2018 (12) TMI 1683 - SC - Law of Competition

Anti-competitive agreements - Cartel - cartel having been formed by three major telecom operators, namely, Bharti Airtel Limited, Vodafone India Limited and Idea Cellular Limited - existence of prima facie case or not - Section 19 of the Competition Act - width and scope of the powers of the CCI under the Competition Act, 2002 pertaining to telecom sector - Jurisdiction of the CCI - Maintainability of petition before Bombay High Court - findings on merits or not. Jurisdiction of the CCI - HELD THAT - In the wake of globalisation and keeping in view the economic development of the country, responding to opening of its economy and resorting to liberalisation, need was felt to enact a law that ensures fair competition in India by prohibiting trade practices which cause an appreciable adverse effect on competition within markets in India and for establishment of an expert body in the form of Competition Commission of India, which would discharge the duty of curbing negative aspects of competition, the Competition Act, 2002 has been enacted by the Parliament - the CCI is entrusted with duties, powers and functions to deal with three kinds of anti-competitive practices. The purpose is to eliminate such practices which are having adverse effect on the competition, to promote and sustain competition and to protect the interest of the consumers and ensure freedom of trade, carried on by the other participants, in India. For the purpose of conducting such an inquiry, the CCI is empowered to call any person for rendering assistance and/or produce the records/material for arriving at even the prima facie opinion. The Regulations also empower the CCI to hold conferences with the concerned persons/parties, including their advocates/authorised persons. The functioning of the telecom companies which are granted licence Under Section 4 of the Telegraph Act is regulated by the provisions contained in the TRAI Act. TRAI is a regulator which regulates the telecom industry, which is a statutory body created under the TRAI Act - with the advent of globalisation/liberalisation leading to free market economy, regulators in respect of each sector have assumed great significance and importance. It becomes their bounden duty to ensure that such a regulator fulfils the objectives enshrined in the Act under which a particular regulator is created. Insofar as the telecom sector is concerned, the TRAI Act itself mentions the objective which it seeks to achieve. It not only exercises control/supervision over the telecom service providers/licensees, TRAI is also supposed to provide guidance to the telecom/mobile market. 'Introduction' to the TRAI Act itself mentions that due to tremendous growth in the services it was considered essential to regulate the telecommunication services by a regulatory body which should be fully empowered to control the services, in the best interest of the country as well as the service providers. Having taken note of the skillful exercise which the TRAI is supposed to carry out, such a comment vis-a-vis TRAI may not be appropriate. No doubt, as commented by the Planning Commission in its report of February, 2007, a sectoral regulator, may not have an overall view of the economy as a whole, which the CCI is able to fathom. Therefore, our analysis does not bar the jurisdiction of CCI altogether but only pushes it to a later stage, after the TRAI has undertaken necessary exercise in the first place, which it is more suitable to carry out. Whether the writ petitions filed before the High Court of Bombay were maintainable? - HELD THAT - Even when we do not agree with the approach of the High Court in labeling the impugned order as quasi-judicial order and assuming jurisdiction to entertain the writ petitions on that basis, for our own and different reasons, we find that the High Court was competent to deal with and decide the issues raised in exercise of its power Under Article 226 of the Constitution. The writ petitions were, therefore, maintainable. Whether the High Court could give its findings on merits? - HELD THAT - Once we hold that the order Under Section 26(1) of the Competition Act is administrative in nature and further that it was merely a prima facie opinion directing the Director General to carry the investigation, the High Court would not be competent to adjudge the validity of such an order on merits. The observations of the High Court giving findings on merits, therefore, may not be appropriate. Since we are upholding the order of the High Court on the aspect that the CCI could exercise jurisdiction only after proceedings under the TRAI Act had concluded/attained finality, i.e. only after the TRAI returns its findings on the jurisdictional aspects which are mentioned above by us, the ultimate direction given by the High Court quashing the order passed by the CCI is not liable to be interfered with as such an exercise carried out by the CCI was premature - appeal dismissed.

Summary

Issues Involved:
1. Jurisdiction of the Competition Commission of India (CCI) versus the Telecom Regulatory Authority of India (TRAI).
2. Maintainability of writ petitions against orders passed under Section 26(1) of the Competition Act.
3. Authority of the High Court to give findings on merits in such cases.

Issue-wise Detailed Analysis:

1. Jurisdiction of CCI versus TRAI:

The Supreme Court analyzed the jurisdictional conflict between CCI and TRAI. The Competition Act, 2002, aims to prevent practices having an adverse effect on competition, promote and sustain competition, and protect consumer interests. It deals with anti-competitive agreements, abuse of dominant positions, and regulation of combinations of enterprises. The TRAI Act, 1997, regulates the telecommunication sector, ensuring compliance with license conditions, technical compatibility, and interconnectivity among service providers.

The Court emphasized that TRAI, being a specialized regulator for the telecom sector, should first address jurisdictional issues related to interconnection agreements, quality of service, and compliance with license conditions. Only after TRAI's findings on these jurisdictional aspects can CCI investigate potential anti-competitive practices under the Competition Act. This balanced approach maintains the respective roles of both regulators without completely ousting CCI's jurisdiction.

2. Maintainability of Writ Petitions:

The Court addressed whether writ petitions against orders passed under Section 26(1) of the Competition Act are maintainable. CCI argued that such orders are administrative and do not result in serious adverse consequences, thus not warranting judicial review. However, the Court held that when jurisdictional issues arise, writ petitions are maintainable. The High Court was competent to decide whether CCI had jurisdiction to entertain the complaints, given the regulatory framework of the telecom sector.

3. Authority of the High Court to Give Findings on Merits:

The Court noted that the High Court's observations on the merits of the case were inappropriate. The order under Section 26(1) of the Competition Act is administrative, forming a prima facie opinion directing an investigation. The High Court should not adjudicate the validity of such an order on merits. However, the Supreme Court upheld the High Court's decision to quash CCI's order, as the investigation was premature without TRAI's findings on jurisdictional aspects.

Conclusion:

The Supreme Court affirmed the High Court's view that TRAI should first address jurisdictional issues related to interconnection agreements and compliance with license conditions. CCI can investigate anti-competitive practices only after TRAI's findings. The Court also upheld the maintainability of writ petitions on jurisdictional grounds but clarified that the High Court should not give findings on merits in such cases. The appeals were dismissed, subject to these observations.