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Published: Fri, 02 Feb 2018
Statement of jurisdiction
The jurisdiction of this Hon’ble High Court has been invoked under Article 226 of the Constitution of India by the Competition Commission challenging the jurisdiction of the Telecom Disputes Settlement And Appellate Tribunal(TDSAT) to pass an interlocutery Order dated 27th September, 2020. It is humbly submitted that this Hon’ble Court has jurisdiction over the matter.
Statement Of Facts
1. The recent victory of the Bharat Mata Janta Party(BMJP) in the assembly elections has shocked poll pundits and astrologers alike as the resurgent party, by virtue of its own numbers formed a majority in the Lok Sabha.
2. The BMJP, elected on a manifesto of globalisation and rejecting Communist state ideology as has one of its first measures, on the 8th August, 2020 notified by the Competition Act, 2002.
3. The statement by Mr. Siddharth Tyabji, the Prime Minister while notifying the enactment at the empowered group of ministers(EGoM), subsequently released to the media as following:
“Ours is a party with a difference and today with the notification of the Competition Act, we have made a difference for the better for the people and for the nation. We are no longer prevaricating on the cliff of uncertainty. We, Indians today wholeheartedly accept the realities and promises of globalisation and the economic basis of regulation. The Competition Act which was languishing for almost 20 years, while companies were squabbling in public and ministers were profiting in private. This was most patently evident when 3G and was allocated by the Personal Progressive Alliance to only 4 private operators and there were charges and allegations of, (a) anti-competitive agreements being entered between select local telecom companies aiming to use the idle national providers 3G spectrum; (B) 3G Operators abusing their dominant position against the surviving 2G operators; and finally (c) the cartelization by the 3G operators. Today we have an economic basis, a rational basis on which to gauge these complaints…. Today, we can throw open our gates for our coffers to blossom with foreign Investment. We can promise our foreign investors that as long as they maintain the rules of the competition act, they will be a rule of law on an economic and national basis. There will no longer be personal aggrandization of ministers under the guise of “policy decisions”, all such disputes will be decided by the quasi-judicial functions performed by the Competitions Commission of India. Today, as we have entered a brave new world, India has shown courage by accepting the global principles of competition law. Vande Mataram!”
4. In the background of the regulatory upheaval, Oceania Telecommunications Holdings, a global telecommunications conglomerate, through its Indian subsidiary Oceania Telecommunications India International Ltd.(OIIL), has instituted an ambitious plan to reserve bandwidth for its partner search engine monolith, Ignosoc whose corporate mantra is, “do a lot of good”.
5. On 20 August 2020, Mister Emmanuel Goldstein, the president of OIIL and Mister Mustafa Mond, the Chief Evangelist Officer for Ignosoc made a joint press statement: “India is an important market for us and for the world. We respect India, we admire India, and we invest in India. Sadly, the World Wide Web has failed to keep up to speed with rise of the new educated India. The world and more so the average Indian is today frustrated with the outages and the sluggish speed of broadband Internet. The rise of high bandwidth applications, on demand streaming, black-ray movies, Mp-10 surround music and ZPEG images poses challenge to the fundamental architecture of the Internet itself. In wake of these maladies affecting the information superhighway, we are building a metro service to Ignosoc for Oceania Internet service subscribers. We will be reserving bandwidth for our subscribers directly routing it to the Ignosoc server farms. Whenever you enter a Ignosoc website, there will be a free tube in a clogged tunnel, carrying a dedicated high-speed stream of information. The service is free, since speed and information should be free. With Ignosoc being the homepage of 70% browsers in India and Oceania having a solid 54% subscriber base in India, we anticipate millions of people to be benefited and access Ignosoc’s, search services on Ignoogle, video services on Ignotube, social networking services on Ignobook and mail services on Ignomail, at their time, click and convenience.”
6. The announcement causes a boom in the traffic to Ignosoc’s online services and a jump in the subscription of OIIL broadband services.
7. Alarmed by the rise, Rajan “˜Rajju’ Tiwari, Vice-President, Legal of Raddit.com, a leading Indian search and online service portal claims that this is an, “anti-competitive” agreement as it prefers Ignosoc to other service providers and on 17th September, 2020 sends a legal notice to OIIL.
8. 0IIL in its reply dated 20th September, 2020 to the legal notice states that it is willing to supply the same arrangement to Raddit.com on the same terms as it provided to Ignosoc, disclosing that it is being paid $328 billion annually by Ignosoc for the reservation of bandwidth in its favour.
9. Raddit even though a sizeable player in the local Indian market, is unable to match this amount as its entire market capitalisation reaches to around $81 billion dollars.
10. Hence, Rajju declined the offer and files a complaint against OIIL and Ignosoc with the Competition Commission of India under Section 19(1) under the newly notified Competition Act, 2002.
11. Acting on the complaint by Rajju, the Competition Commission by its notice dated 20th September, 2020 asks OIIL and Ignosoc why a ruling should not be entered against it as a prima-facie case has been made out against it.
12. Michael Clayton, the lawyer appointed by OI IL and Ignosoc acting against the show-cause notice dated 20th September, 2020 filed a petition under Section 14 of Telecom Regulatory Act of India, 1997 (TRAI) before the Telecom dispute settlement and appellate tribunal (TDSAT) for a declaratory ruling that the actions by his clients did not violate the, “must provide” clause and the principle of non-discrimination enshrined under the TRAI Act.
13. Acting on the petition filed by Mr. Clayton the TDSAT by its interim order dated 27th September, 2020 directed the Competition Commission:
“Raddit should not proceed with the matter in dispute before us, till the pendency of the proceedings. Parties to maintain status quo.”
14. Thereafter the Competition Commission challenging the jurisdiction of TDSAT to pass the order dated 27th September, 2020 approached the Delhi High Court in its writ jurisdiction.
15. The following disclosures as to the grounds have been given through press releases by the officers of these two regulatory arms:
(a) 29th September, 2020-: TDSAT seeks to defend its order and states, the TDSAT, rather than the Competition Commission has exclusive jurisdiction over the dispute since it is a dispute between service providers as envisaged by the TRAI Act.
(b) 1st December, 2020-: Competition Commission seeks to assail the order, on various grounds stating that it is a subsequent enactment as well as has a special mandate and expertise to decide such dispute on an economic basis.
(c) 4th December, 2020-: The TRAI also has an expertise on the subject and has several consultation papers, recommendations, regulations, rulings decided on issue of discrimination. The Competition Act was moreover notified as to its non-obstante provisions in 2002 itself and hence it cannot be termed a later enactment.
16. The Delhi High Court has been pleased to place the matter for 10th December, 2020 for final disposal.
Hence the present petition.
Statement Of Issues: (Tdsat)
1. Whether the Competition Commission has any jurisdiction to decide on the dispute in the present matter?
2. Whether the TDSAT has exclusive jurisdiction to decide on the dispute in the present matter rather than the Competition Commission?
3. Whether the Special Act should prevail over the General Act in the present matter?
4. Whether OIIL and Ignosoc violated the “must provide”�? clause and the principle of non-discrimination enshrined under the TRAI Act?
1. That the Competition Commission does not have any jurisdiction to decide on the dispute in the present matter.
It is humbly submitted that according to the facts of the present matter, Oceania Telecommunications India Ltd.(OIIL) instituted an “˜ambitious’ plan to reserve bandwidth for its partner search engine monolith, Ignosoc and on 20th August, 2020, Mr. Goldstein, President OIIL and Mr. Mond, Chief Evangelist Officer Ignosoc made a joint press statement declaring the same.
The abovementioned statement caused a boom in the traffic to Ignosoc’s online services and a jump in the subscription of OIIL broadband services since this service is free of charge. Where earlier Ignosoc was the homepage of nearly 70% browsers and OIIL having a solid 54% subscriber base in India, these numbers shot up after the joint statement from both.
Aggrieved and alarmed by this rise in numbers in favour of Ignosoc and OIIL, Rajan “˜Rajju’Tiwari, Vice President, Legal, Raddit.com, a leading search engine and online service portal and possibly one of the competitors of Ignosoc claims that this is an “anti-competitive”�? agreement as it prefers Ignosoc to other service providers and on 17th September, 2020 sends a legal notice to OIIL.
S. 3(4) of the Competition Act reads as follows:
“Any agreement amongst enterprises or persons at different stages or levels of the production chain in different markets, in respect of production, supply, distribution, storage, sale or price of, or trade in goods or provision of services, including
(a) tie-in arrangement;
(b) exclusive supply agreement;
(c) exclusive distribution agreement;
(d) refusal to deal;
(e) resale price maintenance,
shall be an agreement in contravention of sub-section (1) if such agreement causes or is likely to cause an appreciable adverse effect on competition in India.
Explanation.””For the purposes of this sub-section,
(a) “tie-in arrangement” includes any agreement requiring a purchaser of goods, as a condition of such purchase, to purchase some other goods;
(b) “exclusive supply agreement” includes any agreement restricting in any manner the purchaser in the course of his trade from acquiring or otherwise dealing in any goods other than those of the seller or any other person;
(c) “exclusive distribution agreement” includes any agreement to limit, restrict or withhold the output or supply of any goods or allocate any area or market for the disposal or sale of the goods;
(d) “refusal to deal” includes any agreement which restricts, or is likely to restrict, by any method the persons or classes of persons to whom goods are sold or from whom goods are bought;
(e) “resale price maintenance” includes any agreement to sell goods on condition that the prices to be charged on the resale by the purchaser shall be the prices stipulated by the seller unless it is clearly stated that prices lower than those prices may be charged.”�?
It is humbly submitted that in the present matter none of the above are in application. The dispute arose as a result of the reservation of bandwidth in favour of Ignosoc by OIIL. Since Raddit.com was not able to afford to the reserve the same, therefore, a complaint against OIIL and Ignosoc was made to the Competition Commission under “anti-competitive agreement”�?.
However, what is important to note in the current matter is whether or not any action attracting any provision of the Competition Act, 2002 has been made. In the abovementioned scenario neither has there been any “exclusive supply agreement”�? nor has there been an “exclusive distribution agreement”�? by the OIIL since it offered Raddit.com the purchase price and terms as were offered to Ignosoc. Hence no discrimination on that front has been made by OIIL. A simple invitation to offer was made, to which Ignosoc responded and Raddit.com was offered the same terms and conditions as were offered to Ignosoc.
Quoting the facts of the case, it was said by OIIL in its reply dated 20th September, 2020 to the legal notice that “it is willing to supply the same arrangement to Radddit.com on the same terms as it provided to Ignosoc, disclosing that it is being paid 328 Billion Dollars annually by Ignosoc for the reservation of bandwidth in its favour”�?. This is a clear indicator of the fact that nothing in this agreement was “exclusive”�? or even “anti-competitive”�? in nature as the invitation to offer was available to all such enterprises who wanted to reserve the spectrum. Hence the issue of the applicability of S. 3 should be done away with.
The jurisdiction of the Competition Commission has been invoked under S. 19(1) of the Competition Act, 2002.
S. 19(1) of the Competition Act, 2002 reads as under:
“The Commission may inquire into any alleged contravention of the provisions contained in subsection (1) of section 3 or sub-section (1) of section 4 either on its own motion or on
(a) [receipt of any information, in such manner and] accompanied by such fee as may be determined by regulations, from any person, consumer or their association or trade association; or
(b) a reference made to it by the Central Government or a State Government or a statutory authority.”�?
Therefore if either S. 3(1) or S. 4(1) of the Competition Act are violated or contravened, only then can the jurisdiction of the Competition Commission may be exercised u/S. 19(1).
S. 4(1) of the Act reads as under:
“[No enterprise or group shall abuse its dominant position.]”�?
Ordinarily, merely the fact that a firm or enterprise or undertaking is in a dominant position in the relevant market alone is not prohibited by competition law. For instance, in EU law, in N. V. Netherlands Banden Industrie Michelin v. Commission of the European Communities  ECR 3451, it was observed that a finding that an undertaking has a dominant position is not a recrimination but simply means that irrespective of the reasons for which it has such a dominant position, the undertaking concerned has a special responsibility not to allow its conduct to impair genuine undistorted competition in the common market”�?.
The Competition Act, 2002, expressly provides in Section 19 (5) that the Competition Commission shall have due regard to the relevant product market and the relevant geographical market in determining whether a market constitutes a relevant market for the purposes of the Act. The definition of relevant market provided by Section 2(r) of the Act also states that the relevant market means the market that may be determined by the Commission with reference to the relevant product market or the relevant geographical market or with reference to both. “relevant product market”�? and “relevant geographic market”�? have been specifically defined in the Indian Competition Act. Section 2 (t) defines the relevant product market as a “˜market comprising all those products or services which are regarded as interchangeable or substitutable by the customer, by reason of the characteristics of the product or service, the prices and the intended use’. Section 2 (s) defines the relevant geographic market as a “˜market comprising the area in which the conditions of competition for supply of goods or provision of services are sufficiently homogeneous and can be distinguished from the conditions prevailing in neighbourhood areas’.
The Indian Competition Act contains a definition of dominant position that takes into account whether the concerned enterprise is in such a position of economic strength that it can operate independently of competitive forces or can affect the relevant market in its favour.
Explanation (a) to Section 4 of the Indian Competition Act defines dominant position as “dominant position means a position of strength, enjoyed by an enterprise, in the relevant market in India, which enables it to
(i) operate independently of competitive forces prevailing in the relevant market or
(ii) affect its competitors or consumers or the relevant market in its favour.
It is important to note that “˜the concept of dominance is broader than economic power over price. It is not the same as economic monopoly, although a monopoly would clearly be dominant’.
To understand whether OIIL and Ignosoc are in a dominant position in the present matter and also if they are abusing their dominant position we need to adhere to the abovementioned definition with utmost clarity. The mere fact that OIIL an d Ignosoc are in a dominant position in the relevant market would not by itself attract S. 4(1) of the Act instead this provision is attracted if and if only there is an abuse of such a “˜dominant position’.
2. That the TDSAT has exclusive jurisdiction to decide on the dispute in the present matter rather than the Competition Commission.
It is humbly submitted that the TDSAT has exclusive jurisdiction over the dispute since the dispute is between two “˜service providers’ as envisaged by the TRAI Act. Also, the TRAI has an expertise on the subject and has several consultation papers, recommendations, regulations, rulings decided on issues of discrimination.
The Telecom Industry is a specialized industry. It is governed by several Regulations issued by the TRAI and judgment passed by the TDSAT from time to time. Each of these Regulations is complex and involves several regulatory mechanisms. Each of the Service Providers is bound by such Regulations. The Regulations and decisions of the TRAI may be challenged before the TDSAT, which has been established as a Special Tribunal to oversee the Telecom Regulation in the country. The establishment of such a Special Tribunal with dispute resolution jurisdiction is special to India and is not to be found in most jurisdictions having an evolved Telecom Sector. Those jurisdictions permit a challenge to the decision of a Regulator to the Ordinary Civil / Appellate Courts. However, the establishment of the Special Tribunal has its advantage inasmuch as it is well versed with the implications of the complex Telecom Regulations and could ensure faster resolution.
It is humbly submitted that the TDSAT has exclusive jurisdiction over the dispute since the dispute is between two “˜service providers’ as envisaged u/S. 14 TRAI Act in addition to which, the TRAI has an expertise on the subject and has several consultation papers, recommendations, regulations, rulings decided on issues of discrimination.
The Consumer Courts under the Consumer Protection Act may entertain individual complaints, but matters affecting a large body of Telecom Consumers ought to be referred to the TDSAT by the Consumer Courts in deference to the provisions of Section 14(a)(ii) of the TRAI Act. This is because the TDSAT is well equipped to handle such important matters effectively, since it deals with such issues on day to day basis and is also qualified as an expert body under the TRAI Act.
A bare reading of the perambulatory clause of the TRAI Act would give a fair idea as to the scope and extent of its jurisdiction. It reads as follows:
“It is an Act to provide for the establishment of the Telecom Regulatory Authority of India (“TRAI”) and the Telecom Disputes Settlement and Appellate Tribunal (“TDSAT”) to regulate the telecommunication services, adjudicate disputes, dispose of appeals and to protect the interests of service providers and consumers of the telecom sector, to promote and ensure orderly growth of the telecom sector and for matters connected therewith or incidental thereto.”�?
Hence all disputes relating to the interests of “˜service providers’ and regulation of “˜telecommunication services’ have to be looked into by the TDSAT established u/S. 14 of the TRAI Act.
A recent decision of the TDSAT in the case of Sea TV , relating to the Broadcasting and Cable Industry explains the distinction between an MRTP action and one under the TRAI Act and holds, inter alia that:
“(MRTP) commission “¦ cannot adjudicate a dispute based on violation of a Regulation made under TRAI Act. Even though the Regulation incidentally trenches on subject of monopoly and RTP.”�?
Since in the present case instead of the MRTP Acts, it is the Competition Act dealing with such disputes, therefore, the Competition Commission cannot adjudicate a dispute between service providers even if it slightly entrenches upon the issue of competition or restrictive trade practices.
It has also been observed that Recent landmark decisions of the TDSAT and several recommendations of the TRAI have been aimed at encouraging development and deployment of new technologies and aimed at encouraging competition and discouraging anti competition and predatory prices or arbitrary acts of disconnection so that consumers are benefited and are enabled access to the latest technologies and without suffering arbitrary disconnection and disruptions.
It is extremely essential to determine the true meanings of the words “˜service provider’ and “˜telecommunication services’ in order to understand the applicability of the abovementioned Act in disputes regarding the same.
S. 14 of the TRAI Act, 1997 reads as under:
“The Central Government shall, by notification, establish an Appellate Tribunal to be known as the Telecom Disputes Settlement and Appellate Tribunal to
(a) adjudicate any dispute
(i) between a licensor and a licensee;
(ii) between two or more service providers;
(iii) between a service provider and a group of consumers:”�?
Clearly the current dipute falls u/S. 14(a)(ii) of the abovementioned Act since both OIIL along with Ignosoc as well as Raddit.com are “˜service providers’ as defined u/S. 2(1)(j) of the Act. It reads as follows:
“”service provider means”�? the [Government as a service provider] and includes a licensee;”�?
“˜Telecommunication services’ u/S.2(1)(k) means any service of any description (including electronic mail, voice mail, data services, audio tax services, video tax services, radio paging and cellular mobile telephone services) which is made available to the users by means of any transmission or reception of any signs, signals, writing, images and sounds or intelligence of any nature, by wire, radio, visual or other electromagnetic means but shall not include broadcasting services.
The subject matter in dispute is the “3-G spectrum”�? and to determine the subject matter of the dispute will help in the determination of the jurisdiction of both parties regarding the present matter.
“˜Radio spectrum’ refers to a range of radio frequencies. The bandwidth of a radio signal is the difference between the upper and lower frequencies of the signal.
For example, in the case of a voice signal having a minimum frequency of 200 hertz (Hz) and a maximum frequency of 3,000 Hz, the bandwidth is 2,800 Hz (3 KHz). The amount of bandwidth needed for 3G services could be as much as 15-20 Mhz, whereas for 2G services a bandwidth of 30-200 KHz is used. Hence, for 3G huge bandwidth is required.
3G helps to simultaneously transfer both voice data (a telephone call) and non-voice data (such as downloading information, exchanging e-mail, and instant messaging. The highlight of 3G is video telephony. 4G technology stands to be the future standard of wireless devices.
Therefore the subject matter of the dispute falls very much u/S. 2(1)(k) of the Act as 3-G spectrum is a “˜telecommunication service’. Therefore the TDSAT has jurisdiction to adjudicate a dispute resulting from the base-price allocation of the same.
S.14 of the TRAI Act empowers TDSAT to adjudicate “any dispute”�?. A dispute in relation to telecommunication services u/S. 2(1)(k) of the TRAI Act is a dispute covered by the words “any dispute”�? u/S. 14 of the TRAI Act.
Thus TDSAT is empowered to adjudicate the present dispute, which is a dispute in relation to telecommunication services.
3. That the Special Act i.e. TRAI Act, 1997 should prevail over a General Act i.e. Competition Act, 2002 in case of the present dispute.
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