CCI or TRAI? High Court Weighs Jurisdiction in Star India Case

In a significant ruling, the Kerala High Court has weighed in on whether the complaint alleging abuse of dominant position by Star India Private Limited (“Star India”) falls within the jurisdiction of the Competition Commission of India (“CCI”) or the Telecom Regulatory Authority of India (“TRAI”).[1]

Background

The dispute arose when Star India allegedly offered additional discounts to select multi-system operators (“MSOs”) and Kerala Communicators Cable Limited (“KCCL”), the main competitor of Asianet Digital in Kerala, through marketing agreements. These discounts were purportedly in excess of the permissible cap under the Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) Regulations 2017 (“Interconnection Regulations 2017”).

As a result, Asianet Digital was compelled to price its channels higher than those of KCCL, leading to a loss of consumers. To retain its subscriber base, Asianet Digital began offering services at a loss-making price, but this strategy failed, resulting in a continued decline in its subscriber base while KCCL’s increased.

In its information to the CCI, Asianet Digital alleged that Star India had abused its dominant position in contravention of Section 4(2)(a)(ii) and Section 4(2)(c) of the Competition Act, 2002, by indulging in discriminatory pricing and conduct resulting in denial of market access.

In February 2022, the CCI found that the alleged discriminatory conduct prima facie appeared to be in violation of said provisions and directed the Director General to cause an investigation to be made. Upon completion of the investigation, a report was submitted to the CCI, which will afford a hearing to the parties before it passes any order.

Aggrieved by this development, Star India and other parties named in the CCI complaint challenged the Commission’s jurisdiction.

Kerala High Court’s Ruling

The Court made the following key observations:

• Both Statutes Are Special Laws: The Court held that both the Competition Act and the TRAI Act are special legislation in their respective field. While there could be some overlap, the TRAI Act does not contain any provision to deal with the three anti-competitive practices, including misuse of the dominant position of a market player as defined under Section 4 of the Competition Act.
• CCI Has Jurisdiction Over Alleged Abuse of Dominance: Since the allegations pertained to abuse of dominant position under the Competition Act, the CCI was found to be the appropriate authority to examine the matter. However, if the allegations involved non-compliance with licensing conditions or violation of TRAI’s regulations, then jurisdiction would lie with TRAI. The Court clarified that jurisdictional overlap does not negate the authority of either regulator, and both operate in different and distinct fields. Accordingly, the Court was of the view that there is no conflict insofar as the jurisdiction of the two sectoral regulators is concerned.
• First Forum of Recourse: TRAI or CCI? On the argument that Asianet Digital ought to have approached TRAI or TDSAT in the first instance, the Court declined to scuttle the proceedings at the current stage. It reasoned that the CCI’s order under Section 26 is only a direction to investigate and does not result in any civil consequences. Such an order is in rem and affects the larger public interest. The Court also noted that the CCI itself is competent to deal with the jurisdictional issue, and the petitioners would have the opportunity to raise such arguments before the CCI.

With this, the Kerala High Court dismissed the writ petitions, while granting the petitioners liberty to raise jurisdictional arguments before the CCI.

[1] Star India Private Limited v. Competition Commission of India & Ors. [W.P.(C) No. 29767 of 2022] and connected matters.