial and other activities in all spheres by placing it in the hands ofprivate sector led to significant economic development. The absoluteEcontrol of the Government through public enterprise or otherwise, whichhad seen licence and quota raj, virtually withered away, thereby revertingback to laissez faire economy to great extent, though not completely.It led to two significant developments:

In the first instance, though the private sector was given fullfreedom to do the business without any shackles in the form of controlsFetc., it was also deemed necessary at the same time that in public interest,some of the aspects of the business need to be regulated, of course, notby the Government but by an independent regulatory authority. Thisnecessity prompted the Government to come out with regulatory regimein different sectors. For example, in insurance sector, we have regulatoryGauthority constituted under Insurance Regulatory and DevelopmentAuthority Act, 1999; for industries generating electricity, there is anelectricity regulatory authority constituted under the Electricity Act, 2003;and for telecom sector, with which we are concerned, the TRAI isconstituted under the provisions of TRAI Act.

Secondly, this requirement to do business thereby allowing freeentry to private enterprise led to competition between different playersin the private sector. Competition is perceived as phenomena which isin best public interest in so many ways. Therefore, it becomes necessaryto encourage competition. At the same time, tendency of the businessenterprises to adopt practices which retard healthy competition neededto be curbed. There was governing law in the field known asMonopolistic and Restrictive Trade Practice Act, 1969. However, itwas felt that new robust statutory regime is required to take care ofthe needs of the present day. This necessity prompted the Parliament tocome out with new Act on the subject and the Competition Act, 2002was passed by the Parliament. Under this Act, the CCI is constituted asa statutory body which is to ensure healthy competition in markets therebypreventing the practice of having adverse effect on competition; topromote and sustain the competition in markets; to protect the interestof consumers and to ensure freedom of trade. In that sense, the CCI isalso regulator. But unique feature of the CCI is that it is not sectorbased body but has the jurisdiction across which transcends sectoralboundaries, thereby covering all the industries, with focus on the aforesaidobject and purpose behind the Competition Act, 2002.

7. In the instant appeals, width and scope of the powers of theCCI under the Competition Act, 2002 pertaining to telecom sector i.e. inrespect of the companies in telecom industry providing telecom servicesis to be defined vis-a-vis the scope of the powers of TRAI under theTRAI Act, 1997. It has arisen in these appeals, in the followingbackground:

As mentioned above, TRAI is the regulatory which regulates thefunctioning of the telecom service provider i.e. the telecom sector. Section11 of the TRAI Act enumerates various functions which TRAI issupposed to perform under the Act. Section 13, likewise, empowers theTRAI to issue directions, from time to time, to the service provider. Inexercise of powers under Section 13 read with Section 11 of the TRAIAct, the TRAI issued directions dated June 07, 2005 to all the telecomservice providers to provide interconnection within ninety days of theapplicable payments made by the interconnection seeker. The purposebehind providing interconnection by one service provider to the otherservice provider is to ensure smooth communication by subscriber ofone service provider to the cell number which is provided by another

Aservice provider. In that sense, this direction facilitates smooth functioningof the cell phone network even when it is managed by differentcompanies as it ensures interconnectivity i.e. connectivity from oneservice provider to other service provider.

8. On October 21, 2013, RJIL was granted Unified License andBUnified Access Service License under Section 4 of the Telegraph Actby the Department of Telecom (DoT) for providing telecommunicationservices in all 22 circles/licensed service areas in India. Soon thereafter,RJIL executed interconnection agreements (ICA) with existing telecomoperators inter alia including, Bharti Airtel Limited and Bharti HexagonLimited (hereinafter collectively referred to as the ‘Airtel’), Idea CellularCLimited (hereinafter referred to as the ‘Idea’); Vodafone India Limited/Vodafone Mobile Services Limited (hereinafter collectively referred toas the ‘Vodafone’). RJIL commenced test trial of its services afterintimation and approval of the DoT and TRAI.

9. By its ‘firm demand’ letter of June 21, 2016, RJIL vide separateDletters requested IDOs to augment Point of Interconnection (POIs) foraccess, National Long Distance (NLD) and International Long Distance(ILD) services, as according to it, the capacity already provided to itwas causing huge POI congestion, resulting in call failures on its network.According to RJIL, these companies intentionally ignored the aforesaidErequest. Accordingly, RJIL sent letter dated July 14, 2016 to TRAIstating that the POIs provided by IDOs are substantially inadequate andleading to congestion/call failures on its network in all circles. Hence,TRAI was requested to intervene and direct these telecom operators toaugment the POI capacities as per the demands made by RJIL. TRAIvide separate letters dated July 19, 2014 requested inter alia theFaforementioned telecom operators to augment POIs as per the RJIL’srequest. Further, responses of the respective companies were also soughton the issues raised by RJIL, within seven days. Idea responded bysending letter dated July 26, 2016 to RJIL denying that there had beenany delay in augmentation of POIs and further stated that it is willing toGfully support RJIL and that it had instructed its circle teams to augmentthe POIs on the basis of traffic congestion as per the ICA. Likewise,Airtel also sent reply dated August 03, 2016 to TRAI, inter alia statingthat augmentation of POIs shall be undertaken as per the terms andconditions of the ICA and on the basis of traffic trends post theircommercial launch. RJIL was not satisfied with such responses. It sentHanother letter dated August 04, 2016 to TRAI reiterating its earlier requestfor augmentation of POIs by the subject telecom operators. In themeantime, even Cellular Operators Association of India (COAI)intervened by addressing communication dated August 08, 2016 to TRAIwherein it took stand by stating that the RJIL was providing free serviceto millions of users under the guise of testing which led to choking ofPOIs. It was further suggested that due to the free service provided byRJIL, substantial imbalance in voice traffic had occurred for whichthe existing operators were not adequately compensated under theInterconnection Usage Charges regulations (IUC) in place.

10. There was further exchange of correspondence between theparties and even by the parties to the TRAI which shows that the partiesstuck to their respective positions and it may not be necessary to refer tothose communications in detail. Suffice it is to mention that RJIL fixedSeptember 05, 2016 as the launch date, which fact was informed toother service providers as well who were also told that the subscriberbase was expected to substantially and swiftly increase resulting in evenmore POI congestion. On that basis, request was made for urgent POIaugmentation vide letter dated September 02, 2016. The TRAI evenfacilitated meeting between the representatives of RJIL and otherservice providers (respondents herein) to sort out and resolve thedifferences in the interest of the consumers. At the same time, in thesaid meeting, the three telecom operators (respondents herein) also raiseda grievance that free calls being provided by RJIL has resulted in anunprecedented traffic congestion on their respective networks and thecurrent IUC regime is inadequate to cover the cost of efficientlymaintaining such high traffic. Thereafter, vide letter dated September14, 2016, addressed by Airtel to RJIL, it stated that the POIs (also knownas E1s) would be converted into 50:50 ratio to outgoing and incomingE1s. In other words, the E1s provided would be converted to ‘onlyoutgoing’ or ‘only incoming’ i.e. one-way E1s. RJIL replied by statingthat it was acceptable to them.

11. Soon thereafter, i.e. in September 2016 itself, Mr. Rajan Sardana,a Chartered Accountant, filed information under Section 19 of theCompetition Act (registered as Case No. 81 of 2016) and similarapplication was filed by Justice K.A. Puj (retired) (registered as CaseNo. 83 of 2016). Then, it was followed by information under Section 19of the Competition Act by RJIL in November, 2016 (registered as CaseNo. 95 of 2016).

AProceedings before TRAI:

12. As the matter was with the TRAI as well, it issued showcause notices dated September 27, 2016 to IDOs and RJIL for violationof Standard of Quality of Service of Basic Telephone Service (Wireline)and Cellular Mobile Telephone Service Regulations, 2009 (hereinafterBreferred to as the ‘QoS’) and for provision of the License Agreements.Similar show cause notices were also sent to other telecom operators.On October 21, 2016, TRAI issued recommendations to DoT after findingthat IDOs have violated conditions under the QoS, interconnectionagreements and Unified License. The TRAI inter alia stated in itsrecommendation as under:C

“21. … (vii) It is evident from the above clauses that the licenseesare mandated to provide interconnection to all eligible telecomservice provider. However, as mentioned in para 6 above, Airtelalong with other service providers have jointly through theirassociation (COAI), declined Point of Interconnection to RJILDwhich is willful violation of the above mentioned license conditions.

...(x) COAI’s letter dated 2nd September, 2016 which wasconfirmed by Airtel in the meeting held on 9th September, 2016clearly indicates attempt by three service providers namely, Airtel,Vodafone India Limited and Idea Cellular Limited to stifleEcompetition in the market and willfully violate the licenseconditions;…

23. While the Authority has been taking necessary steps to ensureeffective interconnection between Airtel and RJIL, it is evidentfrom Para 21 that Airtel is in non-compliance of the terms andFconditions of license and denial of interconnection to RJIL appearsto be with ulterior motive to stifle competition and is anti-consumer.”

13. TRAI recommended that Rs. 50 crore per local service area(LSA) be imposed on all the above three telecom operators for failure toGadhere to TRAI norms and regulations. Similar recommendations werealso issued to DoT against other telecom operators. Against therecommendations dated October 21, 2016 of TRAI, Vodafone filed aWrit Petition being Writ Petition (C) No. 11740 of 2016 before the HighCourt at Delhi. Meanwhile, on January 17, 2017, TRAI also recommendedimposition of penalty of Rs. 1,90,000/- on Idea for its rejection of mobileH

number portability (MNP) requests to RJIL’s network. Against theaforesaid recommendation, Idea has preferred Writ Petition being WritPetition (C) No. 685 of 2017 before the High Court at Delhi. The DoTafter examining the matter referred it back to TRAI for fresh considerationvide DoT’s reference dated April 05, 2017 whereby its recommendationsimposing penalty upon IDOs were sent back for reconsideration. TheTRAI sent its response dated May 24, 2017 to the DoT, wherein it tooka categorical stand that telecom operators have intentionally denied anddelayed the augmentation of POIs to RJIL.

Proceedings before CCI:

14. The CCI took the cognizance of the three informations givento it under Section 19 of the Competition Act which were registered asCase Nos. 81, 83 and 95 of 2016. It gave hearing to the respondentsservice providers as well as COAI and passed order dated April 21,2017 under Section 26(1) of the Competition Act as per which it came toa prima facie conclusion that case for investigation was made out anddirected the Director General to cause investigation in the case. Thisorder was passed by majority of 3:2 as two members of CCI dissentedfrom the said order. Operative portion of the majority order holds asunder:

“23. The Commission notes that allegations of anti-competitiveagreement as well as abuse of dominant position have been madefor the same conduct of refusal to facilitate call termination servicesand denial of mobile number portability. As discussed earlier, theCommission is satisfied that there exist prima facie contraventionof Section 3(3)(b) of Act, as the ITOs appear to have entered intoan agreement amongst themselves through the platform of COAI,to deny POIs to RJIL. Having been prima facie convinced thatthe impugned conduct is an outcome of the anti-competitiveagreement amongst ITOs, Commission does not find it appropriateto consider the same impugned conduct as unilateral action byeach of the ITOs. The Commission therefore at this stage doesnot find it necessary to deal with the allegations and submissionsregarding abuse of dominance in contravention of the provisionsof Section 4 of Act.

24. In view of the foregoing, the Commission directs the DG tocause an investigation into the matter under the provisions of

EFG

Section 26(1) of the Act. Considering the substantial similarity ofallegations in all the informations, the Commission clubs them interms of the proviso to Section 26(1) of the Act read withRegulation 27 of the Competition Commission of India (General)Regulations, 2009. The DO is directed to complete the investigationand submit investigation report within period of 60 days fromthe date of receipt of this Order, if the DG finds contravention, heshall also investigate the role of the persons who at the time ofsuch contravention were in-charge of and responsible for theconduct of the business of the contravening entity/entities. Duringthe course of investigation, if involvement of any other party isfound, DG shall investigate the conduct of such other parties alsowho may have indulged in the said contravention. In case the DGfinds the conduct of the Opposite Parties in violation of the Act,the DG shall also investigate the role of the persons who wereresponsible for the conduct of the Opposite Parties so as to proceedagainst them in accordance with Section 48 of the Act.

25. The Commission makes it clear that nothing stated in thisorder shall tantamount to final expression of opinion on the meritsof the case and DG shall conduct the investigation without beingswayed in any manner whatsoever by the observations madeherein.”

15. Likewise, two members who dissented inter alia held asfollows:

“...As stated above, from the various charts placed on record bythe ITOs showing the number of POIs provided by them to RJIL,the respective learned senior counsel for Ops have tried to showthat the number of POIs provided to RJIL by 08.11.2016 i.e. withinthe first quarter itself, were much more than what was demanded.In fact, the charts filed by RJIL itself corroborate this fact. Thecharts show that even if some of the POIs provided (one-wayPOIs for connecting outgoing calls from ITOs to RJIL) are nottaken into consideration, the number of POIs provided by OP-5and OP-7 were much more than what was demanded by RJIL.Even in case of OP-2, the same were approximately 64% (NLDPOIs) and 85.53% (Access POIs) as on 08.11.2016. However,as we have already observed above, we are not expected to go

into the question of providing adequate number of POIs. Yet thereis ample material on record to show that RJIL was more to beblamed for congestion in its traffic than the ITOs...”

“...we are of the considered opinion that on the basis of materialavailable with the Commission, it is difficult to say that there is aprima facie case...” made out against the Petitioner and othersand accordingly, “...the instant cases ought to be closed underSection 26(2) of the Act...” (hereafter “Dissent Note”).”

16. On June 08, 2017, the Director General issued letter ofinvestigation to the appellant seeking call data records in respect of certainidentified mobile numbers by June 19, 2017. On June 19, 2017, respondentNo. 2 issued letter of investigation to the appellant seeking detailedinformation/documents to be furnished by June 30, 2017. Immediatelythereafter, writ petitions were filed challenging the aforesaid order ofthe CCI as well as action of the Director General seeking informationfor holding inquiry. After preliminary hearing, the High Court passedinterim orders dated June 30, 2017 on the basis of statement of the counselfor CCI that they shall not proceed with the investigation, which ordercontinued till the disposal of the writ petitions. The High Court afterhearing the matter finally allowed the writ petitions, as already mentioned.17. It is clear from the above that as per RJIL, the respondentservice providers, along with COAI, entered into an anti-competitiveagreement/formed cartel and acted in an anti-competitive manner whichis prohibited by the Act. On these allegations, it approached the CCI forinitiating inquiry into this anti-competitive practices. Insofar as the natureof alleged anti-competitive agreement is concerned, the allegations ofRJIL are the following:

(i) Delay in provisioning or denial in provisioning of POIs, alsoknown as ‘E1’ in telecom parlance, to RJIL by IDOs during the testingphase and after commercial launch of RJIL services. POIs are thepoints where the networks of telecom operators connect. Withoutsufficient POIs it is not possible for subscribers of one service providerto make calls to subscribers of another service provider.

(ii) It was also alleged, inter alia, that IDOs are denying MobileNumber Portability (MNP) requests of customers who wanted to switchto RJIL competing service.

A(iii) It was also alleged that COAI was acting at the behest ofIDOs against the interest of competing member, i.e. RJIL, and not forthe common interest of the industry and consumers as whole.

Proceedings before the High Court:

18. Against the order passed by the CCI directing investigationBinto the aforesaid allegations, in the writ petitions filed by the IDOs andalso by COAI, challenge laid to the aforesaid order was premised on theground that the CCI lacked jurisdiction to entertain such complaints/information filed under Section 19 of the Competition Act as such amatter falls within the exclusive jurisdiction of another regulatory authority,Cnamely, TRAI.

19. In nutshell, it was pleaded that the violation alleged by RJIL,namely, whether there was delay or denial in provisioning POIs, comeswithin the domain of TRAI as it is the TRAI which has the exclusivejurisdiction to deal with such matter under the TRAI Act and, in fact,Dthe complaint was also made by TRAI as well which was seized of thematter.

20. The plea of the appellants, on the other hand, was that violationof telecom regulations, etc. was undoubtedly matter which could belooked into by the TRAI for which RJIL has approached the TRAI.EHowever, the subject matter of inquiry before the CCI was entirelydifferent, namely, formation of cartel and concerted effort on the partof the service providers, in collusion with COAI, to curb the competitionin the market and, thus, the CCI was competent and had requisitejurisdiction to look into this aspect. To put it otherwise, according to theappellants, the CCI had decided to examine the facts purely from theFstand point as to whether the alleged Act constituted anti-competitivepractice on the part of the respondents and, therefore, contravened theprovisions contained in Section 3 or Section 4 of the Act. This aspect,they had argued, could not be gone into by the TRAI as the CCI was theonly statutory authority constituted under the Act to examine such anissue.G

21. The Bombay High Court in the impugned judgment has, thus,inter alia, held as under:

“(i) the Competition Commission of India (CCI) had no jurisdictionin view of the Telecom Regulatory Authority of India Act, 1997Hand the authorities and regulations made thereunder;

(ii) the CCI could exercise jurisdiction only after proceedingsunder the TRAI Act had concluded/attained finality;

(iii) the order dated 21.04.2017 passed under section 26(1) of theCompetition Act was not an administrative direction, but rather aquasi judicial one that finally decided the rights of parties andcaused serious adverse consequences, because detailed hearinghad been given and many materials had been tendered in the courtsof the hearings;

(iv) on the merits of the matter, there was no cartelisation asalleged and COAI was exonerated; and

(v) the order of the CCI was perverse and liable to be interferedwith under writ jurisdiction.”

Arguments: The appellants:

22. Mr. P.S. Narasimha, learned Additional Solicitor General,appeared on behalf of the CCI and submitted that the impugned judgmentis contrary to the law. His attack was premised on three principalpropositions, which are follows:

(i) Jurisdiction of the CCI: The CCI has jurisdiction in the presentcase and it need not wait till the conclusion of proceedings under theTRAI Act to conclude.

(ii) Scope of Judicial Interference under Article 226: The HighCourt erred in holding that the order passed under section 26(1) was anorder resulting in serious adverse consequences merely because theCCI had granted hearing.

(iii) The order of CCI was not perverse and the High Court erredin giving findings on merits. The High Court erroneously exercised writjurisdiction.

23. With respect to the first proposition, his argument was that theHigh Court had failed to appreciate that issues before the CCI arealtogether different than the issues before the TRAI and they necessarilybe treated differently. He argued that the CCI and TRAI operate inentirely different fields, which is discernible from the Preambles of therespective legislations. The TRAI Act was supposed to enable it toregulate the telecommunication services, adjudicate dispute, dispose ofappeals and protect the interests of service providers and consumers of

Athe telecom sector, to promote and ensure orderly growth of the telecomsector. The CCI, on the other hand, is body that has been establishedto prevent practices having an adverse effect on competition, to promoteand sustain competition in markets, to protect the interests of consumersand to ensure freedom of trade carried on by other participants in markets,in India.B

24. Mr. Narasimha emphasised that the issue before the CCI waswhether the opposite parties/respondents, i.e. the IDOs, were acting inconcert and colluding (forming cartel) so as to block or hinder theentry of RJIL in the market in violation of section 3(3)(b) of the Act.The key issue is whether there was an anti-competitive agreementCbetween the IDOs, using the platform of COAI. The issue before theTRAI, on the other hand, is whether the delay/denial of POIs has violatedterms of the licence agreement and QoS regulations. The learned ASGpointed out that all the opposite parties have argued that they were justifiedin declining POIs to RJIL. However, the question before the CCI isDwhether the conduct of the parties was unilateralor collectiveactionbased on an agreement? It is precisely this issue that requires investigationby the Director General. If the conduct of the respondents in delaying/denying POIs was unilateral (i.e. an independent decision made by eachof them), then the conduct cannot be faulted under Section 3 of the Actsince Section 3 is premised on existence of an ‘agreement’ as defined inESection 2(b). However, if the conduct of the respondents was based onan ‘agreement’, it would become illegal under Section 3(3)(b) of the Actbecause its intent and effect is to ‘limit or control production, supply,markets, technical development, investment or provision of services”.It was contended that the conduct may well be legal under the TRAI

FAct and regulations or other laws. However, it is the collusive/concertednature of the action coupled with the effect that makes it illegal underthe Competition Act.

25. He adverted to the order dated April 21, 2017 of the CCI,while taking its prima facie view and submitted that the CCI hasGrecognised the distinction between the issues before the TRAI and theissues arising under the Act, as follows:

“9. It is observed that telecom sector is regulated by TRAI as thesectoral regulator. On the allegation of insufficient POIs beingprovided to RJIL, the Commission notes from the informationHavailable on TRAI’s website that, on 21st October 2016, TRAI

had recommended, through three separate communications to theDepartment of Telecommunications, imposition of penalty of Rs.50crore per License Service Area (LSA) against Airtel, Vodafoneand Idea, for violation of the provisions of License Agreementsand the Standards of QoS of Basic Telephone Service (Wireline)and Cellular Mobile Telephone Service Regulations, 2009. Thus,TRAI as sectoral regulator, has held the said conduct of ITOsin violation of relevant TRAI regulations and recommended penalaction against them. However, the recommendations of TRAI isin respect of violations of the provisions of License Agreementsand the Standards of QoS of Basic Telephone Service (Wireline)and Cellular Mobile Telephone Service Regulations, 2009 by theseOPs. Against this, mandate of the Commission under Section 18of the Act is ‘...to eliminate practices having adverse effect oncompetition, promote and sustain competition, protect the interestsof consumers and ensure freedom of trade carried on by otherparticipants, in markets in India.’ Accordingly, it becomes theduty and responsibility of the Commission to eliminate practicesin the market that have an adverse effect on competition andpromote and sustain competition so as to protect the interest ofconsumers and ensure freedom of trade. Further, as per Section62 of the Act, provisions of the Act are in addition to and not inderogation of the provisions of any other law for the time being inforce. Section 61 of the Act grants exclusive power to theCommission and the Competition Appellate Tribunal to exerciseits jurisdiction in respect of any matter which the Act empowersthe Commission or the Competition Appellate Tribunal to determineto the exclusion of civil courts. careful reading of theseprovisions show that the Commission has the jurisdiction to inquireinto the issues alleged in the present information insofar as thesame may result in contravention of the provisions of the Act.

10. It may be noted that the primary grievance of theInformants relates to cartelization by the Opposite Parties,amounting to violation of the provisions of Section 3 of theAct. In this regard, it must be noted that none of the areascovered under Section 3 of the Act are covered by TRAI inits mandate as sector regulator for TSPs. No doubt, TRAIhas the responsibility/obligation to determine whetherQuality of Service regulations and interconnection norms

on the levels of congestion at the points of interconnectionare complied with it not. But apart from that, none of theother issues as envisaged under Section 3 of the Act arelooked into by TRAI. Specifically, TRAI cannot arrive at adetermination as to whether the ITOs have colluded andcartelized to deny POIs to the detriment of RJIL in violationof Section 3(3) read with Section 3(1) of the Act. The scopeof the Section 3 allegation is not whether the ITOs havebreached the terms of their respective License agreementor ICA, rather, the scope of the Section 3 allegationspertains to whether the ITOs have entered into an anti-competitive agreement to provide insufficient POIs or delaythe provisions of POIs to RJIL. It is within the mandate ofthe Commission which can adjudicate on the issue of cartelizationamongst enterprises/associations and arrive at finding on thealleged cartelization. The Commission accordingly holds that theissue of whether such conduct on the part of ITOs (includingCOAI) has resulted in any anti-competitive effect in the marketin violation of the provisions of the Act can and needs to beexamined by it.

11. The Commission recognizes the role and importance of sectoralregulators and exercises its jurisdiction keeping in mind their roleand responsibilities. The Commission is market regulatorand has the jurisdiction to look at those issues which affectcompetition in markets in India, including that of an allegedcartelization amongst enterprises/ associations. The natureof the proceedings before TRAI involving ITOs on theother hand different and related to whether interconnectionnorms and quality of service regulations are complied withor whether the contractual terms of ICAs have beenbreached or met. Palpably, these issues are not relevantfor determination in the current proceedings before theCommission.

12. The informants have alleged that the conduct of ITOsamounts to “cartel” in relation to denial of POIs to RJIL.The definition of cartel has been provided under Section 2(c) ofthe Act which reads as follows: ‘cartel includes an association ofproducers, sellers, distributors, traders or service providers who

by agreement amongst themselves limit, control or attempt tocontrol the production, distribution, sale or price of or, trade ingoods or provision of services.’ Further, any alleged agreementamongst enterprises and an association of enterprises, engaged inidentical or similar trade or provision of services is covered underSection 3(3) of the act which states that:

Any agreement entered into between enterprises or associationsof enterprises or persons or associations of persons or betweenany person and enterprise or practice carried on, or decisiontaken by, any association of enterprises or association of persons,including cartels, engaged in identical or similar trade of goodsor provision of services, which-

(a) directly or indirectly determines purchase or sale prices;

(b) limits or controls production, supply, markets, technicaldevelopment, investment or provision of services;

shall be presumed to have an appreciable adverse effect oncompetition.

13.On the basis of the above, the Commission notes that inaddition to ITOs, conduct of COAI also needs to be examinedunder the provisions of Section 3(3) of the Act.”

(emphasis added)

26. He submitted that it was the statutory duty of the CCI,enumerated in Section 18 of the Act, to eliminate anti-competitivepractices and the focus of the CCI was confined to this Court’s judgmentin the case of Haridas Exports v. All India Float GlassManufacturers’ Assn. & Ors.[1] wherein it was held that where statutesoperate in different fields and have different purposes, it cannot be saidthat there is implied repeal by one, of the other. In the said case, thisCourt was considering alleged conflict between the Monopolies &Restrictive Trade Practices Act, 1969 and the Anti-Dumping Rules underthe Customs Act/Customs Tariff Act. It was held:

“48. The jurisdiction of the MRTP Commission, in our opinion, isnot ousted by the anti-dumping provisions in the Customs Act.The two Acts operate in different fields and have differentpurposes.The Import Control Act and the Customs Tariff Act areconcerned with import of goods into India and the duty whichcould be imposed on the imported items. Import may be allowedon the basis of an import licence or, depending upon the policy,import may be allowed under OGL — open general licence —where no specific licence for import is required. Whether to allowimport or not and the terms on which an item may be imported isa matter of policy and regulated by law.

52. The levy or non-levy of anti-dumping or other duty being alegislative act pursuant to the exercise of powers under theCustoms Tariff Act can also not be subject-matter of judicialreview by the MRTP Commission. The two Acts substantiallyoperate in different fields and the following table brings out someof the distinctions between the MRTP Act and the anti-dumpingprovisions:

[table omitted]

perusal of the above chart indicates that the two statutes andregimes operate in different and distinct spheres and there is noconflict between the two regimes/statutes. Hence, the questionof implied repeal of the provisions of Section 33(1)(j) of the MRTPAct, 1969 on account of the provisions of Section 9-A of theCustoms Tariff Act, 1975 does not arise.

53. It is thus seen that the provisions relating to anti-dumpingcontained in the Customs Tariff Act do not in any way affect thepower or jurisdiction of the MRTP Commission. The Import ControlAct and the Customs Tariff Act on the one hand and the MRTPAct on the other operate in different independent fields and theauthority under one has no jurisdiction over the other.In otherwords, their paths do not cross each other. While the provisionsof the Anti-Dumping Act are concerned with the levy of anti-dumping duty, the MRTP Act in the present case would beconcerned with the agreements between the parties which relateto the restrictive trade practices. Therefore, it would be incorrect

-to say that the incorporation of the antidumping provisions ouststhe jurisdiction of the MRTP Commission to inquire and pass orders,inter alia, with regard to restrictive trade practice in India.”

The learned ASG pointed out that the allegation against therespondents i.e. IDOs is that they have through an anti-competitiveagreement/cartel, limited the provision of services by delaying or denyingPOIs to RJIL, with view to block its entry in the market. As per him,such an agreement would raise presumption of ‘appreciable adverseeffect’ on competition.

27. Explaining the scheme of the Act, Mr. Narasimha referred tothe provisions of Section 3 which prohibits anti-competitive agreementsof the nature mentioned therein. He also referred to the definitions of‘agreement’, ‘cartel’, ‘enterprise’ and ‘service’ contained in Section 2of the Act and submitted that the definition of ‘agreement’ is not restrictedto written agreements, but even extends to ‘action in concert’, which,according to him, is wide enough to allegations of RJIL, if proved correct,within the mischief of Section 3 of the Act. He also referred to Section19(3) of the Act which lists certain factors to be considered in analysingadverse effect on competition and submitted that creation of barriers tonew entrants in the market and foreclosure of competition by hinderingentry into the market are to be perceived as having adverse effect oncompetition. He, thus, submitted that having regard to the aforesaidprovisions, the CCI wanted to investigate the matter with focus on theaspect as to whether there was an agreement between the respondentservice providers and they acted in concert pursuant to the saidagreement; whether it amounted to anti-competitive act on the part ofthese respondents and had adverse effect on the competition. In theprocess, the CCI was also supposed to examine as to whether therespondents colluded with COAI and abused their dominant position.His further argument was that inquiry into these aspects was within theexclusive domain of the CCI as it is the CCI which is supposed to ensurethat no such anti-competitive practices are adopted by anybody and ifthat has happened, the CCI is empowered to issue directions in terms ofSection 27 of the Act and also impose penalties. It has power to imposeeven lesser penalties as provided in Section 46 of the Act.

28. Mr. Narasimha also referred to Section 60 of the Act whichprovides for overriding effect for the Act and reads as under:

A“60. Act to have overriding effect. - The provisions of this Actshall have effect notwithstanding anything inconsistent therewithcontained in any other law for the time being in force.”

It was emphasised that the case of the CCI is not that the TRAIdoes not have power to exercise jurisdiction at all in the present factualBmatrix and there is no conflict of jurisdiction or legal regimes. Rather,both the TRAI and the CCI exercise their jurisdiction in their respectivefields. Exercise of jurisdiction by the CCI to investigate an alleged carteldoes not impinge upon TRAI’s jurisdiction to regulate the industry in anyway. Submission in this behalf was that the TRAI exercises its jurisdictionby ensuring compliance with the interconnect agreements, licenseCconditions, interconnection regulations, quality of service norms andregulations etc. Based on past experience, the TRAI frames regulationsfor the improvement of the telecom industry in the future. For instance,the June 07, 2005 direction of TRAI which provided for 90-day periodfor interconnection has now been replaced by the interconnectionDregulations of 2018, by which the time period for provision of POIs hasbeen reduced to 30 days, because it was found that due to technicaladvancements, it was possible to give POIs in much shorter time frame,and parties were using the 90-day period to delay the provision of POIs,as in the case of RJIL. However, the TRAI does not have the power topenalize for past conduct which was of anti-competitive nature. It wasEfurther submitted that while the competition law seeks to promoteefficient allocation and utilization of resources by inter alia lowering theentry barriers in the market, the primary objective of the sectoralregulators like the TRAI is development of their respective sector.However, what is important to bear in mind is that the promotion ofFcompetition and prevention of competitive behaviour may not be high onthe agenda of sectoral regulator which makes it prone to ‘regulatorycapture’. The position has been very succinctly captured by the Reportof the Working Group on Competition Policy, Planning Commission ofIndia, Government of India, February 2007 which states as follows:

G“7.2.3 The objective of sectoral regulator is to provide goodquality service at affordable rates, but the promotion ofcompetition and prevention of anti-competitive behaviour maynot be high on its agenda or the laws governing the regulatormay be silent on this aspect. It is not uncommon for sectoralregulators to be more closely aligned with the interest of theH

firms being regulated, which is also known as ‘regulatorycapture’. Besides, sectoral regulator may not have an overallview of the economy as whole and may tend to applyyardsticks which are different from the ones used by the othersectoral regulators. In other words, there is possibility ofthe lack of consistency across sectors. On the other hand,CCI will be able to apply uniform competition principles acrossall sectors of economy.”

(emphasis added)

The National Competition Policy 2011 has also observed asfollowing:

“8.3 The objective of sectoral regulator is to provide goodquality service at affordable rates, but the promotion ofcompetition and prevention of anti-competitive behaviour maynot be high on its agenda or the laws governing the regulatormay be silent on this aspect. Besides, sectoral regulatormay not have an overall view of the economy as whole andmay tend to apply yardsticks which are different from the onesused by the other sectoral regulators. In other words, thereis possibility of the lack of consistency across sectors asregards competition issues. On the other hand, the CCI, whichis expected to have developed the core competence, expertiseand capacity in competition related issues, will be able toapply uniform competition principles across all sectors ofeconomy. Besides, enforcement and penalizing violations ofCompetition Act is the exclusive area of the CCI. Evenotherwise, the general principle for economic efficiencywould be, whoever can do thing in best and mostprofessional manner should do it.”

(emphasis added)

29. The learned ASG, on taking support from the above, submittedthat the sectoral regulators, by contrast, will not be as experienced inconducting competition analysis as the competition authorities. Beingsusceptible to regulatory capture, the day-to-day interactions betweenindustry officials and regulatory agency may lead to commonality ofinterests that can interfere with the perspective necessary to evaluatecompetitive harms and to construct remedies that will protect competition

Afor the benefit of the economy as whole. While the sector specificregulators typically impose and monitor various behavioral conditions,the competition agencies are more likely to opt for structural remedieswhich would lead the sector to evolve to point where sufficient newentry is induced thereby promoting genuine competition. According tohim, keeping in view the aforesaid respective roles in mind, the ParliamentBin its wisdom and foresight has built in mechanism within the Act toaddress apparent conflicts of jurisdiction. The ‘comity’ between thesectoral regulator (TRAI) and the market regulator (CCI) is entirelyaddressed by reading of Section 21 and Section 21A of the Act. Inany case, Section 60 of the Act had an overriding effect. To support hisCargument, the learned ASG relied upon State (NCT of Delhi) v. Sanjay[2]wherein this Court dealt with the issue of whether prescription ofoffence under the Mines & Minerals Development & Regulation(MMDR) Act would exclude the application of the Indian Penal Code.The Court held that due to the absence of non-obstante clause, the

application of the Indian Penal Code was not excluded. In the presentDcase, the TRAI Act does not apply notwithstanding any other laws, andit does not contain an overriding effect provision containing non-obstanteclause. The relevant paragraphs of the judgment have been extractedbelow:

“62. Sub-section (1-A) of Section 4 of the MMDR Act puts aErestriction in transporting and storing any mineral otherwise thanin accordance with the provisions of the Act and the Rules madethereunder. In other words no person will do mining activity withouta valid lease or licence. Section 21 is penal provision accordingto which if person contravenes the provisions of sub-section (1-FA) of Section 4, he shall be prosecuted and punished in the mannerand procedure provided in the Act. Sub-section (6) has beeninserted in Section 4 by amendment making the offence cognizablenotwithstanding anything contained in the Code of CriminalProcedure, 1973. Section 22 of the Act puts restriction on thecourt to take cognizance of any offence punishable under the ActGor any Rule made thereunder except upon complaint made by aperson authorised in this behalf. It is very important to note thatSection 21 does not begin with non obstante clause. Instead ofthe words “notwithstanding anything contained in any law for the

time being in force no court shall take cognizance….”, the sectionbegins with the words “no court shall take cognizance of anyoffence.

63. It is well known that non obstante clause is legislativedevice which is usually employed to give overriding effect to certainprovisions over some contrary provisions that may be found eitherin the same enactment or some other enactment, that is to say, toavoid the operation and effect of all contrary provisions.”

30. He also premised his argument on the basis that the Act is aspecial statute in the field of telecommunications regulation, includingtechnical aspects connected thereto, and in case of conflict betweentwo special legislations, the later enactment would prevail. In SolidaireIndia Ltd. v. Fairgrowth Financial Services Ltd. & Ors.[3], this Courtheld as under:

“7. Coming to the second question, there is no doubt that the 1985Act is special Act. Section 32(1) of the said Act reads as follows:

“32. Effect of the Act on other laws.—(1) The provisions ofthis Act and of any rules or schemes made thereunder shallhave effect notwithstanding anything inconsistent therewithcontained in any other law except the provisions of the ForeignExchange Regulation Act, 1973 (46 of 1973) and the UrbanLand (Ceiling and Regulation) Act, 1976 (33 of 1976) for thetime being in force or in the Memorandum or Articles ofAssociation of an industrial company or in any other instrumenthaving effect by virtue of any law other than this Act.”

8. The effect of this provision is that the said Act will have effectnotwithstanding anything inconsistent therewith contained in anyother law except to the provisions of the Foreign ExchangeRegulation Act, 1973 and the Urban Land (Ceiling and Regulation)Act, 1976. similar non obstante provision is contained in Section13 of the Special Court Act which reads as follows:

“13. Act to have overriding effect.—The provisions of thisAct shall have effect notwithstanding anything inconsistenttherewith contained in any other law for the time being in forceor in any instrument having effect by virtue of any law, other

Athan this Act, or in any decree or order of any court, tribunal orother authority.”

9. It is clear that both these Acts are special Acts. This Court haslaid down in no uncertain terms that in such an event it is the laterAct which must prevail. The decisions cited in the above contextBare as follows: Maharashtra Tubes Ltd. v. State Industrial &Investment Corpn. of Maharashtra Ltd. [(1993) 2 SCC 144];Sarwan Singh v. Kasturi Lal [(1977) 1 SCC 750 : (1977) 2 SCR421]; Allahabad Bank v. Canara Bank [(2000) 4 SCC 406] andRam Narain v. Simla Banking & Industrial Co. Ltd. [AIR 1956SC 614 : 1956 SCR 603]”C

31. The learned ASG endeavoured to support his proposition byreferring to the contrasting provision contained in Section 14 of the TRAIAct which provides for dispute resolution in respect of various categoriesof persons before the TDSAT, which specifically carves out an exceptionin respect of monopolistic trade practice, restrictive trade practice andDunfair trade practice, which was subject to the jurisdiction of theMonopolies and Restrictive Trade Practices Commission (MRTPCommission). He submitted that this was another indicator in the TRAIAct itself from which it can be inferred that when it comes to anti-competitive practices, an embargo is put on the TRAI to deal with suchEpractices, inasmuch as the Competition Act is enacted to repeal andreplace the obsolete regime of the MRTP Act. In this behalf, he drewsustenance from Section 8 of the General Clauses Act to submit that theCompetition Act could be read in place of MRTP Act while construingthe provisions of Section 14 of the TRAI Act.

F32. His another submission, in this hue, was that distinction needs to bedrawn between facilitating competition (as provided in Section 11 of theTRAI Act) on the one hand and curbing and deterring anti-competitiveconduct and practices on the other hand. His submission in this behalfwas that the function of the TRAI under Section 11(1)(a)(iv) was tofacilitate competition which was purely recommendatory in nature andGnot part of regulatory function of the TRAI, as held in Union of Indiaand Another v. Association of Unified Telecom Service Providers ofIndia and Others[4]. He also argued that TRAI has no power to enforcecompliance, pass orders, or give directions of the nature envisaged underthe Act to curb anti-competitive conduct.H4(2011) 10 SCC 543

33. The learned ASG also relied upon the judgment of the EuropeanCommission in Deutsche Telekom v. European Commission[5]whereinit was held that it is only if the legislative framework eliminates thepossibility of competition (for example, statutory monopoly) that thejurisdiction of the Commission would be excluded. Following passagefrom the said judgment was specifically referred to:

“80. According to the case-law of the Court of Justice, it is onlyif anti-competitive conduct is required of undertakings by nationallegislation, or if the latter creates legal framework which itselfeliminates any possibility of competitive activity on their part,thatArticles 81 EC and 82 EC do not apply. In such situation, therestriction of competition is not attributable, as those provisionsimplicitly require, to the autonomous conduct of the understandings.Articles 81 EC and 82 EC may apply, however, if it is found thatthe national legislation leaves open the possibility of competitionwhich may be prevented, restricted or distorted by the autonomousconduct of undertakings(Joined Cases C-359/95P and C-379/95P Commission and France v. Ladbroke Racing (1997) ECR I-6265, paragraphs 33 and 34 and the case-law cited).”34. Mr. Narasimha also referred to another judgment of theGeneral Court of the European Union in Telefonica SA v. EuropeanCommission (T-336/07) wherein it was held that the EuropeanCommission could intervene in the telecommunications market, eventhough the entry was regulated through sectorial regulator. He pointedout that this decision of the General Court was upheld in appeal by theEuropean Court of Justice vide its judgment dated July 10, 2014.

35. Mr. Narasimha also contrasted the investigative regime underthe two Acts, i.e. Section 12 of the TRAI Act vis-a-vis Section 41 readwith Section 36(2) of the Competition Act and submitted that the DirectorGeneral under the Competition Act is better equipped to deal withdetection and investigation of anti-competitive agreements.

36. Labelling as erroneous, the approach of the High Court thatCCI should await the outcome of the proceedings before TRAI to attainfinality, answer given by Mr. Narasimha was that this approach waserroneous for three reasons. First, the High Court has failed to appreciatethe different fields/domains in which the CCI and the TRAI operate.

5Case C-280/08P, Judgement dated 14.10.2010

ASecondly, the course of action proposed by the High Court would resultin considerable delay defeating the CCI’s investigation. Thirdly, the HighCourt has failed to notice the role played by Section 21A of the Act.

37. He again emphasised that CCI is not inquiring into the adequacyof POIs provided to RJIL by the respondents, or compliance with theBQoS standards of TRAI and licence conditions, but was examining whetherthe conduct of the respondents was unilateral or it was the result of anti-competitive agreement. Insofar as requirement of speedy investigationby the CCI is concerned, he submitted that such requirement hasalready been acknowledged and mandated by this Court in CompetitionCommission of India v. Steel Authority of India Limited and Another[6].CFurther, if at any stage, prior to or after taking decision, the CCI is ofthe view that opinion of TRAI is required, it could always make referenceunder Section 21A of the Competition Act.

38. On the second proposition, namely, the High Court could nothave entertained writ jurisdiction in respect of an order passed underDSection 26(1) of the Competition Act, Mr. Narasimha clarified that hewas not taking the position that the High Court ,in no circumstance/situation, exercise its extraordinary jurisdiction under the said provision,in spite of an order passed under Section 26 of the Competition Act. Hissubmission, however, was that as per the judgment in Steel Authority ofEIndia Limited case, such jurisdiction would be very narrow and is to beexercised in exceptional cases. According to him, no such exceptionalcircumstance arises in the instant case as order in question was only aprima facie view of the CCI and such an order was administrative innature. Learned ASG specifically referred to the following discussion inthe case of Steel Authority of India Limited:F

“38. In contradistinction, the direction under Section 26(1) afterformation of prima facie opinion is direction simpliciter to causean investigation into the matter. Issuance of such direction, atthe face of it, is an administrative direction to one of its own wingsdepartmentally and is without entering upon any adjudicatoryGprocess. It does not effectively determine any right or obligationof the parties to the lis. Closure of the case causes determinationof rights and affects party i.e. the informant; resultantly, thesaid party has right to appeal against such closure of case under

H6(2010) 10 SCC 744

Section 26(2) of the Act. On the other hand, mere direction forinvestigation to one of the wings of the Commission is akin to adepartmental proceeding which does not entail civil consequencesfor any person, particularly, in light of the strict confidentiality thatis expected to be maintained by the Commission in terms of Section57 of the Act and Regulation 35 of the Regulations.

xxxx

97. The above reasoning and the principles enunciated, which areconsistent with the settled canons of law, we would adopt even inthis case. In the backdrop of these determinants, we may refer tothe provisions of the Act. Section 26, under its different sub-sections, requires the Commission to issue various directions, takedecisions and pass orders, some of which are even appealablebefore the Tribunal. Even if it is direction under any of theprovisions and not decision, conclusion or order passed on meritsby the Commission, it is expected that the same would be supportedby some reasoning. At the stage of forming prima facie view, asrequired under Section 26(1) of the Act, the Commission may notreally record detailed reasons, but must express its mind in nouncertain terms that it is of the view that prima facie case exists,requiring issuance of direction for investigation to the DirectorGeneral. Such view should be recorded with reference to theinformation furnished to the Commission. Such opinion should beformed on the basis of the records, including the informationfurnished and reference made to the Commission under the variousprovisions of the Act, as aforereferred. However, other decisionsand orders, which are not directions simpliciter and determiningthe rights of the parties, should be well reasoned analysing anddeciding the rival contentions raised before the Commission bythe parties. In other words, the Commission is expected to expressprima facie view in terms of Section 26(1) of the Act, withoutentering into any adjudicatory or determinative process and byrecording minimum reasons substantiating the formation of suchopinion, while all its other orders and decisions should be wellreasoned.”

39. He also drew the attention of the Court to paragraph 25 of theCCI’s order dated April 21, 2017 as per which the Director General wasasked to conduct the investigation without being swayed in any manner

Awhatsoever by the observations made by the CCI in the said order. Hesubmitted that in these circumstances the said order was merelyadministrative in nature and could not be labelled as quasi-judicial order.In the same vein his further submission was that the observations of theHigh Court that the CCI has decided several issues and elements withclear adverse consequences was clearly erroneous and contrary to theBwell-established principle of law. In support, he also referred to thejudgments of the Bombay and the Allahabad High Courts.

40. Dilating on his third proposition, namely, the CCI order wasnot perverse, he submitted that there was sufficient material before theCCI for formation of prima facie opinion that the conduct of theCrespondents was violative of Section 3(3)(b) of the Competition Act.He submitted that such material was taken into consideration anddiscussed in the order itself and he referred to certain paragraphs of theorder dated April 21, 2017 in this behalf. In the process, he againemphasised that none of the observations made in the said order areDconclusive findings in any way and not binding on the Director Generaland this was only the starting point, as held in the case of Excel CropCare Limited.

41. M/s. Harish Salve, Dr. A.M. Singhvi, Ramji Srinivasan andAmit Sibal, learned senior advocates, argued on behalf of RJIL. TheirEdetailed submissions were almost on the lines on which Mr. Narasimha,learned ASG, had argued on behalf of the CCI.

42. In the first place, it was emphasised that insofar as draggingof COAI into this investigation is concerned, it was sought to be justifiedby placing reliance on Section 3 of the Act which specifically recognisesFpossible mischief by an association of persons or an association ofenterprises. It was stressed that Section 3(3) recognises certainagreements as per se violations, and shall be presumed to have appreciableadverse effect on competition. Submission was that associations ofenterprises, after the operation of the Act are now liable to be viewedwith great suspicion in view of the fact that by its very nature anGassociation of competing enterprises provides convenient platform forsuch competitors to assemble together.

43. The involvement of COAI was sought to be proved by arguingthat the IDOs have not argued that COAI letters must be ignored sincethe decision to provide or not to provide POIs to its competitor wasH

taken by each of them independently either Airtel by itself, or Vodafoneby itself, or Idea by itself. But the facts of the case disclose activeinvolvement by that common platform called COAI. As per the RelianceJio, the COAI admittedly facilitated exchange of information betweenthe three IDOs. It draws references in its response to private lettersexchanged between Reliance Jio and each of the IDOs separately. Thedecisions of the COAI are not decisions of majority comprising of alarge and diverse pool of members that could suggest democraticdecision making. By its very constitution, the COAI’s majority viewswere nothing but the common views of the three IDOs that controlled it.It was also argued that in the preliminary conference and in the HighCourt defence raised was that COAI was not front for these threeIDOs but was merely espousing general industry issues. It does notexplain how it chanced upon private documents and correspondenceexchanged bilaterally between RJIL with each of the IDOs separately.It does not explain how it voiced the common decisions on behalf ofthose three IDOs. The COAI was not the fourth voice but was theprohibited chorus of those three colluding competitors. Thus, nolegitimacy can be attributed to actions of the COAI. Attention of theCourt was drawn to the letter dated August 08, 2016 (before theannouncement of launch of services by Reliance Jio dated September01, 2016) and the letter dated September 02, 2016 (after the launch ofReliance Jio) which, according to Reliance Jio, expose the commoncollusive conduct of these competitors to first delay the launch andsecondly to scuttle the launch. It was also contended that the concerted,collusive conspiracy by the three existing IDOs (having collectivemarket share of 65%) to meet with each other under auspices of theirassociation called Cellular Operators Association of India (COAI) andevolve common strategy to respond to challenge posed by new entrantRJIL, is by itself violative of Section 3 of the Act. The learned seniorcounsel pointed out that the defence of the COAI is that it was merelylobbying the Government for enacting change in law or regulation tostop Reliance Jio from carrying out test on such large scale byintroducing limits on number of Test-subscribers. However, the lettersof COAI revealed an active participation of taking sides of certainoperators whose interest was to hinder, or at least slowdown the entryof the new operator. COAI announced unilateral decisions like virtualboycott (which is not the same as lobbying for change of regulation). To

ABC

DEFG

Asupport this argument, reference was made to the decisions of SupremeCourt of United States in FTC v. Supreme Court Trial LawyersAssociation[7] wherein it has observed that:

“no violation of the Act can be predicated upon mere attempts toinfluence the passage or enforcement of laws,” even if theBdefendants’ sole purpose is to impose restraint upon the trade oftheir competitors. But in the Noerr case the alleged restraint oftrade was the intended consequence of public action; in this casethe boycott was the mans by which respondents sought to obtainfavourable legislation. The restraint of trade that was implementedwhile the boycott lasted would have had precisely the sameCanticompetitive consequences during that period even if nolegislation had been enacted. In Noerr, the desired legislationwould have created the restraint on the truckers’ competition; inthis case the emergency legislative response to the boycott put anend to the restraint.”D 44. On the submission that the dangers of trade associationbeing hijacked to further the cause of only few competitors and yetattempt to give the entire exercise veneer of respectability has beenalso commented upon in the recent decision of this Court in CompetitionCommission of India v. Coordination Committee of Artistes andETechnicians of West Bengal Film and Television & Ors.[8] wherein ithas been observed that:

“47. In the instant case, admittedly the Coordination Committee,which may be “person” as per the definition contained in Section2(l) of the Act, is not undertaking any economic activity by itself.FTherefore, if we were to look into the “agreement” of such a“person” i.e. Coordination Committee, it may not fall under Section3(1) of the Act as it is not in respect of any production, supply,distribution, storage, acquisition or control of goods or provision ofservices. The Coordination Committee, which as trade unionacting by itself, and without conjunction with any other, would notGbe treated as an “enterprise” or the kind of “association of persons”described in Section 3. trade union acts as on behalf of itsmembers in collective bargaining and is not engaged in economicactivity. In such circumstances, had the Coordination Committee

7493 US 411 (1990)H8(2017) 5 SCC 17

acted only as trade unionists, things would have been different.Then, perhaps, the view taken by the Tribunal could be sustained.However, what is lost in translation by the Tribunal i.e. in applyingthe aforesaid principle of the activity of the trade union, is verypertinent and significant fact, which was taken note of by the DGas well as CCI in its majority opinion. It is this: the CoordinationCommittee (or for that matter even Eimpa) are, in fact, associationof enterprises (constituent members) and these members areengaged in production, distribution and exhibition of films.Eimpais an association of film producers, distributors and exhibitors,operating mainly in the State of West Bengal. Likewise, theCoordination Committee is the joint platform of Federation ofSenior Technician and Workers of Eastern India and West BengalMotion Pictures Artistes’ Forum. Both Eimpa as well as theCoordination Committee acted in concerted and coordinatedmanner. They joined together in giving call of boycott of thecompeting members i.e. the informant in the instant case and,therefore, the matter cannot be viewed narrowly by treatingCoordination Committee as trade union, ignoring the fact that it“”is backing the cause of those which are enterprises.Theconstituent members of these bodies take decision relating toproduction or distribution or exhibition on behalf of the memberswho are engaged in the similar or identical business of production,distribution or exhibition of the films. Decision of these two bodiesreflected collective intent of the members. When some of themembers are found to be in the production, distribution or exhibitionline, the matter could not have been brushed aside by merely givingit cloak of trade unionism. For this reason, the argumentpredicated on the right of trade union under Article 19 of theConstitution, as professed by the Coordination Committee, is alsonot available.”

(emphasis supplied)

Arguments: The respondents:

45. Mr. Darius J. Khambata, senior advocate, appeared on behalfof Idea Cellular Ltd. Mr. Gopal Jain and Mr. Navroz Seervai, senioradvocates, appeared on behalf of Bharti Airtel Ltd. Mr. Ranjit Kumar,Mr. Arvind Datar and Mr. Sidharth Luthra, senior advocates, appeared

Aon behalf of Vodafone India Ltd. Mr. P. Chidambaram, senior advocate,appeared on behalf of the COAI. TRAI had also intervened in the matterand supported the legal submission of the IDOs, namely, that TRAI hadthe exclusive jurisdiction to deal with the matter, i.e. there was completeabsence of jurisdiction in CCI to deal with the issue at hand. Instead oftaking note of the submissions of these counsel separately, we are takingBnote of the submissions in consolidated manner as that would avoidrepetition.

46. The submissions of the respondents can be paraphrased asunder:

C(i) The TRAI Act, being special law, ousts the jurisdiction ofCCI to examine the telecom sector. In that sense, exclusive jurisdictionvests in TRAI to regulate the telecom sector, including competition relatedissues, thereby ousting the jurisdiction of the CCI altogether.

(ii) Even if the CCI has the jurisdiction, TRAI’s jurisdiction willDprevail.

(iii) In the alternative, the jurisdictional facts, in any case, had tobe determined by the TRAI in the first place. Since there was absenceof jurisdictional facts, the CCI could not have proceeded with the matterand ordered the investigation. Thus, the CCI’s order for carry outEinvestigation is premature.

(iv) The impugned order passed by the CCI under Section 26(1)of the Competition Act applies the ‘prima facie test’ and consequencesof such an order are grave. Such an order was quasi-judicial in natureand, therefore, amenable to judicial review under Article 226 of theConstitution of India. Thus, the writ petitions filed by the IDOs challengingFthis order were maintainable.

(v) On merits, the prima facie order passed by the CCI waswithout considering the material submitted by the IDOs. In this behalf itwas argued that the IDOs had provided sufficient POIs and given ampleproof thereof, which was not taken into consideration by the CCI whileGpassing the impugned order under Section 26(1) of the Competition Act.This also becomes valid ground to challenge the order by filing writpetition under Article 226 of the Constitution of India.

47. Insofar as the argument of the respondents that the TRAIAct is complete code and the jurisdiction of CCI is totally ousted, theargument proceeded on the following basis:

The real issue which arises is comparison of two regimes – oneregulated by TRAI under the Indian Telegraph Act, 1885, WirelessTelegraphy Act, 1933 and the TRAI Act, 1997 which together forms acomprehensive and complete code; and the other being CCI under theCompetition Act. The various provisions under these legislations seenwith the terms of the License Agreement show that the issues arisingout of interconnection between different operators shall be determinedwithin the overall framework of the interconnection regulations/directions/orders issued by TRAI from time to time. The Object and Reasons ofthe TRAI Act itself lays down that it is mandated to make arrangementsfor protection and promotion of consumer interest and ensuring faircompetition and to ensure orderly and healthy growth oftelecommunication infrastructure. Moreover, the competition in thetelecom sector is of different kind as it has to function under theconstant monitoring and regulation of TRAI. TRAI effectively playsthe role of watchdog of the sector as otherwise the entire sector wouldcollapse if there is no interdependence between the telecom operators.Moreover, under Section 11(1)(a)(iv) of the TRAI Act, the authority isrequired to take measures to facilitate competition in the market. CCIcan ensure competition only in an unregulated sector and not in the likesof the telecom sector wherein even the tariffs are capped/determinedby TRAI.

48. On the aforesaid basis, the submission was that:

(a) The TRAI Act is complete code.

(b) Exclusive jurisdiction vests in TRAI to regulate the telecomsector including competition related issues.

(c) The TDSAT has the exclusive jurisdiction to examine thedisputes between licensees including the one raised by RJIL before CCI.

(d) CCI has no jurisdiction to decide disputes pertaining to thetelecom sector.

In this hue it was submitted that the Statement of Objects andReasons of the TRAI Act made it abundantly clear by satisfying thatTRAI was supposed to make “arrangements for protection and promotion

Aof consumer interest and ensuring fair competition...”. It was, thus,clear that even the competition aspects of the telecom sector were withinthe domain of TRAI. The respondents also drew comparison of thePreamble of the Competition Act with that of the TRAI Act to point outthat insofar as dealing with the issue of fair competition in telecom sectoris concerned, it was overlapping to great extent in the following manner:B

Competition ActTRAI ActAn Act to provide, keeping in view the An Act to provide for the economic development of the country, establishment of the Telecom for the establishment of Commission Regulatory Authority of India and tothe Telecom Dispute Settlement and Appellate Tribunal (“TDSAT”) Cto“prevent practices having adverse effect [-]on competitionto promote and sustain competition in [for protection and promotion of marketsconsumer interest and ensuring Dfair competition (Statement of Object and Reasons)]to protect interests of consumers and to protect the interest of the service providers and consumers of the telecom sector (Preamble)to ensure freedom of trade carried on by to promote and ensure orderly Eother participants in the markets, in growth of the telecom sectoralIndiafor matters connected therewith or For matters connected therewith incidental thereto”and incidental thereto

49. It was submitted that pursuant to Section 11(1)(a)(iv) readFwith Section 11(1)(b)(ii), (iii), (iv) of the TRAI Act (including directionsand regulations issued by TRAI), the TRAI has been statutorily mandatedto perform functions on variety of matters including measures aimedat facilitating competition and regulated interconnection between serviceproviders. Reliance was also placed on Section 12 of the TRAI Actwhich empowers TRAI with vast powers to discharge its functions,Gincluding to call for information, conduct investigations and issue suchnecessary directions as it may deem necessary for the discharge of itsfunctions. Moreover, TRAI has also been empowered to issueappropriate directions under Section 12 and make regulations underSection 36 of the TRAI Act. Section 29 of the TRAI Act provides for

penalties for contravention of directions of the TRAI. Further, underSection 14A of the TRAI Act, it has been provided that any person maymake an application before the TDSAT. With regard to the jurisdiction,Section 15 and 27 of the TRAI Act provide for explicit bar on jurisdictionof the civil courts to determine any matter with regard to which TDSATor TRAI have been empowered by or under the TRAI Act.

50. It was submitted that in the present case, at the time RJILfiled its Information before the CCI on November 08, 2016 as also whenthe prima facie order was passed on April 21, 2017, TRAI was seizedof the matter pertaining to provisioning of POIs and even made certainrecommendations to the DoT on October 21, 2016. Accordingly, TRAIhad assumed jurisdiction and was exercising the same. Thus, the disputewas being dealt with and was addressed by the TRAI and even on thisground, the jurisdiction of the CCI stands ousted.

51. The TDSAT has the exclusive jurisdiction to examine thedisputes between licensees including the one raised by RJIL before CCI.This very submission on the exclusion of CCI’s jurisdiction was soughtto be projected from another angle. It was submitted that in theInformation filed by RJIL before the CCI, Reliance Jio stressed:

(a) The dispute raised by RJIL before the CCI pertains to thespecific performance of the Interconnect Agreement and the rights andliabilities arising therefrom;

(b) The Interconnect Agreement is completely regulated by theTRAI inter alia under Section 11(1)(b)(ii), (iii), (iv) of the TRAI Actread with the Quality of Service Regulations, 2009 issued thereunder.

The argument was that the prayers sought by RJIL in theInformation filed before the CCI clearly demonstrate that RJIL wasseeking specific performance of the Interconnect Agreement. Hence,RJIL has dressed up what is essentially contractual complaint intoanti-competition clothing. In the present dispute, upon meaningfulreading of the Information it can clearly be seen that through cleverdrafting, RJIL has dressed up the allegations of delay/denial of the POIsas alleged anti-competitive behaviour. In this behalf, reliance was placedon the decision of this Court in Begum Sabiha Sultan v. Nawab Mohd.Mansur Ali Khan & Ors.[9], wherein it was held:

A“10. There is no doubt that at the stage of consideration of thereturn of the plaint under Order 7 Rule 10 of the Code, what is tobe looked into is the plaint and the averments therein. At the sametime, it is also necessary to read the plaint in meaningful mannerto find out the real intention behind the suit. In Moolji Jaitha andCo. v. Khandesh Spg. and Wvg. Mills Co. Ltd. [AIR 1950 FCB83] the Federal Court observed that: (AIR p. 92, para 24)

“The nature of the suit and its purpose have to be determinedby reading the plaint as whole.”

It was further observed: (AIR p. 92, para 25)C

“The inclusion or absence of prayer is not decisive of thetrue nature of the suit, nor is the order in which the prayers arearrayed in the plaint. The substance or object of the suit has tobe gathered from the averments made in the plaint and onwhich the reliefs asked in the prayers are based.”

DIt was further observed: (AIR p. 98, para 59)

“It must be borne in mind that the function of pleading is onlyto state material facts and it is for the court to determine thelegal result of those facts and to mould the relief in accordancewith that result.”E

52. In support of the submission that special legislation i.e. theTRAI Act, will prevail over the provisions of the Competition Act, whichaccording to the respondents is general in nature, reliance has been placedon the decisions of this Court in State of Punjab v. Labour Court,Jullundur & Ors.[10]. In the said matter, the Court was inter alia seizedFof the issue whether the employee-respondents were at liberty to seekthe payment of gratuity by invoking the remedy available under Section33-C(2) of the Industrial Disputes Act, 1947 as opposed to the Paymentof Gratuity Act, 1972. In deciding the said dispute, it was held that:

“7. It is apparent that the Payment of Gratuity Act enacts aGcomplete code containing detailed provisions covering all theessential features of scheme for payment of gratuity.It createsthe right of payment of gratuity, indicates when the right will accrue,and lays down the principles for quantification of the gratuity. Itprovides further for recovery of the amount, and contains an

H10(1980) 1 SCC 4

especial provision that compound interest at nine per cent perannum will be payable on delayed payment. For the enforcementof its provisions, the Act provides for the appointment of acontrolling authority, who is entrusted with the task of administeringthe Act. The fulfilment of the rights and obligations of the partiesare made his responsibility, and he has been invested with anamplitude of power for the full discharge of that responsibility.Any error committed by him can be corrected in appeal by theappropriate Government or an Appellate Authority particularlyconstituted under the Act.8. Upon all these considerations, the conclusion is inescapablethat Parliament intended that proceedings for payment of gratuitydue under the Payment of Gratuity Act must be taken under thatAct and not under any other. That being so, it must be held thatthe applications filed by the employee respondents under Section33-C(2) of the Industrial Disputes Act did not lie, and the LabourCourt had no jurisdiction to entertain and dispose of them. On thatground, this appeal must succeed.”

(emphasis supplied)

53. Applying the aforesaid tests to the present case, the submissionof the respondents is that:

(a) The subject area of competition law is dealt with by theCompetition Act, 2002.

(b) The TRAI Act, 1997 is complete code in itself and regulatesthe Telecom Sector.

(c) The Preamble, the Statement of Objects and Reasons andSection 11(1) of the TRAI Act provide the TRAI with the power tointer alia regulate competition in the telecom sector.

(d) Accordingly, being the special law regarding the telecom sector,as regards competition issues arising in the telecom sector, the TRAIAct would prevail over the Competition Act.

54. Replying to the argument of the appellants that the TRAI Actas well as the Competition Act are both special statutes and hence, therule of statutory interpretation of special law prevailing over the generallaw will be inapplicable in the present dispute, the respondents referred

Ato the decision of this Court in Ashoka Marketing Ltd. & Anr. v. PunjabNational Bank & Ors.[11]. In the said case, the Court was seized of anissue on whether the provisions of the Public Premises (Eviction ofUnauthorised Occupants) Act, 1971 would override the provisions ofthe Delhi Rent Control Act, 1958 in relation to the premises belonging toPunjab National Bank Ltd., body corporate under the BankingBCompanies (Acquisition and Transfer of Undertakings) Act, 1970. Eachside argued that the enactment relied upon by it is special statute andthe other enactment is general. The Court held that the Rent ControlAct is special statute regulating the relationship of landlord and tenantin the Union Territory of Delhi and even the Public Premises Act is aCspecial statute relating to eviction of unauthorised occupants from publicpremises. While concluding that both the enactments are special statutes,the Court held:

“”61. ...in the case of inconsistency between the provisions oftwo enactments, both of which can be regarded as special in nature,Dthe conflict has to be resolved by reference to the purpose andpolicy underlying the two enactments and the clear intendmentconveyed by the language of the relevant provisions therein.

64. ...In our opinion, therefore, keeping in view the object andpurpose underlying both the enactmentsviz. the Rent Control ActEand the Public Premises Act, the provisions of the Public PremisesAct have to be construed as overriding the provisions containedin the Rent Control Act.”

(emphasis supplied)

55. Heavy reliance was placed on the judgment of the UnitedFStates Supreme Court in the case of Credit Suisse v. Billing et al[12].Here the submission was that if the CCI is permitted to examine theinformation of RJIL that it was to be provided POIs immediately despitethere being period of 90 days in the ICA, the following would be theconsequences:

G(i) The same may cause threat and may alter the functioning oftelecom sector on account of threat of intervention of CCI even wherethe acts are in accordance with TRAI’s Regulations. The same wouldthreaten efficient functioning of the telecom sector.

11(1990) 4 SCC 406H12551 US 264 (2007)

(ii) The additional benefits to competition would be very small asthe TRAI Regulations anyway have been framed keeping in mind“facilitation of competition” in telecom sector.

(iii) The same would encourage future actions before CCI whentelecom related issues will be dressed up as competition issues.

It was the fervent plea that in order to avoid such conflict ofstandards and norms, the TRAI Act being the sectoral law and the TRAIis already seized of the matter, the CCI should not be allowed to proceed.

56. According to the respondents, the jurisdictional facts in thepresent matter would be:

(a) Failure to provide adequate POIs in the test phase; or

(b) Delay in providing POIs; or

(c) Providing inadequate POIs.

57. Mr. Datar, in particular, submitted that from perusal of theextensive pleadings and findings of the High Court, it is manifest that theabove issues are pending consideration before the TRAI/DoT as wellas in connected writ petitions pending adjudication before the Delhi HighCourt. The emphasis was that there must first be clear findings on theabove issues in the context of the TRAI Act, Rules and Regulations.According to him, that alone is not enough. It is necessary to establishthat violation of the provisions of TRAI Act amounts to “abuse ofdominance” or “anti-competitive agreements”. As per him, Section 21and 21A of the Competition Act make it clear that jurisdiction of the CCIis divided into parts, viz:

(a) Economic activity not regulated by any statutory authority.

(b) Economic activity regulated by statutory authority.

In the latter case, Section 21A is mandatory and the CCI can actonly in accordance with Sections 21A(1) and (2). Submission was thatin economic activity that is regulated by statutory authority, CCI canexercise powers under Section 26 only after complying with Section21A. It was predicated on the principle that when the law prescribesthings to be done in particular manner, all other modes of action areprohibited. (Bhavnagar University v. Palitana Sugar Mill (P) Ltd. &Ors.[13])

A58. In this hue, it was also argued that the decision of this Court inCompetition Commission of India v. Steel Authority of India Ltd. &Anr.[14] has no application to the present case because it does not dealwith sector that is regulated by statutory authority. On the otherhand, reliance was placed on the judgment in the case of Carona Ltd.v. Parvathy Swaminathan & Sons[15].B

59. It was submitted that the facts of the SAIL case are clearlydistinguishable from the present case as the main issue before theSupreme Court in SAIL was whether an appeal can be filed against anorder passed under Section 26(1) of the Competition Act. Distinctionwas sought to be drawn on the basis of the following facts:

(a) in the present case, CCI issued notice and called the TSPsincluding Vodafone for preliminary conference to be held on January31, 2017 and the parties were heard on January 31, 2017, February 07,2017 and February 08, 2017;

(b) hearing was held before CCI and detailed notes on argumentswere submitted with supporting documents by the TSPs includingVodafone;

(c) the prima facie order has been passed after hearing thesubmissions of the TSPs holding that prima facie case of violation ofEthe Competition Act has been made out; and

(d) the prima facie order also provide for reasons in support ofthe decision arrived at by the CCI.

60. Justifying the observations of the High Court that the order ofthe CCI cannot be treated as an ‘administrative order’, it was submittedFthat the order was passed by the CCI after collecting the detailedinformation from the parties and by holding the conferences, callingmaterial details, documents, affidavits and by recording the opinion. Itwas also submitted that the High Court had rightly noted that majoritydecision of the CCI has given reasons by overlooking the law and therecord. It was reasoned order/direction and, therefore, judicial reviewGis permissible. In this behalf it was submitted that the aforesaid viewwas taken on the basis of the following:

14(2010) 10 SCC 744H15(2007) 8 SCC 559

(a) whilst an order under Section 26(2) has been made appealable,an order under Section 26(1) is not appealable;

(b) an order under Section 26(1) of the Competition Act is adirection simpliciter to the Director General to cause an investigation;

(c) at the stage of passing of the order under Section 26(1), thereis no adjudicatory process undertaken by the CCI as there is nodetermination of any right or obligation of the parties to the lis; and

(d) the order passed under Section 26(1) does not entail civilconsequences for any person as against Section 26(2) order whereinrights of the informant are affected.

61. In the alternative, it was argued that the observations of theCourt limited to the extent of the nature of powers vested in the CCIunder Section 26(1) needs reconsideration by this Court.

Our discussion:

62. We have noted of three propositions which were advanced byMr. Narasimha, learned Additional Solicitor General. These are themain issues which arise for consideration. In fact, other counsel for theparties have also made their submissions on these aspects. We would,therefore, focus our discussion on the said propositions. We would liketo mention that while analysing the arguments of all the parties, we havekept in mind their detailed submissions as well as the principles laid downin various judgments cited by them, even if we have not made specificmention to these judgments in our discussion.

A. Jurisdiction of the CCI

63. This is the principal issue which is the bone of contention.

64. In order to discuss and analyse this aspect, it would be apt totake note of the salient provisions of the Competition Act as well as theTRAI Act inasmuch as that would facilitate appreciating the argumentsso advanced.

65. In the wake of globalisation and keeping in view the economicdevelopment of the country, responding to opening of its economy andresorting to liberalisation, need was felt to enact law that ensures faircompetition in India by prohibiting trade practices which cause an

Aappreciable adverse effect on competition within markets in India andfor establishment of an expert body in the form of CompetitionCommission of India, which would discharge the duty of curbing negativeaspects of competition, the Competition Act, 2002 has been enacted bythe Parliament.

B66. Having regard to this specific objective which the Act seeksto achieve, provisions contained therein, which are relevant for decidingthe instant appeals, are reproduced below:

“2. Definitions. –

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(b) “agreement” includes any arrangement or understanding oraction in concert, –

(i) whether or not, such arrangement, understanding or actionis formal or in writing; or

D(ii) whether or not such arrangement, understanding or actionis intended to be enforceable by legal proceedings;

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(c) “cartel” includes an association of producers, sellers,distributors, traders or service providers who, by agreementEamongst themselves, limit control or attempt to control theproduction, distribution, sale or price of, or, trade in goods orprovision of services;

xxxx

F(g) “Director General” means the Director-General appointedunder sub-section (1) of section 16 and includes any Additional,Joint, Deputy or Assistant Directors General appointed under thatsection;

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G(m) “practice” includes any practice relating to the carrying onof any trade by person or an enterprise;

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(u) “service” means service of any description which is madeavailable to potential users and includes the provision of servicesH

in connection with business of any industrial or commercial matterssuch as banking, communication, education, financing, insurance,chit funds, real estate, transport, storage, material treatment,processing, supply of electrical or other energy, boarding, lodging,entertainment, amusement, construction, repair, conveying of newsor information and advertising;

xxxx

3. Anti-competitive agreements. – (1) No enterprise orassociation of enterprises or person or association of persons shallenter into any agreement in respect of production, supply,distribution, storage, acquisition or control of goods or provision ofservices, which causes or is likely to case an appreciable adverseeffect on competition within India.

(2) Any agreement entered into in contravention of the provisionscontained in sub-section (1) shall be void.

(3) Any agreement entered into between enterprises orassociations of enterprises or persons or associations of personsor between any person and enterprise or practice carried on, ordecision taken by, any association of enterprises or association ofpersons, including cartels, engaged in identical or similar trade ofgoods or provision of services, which –

(a) directly or indirectly determines purchase or sale prices;

(b) limits or controls production, supply, markets, technicaldevelopment, investment or provision of services;

(c) shares the market or source of production or provision ofservices by way of allocation of geographical area of market,or type of goods or services, or number of customers in themarket or any other similar way;

(d) directly or indirectly results in bid rigging or collusive bidding,shall be presumed to have an appreciable adverse effect oncompetition:

Provided that nothing contained in this sub-section shall apply toany agreement entered into by way of joint ventures if suchagreement increases efficiency in production, supply, distribution,storage, acquisition or control of goods or provisions of services.

AExplanation. – For the purpose of this sub-section, “bid rigging”means by agreement, between enterprises or persons referred toin sub-section (3) engaged in identical or similar production ortrading of goods or provision of services, which has the effect ofeliminating or reducing competition for bids or adversely affectingor manipulating the process for bidding.

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19. Inquiry into certain agreements and dominant positionof enterprise. – (1) The Commission may inquire into any allegedcontravention of the provisions contained in sub-section (1) ofCsection 3 or sub-section (1) of section 4 either on its own motionor on -

“(a) receipt of any information, in such manner andaccompanied by such fee as may be determined by regulations,from any person, consumer or their association or tradeassociation; or

(b) reference made to it by the Central Government or aState Government or statutory authority.

(2) Without prejudice to the provisions contained in sub-section(1), the powers and functions of the Commission shall include theEpowers and functions specified in sub-sections (3) to (7).

(3) The Commission shall, while determining whether anagreement has an appreciable adverse effect on competition undersection 3, have due regard to all or any of the following factors,namely:

(a) creation of barriers to new entrants in the market;

(b) driving existing competitors out of the market;

(c) foreclosure of competition by hindering entry into themarket;

(d) accrual of benefits to consumers;

(e) improvements in production or distribution of goods orprovision of services;

(f) promotion of technical, scientific and economic developmentby means of production or distribution of goods or provision ofservices.

21A. Reference by Commission. – (1) Where in the courseof proceeding before the Commission an issue is raised by anyparty that any decision, which the Commission has taken duringsuch proceeding or proposes to take, is or would be contrary toany provision of this Act whose implementation is entrusted to astatutory authority, then the Commission may make referencein respect of such issue to the statutory authority:

Provided that the Commission, may, suo motu, make such areference to the statutory authority.

(2) On receipt of reference under sub-section (1), the statutoryauthority shall give its opinion, within sixty days of receipt of suchreference, to the Commission which shall consider the opinion ofthe statutory authority, and thereafter give its findings recordingreasons therefor on the issues referred to in the said opinion.

xxxx

26. Procedure for inquiry under section 19. – (1) On receiptof reference from the Central Government or StateGovernment or statutory authority or on its own knowledge orinformation received under section 19, if the Commission is of theopinion that there exists prima facie case, it shall direct theDirector General to cause an investigation to be made into thematter:

Provided that if the subject matter of an information received is,in the opinion of the Commission, substantially the same as or hasbeen covered by any previous information received, then the newinformation may be clubbed with the previous information.

(2) Where on receipt of reference from the Central Governmentor State Government or statutory authority or informationreceived under section 19,the Commission is of the opinion thatthere exists no prima facie case, it shall close the matter forthwithand pass such orders as it deems fit and send copy of its order

to the Central Government or the State Government or thestatutory authority or the parties concerned, as the case may be.

(3) The Director-General shall, on receipt of direction under sub-section (1), submit report on his findings within such period asmay be specified by the Commission.

(4) The Commission may forward copy of the report referredto in sub-section (3) to the parties concerned: Provided that incase the investigation is caused to be made based on referencereceived from the Central Government or the State Governmentor the statutory authority, the Commission shall forward copy ofthe report referred to in sub-section (3) to the Central Governmentor the State Government or the statutory authority, as the casemay be.

(5) If the report of the Director General referred to in sub-section(3) recommends that there is no contravention of the provisionsof this Act, the Commission shall invite objections or suggestionsfrom the Central Government or the State Government or thestatutory authority or the parties concerned, as the case may be,on such report of the Director-General.

(6) If, after consideration of the objections and suggestions referredto in sub section (5), if any, the Commission agrees with therecommendation of the Director General, it shall close the matterforthwith and pass such orders as it deems fit and communicateits order to the Central Government or the State Government orthe statutory authority or the parties concerned, as the case maybe.

(7) If, after consideration of the objections or suggestions referredto in sub section (5), if any, the Commission is of the opinion thatfurther investigations is called for, it may direct further investigationin the matter by the Director General or cause further inquiry tobe made by in the matter or itself proceed with further inquiry inthe matter in accordance with the provisions of this Act.

(8) If the report of the Director-General referred to in sub-section(3) recommends that there is contravention of any of the provisionsof this Act, and the Commission is of the opinion that further inquiry

is called for, it shall inquire into such contravention in accordancewith the provisions of this Act.

36. Power of Commission to regulate its own procedure. –

xxxx

(2) The Commission shall have, for the purposes of dischargingits functions under this Act, the same powers as are vested in aCivil Court under the Code of Civil Procedure, 1908 (5 of 1908),while trying suit, in respect of the following matters, namely:–

(a) summoning and enforcing the attendance of any personand examining him on oath;

(b) requiring the discovery and production of documents;

(c) receiving evidence on affidavit;

(d) issuing commissions for the examination of witnesses ordocuments;

(e) requisitioning, subject to the provisions of sections 123 and124 of the Indian Evidence Act, 1872 (1 of 1972), any publicrecord or document or copy of such record or document fromany office.

41. Director General to investigate contraventions. –(1) The Director General shall, when so directed by theCommission, assist the Commission in investigating into anycontravention of the provisions of this Act or any rules or regulationsmade thereunder.

(2) The Director General shall have all the powers as are conferredupon the Commission under sub-section (2) of section 36.

(3) Without prejudice to the provisions of sub-section (2), sections240 and 240A of the Companies Act, 1956 (1 of 1956), so far asmay be, shall apply to an investigation made by the DirectorGeneral or any other person investigating under his authority, asthe apply to an inspector appointed under that Act.

Explanation. – For the purposes of this section, –

(a) the words “the Central Government” under section 240 ofthe Companies Act, 1956 (1 of 1956) shall be construed as“the Commission”;

(b) the word “Magistrate” under Section 240A of theCompanies Act, 1956 (1 of 1956) shall be construed as “theBChief Metropolitan Magistrate, Delhi”.

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45. Penalty for offences in relation to furnishing ofinformation. – (1) Without prejudice to the provisions of section44, if person, who furnishes or is required to furnish under thisact any particulars, documents or any information, –

(a) makes any statement or furnishes any document which heknows or has reason to believe to be false in any materialparticular; or

(b) omits to state any material fact knowing it to be material;or

(c) wilfully alters, suppresses or destroys any document whichis required to be furnished as aforesaid,

such person shall be punishable with fine which may extend toErupees one crore as may be determined by the Commission.

(2) Without prejudice to the provisions of sub-section (1), theCommission may also pass such other order as it deems fit.

60. Act to have overriding effect. – The provisions of this Actshall have effect notwithstanding anything inconsistent therewithcontained in any other law for the time being in force.

61. Exclusion of jurisdiction of civil courts. – No civil courtshall have jurisdiction to entertain any suit or proceeding in respectof any matter which the Commission or the Appellate Tribunal isempowered by or under this Act to determine and no injunctionshall be granted by any court or other authority in respect of anyaction taken or to be taken in pursuance of any power conferredby or under this Act.

62. Application of other laws not barred. – The provisions ofthis Act shall be in addition to, and not in derogation of, the provisionsof any other law for the time being in force.”

67. The aforesaid provisions would indicate that the Act dealswith three kinds of practices which are treated as anti-competitive andare prohibited. These are:

(a) where agreements are entered into by certain persons with aview to cause an appreciable adverse effect on competition;

(b) where any enterprise or group of enterprises, which enjoysdominant position, abuses the said dominant position; and

(c) regulating the combination of enterprises by means of mergersor amalgamations to ensure that such mergers or amalgamations do notbecome anti-competitive or abuse the dominant position which they canattain.

The objective behind the Act and rationale in curbing the aforesaidanti-competitive practices was taken note of in Excel Crop Care Limitedv. Competition Commission of India and Another[16] and we wouldlike to reproduce the following passages therefrom:

“21. In the instant case, we are concerned with the first type ofpractices, namely, anti-competitive agreements. The Act, whichprohibits anti-competitive agreements, has laudable purposebehind it. It is to ensure that there is healthy competition in themarket, as it brings about various benefits for the public at largeas well as economy of the nation. In fact, the ultimate goal ofcompetition policy (or for that matter, even the consumer policies)is to enhance consumer well-being. These policies are directed atensuring that markets function effectively. Competition policytowards the supply side of the market aims to ensure thatconsumers have adequate and affordable choices. Another purposein curbing anti-competitive agreements is to ensure “level playingfield” for all market players that helps markets to be competitive.It sets “rules of the game” that protect the competition processitself, rather than competitors in the market. In this way, the pursuitof fair and effective competition can contribute to improvementsin economic efficiency, economic growth and development of

consumer welfare. How these benefits accrue is explained in theASEAN Regional Guidelines on Competition Policy, in the followingmanner:

“2.2. Main Objectives and Benefits of Competition Policy

2.2.1.1. Economic efficiency: Economic efficiency refers tothe effective use and allocation of the economy’s resources.Competition tends to bring about enhanced efficiency, in botha static and dynamic sense, by disciplining firms to produceat the lowest possible cost and pass these cost savings on toconsumers, and motivating firms to undertake research anddevelopment to meet customer needs.

2.2.1.2. Economic growth and development: Economicgrowth—the increase in the value of goods and servicesproduced by an economy—is key indicator of economicdevelopment. Economic development refers to broaderdefinition of an economy’s well-being, including employmentgrowth, literacy and mortality rates and other measures ofquality of life. Competition may bring about greater economicgrowth and development through improvements in economicefficiency and the reduction of wastage in the production ofgoods and services. The market is therefore able to more rapidlyreallocate resources, improve productivity and attain higherlevel of economic growth. Over time, sustained economicgrowth tends to lead to an enhanced quality of life and greatereconomic development.

2.2.1.3. Consumer Welfare: Competition policy contributes toeconomic growth to the ultimate benefit of consumers, in termsof better choice (new products), better quality and lower prices.Consumer welfare protection may be required in order toredress perceived imbalance between the market power ofconsumers and producers. The imbalance between consumersand producers may stem from market failures such asinformation asymmetries, the lack of bargaining position towardsproducers and high transaction costs. Competition policy mayserve as complement to consumer protection policies toaddress such market failures.”

22. The aforesaid Guidelines also spell out few more benefits ofsuch laws incorporating competition policies by highlighting thefollowing advantages:

“2.2.2. In addition, competition policy is also beneficial todeveloping countries. Due to worldwide deregulation,privatisation and liberalisation of markets, developing countriesneed competition policy, in order to monitor and control thegrowing role of the private sector in the economy so as toensure that public monopolies are not simply replaced by privatemonopolies.

2.2.3. Besides contributing to trade and investment policies,competition policy can accommodate other policy objectives(both economic and social) such as the integration of nationalmarkets and promotion of regional integration, the promotionor protection of small businesses, the promotion of technologicaladvancement, the promotion of product and process innovation,the promotion of industrial diversification, environmentprotection, fighting inflation, job creation, equal treatment ofworkers according to race and gender or the promotion ofwelfare of particular consumer groups.

In particular, competition policy may have positive impact onemployment policies, reducing redundant employment (whichoften results from inefficiencies generated by large incumbentsand from the fact that more dynamic enterprises are preventedfrom entering the market) and favouring jobs creation by newefficient competitors.

2.2.4. Competition policy complements trade policy, industrialpolicy and regulatory reform. Competition policy targetsbusiness conduct that limits market access and which reducesactual and potential competition, while trade and industrialpolicies encourage adjustment to the trade and industrialstructures in order to promote productivity-based growth andregulatory reform eliminates domestic regulation that restrictsentry and exit in the markets. Effective competition policy canalso increase investor confidence and prevent the benefits oftrade from being lost through anti-competitive practices. Inthis way, competition policy can be an important factor in

enhancing the attractiveness of an economy to foreign directinvestment, and in maximising the benefits of foreigninvestment.”

23. In fact, there is broad empirical evidence supporting theproposition that competition is beneficial for the economy.Economists agree that it has an important role to play in improvingproductivity and, therefore, the growth prospects of an economy.

It is achieved in the following manner:

“International Competition Network — Economic Growthand Productivity

Competition contributes to increased productivity through:

Pressure on firms to control costs—In competitiveenvironment, firms must constantly strive to lower theirproduction costs so that they can charge competitive prices,and they must also improve their goods and services so thatthey correspond to consumer demands.

Easy market entry and exit—Entry and exit of firmsreallocates resources from less to more efficient firms. Overallproductivity increases when an entrant is more efficient thanthe average incumbent and when an existing firm is less efficientthan the average incumbent. Entry—and the threat of entry—incentivises firms to continuously improve in order not to losemarket share to or be forced out of the market by new entrants.

Encouraging innovation—Innovation acts as strong driverof economic growth through the introduction of new orsubstantially improved products or services and the developmentof new and improved processes that lower the cost and increasethe efficiency of production. Incentives to innovate are affectedby the degree and type of competition in market.

Pressure to improve infrastructure—Competition putspressure on communities to keep local producers competitiveby improving roads, bridges, docks, airports andcommunications, as well as improving educational opportunities.

Benchmarking—Competition also can contribute to increasedproductivity by creating the possibility of benchmarking. The

productivity of monopolist cannot be measured against rivalsin the same geographic market, but dose of competitionquickly will expose inferior performance. monopolist maybe content with mediocre productivity but firm battling in acompetitive market cannot afford to fall behind, especially ifthe investment community is benchmarking it against its rivals.”

24. Productivity is increased through competition by puttingpressure on firms to control costs as the producers strive to lowertheir production costs so that they can charge competitive prices.It also improves the quality of their goods and services so thatthey correspond to consumers’ demands.

25. Competition law enforcement deals with anti-competitivepractices arising from the acquisition or exercise of undue marketpower by firms that result in consumer harm in the forms of higherprices, lower quality, limited choices and lack of innovation.Enforcement provides remedies to avoid situations that will leadto decreased competition in markets. Effective enforcement isimportant not only to sanction anti-competitive conduct but also todeter future anti-competitive practices.

26. When we recognise that competition has number of benefits,it clearly follows that cartels or anti-competitive agreements causeharm to consumers by fixing prices, limiting outputs or allocatingmarkets. Effective enforcement against such practices has directvisible effects in terms of reduced prices in the market and this isalso supported by various empirical studies.

27. Keeping in view the aforesaid objectives that need to beachieved, Indian Parliament enacted the Competition Act, 2002.Need to have such law became all the more important in thewake of liberalisation and privatisation as it was found that thelaw prevailing at that time, namely, Monopolies and RestrictiveTrade Practices Act, 1969 was not equipped adequately enoughto tackle the competition aspects of the Indian economy. The lawenforcement agencies, which include CCI and Compat, have toensure that these objectives are fulfilled by curbing anti-competitiveagreements.

28. Once the aforesaid purpose sought to be achieved is kept inmind, and the same is applied to the facts of this case after findingthat the anti-competitive conduct of the appellants continued aftercoming into force of provisions of Section 3 of the Act as well, theargument predicated on retrospectivity pales into insignificance.

29. One has to keep in mind the aforesaid objective which thelegislation in question attempts to subserve and the mischief whichit seeks to remedy. As pointed out above, Section 18 of the Actcasts an obligation on CCI to “eliminate” anti-competitive practicesand promote competition, interests of the consumers and free trade.It was rightly pointed out by Mr Neeraj Kishan Kaul, the learnedAdditional Solicitor General, that the Act is clearly aimed ataddressing the evils affecting the economic landscape of the countryin which interest of the society and consumers at large is directlyinvolved. This is so eloquently emphasised by this Court inCompetition Commission of India v. SAIL in the followingmanner: (SCC pp. 755-56 & 794, paras 6, 8-10 & 125)

“6. As far as the objectives of competition laws are concerned,they vary from country to country and even within countrythey seem to change and evolve over the time. However, itwill be useful to refer to some of the common objectives ofcompetition law. The main objective of competition law is topromote economic efficiency using competition as one of themeans of assisting the creation of market responsive toconsumer preferences. The advantages of perfect competitionare threefold: allocative efficiency, which ensures the effectiveallocation of resources, productive efficiency, which ensuresthat costs of production are kept at minimum and dynamicefficiency, which promotes innovative practices. These factorsby and large have been accepted all over the world as theguiding principles for effective implementation of competitionlaw.

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8. The Bill sought to ensure fair competition in India byprohibiting trade practices which cause appreciable adverseeffect on the competition in market within India and for thispurpose establishment of quasi-judicial body was considered

essential. The other object was to curb the negative aspects ofcompetition through such body, namely, “the CompetitionCommission of India” (for short “the Commission”) which hasthe power to perform different kinds of functions, includingpassing of interim orders and even awarding compensation andimposing penalty. The Director General appointed under Section16(1) of the Act is specialised investigating wing of theCommission. In short, the establishment of the Commissionand enactment of the Act was aimed at preventing practiceshaving adverse effect on competition, to protect the interest ofthe consumer and to ensure fair trade carried out by otherparticipants in the market in India and for matters connectedtherewith or incidental thereto.

9. The various provisions of the Act deal with the establishment,powers and functions as well as discharge of adjudicatoryfunctions by the Commission. Under the scheme of the Act,this Commission is vested with inquisitorial, investigative,regulatory, adjudicatory and to limited extent even advisoryjurisdiction. Vast powers have been given to the Commissionto deal with the complaints or information leading to invocationof the provisions of Sections 3 and 4 read with Section 19 ofthe Act. In exercise of the powers vested in it under Section64, the Commission has framed regulations called theCompetition Commission of India (General) Regulations, 2009(for short “the Regulations”).10. The Act and the Regulations framed thereunder clearlyindicate the legislative intent of dealing with the matters relatedto contravention of the Act, expeditiously and even in time-bound programme. Keeping in view the nature of thecontroversies arising under the provisions of the Act and largerpublic interest, the matters should be dealt with and taken tothe logical end of pronouncement of final orders without anyundue delay. In the event of delay, the very purpose and objectof the Act is likely to be frustrated and the possibility of greatdamage to the open market and resultantly, country’s economycannot be ruled out.”

A68. It is for the aforesaid reason that the CCI is entrusted withduties, powers and functions to deal with three kinds of anti-competitivepractices mentioned above. The purpose is to eliminate such practiceswhich are having adverse effect on the competition, to promote andsustain competition and to protect the interest of the consumers andensure freedom of trade, carried on by the other participants, in India.BFor the purpose of conducting such an inquiry, the CCI is empowered tocall any person for rendering assistance and/or produce the records/material for arriving at even the prima facie opinion. The regulationsalso empower the CCI to hold conferences with the concerned persons/parties, including their advocates/authorised persons.C

69. It is also relevant to mention at this stage that while inquiringinto any alleged contravention and determining whether any agreementhas an appreciable adverse effect on competition, factors which are tobe taken into consideration are mentioned in sub-section (3) of Section19. These include creation of barriers to new entrants in the market,Ddriving existing competitors out of the market and foreclosure ofcompetition by hindering entry into the market. All these activities haveconnection with the ‘market’. The word ‘market’ has reference to‘relevant market’. As per sub-section (5) of Section 19, such relevantmarket can be relevant geographic market or relevant product market.In the present case, we are concerned with the relevant product market,Eviz. telecommunication market. Sub-section (7) of Section 19 enumeratesthe factors which are to be kept in mind while determining the relevantproduct market.

70. Market definition is tool to identify and define the boundariesof competition between firms. It serves to establish the framework withinFwhich the competition policy is applied by the Commission. The mainpurpose of market definition is to identify in systematic way thecompetitive constraints that the undertakings involved face. The objectiveof defining market in both its product and geographic dimension is toidentify those actual competitors of the undertakings involved that areGcapable of constraining those undertakings behaviour and of preventingthem from behaving independently of effective competitive pressure.Therefore, the purpose of defining the ‘relevant market’ is to assesswith identifying in systematic way the competitive constraints thatundertakings face when operating in market. This is the case inparticular for determining if undertakings are competitors or potentialH

competitors and when assessing the anti-competitive effects of conductin market. The concept of relevant market implies that there could bean effective competition between the products which form part of it andthis presupposes that there is sufficient degree of interchangeabilitybetween all the products forming part of the same market insofar asspecific use of such product is concerned. In essence, it is the notion of‘power over the market’ which is the key to analyse many competitiveissues.

71. It is an admitted position that in the instant case we are dealingwith the telecom market, which is the relevant market. An interestingfeature is that this telecom market is also regulated by the statutoryregime contained in the TRAI Act. Under the said Act, TRAI is establishedas regulator which exercises control/supervision and also providesguidance to the telecom/mobile market. This statutory body is requiredto function as per the provisions of the TRAI Act as well as the Rulesand Regulations framed thereunder. Additionally, the telecom companiesare also governed by licence agreements entered into between the CentralGovernment and such service providers, for providing telephone/telecommunication services to the customers/subscribers. At this stage,therefore, we take note of the relevant provisions of the TRAI Act:

“11. Functions of Authority. – (1) Notwithstanding anythingcontained in the Indian Telegraph Act, 1885 (13 of 1885), thefunctions of the Authority shall be to –

(a) make recommendations, either suo moto or on request fromthe licensor, on the following matters, namely:

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(iv) measures to facilitate competition and promote efficiency inthe operation of telecommunication services so as to facilitategrowth in such services;

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(b) discharge the following functions, namely:–

(i) ensure compliance of terms and conditions of licence;

(ii) notwithstanding anything contained in the terms andconditions of the licence granted before the commencementof the Telecom Regulatory Authority of India (Amendment)

Act, 2000, fix the terms and conditions of inter-connectivitybetween the service providers;

(iii) ensure technical compatibility and effective inter-connectionbetween different service providers;

(iv) regulate arrangement amongst service providers of sharingtheir revenue derived from providing telecommunicationservices;

(v) lay-down the standards of quality of service to be providedby the service providers and ensure the quality of service andconduct the periodical survey of such service provided by theservice providers so as to protect interest of the consumers oftelecommunication service;

(vi) lay-down and ensure the time period for providing localand long distance circuits of telecommunication betweendifferent service providers;

(vii) maintain register of interconnect agreements and of allsuch other matters as may be provided in the regulations;

(viii) keep register maintained under clause (vii) open forinspection to any member of public on payment of such feeand compliance of such other requirement as may be providedin the regulations;

(ix) ensure effective compliance of universal serviceobligations;

(c) levy fees and other charges at such rates and in respect ofsuch services as may be determined by regulations;

(d) perform such other functions including such administrativeand financial functions as may be entrusted to it by the CentralGovernment or as may be necessary to carry out the provisionsof this Act:

Provided that the recommendations of the Authority specified inclause (a) of this sub-section shall not be binding upon the CentralGovernment.

14. Establishment of Appellate Tribunal. – The CentralGovernment shall, by notification, establish an Appellate Tribunalto be known as the Telecom Disputes Settlement and AppellateTribunal to –

(a) adjudicate any dispute –

(i) between licensor and licensee;

(ii) between two or more service providers;

(iii) between service provider and group of consumers:

Provided that nothing in this clause shall apply in respect ofmatters relating to –

(A) the monopolistic trade practice, restrictive trade practiceand unfair trade practice which are subject to the jurisdictionof the Monopolies and Restrictive Trade Practices Commissionestablished under sub-section (1) of section 5 of the Monopoliesand Restrictive Trade Practices Act, 1969 (54 of 1969);

(B) the complaint of an individual consumer maintainable beforea Consumer Disputes Redressal Forum or Consumer DisputesRedressal Commission or the National Consumer RedressalCommission established under section 9 of the ConsumerProtection Act, 1986 (68 of 1986);

(C) dispute between telegraph authority and any other personreferred to in sub-section (1) of section 7B of the IndianTelegraph Act, 1885 (13 of 1885);

(b) hear and dispose of appeal against any direction, decision ororder of the Authority under this Act.

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16. Procedure and powers of Appellate Tribunal. – (1) TheAppellate Tribunal shall not be bound by the procedure laid downby the Code of Civil Procedure, 1908 (5 of 1908), but shall beguided by the principles of natural justice and, subject to the otherprovisions of this Act, the Appellate Tribunal shall have powers toregulate its own procedure.

A(2) The Appellate Tribunal shall have, for the purposes ofdischarging the functions under this Act, the same powers as arevested in civil court under the Code of Civil Procedure, 1908 (5of 1908), while trying suit, in respect of the following matters,namely:–

B(a) summoning and enforcing the attendance of any personand examining him on oath;

(b) requiring the discovery and production of documents;

(c) receiving evidence on affidavits;

C(d) subject to the provisions of section 123 and 124 of theIndian Evidence Act, 1872 (1 of 1872), requisitioning any publicrecord or document or copy of such record or document,from any office;

(e) issuing commissions for the examination of witnesses ordocuments;

(f) reviewing its decisions;

(g) dismissing an application for default or deciding it, ex parte;

(h) setting aside any order of dismissal of any application fordefault or any order passed by it, ex parte; and

(i) any other matter which may be prescribed.

(3) Every proceeding before the Appellate Tribunal shall bedeemed to be judicial proceeding within the meaning of sections193 and 228, and for the purposes of section 196 of the IndianFPenal Code (45 of 1860) and the Appellate Tribunal shall bedeemed to be civil court for the purposes of section 195 andChapter XXVI of the Code of Criminal Procedure, 1973 (2 of1974).”

72. Other provisions in the telecom sector which are relevant forGthe purposes of these appeals are taken note of by the High Court asunder:

“Telecommunication laws binds all

19. The relevant licenses

Unified License (UL)– The UL issued by Department ofTelecommunications, Government of India (“DoT”) for providingtelecommunication services on pan India basis. Licence underSection 4 of Indian Telegraph Act, 1885 therefore they becomeTelecom Service Provider (“TSP”). Relevant clauses of the UL(UASL) are -

(a) Clause 16 of Part-I: Other conditions: The licensee is boundby all TRAI Orders/Directions/Reglations;

(b) Clause 27 of Part-I: Network Interconnnection, particularly,Clause 27.4, which requires licensee to interconnect subject tocompliance with prevailing regulations and determinations issuedby TRAI, and contemplates the execution of ICAs to establishinterconnection in sufficient capacity and number to enabletransmission and reception of messages between theinterconnected systems;

(c) Clause 29 of Part-I, requiring licensee to ensure QoS standardsas may be prescribed by DoT/TRAI. Specifically, Clause 29.4,empowers DoT/TRAI to evaluate QoS parameters prior to grantof permission for commencement of services; and

(d) Clause 6.2 of Part-II, which requires licensee to provideinterconnection to all TSPs to ensure that calls are completed toall destinations.

Inter-connection Agreements

20. Similar separate Interconnection Agreements (ICAs) areexecuted between the parties. The relevant clauses of ICAs areas under:

Clause 2.4: “...RJIL will be required to establish Interconnectionat the Switches of IDEA as listed in Schedule I. In addition tothese specified locations, the Parties may further agree tointerconnect at an additional location(s) as mutually agreed toby and between the parties during the term of thisAgreement...”

Clause 5.7: “...At the end of two years, the Parties shall convertthe total E1s existing at the POIs into one-way E1s for the

Outgoing Traffic of each Party on the basis of the traffic ratioexisting 3 months prior to the expiry of the initial period of twoyears. These E1s shall thereafter be continued as one-wayE1s for the remaining term of the Agreement at the cost ofRJIL...”

Clause 9.1: “...A minimum notice of 4 weeks has to be givenby either Party for augmentations of Interconnect Links...”

Clause 9.2: “...Augmentation shall be completed within 90 daysof receipt of requisite charges specified in Schedule 2 fromRJIL...”

Clause 9.3: “...Any request for augmentation of capacity shallbe in writing with Performance reports as prescribed inSchedule 4...”

Clause 9.4: “...Traffic measurements for 7 days shall be takenby both the parties during agreed busy route hours, every 6Dmonths after commencement of traffic at the POIs to determinefurther capacity requirements...”

Clause 9.5: “...RJIL shall provide forecast in writing inadvance for its requirement of port capacity for TelephonyTraffic for the next 6 months to enable IDEA to dimension therequired capacity in its network...”

21. The relevant clauses of the ICAs are:

(a) Clause 2 makes clear that the ICA will be applicable andin effect from the date of execution;

(b) Clause 2.10 makes clear that the interconnection facilitiesat each POI will conform to the applicable QoS standardsprescribed by TRAI;

(c) Clause 3 – Terms and Amendments – again makes clearthat the ICA becomes applicable, effective and operationalfrom the date of execution and is valid until both parties hold avalid license for providing access services;

(d) Clause 4 – Applicability and Providing Services – reiteratesthat the ICA becomes applicable on signing and is subject tothe terms and conditions of the telecom licence;

(e) Clause 5.2 specifically provides that for the initial twoyears, provision and augmentation of transmission links shallbe at the cost of RJIL;

(f) Clause 5.7 contemplates conversion of two-way E1s intoone-way E1s only after two years, which in other words meanthat for two years all E1s must be two-way E1s;

(g) Clause 9 provides modalities for enhancement of ports;and

(h) Clause 10.7 again reiterates that Idea is bound to maintainQoS standards prescribed by TRAI.

22. Quality of Service Regulations, 2009

Quality of Service Regulations (“QoS Regulations, 2009”)issued by TRAI under Section 36 read with Section 11 of theTRAI Act. Clause 5Iiv) and Clause 14, as relevant, are reproducedas under:

(a) Clause 5(iv) prescribes that the congestion at each individualPOI cannot exceed 0.5% over period of one month (no morethan 5 out of every 100 calls can fail).

(b) Clause 14 provides that in the event of any doubt regardinginterpretation of any of the provisions of the QoS regulations,the view of the TRAI shall be final and binding.

23. The relevant clauses of the Standards of Quality of Serviceof Basic Telephone Service (wireline) and Cellular MobileTelephone Service Regulations, 2009 includes Cellular MobileTelephone Services. The terms “Point of Interconnection (POI)”,“Quality of Service (QoS)”, “Service Provider, Telecommunicationservices” have been defined in the Regulations. The term POIcongestion is also described in 3.12 and 4.7 of POI.”

73. Some of the features which govern the telecommunicationindustry and noted by the High Court may also be captured at this stage.These are:

(a) To protect the interest of the service providers and consumersof the telecom sector and to permit and ensure technical compatibilityand effective inter-relationship between different service providers and

Afor ensuring compliance of licence conditions by all the service providers,TRAI was constituted under the Telecom Regulatory Authority of IndiaAct, 1997. TRAI is recommendatory/advisory and regulatory bodydischarging the functions envisaged under sub-section (1) of Section 11of the said Act. TRAI, inter alia, is charged with ensuring faircompetition amongst service providers, including fixing the terms andBconditions of entire activity between the service providers and layingdown the standards of Quality of Service (QoS) to be provided by eachservice provider. In exercise of its functions, TRAI has issued detailedRegulations for telecom services, including fixation and revision of tariffs(Tariff Order), fixation of Inter-connect Usage Charges (IUC),Cprescription of quality of service standards, etc.

(b) The Telecom Service Providers, which include the respondentsas well as RJIL, provide telecommunication access service and are PANIndia Telecom Service Providers. They are governed by the CellularMobile Telephone Service (CMTS)/ Unified Access Service LicenceD(UASL) issued by the Telecommunications Department, Governmentof India under section 4 of the Telegraph Act.

(c) The Central Government has the exclusive privilege ofestablishing, maintaining and working telegraphs under the TelegraphAct and the Central Government is authorised to grant licence on suchEterms and conditions and in consideration of such payment as it thinks fitto any person to establish, maintain or work as telegraph within any partof the country. By virtue of Section 4 of the Telegraph Act, serviceprovider is duty bound to enter into licence agreement with the formerfor unified licence, with authorisation for provision of services, as perthe terms and conditions prescribed in the Schedule. As condition ofFthe said licence, the licensee agrees and unequivocally undertakes tofully comply with the terms and conditions stipulated in the licenceagreement without any deviation or reservation of any kind. The licenceis governed by the provisions of the Telegraph Act, the Indian WirelessTelegraphy Act, 1933, the TRAI Act and the Information TechnologyGAct, 2000, as modified or regulated from time to time.

74. In order to ensure that there is smooth interconnectivity and aconsumer who is the subscriber of mobile phone of one service provider,say for e.g. Vodafone, and wants to make call to mobile phone of hisfriend which is provided by another service provider, say Idea Cellular,Hthe unified licenses put an obligation on all these licensees to interconnect

with each other on the POI. This is so mentioned in Clause 27.4 of PartI of the Schedule to the unified licence. Such interconnectivity of POI issubject to compliance of regulation/directions issued by TRAI. Theinterconnection agreement, inter alia, provides for the following clauses:

(a) to meet all reasonable demand for the transmission andreception of messages between the interconnect systems;

(b) to establish and maintain such one or more POIs as arereasonably required and are of sufficient capacity and in sufficientnumbers to enable transmission and reception of the messages by meansof applicable systems; and

(c) to connect and keep connected to the applicable systems.

Some of the other clauses of the interconnection agreement areas follows:

minimum four weeks’ written notice has to be given by eitherparty for augmentation of interconnect links.

Augmentation shall be completed within 90 days of receipt ofrequisite charges specified in the Schedule.

Either party shall provide forecast in writing, in advance forits requirements of port capacity for “Telephony Traffic” forthe next six months to enable the other party to dimension therequired capacity in its network.

The interconnection tests for reach and every interface will becarried out by mutual arrangement between signatories of the

agreement.

By virtue of the licence, the licensee is obligated to ensure qualityof service as prescribed by the licensor or TRAI and failure on their partto adhere to the quality of service stipulated by TRAI would make thelicensor liable to be treated for breach of the terms and conditions of thelicence.

In order to render effective services, it is mandatory for the licenseeto interconnect/provide POIs to all eligible telecom service providers toensure that calls are completed to all destinations and interconnectionagreement is entered into between the different service providers whichmandates each of the party to the agreement to provide to the other

Ainterconnection traffic carriage and all the technical and operational qualityservice and time lines, i.e. the equivalent to that which the party providesto itself. The interconnection agreement separately entered into differentservice providers is based on the format prescribed in theTelecommunication Interconnection (Reference Interconnect Offer)Regulations, 2002.B

75. POI is defined in the agreement, in the following words:

“POI are those points between two network operators which allowvoice call originating from the work of one operator to terminateon the network by other operator.”C76. We may also note that on June 07, 2005 direction was issuedunder Section 13 read with sub-clause (i) to (v) of sub-clause (b) ofSection 11 of the TRAI Act, which provides as follows:

“In exercise of the powers vested in it under section 13 read withsection 11(1)(b)(i), (ii), (iii), (iv) and (v) of the Telecom RegulatoryDAuthority of India Act, 1997 and in order to ensure compliance ofterms and conditions of license and effective interconnectionbetween service providers and to protect consumer interest, theAuthority hereby directs all service providers to provideinterconnection on the request of the interconnection seeker withinE90 days of the applicable payments made by the interconnectionseeker. Further there is direction issued by the Government ofIndia, Ministry of Telecommunication dated 28th August, 2005 bywhich directions have been issued to provide data of subscribersin the prescribed format.”

77. From the aforesaid analysis of the scheme contained in theFTRAI Act, it becomes clear that the functioning of the telecom companieswhich are granted licence under Section 4 of the Telegraph Act isregulated by the provisions contained in the TRAI Act. TRAI is aregulator which regulates the telecom industry, which is statutory bodycreated under the TRAI Act. The necessity of such regulators has beenGemphasised by Constitution Bench of this Court in Modern DentalCollege and Research Centre and Others v. State of Madhya Pradeshand Others[17] in the following words:

“Need for regulatory mechanism

H17(2016) 7 SCC 353

87. Regulatory mechanism, or what is called regulatory economics,is the order of the day. In the last 60-70 years, economic policy ofthis country has travelled from laissez faire to mixed economy tothe present era of liberal economy with regulatory regime. Withthe advent of mixed economy, there was mushrooming of thepublic sector and some of the key industries like aviation, insurance,railways, electricity/power, telecommunication, etc. weremonopolised by the State. Licence/permit raj prevailed during thisperiod with strict control of the Government even in respect ofthose industries where private sectors were allowed to operate.However, Indian economy experienced major policy changes inearly 90s on LPG Model i.e. liberalisation, privatisation andglobalisation. With the onset of reforms to liberalise the Indianeconomy, in July 1991, new chapter has dawned for India. Thisperiod of economic transition has had tremendous impact on theoverall economic development of almost all major sectors of theeconomy.88. When we have liberal economy which is regulated by themarket forces (that is why it is also termed as market economy),prices of goods and services in such an economy are determinedin free price system set up by supply and demand. This is oftencontrasted with planned economy in which Central Governmentdetermines the price of goods and services using fixed pricesystem. Market economies are also contrasted with mixedeconomy where the price system is not entirely free, but undersome government control or heavily regulated, which is sometimescombined with State led economic planning that is not extensiveenough to constitute planned economy.

89. With the advent of globalisation and liberalisation, though themarket economy is restored, at the same time, it is also felt thatmarket economies should not exist in pure form. Some regulationof the various industries is required rather than allowing self-regulation by market forces. This intervention through regulatorybodies, particularly in pricing, is considered necessary for thewelfare of the society and the economists point out that suchregulatory economy does not rob the character of marketeconomy which still remains market economy. Justification forregulatory bodies even in such industries managed by private

Asector lies in the welfare of people. Regulatory measures are feltnecessary to promote basic well being for individuals in need. It isbecause of this reason that we find regulatory bodies in all vitalindustries like, insurance, electricity and power,telecommunications, etc.”

78. Thus, with the advent of globalisation/liberalisation leading tofree market economy, regulators in respect of each sector have assumedgreat significance and importance. It becomes their bounden duty toensure that such regulator fulfils the objectives enshrined in the Actunder which particular regulator is created. Insofar as the telecomsector is concerned, the TRAI Act itself mentions the objective which itCseeks to achieve. It not only exercises control/supervision over thetelecom service providers/ licensees, TRAI is also supposed to provideguidance to the telecom/mobile market. ‘Introduction’ to the TRAI Actitself mentions that due to tremendous growth in the services it wasconsidered essential to regulate the telecommunication services by aDregulatory body which should be fully empowered to control the services,in the best interest of the country as well as the service providers.Likewise, the Statement of Objects and Reasons of this Act, inter alia,stipulates as under:

“1. In the context of the National Telecom Policy, 1994, whichEamongst other things, stresses on achieving the universal service,bringing the quality of telecom services to world standards,provisions of wide range of services to meet the customers demandat reasonable price, and participation of the companies registeredin India in the area of basic as well as value added telecom servicesas also making arrangements for protection and promotion ofFconsumer interest and ensuring fair competition, there is feltneed to separate regulatory functions from service providingfunctions which will be in keeping with the general trend in theworld. In the multi-operator situation arising out of opening ofbasic as well as value added services in which private operatorGwill be competing with Government operators, there is pressingneed for an independent telecom regulatory body for regulationof telecom services for orderly and healthy growth oftelecommunication infrastructure apart from protection ofconsumer interest.

4. The powers and functions of the Authority, inter alia, are.–

(i) ensuring technical compatibility and effective inter-relationship between different service providers;

(ii) regulation of arrangement amongst service providers ofsharing their revenue derived from providing telecommunicationservices;

(iii) ensuring compliance of licence conditions by all serviceproviders;

(iv) protection of the interest of the consumers oftelecommunication service;

(v) settlement of disputes between service providers;

(vi) fixation of rates for providing telecommunication servicewithin India and outside India;

(vii) ensuring effective compliance of universal serviceobligations.”

79. TRAI is, thus, constituted for orderly and healthy growth oftelecommunication infrastructure apart from protection of consumerinterest. It is assigned the duty to achieve the universal service whichshould be of world standard quality on the one hand and also to ensurethat it is provided to the customers at reasonable price, on the otherhand. In the process, purpose is to make arrangements for protectionand promotion of consumer interest and ensure fair competition. It isbecause of this reason that the powers and functions which are assignedto TRAI are highlighted in the Statement of Objects and Reasons.Specific functions which are assigned to TRAI, amongst other, includingensuring technical compatibility and effective inter-relationship betweendifferent service providers; ensuring compliance of licence conditionsby all service providers; and settlement of disputes between serviceproviders.

80. In the instant case, dispute raised by RJIL specifically touchesupon these aspects as the grievance raised is that the IDOs have notgiven POIs as per the licence conditions resulting into non-complianceand have failed to ensure inter se technical compatibility thereby. Notonly RJIL has raised this dispute, it has even specifically approachedTRAI for settlement of this dispute which has arisen between various

Aservice providers, namely, RJIL on the one hand and the IDOs on theother, wherein COAI is also roped in. TRAI is seized of this particulardispute.

81. It is matter of record that before the TRAI, IDOs haverefuted the aforesaid claim of RJIL. Their submission is that not onlyBrequired POIs were provided to RJIL, it is the RJIL which is in breachas it was making unreasonable and excessive demand for POIs. It isspecifically pleaded by the IDOs that:

(i) RJIL raised its demand for POIs for the first time on June 21,2016.

C(ii) In the letter dated June 21, 2016, it was admitted that RJILwas in test phase.

(iii) There was no express mention of any commercial launchdate.

D(iv) As per the letter, immediately on commercial launch RJILwould have 22mn subscriber base for which number series wasalready allotted.

(v) As per the DoT Circular dated August 29, 2005 test customersare not considered as subscribers and test customers can only bein the form of business partners. It was highlighted that problem,Eif any, of congestion has been suffered on account of provisioningof full-fledged services during test phase.

(vi) RJIL in its complaint before the TRAI was not consideringthe period of 90 days as was prescribed in the InterconnectionAgreement. It was instead proceeding on the basis that theFdemand for POIs should be met on an immediate basis.

(vii) There was several errors in the forecast made by RJIL.

(viii) The tables given by the RJIL are wrong as they take intoaccount its total demand at the end of nine months against whatGwas actually provided.

82. Learned counsel appearing for the IDOs had also argued thatthe first firm demand for provisioning of POIs was made by RJIL onJune 21, 2016. According to the IDOs, in that letter, RJIL had expresslyadmitted that it was under test phase and had not commenced

‘commercial services’. RJIL had also stated that the demand for POIswas being made to ‘provide seemless connectivity to targeted subscribers’as against ‘test consumers’. Their submission was that it was notdisclosed at all as to when RJIL was going to launch commercial services.On the basis of the aforesaid stand taken by the IDOs, their argument isthat in the first instance it is the TRAI which is not only competent butmore appropriate authority to consider these aspects as it is the TRAIwhich is the specialised body going by the nature of dispute between theparties, following aspects have to be determined by the TRAI:

(a) Whether IDOs were under any obligation to provide POIsduring test period?

(b) As per the letter dated June 21, 2016 from RJIL, when IDOswere to commence provisioning of POIs to RJIL?

(c) Whether the demand for POIs made by RJIL were reasonableor not?

(d) Whether there was any delay/denial at the end of Vodafone inprovisioning of POIs?

(e) Whether the POIs were to be provided ‘immediately’ andduring ‘test phase’?

(f) Whether IDOs have provided sufficient number of POIs toRJIL in conformity with the licence conditions?

83. We are of the opinion that as the TRAI is constituted as anexpert regulatory body which specifically governs the telecom sector,the aforesaid aspects of the disputes are to be decided by the TRAI inthe first instance. These are jurisdictional aspects. Unless the TRAIfinds fault with the IDOs on the aforesaid aspects, the matter cannot betaken further even if we proceed on the assumption that the CCI has thejurisdiction to deal with the complaints/information filed before it. Itneeds to be reiterated that RJIL has approached the DoT in relation toits alleged grievance of augmentation of POIs which in turn had informedRJIL vide letter dated September 06, 2016 that the matter related tointer-connectivity between service providers is within the purview ofTRAI. RJIL thereafter approached TRAI; TRAI intervened and issuedshow-cause notice dated September 27, 2016; and post issuance of show-cause notice and directions, TRAI issued recommendations datedOctober 21, 2016 on the issue of inter-connection and provisioning of

APOIs to RJIL. The sectoral authorities are, therefore, seized of thematter. TRAI, being specialised sectoral regulator and also armedwith sufficient power to ensure fair, non-discriminatory and competitivemarket in the telecom sector, is better suited to decide the aforesaidissues. After all, RJIL’s grievance is that inter-connectivity is not providedby the IDOs in terms of the licenses granted to them. TRAI Act andBRegulations framed thereunder make detailed provisions dealing withintense obligations of the service providers for providing POIS. Theseprovisions also deal as to when, how and in what manner POIs are to beprovisioned. They also stipulate the charges to be realised for POIs thatare to be provided to another service provider. Even the consequencesCfor breach of such obligations are mentioned.84. We, therefore, are of the opinion that the High Court is right inconcluding that till the jurisdictional issues are straightened and answeredby the TRAI which would bring on record findings on the aforesaidaspects, the CCI is ill-equipped to proceed in the matter. Having regardDto the aforesaid nature of jurisdiction conferred upon an expert regulatorpertaining to this specific sector, the High Court is right in concludingthat the concepts of “subscriber”, “test period”, “reasonable demand”,“test phase and commercial phase rights and obligations”, “reciprocalobligations of service providers” or “breaches of any contract and/orpractice”, arising out of TRAI Act and the policy so declared, are theEmatters within the jurisdiction of the Authority/TDSAT under the TRAIAct only. Only when the jurisdictional facts in the present matter asmentioned in this judgment particularly in paras 56 and 82 above aredetermined by the TRAI against the IDOs, the next question wouldarise as to whether it was result of any concerted agreement betweenFthe IDOs and COAI supported the IDOs in that endeavour. It would beat that stage the CCI can go into the question as to whether violation ofthe provisions of TRAI Act amounts to ‘abuse of dominance’ or ‘anti-competitive agreements’. That also follows from the reading of Sections21 and 21A of the Competition Act, as argued by the respondents.G85. The issue can be examined from another angle as well. If theCCI is allowed to intervene at this juncture, it will have to necessarilyundertake an exercise of returning the findings on the aforesaid issues/aspects which are mentioned in paragraph 82 above. Not only TRAI isbetter equipped as sectoral regulator to deal with these jurisdictionalaspects, there may be possibility that the two authorities, namely, TRAIH

on the one hand and the CCI on the other, arrive at conflicting views.Such situation needs to be avoided. This analysis also leads to thesame conclusion, namely, in the first instance it is the TRAI which shoulddecide these jurisdictional issues, which come within the domain of theTRAI Act as they not only arise out of the telecom licenses granted tothe service providers, the service providers are governed by the TRAIAct and are supposed to follow various regulations and directions issuedby the TRAI itself.

86. This takes us to the next level of the issue, viz. whether TRAIhas the exclusive jurisdiction to deal with matters involving anti-competitivepractices to the exclusion of CCI altogether because of the reason thatthe matter pertains to telecom sector?

87. The IDOs have argued that not only TRAI is an expert bodywhich can deal with these issues and has been assigned this functionspecifically under the TRAI Act, even the anti-competitive aspects oftelecom sector are specifically assigned to the TRAI in the TRAI Actitself. On that premise the submission is that the TRAI Act is speciallegislation which prevails over the provisions of the Competition Act asthe Competition Act is general in nature. It is also argued that even ifthe Competition Act is treated as special statute, between the twospecial statutes the TRAI Act would prevail as it is complete code initself which regulates the telecom sector in its entirety, including theaspects of competition.88. Such submission, on cursory glance, may appear to beattractive. However, the matter cannot be examined by looking into theprovisions of the TRAI Act alone. Comparison of the regimes andpurpose behind the two Acts becomes essential to find an answer to thisissue. We have discussed the scope and ambit of the TRAI Act in thegiven context as well as the functions of the TRAI. No doubt, we haveaccepted that insofar as the telecom sector is concerned, the issueswhich arise and are to be examined in the context of the TRAI Act andrelated regime need to be examined by the TRAI. At the same time, itis also imperative that specific purpose behind the Competition Act iskept in mind. This has been taken note of and discussed in the earlierpart of the judgment. As pointed out above, the Competition Act frownsthe anti-competitive agreements. It deals with three kinds of practiceswhich are treated as anti-competitive and are prohibited. To recapitulate,these are:

A(a) where agreements are entered into by certain persons with aview to cause an appreciable adverse effect on competition;

(b) where any enterprise or group of enterprises, which enjoysdominant position, abuses the said dominant position; and

(c) regulating the combination of enterprises by means of mergersBor amalgamations to ensure that such mergers or amalgamations do notbecome anti-competitive or abuse the dominant position which they canattain.

89. The CCI is specifically entrusted with duties and functions,and in the process empower as well, to deal with the aforesaid threeCkinds of anti-competitive practices. The purpose is to eliminate suchpractices which are having adverse effect on the competition, to promoteand sustain competition and to protect the interest of the consumers andensure freedom of trade, carried on by other participants, in India. Tothis extent, the function that is assigned to the CCI is distinct from thefunction of TRAI under the TRAI Act. Learned counsel for theDappellants are right in their submission that the CCI is supposed to findout as to whether the IDOs were acting in concert and colluding, therebyforming cartel, with the intention to block or hinder entry of RJIL in themarket in violation of Section 3(3)(b) of the Competition Act. Also,whether there was an anti-competitive agreement between the IDOs,Eusing the platform of COAI. The CCI, therefore, is to determine whetherthe conduct of the parties was unilateral or it was collective actionbased on an agreement. Agreement between the parties, if it was there,is pivotal to the issue. Such an exercise has to be necessarily undertakenby the CCI. In Haridas Exports, this Court held that where statutesFoperate in different fields and have different purposes, it cannot be saidthat there is an implied repeal of one by the other. The Competition Actis also special statute which deals with anti-competition. It is also tobe borne in mind that if the activity undertaken by some persons is anti-competitive and offends Section 3 of the Competition Act, theconsequences thereof are provided in the Competition Act. Section 27Gempowers the CCI to pass certain kinds of orders, stipulated in the saidprovision, after inquiry into the agreements for abuse of dominant position.The following kinds of orders can be passed by the CCI under thisprovision:

“27. Orders by Commission after inquiry into agreementsor abuse of dominant position. - Where after inquiry theCommission finds that any agreement referred to in section 3 oraction of an enterprise in dominant position, is in contraventionof section 3 or section 4, as the case may be, it may pass all or anyof the following orders, namely:—

(a) direct any enterprise or association of enterprises or person orassociation of persons, as the case may be, involved in suchagreement, or abuse of dominant position, to discontinue and notto re-enter such agreement or discontinue such abuse of dominantposition, as the case may be;

(b) impose such penalty, as it may deem fit which shall be notmore than ten per cent of the average of the turnover for the lastthree preceding financial years, upon each of such person orenterprises which are parties to such agreements or abuse:

Provided that in case any agreement referred to insection 3 has been entered into by cartel, the Commission mayimpose upon each producer, seller, distributor, trader or serviceprovider included in that cartel, penalty of up to three times of itsprofit for each year of the continuance of such agreement or tenpercent. of its turnover for each year of the continuance of suchagreement, whichever is higher.

(c) repealed;

(d) direct that the agreements shall stand modified to the extentand in the manner as may be specified in the order by theCommission;

(e) direct the enterprises concerned to abide by such other ordersas the Commission may pass and comply with the directions,including payment of costs, if any;

(f) repealed;

(g) pass such other [order or issue such directions] as it may deemfit.

Provided that while passing orders under this section, ifthe Commission comes to finding, that an enterprise incontravention to section 3 or section 4 of the Act is member of

Aa group as defined in clause (b) of the Explanation to section 5of the Act, and other members of such group are also responsiblefor, or have contributed to, such contravention, then it may passorders, under this section, against such members of the group.

Moreover, it is within the exclusive domain of the CCI to find outBas to whether particular agreement will have appreciable adverse effecton competition within the relevant market in India. For this purpose, CCIis to take into consideration the provisions contained in the CompetitionAct, including Section 29 thereof. Sections 45 and 46 also authorise theCCI to impose penalties in certain situations.C90. Obviously, all the aforesaid functions not only come within thedomain of the CCI, TRAI is not at all equipped to deal with the same.Even if TRAI also returns finding that particular activity was anti-competitive, its powers would be limited to the action that can be takenunder the TRAI Act alone. It is only the CCI which is empowered todeal with the same anti-competitive act from the lens of the CompetitionDAct. If such activities offend the provisions of the Competition Act aswell, the consequences under that Act would also follow. Therefore,contention of the IDOs that the jurisdiction of the CCI stands totallyousted cannot be accepted. Insofar as the nuanced exercise from thestand point of Competition Act is concerned, the CCI is the experiencedEbody in conducting competition analysis. Further, the CCI is more likelyto opt for structural remedies which would lead the sector to evolve apoint where sufficient new entry is induced thereby promoting genuinecompetition. This specific and important role assigned to the CCI cannotbe completely wished away and the ‘comity’ between the sectoralregulator (i.e. TRAI) and the market regulator (i.e. the CCI) is to beFmaintained.91. The conclusion of the aforesaid discussion is to give primacyto the respective objections of the two regulators under the two Acts. Atthe same time, since the matter pertains to the telecom sector which isspecifically regulated by the TRAI Act, balance is maintained byGpermitting TRAI in the first instance to deal with and decide thejurisdictional aspects which can be more competently handled by it. Oncethat exercise is done and there are findings returned by the TRAI whichlead to the prima facie conclusion that the IDOs have indulged in anti-competitive practices, the CCI can be activated to investigate the matter

going by the criteria laid down in the relevant provisions of the CompetitionAct and take it to its logical conclusion. This balanced approach inconstruing the two Acts would take care of Section 60 of the CompetitionAct as well.

92. We, thus, do not agree with the appellants that CCI couldhave dealt with this matter at this stage itself without availing the inquiryby TRAI. We also do not agree with the respondents that insofar as thetelecom sector is concerned, jurisdiction of the CCI under the CompetitionAct is totally ousted. In nutshell, that leads to the conclusion that theview taken by the High Court is perfectly justified. Even the argumentof the learned ASG is that the exercise of jurisdiction by the CCI toinvestigate an alleged cartel does not impinge upon TRAI’s jurisdictionto regulate the industry in any way. It was submitted that the promotionof competition and prevention of competitive behaviour may not be highon the change of sectoral regulator which makes it prone to ‘regulatorycapture’ and, therefore, the CCI is competent to exercise its jurisdictionfrom the stand point of the Competition Act. However, having takennote of the skillful exercise which the TRAI is supposed to carry out,such comment vis-a-vis TRAI may not be appropriate. No doubt, ascommented by the Planning Commission in its report of February, 2007,a sectoral regulator, may not have an overall view of the economy as awhole, which the CCI is able to fathom. Therefore, our analysis doesnot bar the jurisdiction of CCI altogether but only pushes it to laterstage, after the TRAI has undertaken necessary exercise in the firstplace, which it is more suitable to carry out.

B.Whether the writ petitions filed before the High Courtof Bombay were maintainable?

93. Here comes the scope of judicial interference under Article226 of the Constitution. As per the RJIL as well as CCI, the High Courtcould not have entertained the writ petition against an order passed underSection 26(1) of the Competition Act which was pure administrativeorder and was only prima facie view expressed therein, and did notresult in serious adverse consequences. It was submitted that the findingof the High Court that such an order was quasi-judicial order is not onlyerroneous but it is contrary to the law laid down in the case of SteelAuthority of India Limited. The respondents, on the other hand, havesubmitted that the judgment in the above case had no application in theinstant case as it did not deal with the sector that is regulated by

Astatutory authority. Moreover, such an order was quasi-judicial in natureand cannot be treated as an administrative order since it was passed bythe CCI after collecting the detailed information from the parties and byholding the conferences, calling material details, documents, affidavitsand by recording the opinion. It was submitted that judicial review againstsuch an order is permissible and it was open to the respondents to pointBout that the complete material, as submitted by the respondents, was nottaken into consideration which resulted in an erroneous order, which hadadverse civil consequences inasmuch as the respondents were subjectedto further investigation by the Director General.94. We may mention at the outset that in the case of Steel AuthorityCof India Limited, nature of the order passed by the CCI under Section26(1) of the Competition Act (here also we are concerned with an orderwhich is passed under Section 26(1) of the Competition Act) was goneinto. The Court, in no uncertain terms, held that such an order would bean administrative order and not quasi-judicial order. It can be discernedDfrom paragraphs 94, 97 and 98 of the said judgment, which are as under:

“94. The Tribunal, in the impugned judgment, has taken the viewthat there is requirement to record reasons which can be express,or, in any case, followed by necessary implication and therefore,the authority is required to record reasons for coming to theEconclusion. The proposition of law whether an administrative orquasi-judicial body, particularly judicial courts, should recordreasons in support of their decisions or orders is no more resintegra and has been settled by recent judgment of this Court inCCT v. Shukla & Bros. [(2010) 4 SCC 785: (2010) 2 SCC (Cri)1201 : (2010) 2 SCC (L&S) 133], wherein this Court was primarilyFconcerned with the High Court dismissing the appeals withoutrecording any reasons. The Court also examined the practice andrequirement of providing reasons for conclusions, orders anddirections given by the quasi-judicial and administrative bodies.

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97. The above reasoning and the principles enunciated, whichare consistent with the settled canons of law, we would adopteven in this case. In the backdrop of these determinants, we mayrefer to the provisions of the Act. Section 26, under its differentsub-sections, requires the Commission to issue various directions,

take decisions and pass orders, some of which are even appealablebefore the Tribunal. Even if it is direction under any of theprovisions and not decision, conclusion or order passed on meritsby the Commission, it is expected that the same would be supportedby some reasoning. At the stage of forming prima facie view, asrequired under Section 26(1) of the Act, the Commission may notreally record detailed reasons, but must express its mind in nouncertain terms that it is of the view that prima facie case exists,requiring issuance of direction for investigation to the DirectorGeneral. Such view should be recorded with reference to theinformation furnished to the Commission. Such opinion should beformed on the basis of the records, including the informationfurnished and reference made to the Commission under the variousprovisions of the Act, as aforereferred. However, other decisionsand orders, which are not directions simpliciter and determiningthe rights of the parties, should be well reasoned analysing anddeciding the rival contentions raised before the Commission bythe parties. In other words, the Commission is expected to expressprima facie view in terms of Section 26(1) of the Act, withoutentering into any adjudicatory or determinative process and byrecording minimum reasons substantiating the formation of suchopinion, while all its other orders and decisions should be wellreasoned.

98. Such an approach can also be justified with reference toRegulation 20(4), which requires the Director General to record,in his report, findings on each of the allegations made by party inthe intimation or reference submitted to the Commission and sentfor investigation to the Director General, as the case may be,together with all evidence and documents collected duringinvestigation. The inevitable consequence is that the Commissionis similarly expected to write appropriate reasons on every issuewhile passing an order under Sections 26 to 28 of the Act.”

95. There is no reason to take contrary view. Therefore, weare not inclined to refer the matter to larger Bench for reconsideration.

96. It was, however, argued that since the case of Steel Authorityof India Limited was not dealing with the telecom sector, which isregulated by the statutory regulator, namely, TRAI under the TRAI Act,that judgment would not be applicable. Merely because the present

Acase deals with the telecom sector would not change the nature of theorder that is passed by the CCI under Section 26(1) of the CompetitionAct. However, it raises another dimension. Even if the order isadministrative in nature, the question raised before the High Court in thewrit petitions filed by the respondents touched upon the very jurisdictionof the CCI. As is evident, the case set up by the respondents was thatBthe CCI did not have the jurisdiction to entertain any such request orInformation which was furnished by RJIL and two others. The question,thus, pertained to the jurisdiction of the CCI to deal with such matterand in the process the High Court was called upon to decide as to whetherthe jurisdiction of the CCI is entirely excluded or to what extent the CCICcan exercise its jurisdiction in these cases when the matter could bedealt with by another regulator, namely, the TRAI. When suchjurisdictional issues arise, the writ petition would clearly be maintainableas held in Barium Chemicals Ltd. and Another v. Company LawBoard and Others[18] and Carona Limited. In Carona Limited, thisCourt held as under:D

“26. The learned counsel for the appellant company submittedthat the fact as to “paid-up share capital” of rupees one crore ormore of company is “jurisdictional fact” and in absence ofsuch fact, the court has no jurisdiction to proceed on the basis thatthe Rent Act is not applicable. The learned counsel is right. TheEfact as to “paid-up share capital” of company can be said to bea “preliminary” or “jurisdictional fact” and said fact would conferjurisdiction on the court to consider the question whether theprovisions of the Rent Act were applicable. The question, however,is whether in the present case, the learned counsel for the appellantFtenant is right in submitting that the “jurisdictional fact” did notexist and the Rent Act was, therefore, applicable.

27. Stated simply, the fact or facts upon which the jurisdiction ofa court, tribunal or an authority depends can be said to be a“jurisdictional fact”. If the jurisdictional fact exists, court, tribunalGor authority has jurisdiction to decide other issues. If such factdoes not exist, court, tribunal or authority cannot act. It is alsowell settled that court or tribunal cannot wrongly assumeexistence of jurisdictional fact and proceed to decide matter.The underlying principle is that by erroneously assuming existence

of jurisdictional fact, subordinate court or an inferior tribunalcannot confer upon itself jurisdiction which it otherwise does notposses.

28. In Halsbury’s Laws of England (4th Edn.), Vol. 1, Para 55,p. 61; Reissue, Vol. 1(1), Para 68, pp. 114-15, it has been stated:

“Where the jurisdiction of tribunal is dependent on theexistence of particular state of affairs, that state of affairsmay be described as preliminary to, or collateral to the meritsof, the issue. If, at the inception of an inquiry by an inferiortribunal, challenge is made to its jurisdiction, the tribunal hasto make up its mind whether to act or not and can give rulingon the preliminary or collateral issue; but that ruling is notconclusive.”

The existence of jurisdictional fact is thus sine qua non orcondition precedent to the assumption of jurisdiction by court ortribunal.

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36. It is thus clear that for assumption of jurisdiction by court ora tribunal, existence of jurisdictional fact is condition precedent.But once such jurisdictional fact is found to exist, the court ortribunal has power to decide adjudicatory facts or facts in issue.”

97. Thus, even when we do not agree with the approach of theHigh Court in labeling the impugned order as quasi-judicial order andassuming jurisdiction to entertain the writ petitions on that basis, for ourown and different reasons, we find that the High Court was competentto deal with and decide the issues raised in exercise of its power underArticle 226 of the Constitution. The writ petitions were, therefore,maintainable.

C. Whether the High Court could give its findings on merits?

98. Once we hold that the order under Section 26(1) of theCompetition Act is administrative in nature and further that it was merelya prima facie opinion directing the Director General to carry theinvestigation, the High Court would not be competent to adjudge thevalidity of such an order on merits. The observations of the High Courtgiving findings on merits, therefore, may not be appropriate.

A99. At the same time, since we are upholding the order of theHigh Court on the aspect that the CCI could exercise jurisdiction onlyafter proceedings under the TRAI Act had concluded/attained finality,i.e. only after the TRAI returns its findings on the jurisdictional aspectswhich are mentioned above by us, the ultimate direction given by theHigh Court quashing the order passed by the CCI is not liable to beBinterfered with as such an exercise carried out by the CCI was premature.The result of the discussion would be to dismiss these appeals, subject toour observations on certain aspects. Ordered accordingly.

Devika Gujral

Appeals disposed of.