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CCI to Trai: Consult us on predatory pricing issues

LiveMint logoLiveMint 27-07-2017 Amrit Raj

New Delhi: In a move that could set off a high-decibel regulatory turf war, the antitrust watchdog wants the telecom regulator to consult it on matters such as predatory pricing.

Competition Commission of India (CCI) chairman Devender K. Sikri wrote in a letter to the telecom industry regulator that assessment of market dominance and predatory pricing fall under CCI’s ambit.

In a 21 July letter to Telecom Regulatory Authority of India (Trai) chairman R.S. Sharma, Sikri asked the latter to consult CCI on such issues, which he wrote may be at the “intersection of regulation and competition” and “are central to the enforcement of the provisions of the (Competition) Act relating to abuse of dominance”.

Mint has reviewed a copy of the letter.

Trai’s Sharma did not respond to phone calls and a text message seeking comment.

Trai is in the process of coming out with policies on tariffs, including aspects related to abuse of market dominance or predatory pricing.

The debate on predatory pricing and abuse of market dominance started after Reliance Jio Infocomm Ltd began operations last year, announcing an array of free services to attract consumers, drawing criticism from established rivals that it was engaging in predatory pricing.

India’s largest telecom service provider Bharti Airtel Ltd in February filed a complaint against Jio with CCI, accusing the latter of “creating a monopoly for itself” to reap higher profits in the long run. In June, CCI said that in a competitive market, where there are already big companies operating, it would not be anti-competitive “for an entrant to incentivise customers towards its own services by giving attractive offers and schemes”.

In February, Trai floated a consultation paper to discuss whether tariff offers made by telecom companies are transparent enough and if the current definition, such as ‘non-discrimination’, is adequate.

Sikri, in his letter, said the delineation of a relevant market is a critical step in the assessment of abuse of dominant position, which includes many other conducts apart from predatory pricing.

The letter added that the Competition Act defines the relevant product market and geographic market and lists the factors to be considered in making such an assessment.

“This exercise, regardless of the sector, is the exclusive remit of the competition authority, which has the technical capacity and the supporting statutory framework to carry it out,” Sikri wrote.

He added that competition law also defines predatory pricing and dominant position while also providing the factors that should guide the determination of dominance.

“We do believe that the (telecom) regulator may not have the wherewithal for the determination of these issues, as such issues do not afford themselves to blanket prescriptions and blunt instrument of regulation,” Sikri said.

Sikri is of the opinion that such market interactions would need to be assessed on a case-by-case basis without any presumptions based on a formulaic framework.

“This, in our opinion, the appropriate legal-economic instrument and the framework for such an analysis to conclusively establish abuse, including predatory pricing, is the competition law of the country. Going forward, we hope this instrumentality is preserved for an effectual regulatory architecture,” Sikri said.

“In Trai Act, the word competition is used once. Trai’s role in competition matters is rather limited. It is well within its powers to set tariffs but if there is a case of market abuse, I think the role of competition body is very relevant. In my opinion, Trai must deal ex ante with tariffs, eg, IUC (interconnect usage charge) rates, (and) CCI must deal with issues arising ex poste, out of market behaviour,” said Mahesh Uppal, a telecom consultant and director at consultancy ComFirst.

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