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INTERFACE BETWEEN SECTORAL
REGULATION AND COMPETITION LAW:
A COMPREHENSIVE ANAYLSIS
Dissertation submitted in part fulfilment for the requirement of the
Degree of
LL.M.
Submitted by: Supervised by:
SARTHAK BHATNAGAR Dr. RITU GUPTA
NATIONAL LAW UNIVERSITY
DELHI (INDIA)
2017
i
DECLARATION BY THE CANDIDATE
I hereby declare that the dissertation entitled INTERFACE BETWEEN
SECTORAL REGULATION AND COMPETITION LAW: A
COMPREHENSIVE ANAYLSIS is the outcome of my own work carried out under
the supervision of. Dr. Ritu Gupta, Associate Professor, National Law University
Delhi.
I further declare that to the best of my knowledge the dissertation does not contain any
part of work, which has not been submitted for the award of any degree either in this
University or any other institutions without proper citation.
I further declare that I followed the Research guidelines of the University.
Sarthak Bhatnagar
36LLM, 2016
National Law University Delhi
Place: New Delhi
Date: May 31st 2017
ii
CERTIFICATE OF SUPERVISOR
This is to certify that the work reported in the LLM dissertation entitled
INTERFACE BETWEEN SECTORAL REGULATION AND COMPETITION
LAW: A COMPREHENSIVE ANAYLSIS submitted by Sarthak Bhatnagar at
National Law University, Delhi is a bona fide record of his original work carried out
under my supervision. To the best of my knowledge and belief, the dissertation: (i)
embodied the work of the candidate himself; (ii) has duly been completed; and (iii) is
up to the standard for being referred to the examiner.
(Dr. Ritu Gupta)
Associate Professor
National Law University, Delhi
Place: New Delhi
Date: May 31st 2017
iii
ACKNOWLEDGEMENT
I would like to acknowledge the able guidance provided by my teacher, Dr Ritu
Gupta, Associate Professor at National Law University Delhi, Dwarka, as without her
presence the dissertation would not have been possible. I am highly indebted to my
teacher for providing constant support and supervision despite her busy schedule.
It gives me immense pleasure to express my deep and profound gratitude to Dr. Ritu
Gupta whose efforts and dedication made this study conceivable and viable in its
present form. Her untiring support and swift responses have been a great source of
inspiration in completion of the work.
I would further like to acknowledge the help extended to me by the Library staff of
National Law University Delhi. I would like to thank my friends, Anoosha Panwar,
Ankur Madhia who made this journey memorable for me.
Above all, I would like to thank my Parents & Entire Family, who have always trusted
me and provided me with whatever I asked for. It is due to their endless love and
blessings only that I could pursue my goals and reached this place. Last, but not the
least, I acknowledge and thank the scholars whose work is used for completion of this
dissertation.
SARTHAK BHATNAGAR.
iv
LIST OF ABBREVIATIONS
AAEC Appreciable Adverse Effect on Competition
ACA Australia Communication Authority
ACCC Australian Competition and Consumer Commission
ACM Authority for Consumer and Market, Netherlands
CCI Competition Commission of India
CMA Competition and Market Authority
CMT The Telecommunications Market Commission,
Spain
COMPAT Competition Appellant Tribunal
DPSP Directive Principles of State Policy
DG Director General
DCA Department of Company Affairs
DERC Delhi Electricity Regulatory Commission
DOT Department of Telecom
CEA Central Electricity Authority
EU European Union
ECC European Competition Commission
FCC Federal Communication Commission
FRAND Fair, Reasonable, and Non-Discriminatory terms
FTC Federal Trade Commission
LPD Liberalisation, privatisation and deregulation
v
ICASA Independent Communication Authority of South
Africa
IPP Independent Power Producers
IRDA Insurance Regulatory and Development Authority
Act
KFTC Korea Fair Trade Commission
MRTPC Monopolies and Restrictive Trade Practice
Commission
MRTP Act Monopolies and Restrictive Trade Practice Act
NMa Netherlands Competition Authority
PNGRB Petroleum and Natural Gas Regulatory Board
POI Points of Interconnection
PPA Power Purchase Agreements
QOS Quality of Services
RBI Reserve Bank of India
SEP Standard Essential Patents
SEB State Electricity Board
TDSAT Telecommunication Dispute Settlement and
Appellate Tribunal
TRAI Telecom Regulatory Authority of India
SEBI Securities & Exchange Board of India
OECD Organisation for Economic Co-operation and
Development
TFEU Treaty on the Functioning of the European Union
TEC Telecom Engineering Centre
TERM Telecom Enforcement Resource and Monitoring
Cells
vi
TTO Telecommunication Tariff Order
WPC Wireless Planning Coordination Wing
vii
LIST OF CASES
1 Belaire Owner’s Association v. DLF Limited Case 19 of 2010
2 Brahm Dutt v. Union of India W.P (c) 490 of 200
3 Competition Commission of India v. SAIL ([2010] 10 SCC
744)
4 Competition Commission of SA v. Telkom SA C623/2008
5 Consumer Online Foundation v. TATA Sky Limited & Ors.
Case No 2 of 2009
6 Delhi Development Authority v. Competition Commission of
India W.P (c) No 6892/2014
7 Deutsche Telekom AG v. Commission of the European
Communities, Case T-271/03, OJ C 128
8 EchoStar/Hughes Electronics Merger
9 Ericsson v. CCI Case 04 of 2015
10 JCB v. CCI W.P. (c)No. 2244/2014
11 Monnet Sugar Limited v. Union of India
12 Neeraj Malhotra v. North delhi Power Limited, BSES
Yamina, Rajdhani Power, Case No 6 of 200
13 Telefonica case (C-295/12P)
14 Vlasic Pickle Company/Clauseen pickle merger
viii
LIST OF TABLES & FIGURES
Table/Figure
Number
Caption Page
Number
1.1 Non-Obstinate, Competition Clause 21
1.2 Sectoral Regulator v. Competition Authority 23
1.3 Pie Chart, Market Share in Wireless Segment 33
1.4 Pie Chart Representing Market share in Wired Segment 34
1.5 Tele Density Figures 35
1.6 Per Capita Electricity Consumption 47
1.7 Approach Adopted by Different Countries 56
1.8 Remedies Available from Sectoral Regulator 72
ix
TABLE OF CONTENTS
TITLE PAGE
NO.
DECLARATION BY THE CANDIDATE i
SUPERVISOR’S CERTIFICATE ii
ACKNOWLEDGEMENTS iii
LIST OF ABBREVIATIONS iv-v
LIST OF CASES vi
LIST OF INTERNATIONAL CASES vi
LIST OF TABLES & FIGURES vii
CHAPTER 1
INTRODUCTION
1-10
1.1 BACKGROUND 1
1.2 SCOPE OF STUDY 4
1.3 LITERATURE REVIEW 5
1.4 STATEMENT OF PROBLEM 7
1.5 OBJECTIVE 8
1.6 HYPOTHESES 8
1.7 SIGNIFICANCE OF STUDY 8
1.8 DATA COLLECTION TOOLS 9
1.9 RESEARCH METHODOLOGY 9
1.10 SCHEME OF THE RESEARCH 10
CHAPHTER 2
REGULATORY FRAMEWORK IN INDIA
12-21
x
2.1 INTRODUCTION 12
2.2 NEED AND NECCESITY OF REGULATOR 12
2.3 REGULATORY FAILURES 15
2.4 INCEPTION OF COMPETITION LAW IN INDIA 16
2.5COMPETITION LAW AND SECTORAL
REGULATORS
18
2.5.1 SECURITIES MARKET 18
2.5.2 INSURANCE SECTOR 18
2.5.3 PETROLEUM SECTOR 19
2.5.4 TELECOM AND ELECTRICITY SECTOR 19
2.5.5 ELECTRICITY SECTOR 20
CHAPTER 3-
EXPERIENCES OF REGULATORY OVERLAP IN INDIA
22-27
3.1 INTRODUCTION 21
3.2 AREAS OF OVERLAPPING CONFLICT 23
3.3 CASS OF OVERLAAPING ISSUES IN INDIA 25
CHAPTER 4
COMPETITION ISSUES IN INFRASTRUCTURE SECTOR
28-45
4.1 INTRODUCTION 28
4.2 TELECOM SECTOR AND COMPETITION LAW 30
4.2.1 FRAMEWORK 30
4.2.2 IMPACT OF REGULATION ON TELECOM
SECTOR
31
4.2.3 MARKET STRCUTURE 36
4.1.4 FACTORS INFLUENCING MARKET SHARE 36
4.2.5 COMPETITION ISSUES IN TELECOM SECTOR 37
4.2.6 REGULATORY CONFLICT 39
xi
4.2.7 MERGER AND TELECOM INDUSTRY 42
4.2 COMPETITION ISSUES ELECTRICITY SECTOR 46-53
4.2.1 ISSUES IN ELECTRICITY SECTOR 47
CHAPTER 5
INTERNATIONAL EXPERIENCES
54-67
5.1 INTRODUCTION 54
5.2 OECD APPROACH 55
5.3 SOUTH AFRICA 57
5.3 AUSTRALIA 59
5.5 SOUTH KOREA 61
5.4 UK, US 63
5.6 EUROPEAN MEMBER STATES 65
CHAPTER 6
A LESSON FOR INDIA- THE WAY FORWARD
68-76
6.1 INTRODUCTION 68
6.2 RELACEMENT BY SECTORAL REGULATOR 69
6.3 RELAPCEMENT BY COMPETITION AUHTORITY 69
6.4 PARALLEL COEXISTENCE 70
6.4.1 COLLABORATIVE MEANS 74
6.4.2 AGREEMENTS 74
6.4.3 CONSULATATIONS 75
6.4.4 INTERPRETATION BY COURTS 75
CHAPTER 7
CONCLUSION AND RECOMMENDATIONS
77-81
BIBLIOGRAPHY xiii-xix
1
CHAPTER 1
INTRODUCTION
1.1 BACKGROUND
Way back in 1997 David Boies a rewound American Lawyer had stated that:
“The interface between antitrust (competition law is referred to as antitrust in the United
States) and regulation is a veritable no-man ‘s land for students and practitioners alike.
Since the theories of antitrust and regulation reflect differing assumptions about
government intervention into the market place, it is often difficult to rationalise their
impact on particular industry behaviour. The antitrust laws, to borrow a phrase, are
brooding omnipresence, with pervasive, almost constitutional meaning in our
jurisprudence. Direct economic regulation (which is entrusted to agencies rather than the
USA Courts) may supplant the antitrust laws and specific industries for carefully carved-
out purposes. But at the edges these purposes thin out and the antitrust laws inevitable
reappear in the background. At this point it is no small matter to blend the policies of the
two conflicting regimes into an overall regulatory purpose that preserves the values of
both”.1
There has been a paradigm shift in the economic managements and its approach, in
India during the nineties. The value and significance in markets and its use in a market
friendly processes in the economy have been greatly recognised here. The benefits of
competitive markets are standard material for courses in economic theory. At the
same time, it is a well-recognised fact that competitive markets may not yield best or
desirable results. Economies of scale, imperfect and asymmetric information and
imperfect competition are few identified factors for this.
It is because of these factors; economic sectors cannot be left alone to market that are
unregulated and thus there should be some kind of intervention in the process. The
1 David Boies (1997), “The Control of Business, Public control of business”, little brown ,1977
2
nature and character of the desired intervention could clearly depend on the source of
the failure. Interventions can be broadly classified into two for the purpose of analysis,
First seeks to restore efficiency in a particular market by creating a sectoral
regulator. Hence, we have regulators in telecom, electricity, petrol and gas,
financial sectors and so on.
Second form of intervention tries to create an entitlement for competition through
an enacted competition law and aims to promote competition through competitive
practices in the market. Problems created by imperfect competition can be
resolved through this second intervention.
The two forms of interventions are distinctive in their nature as first is clearly in the
executive domain where the sectoral regulator tries to examine issues relating to
technology, costs and processes in that particular industry. Second form deals with
adjudicatory process where an authority on receipt of complaint acts on anti-
competitive practices of an enterprise. It is to be noted that Competition Act 2002,
similar to MRTP act creates an obligation on the Competition Commission of India to
promote competition in the market.
The separation between executive and adjudicatory functions are not perfect since
competition authorities in exercise of merger jurisdiction for instance, function in an
executive capacity, and regulators are routinely empowered to adjudicate disputes
amongst players on issues related to interconnect charges, access and so on.2 In
addition to the functional separation, the sectoral regulator is typically and narrowly
focused whereas the competition agency has an economy wide remit.3
Both the agencies, Competition and Sectoral have certain common goals and
objectives that foster economic growth. The sectoral ones have their eyes set on
prevention of “excessive pricing” by the enterprise which is done through tariff
regulation, open access of essential facilities, thus becomes necessary for executives
to promote competition that surround both sectoral regulator and competition
agencies. Especially when it comes to natural monopolies like coal, rail industry,
sectoral regulators are required to imitate competition in the sector.
2 Pradeep S Mehta, Towards A Functional Competition Policy for India, Pg-84 (Academic
Foundation,2005) 3 Id.
3
Regardless of sharing common objectives there lie a distinction between the
legislative mandate and perspective regarding competition issues which may vary
between the competition authorities and sectoral regulator. Behavioural and Structural
Issues are two different things where sectoral regulators are into structural
responsibilities ad ex ante issues, on the other hand the competition law looks into ex
post issues (except for mergers) which are behavioural issues.
Jurisdictional issue can harm consumers in a scenario when cost and prices increases,
this may happen when in overlapping jurisdiction between the sectoral regulator and
competition agencies, both the agencies do not coordinate their decisions and
processes as in that case it will create a risk for the investors and the same time
increase the compliance cost.
Since 90’s a number of countries have moved ahead with breaking up of monopoly
structure in infrastructure and financial market. These countries have primarily
focused upon LPD (liberalisation, privatisation and deregulation) structure of telecom,
electricity, financial sector (and many more). This has brought about a reform, as
private players at different levels have emerged which need attention of regulatory
overlap more than ever.4
The overlap between the regulators and competition authority has been usually at
different stages which include rules, domain or institutions. Previously, in developing
countries the infrastructure and financial sectors have been operated by the monopoly
state enterprise all along and hence overlapping of jurisdiction was irrelevant in those
stages.5 But with privatisation things changed and sectoral regulators had to evolve
leading to conflict between them.
New mechanisms were required after the introduction of competition and sectoral
regulators to ensure effective interface between the two. Also, there arose a need to
create complementary expertise and views of the two regulators. Whatever be the
situation between the regulators, there are very few countries across the globe where
4 Maher M. Dabbah, “The Relationship Between Competition Authorities and Sector Regulators”,
Cambridge Law Journal Volume 70 Issue 1, pp. 113, (March 2011) 5 Id.
4
this problem has been settled finally, as the transition to greater competition has not
been fully completed.6
As competition law in India is at a very nascent stage compared to many matured
jurisdictions such as EU, USA, and UK, the Competition authorities in India have
been constantly trying to cope up with certain administrative challenges and are trying
to walk on the same footing as these mature jurisdictions.
The Author in this dissertation will critically examine the situation of conflict between
sectoral regulators and competition authorities in India with special emphasis on
competition issues in infrastructure sector and would discuss the situation in other
countries with relevant case laws in India and abroad. The author will assess the
provision in Indian competition law and other regulators act in the infrastructure
sector. In this dissertation, I would be dealing with the provisions under the Indian
competition Act and the sectoral regulation which has led to conflicting jurisdictions
and view on competition related issues.
1.2 SCOPE OF STUDY
The issue between Sectoral Regulators and Competition Commission is basically due
to legislative framework. The study undertaken is only restricted to overlapping issues
between the two in India with special emphasis on infrastructure sector. The position
in India is discussed with relevant provisions under Competition Act, and other Acts
pertaining to Infrastructure sector with case laws that are being discussed. Similarly,
International experiences of developing country like South Africa and Developed
countries like Australia where Competition Act passed in 2010 similar to India, and
countries such as South Korea, Spain, Netherlands have been critically examined.
Matured jurisdiction of UK and US have also been touched in this research while
examining the OECD provisions on the issue.
6 DTI Report, Concurrent Powers in Sectoral Reforms, May 2006
5
1.3 REVIEW OF LITERATURE
Regulations and Competition Policy are mutually reinforcing in present scenario but
their instruments could be completely different. In current scheme of work, lesser the
regulatory scheme interferes in the market the more room opens up for competition
policy to work. This reinforcing nature thus requires some kind of coordination
between the agencies to work. Particularly in India these issues relating to
coordination are relevant as specific regulators were set up along with opening of
markets in 1990’s. (Rakesh Basant, 2001)
A firm that is dominant would endeavour to abuse that position and engage in anti-
competitive behaviour Regulators have been categorised basically into two – one
pertaining to specific regulators and other competition authorities which was
established in order to enforce competition law, this authority has mandate to over
competition issues. These two sects of regulator have common goal in them “to
protect and improve economic welfare”. Despite this common goal there might be an
overlapping between the two may have different perspective on competition issues.
Competition regulations dictates as what not to do and sectoral regulators works on
the mandate as what all to do. (Cornelius Dube, 2008)
TRAI and CCI could be a forum where both can here same issues regard competition
matters as both independent regulators have jurisdiction to do so. There could be a
possibility where a matter is rejected by TRAI and not by CCI based on similar facts
and circumstances. This would clearly create confusion and multiciplity of complaints
(Dhruv Suri, 2010)
A healthy relationship is something that is required between the regulators and the
tussle me arise basically in situations where both Competition Authority (CCI) and
Specific regulator may feel they have jurisdiction to deal with matters relating to anti-
competitive conduct in that market. (Karan K. Sharma, 2014)
The problem of overlapping between the sectoral regulator and competition authority
could be at different rules or at institution level. When competition is introduced into a
monopoly industries, new mechanism is required to ensure the efficiency of the two
regulators. Hence there is increasing need to miniating complementary expertise and
views of both the regulators. Sectoral regulators were basically established to carry
6
out specialisation in technical areas in that particular industry. They lack expertise in
dealing with competition issues as compared to Competition Commission. (Cezly
Sampson, Faye Sampson 2003)
(Natasha Nayak, 2012) in her article has mentioned that interaction between the two
regulators can be managed in different ways, learning from international experiences
as to how other jurisdiction have dealt with the current issue. One possible solution
could be handing primary to either of the one, another could be a concurrent one like
in UK where both the regulator has equal jurisdiction and working through a
consultative approach.
Where Competition Authorities has jurisdiction in a matter, its role in dealing with the
issues with state department and which includes sectoral regulator will largely depend
on a scenario where it avoids anticompetitive measures which are taken by legislative
and administrative authorities. Competition Authority will only have advocacy role
which is a narrow one when it lacks jurisdiction. (Dr. Gamze Ascioglu Oz, 2002)
Although there is inference between the authorities. Competition Authorities have
some advantage over the sectoral regulator when it comes to anti-competitive conduct
and ensuring it, while mergers on the one hand do not undo the benefits from
introducing more competition into the respective sectors. And the sectoral regulators
have, advantages relating to, securing and analysing cost data which is required for
economic regulation, which will favour the regulator in performing regulatory
function in their respective sectors. (Mr. Gary Hewitt, 1998)
European Commission that enforces EU competition policy and also develops sector
regulation at EU level, is one of the commission strength. It also helps and ensures
that competition policy and its objectives are taken up with serious consideration for
development of sector regulation. (Joaquin Almunia, 2010)
There is a drastic difference between both the regulators in approach adopted. Under
specific regulation, a special course of action is determined for firms, while in
competition issues, firms are informed as to what all are prohibited. (Meltem Bagis
Akkaya, 2014)
7
The establishment of competition authority has raised questions and concerns about
the relationship between the sectoral regulators and competition authorities. In India,
the relationship is somewhat ambiguous. And the practice in other countries has been
to recognise these problems and derive a variety of solutions for them (T.C.A Anant,
S. Sundar, 2005)
The greatest threat to telecom sector in telecommunication sector is the issues caused
in the market due to rules, regulation and policies of the government. Which are
basically set by different government agencies, there is lack of coordination between
TRAI and CCI which could lead to a situation of “forum shopping” in these agencies.
Thus, people might reach out to the forum which provide adequate kind of relief.
(Mahesh Uppal, 2009)
1.4 STATEMENT OF PROBLEM
The sector regulators and Competition Authorities have been set up to deal with
competition issues which include anti-competitive agreements and abuse of
dominance with the sole object of consumer welfare. This creates an issue among the
regulator as to who’s verdict will prevail when it comes to competition Related issues.
There has been a lot of cases where such issues have been dealt with the higher courts
in India relating to electricity, telecom sectors. Where defendant have always
questioned the jurisdiction of the competition commission on particular issues.
This particular research will dwell upon cases of overlapping of jurisdiction of the
regulators with explaining the role of sectoral regulator main focus would be on the
infrastructure issues.
8
1.5 OBJECTIVES
The aim of this dissertation is to bring into notice the functioning of jurisdictional
issues and how judiciary has dealt with the issues with international experiences as to
how other countries have dealt with the issues
To highlight the regulatory framework in India and inception of competition
authority.
To examine the cases related to regulatory overlap and international experiences
around the globe.
To study competition issues in infrastructure sector and regulatory overlap
between the regulator.
1.6 HYPOTHESES
1.6.1 Cooperation and Coordination is best form of solution to resolve, Interface
Between Sectoral Regulation and Competition Law in a country like India.
1.6.2 Overleaping existed due to legislative framework which resulted in forum
shopping by enterprises.
1.7 SIGNIFICANCE OF STUDY
The significance of this study is to determine the whether these competition
authorities which are a by-product of the competition act, 2002 in India have
Jurisdiction to try competition related issues irrespective of the industry and sectoral
regulators mandate. Although the legislation of few sector does provide competition
mandate for the regulators to try cases relating to competition, which may lead to an
overlapping situation, the study will aim at proving that across the globe competition
authorities are the best possible forum for implementation of competition law policy.
There are different approaches adopted by other matured jurisdiction to resolve the
conflict between the regulators. The research will help determine that cooperation and
coordination is the best possible solution to the conflicting issues irrespective of the
mandates adopted by other countries.
9
1.8 DATA COLLECTION TOOLS
Books
Case laws
Articles
Statues
Report
E resources
1.9 RESEARCH METHOLOGY
In accordance with the objectives of the present study, a doctrinal method has been
adopted to examine and explain the problem undertaken. The design has been used to
study secondary sources such as Acts, Reports, Notifications, Rules; Judgments etc.
which will help in determine the powers and functions of both the competition
authorities and how the powers granted to both regulators are conflicting at times, thus
helping in forum shopping. Sources such as books, journals and articles of various
mature jurisdictions in competition laws which can pave way for determining a better
and efficient way to handle procedural issues at hands of competition authorities in
India are also looked into briefly. They have also been used to get a comparative
analysis of functioning of competition authorities worldwide.
The doctrinal design has been used to attain desired results of the study. The
collection of case orders and judgements from the inception of the Competition Act,
2002 which the CCI and other courts dealt with, with regard to overlapping between
the competition authorities and sectoral regulators. The collection of data is mostly
done by the official websites of both the competition authorities and sectoral regulator
in infrastructure sector. The data analysis is processed in tabulation and pie chart with
help of statistics in this sector.
10
1.10 SCHEME OF RESEARCH
The present study is divided into 7 chapters
Chapter 1, INTRODUCTION, introduces the topic and explains the economic
structure and requirement of competition authority and sectoral regulators. This
chapter also tries to explain, Both the agencies have common goal to foster economic
growth and consumer welfare but there may be a distinction between the legislative
mandate and perspective regarding competition issues.
Chapter 2, REGULATORY FRAMEWORK IN INDIA, deals with the regulatory
framework in India, while explaining the need and necessity for regulatory agencies.
Also, explaining the regulatory failures in India and inception of competition law in
India. This chapter also tries to give a brief overview on the regulatory conflicts
between different sectoral regulators in India and the competition authority.
Chapter 3, EXPERIENCES OF OVERLAPPING CONFLICT IN INDIA,
basically talks about the experiences of overlapping situation in India and the areas of
conflict between the authorities. And focuses on different case laws relating on this
issues in India.
Chapter 4, COMPETITION ISSUES IN INFRASTRUCTURE SECTOR, is
divided into two parts and focuses on competition issues in infrastructure sector, i.e.
telecommunication and electricity sector and talks about the framework of the
regulators in details. Factors that involve market share in telecom sector with market
share in wired and wireless technologies. Further this chapter talks in detail about
competition issues in both telecom and energy sector with main focus on sectoral
conflict.
Chapter 5, INTERNATIONAL EXPERIENCES, mainly focus on international
experiences in different jurisdiction while dealing with this sectoral conflict and
mentions about few landmark cases in process. Countries like South Africa, Australia,
South Korea, Spain, Netherlands have been discussed in this chapter with focus on
telecom and electricity sector.
11
Chapter 6, A LESSON FOR INDIA- THE WAY FORWARD, mainly focuses on
the way forward, as to which method is between to reduce the conflict between the
regulators by providing different solutions to the problem
Chapter 7, CONCLUSION & RECOMMENDATIONS, concludes the work and
focuses on recommendations and suggestions given by the researcher
12
CHAPTER 2
REGULATORY FARMEWORK IN INDIA
2.1 INTRODUCTION
The interface between sector regulators (specific) with the competition law and
competition authorities in a country like India has always been a matter of debate7.
The Indian economy has witnessed a massive growth rate in the immediate past. The
increased development rate has helped millions of people “up” from poverty level but
at the same time has led to many different challenges. India has seen several economic
scandals during this economic development. A Significant feature here has been
growth of regulatory authorities for resolving important issues and keeping a check as
a watchdog in their specific sector market8. And with this establishment of different
regulatory authorities coming up simultaneously, it was very evident that there might
be having overlapping jurisdictions.
2.2 NEED AND NECCESITY OF REGULATORS.
After reforming of the market, sector regulators were installed keep a check on
failures and distortions in their particular sector (market). One of the mandates given
to the sector regulator was to promote fair competition in their sectors. The need for
regulation of competition in the whole economy, however made the policy makers to
enact competition laws with the competition authorities being given the mandate to
regulate competition in all sector of economy.
Regulations in general terms can be said to be influencing the flow of events. It
consists of rules and regulations set by the government or motivation that could help
in order to manage prices with sale and entry exit by the firm9. Thus regulation may
broadly be understood as an effort by the State to address social risk, market failure of
7 Pradeep S. Mehta and Natasha Nayak, Harmonizing Regulatory Conflicts- CUTS Institute, available at
http://oldwebsite.iica.in/images/Harmonising%20Regulatory%20Conflicts.pdf, (last visited May 2017) 8 Cornelius Dube, Interface between competition law and sector regulator, CUTS CCIER, available at
http://slideplayer.com/slide/6267323/,( last visited May 2017) 9 Supra note 8
13
equity concerns, universal service obligation for promoting equity by a process
through direction of rule based system which could be said like an individual action
and social action in the process.
The two core regulatory objectives are the setting of minimum tariffs, making
accessibility of service at affordable price to all the sections of the society, especially
the weak and vulnerable sections and enforcing the minimum service standards. Thus
the objective of regulation is twofold: to deal with market failures and prevent 'unfair
competition' or equivalently to ensure 'fair competition'10
.Economic regulation used
by the states in order to attain consumer protection with maintaining health and safety
standards.
There may be many such explanations as to why this economic regulation has
emerged in India with the process of liberalisation. Remarkable and important reasons
for this economic regulation basically spin around certain aspects of the remediation
of failure of information, with abuse of market power by an enterprise and with regard
to externalities and its correction11
.
At the outset, it may be mentioned that the following key sectoral regulators are in
place governing the regulatory landscape of the respective sectors in India:
1. Securities market – Securities & Exchange Board of India Act, 1992 (SEBI)12
.
2. Insurance market – Insurance Regulatory and Development Authority Act, 1999
(IRDA)13
.
3. Petroleum sector – The Petroleum and Natural Gas Regulatory Board, 2006
(PNGRB)14
.
4. Telecom sector – Telecom Regulatory Authority of India Act, 1997 (TRAI)15
.
5. Electricity sector – Electricity Act, 200316
.
10
T.C.A. Anant & S.Sundar, Interface between Regulation and Competition Law, p.no, 82 (CUTS Jaipur, 2005) 11
Karn Gupta, Sectoral Regulation & CCI: Conflict or Complement, CCI, available at http://www.cci.gov.in/sites/default/files/speeches/interface.pdf?download=1 (last visited May 2017) 12
Securities & Exchange Board of India Act, 1992 (Act-15 of 1992) 13
Insurance Regulatory and Development Authority Act, 1999 (Act-41 of 1999) 14
The Petroleum and Natural Gas Regulatory Board, 2006 (Act-19 of 2006) 15
Telecom Regulatory Authority of India Act, 1997 (Act 24 of 1997)
14
In few cases, the establishment of regulatory authorities took place after the players in
the economy had started operations on a large scale. Where, the telecom regulator, the
Telecom Regulatory Authority of India (TRAI)17
, was set up in 1997 only after mobile
services were active for past 2 years
In the case of “Monnet Sugar Limited v. Union of India”18
the Allahabad High court
dealt with Industrial Development and Regulation act, 1951 which prior to the prices
of liberalisation was the authority to grant license and permit the control. Similarly,
when government felt that department of telecom cannot be regulated in the telecom
sector the same was replaced by the department of telecom with the telecom
regulatory authority of India.
INSTRUMENTS OF REGULATIONS
Regulators in today’s world have tremendous powers to implement. They now have
power to determine the entry, for example in case of chartered accountant, lawyers
and doctors. In these professional cases the professional body regulates the
qualification process.
The centre or state commission has the power to issue licences in electricity sector for
transmission, distribution or trade in electricity. These regulators have the power to
influence the conduct through standards and norms as well as through direction of
prices and use of technology. Different regulators have different mix of powers which
is allowed to them by the legislation itself, thus in case of telecom sector licensing
conditions is a prerogative of the Government and in case of electricity the power lies
with the regulator itself.
2.3 REGULATORY FAILURE
16
Electricity Act, 2003 (Act 36 of 2003) 17
Setup by the act of 1997 18
Monnet Sugar Limited V. Union of India AIR (2006 All 200)
15
Despite positives, sectoral regulators have been criticised on a number of grounds and
these can be summarised as:
Narrow Technical Focus- The technical and skill requirement of regulation imply that
regulators are drawn from the industry they seek to regulate19
. This, at times, implies
that they approach issues from their technical standpoint rather than the effect on
social welfare. A related concern is on, regulatory capture.
Regulatory Capture- the close proximity of regulator to the industry being regulated,
leads it to give higher value to industries requirement rather than those of consumers
or market welfare. Furthermore, regulators who are dependent on the industry, to
provide them with skills and personnel are more valuable to capture20
.
A consequence, of both these types of concerns, is that the regulator may not
adequately take account of the requirements of efficiency and welfare. In addition to
the limitation of a single regulator, the presence of multiple regulators, in closely
related fields, leads to concerns arising out of regulatory overlaps.
Technological changes/overlap- Telecom, cable, TV, internet service is increasingly
seen as areas where the interests of different providers are in conflict. The potential
conflict increases once it was realised, that optic fibre cable laid by the railways and
electricity companies, also offer potential sources of competition21
. A similar
convergence is seen in the financial sectors with converging interest of banks,
insurance companies and stock market players. In spite of this convergence in the
financial sector we see capital market and insurance activities that were once regulated
by the ministry of finance, are now with SEBI and IRDA. Most banks and
development financial institutions are regulated by RBI. The department of company
affairs (DCA) regulates deposit taking activities of corporate entities, other than bank
and non-financial companies.
Regulators have different objectives and are bound by it, this could be a troublesome
issue where for example- RBI is concerned more with systematic stability and SEBI
concerns investor protection and information disclosure22
. This could be a problem
19
TCA Anant & S. Sundar, Towards a Functional Competition Policy for India, Interface Between
Regulation and Competition law, p.no 85, (Academic Foundation, 2005) 20
Id. 21
Id. 22
Supra note 11
16
and could result in conflict. Regulators have different powers of enforcement and to
punish, thus in overlapping jurisdiction this could also be a cause of concern.
Another issue is that different regulators have different objectives depending on the
maturity of the market. For example, insurance regulator(IRDA) has objective to
develop insurance market. Similarly, to increase the tele density is objective of TRAI.
The market objective at times requires the regulator to allow regulated firms, to make
larger profit on existing operations to enable them to meet cost of market
development.
Regulation is often perceived to be gratis, available at no cost, but the reality is
different. There is certain administrative cost involved and also structural cost
involved, where inefficient regulation may lead to a situation where competition may
stifle efficiency23
. This may also lead us to another important question as to what is
the appropriate domain for regulatory intervention and to what extent can we leave
matters to the free play of market forces.
2.4 INCEPTION OF COMPETITION LAW IN INDIA
The competition act of 2002 is highly influenced from the constitution of India. The
Indian Constitution includes directive principles (DPSP) under part 4, which guide the
policymaking of the state and also incorporates the concept that the economy of the
country should function in a manner that, there should be no concentration of wealth
by few players24
. The constitution mandate also clearly favours the common good of
the society as well.
The U.S. Antitrust Model25
and the European Union Competition law26
are one of the
oldest competition law in the world which have influenced other competition law
regime round the globe. Until 1975 it assumed that their existed two different models
of competition law but as early as 1969 India had its own sui generis model, the
MRTP act. However, after the liberalisation in 1991 MRTP act was found inadequate
to address the needs of the globalised economy as it concluded “BIG” is bad. Hence
the government of India opted for modern competition law that would help enhance
23
Id. 24
The Constitution of India, Article 39(c) 25
The Sherman Antitrust Act, 1890 26
TFEU (Treaty on the Functioning of the European Union), 2012/C 326/01
17
the consumer welfare through sustaining competition in the market. The new
competition was based on basic three modules which the other countries have been
following there were
Anti-Competitive Agreements
Abuse of Dominance
Combination
Competition Act was enacted in 2002 but came into existence only in 2009 due to
administrative issues brought about in the Brahm Dutt27
case and the sail28
judgement
also established the Competition Appellate Tribunal, thus the appeal from
Competition Commission of India lies to the COMPAT and then to the Supreme
Court.
27
Brahm Dutt v. Union of India (AIR 2005 SC 730) 28
Competition Commission of India v. SAIL, [(2010) 10SCC 744]
18
2.5 COMPETITION LAW AND SECTOR REGULATORS
2.5.1 Securities Market
SEBI is one of the oldest regulator in the securities market and was set up on the cusp
of market reforms in India29
. SEBI has been entrusted with dual task of protecting
investor’s interest and developing the securities market with the authority to regulate
unfair and fraudulent trade practices30
. SEBI also oversees mergers in this sector. But
the need of SEBI in dealing with the trade practices as mentioned before can be done
away with the coming into being of the CCI31
. There is a technical aspect that can be
highlighted in the present part of the essay. So, many firms, brokers, sub broker,
underwriters, etc. are involved in the activities of SEBI that there can often be a
justification to the numerous rules and regulations on the statute book when it comes
to operation and enforcement of SEBI matters32
. But competition regulation is also a
technical job and it should not be left to the mandate of a sector specific body which,
may fail to appreciate the nuances of overall economic development of the country.
2.5.2 Insurance sector
The insurance sector has a very important role to play in the economic development of
the country. It is only when the people of a country are socially secure that they would
be able to work in a better manner for economic development. After having a look at
section 14(2) of IRDA Act, it becomes clear that IRDA does not delve too much into
competition regulation. This could act as a breather for the CCI but then again there
are the IRDA (Scheme of Amalgamation and Transfer of General Insurance Business)
Regulations 2011 which provide for powers to IRDA in dealing with or to regulate
combinations in the insurance sector which is also subject to the scrutiny of CCI33
.
But this authority is in direct conflict with sections 5 and 6 of the Competition Act,
2002. There is apparent overlapping and duplicity of efforts in providing for legal
29
Securities and Exchange board of India Act, 1992 30
Brought about from section 12A of the act 31
Supra note 5 32
Id. 33
IRDA Regulations available at www.irda.gov.in (visited May 2017)
19
regulation of the same nature at two different forums. Therefore, as per the mandate of
the CCI contained in terms of sections 5 and 6 of the Competition Act, 2002, the CCI
is the appropriate body to deal with issues related to combinations and regulation of
combinations of any nature.
2.5.3 Petroleum sector:
The preamble to the PNGRB Act, 2006, also talks about promoting competition in the
market. This clearly indicates that the mandate of the CCI is sought to be transferred
by way of the very preamble itself. Therefore, it could be stated that, the task of
promoting and sustaining competitive markets should be left to the CCI itself under
the aegis of the Competition Act, 2002. Section 11(a) of the PNGRB Act mentions
that the Board established under the Act also has shown the duty to protect the
interests of consumers by encouraging fair trade and competition amongst the
entities34
. This is very typical, as there is again sought to be created duplicity of efforts
and more importantly duplicity of mandate in the Indian regulatory sector. The
PNGRB act does not have any overriding non-obstante provision.
2.5.4 Telecom sector:
The telecom sector saw the pangs of regulation with the coming into force of the
Telecom Regulatory Authority of India Act, 1997. Chapter III of the TRAI Act, 1997,
states the powers and functions of the authority (ie: TRAI) under the TRAI Act,
1997.35
A look at the functions of the TRAI indicates that even though it has been
given the powers to promote competition and to prevent it from unfairness wherever
possible, it does not have an overriding effect on the powers of the CCI established
under the Competition Act, 2002. There have been few cases of conflicting
jurisdiction between TRAI and CCI but were settled by the judicial process.
2.5.5 Electricity Sector:
34
Supra at 33 35
Section 18 of TRAI Act, 1997
20
Preamble of the Electricity Act talks about promoting competition in electricity sector.
State and Central commission were set up to regulate electricity sector and were
empowered to regulate-production, supply, consumption as well as promote
competition. The commission is also empowered to regulate distribution of electricity
while preventing enterprises or companies to abuse their dominant position. The
legislation itself directs the regulator to promote competition and maintain efficiency.
The result is also to advise government agencies on certain measure to promote and
increase competition in this sector.36
The Electricity Act, 2003, is the consolidated piece of law governing the electricity
sector in India. Under the Act, the regulator has been conferred powers to deal with
anti-competitive agreements, abuse of dominant position and combinations pertaining
to the electricity sector37
. This might prove to be overlapping of functions and efforts
by both CCI and the regulator
It could be said competition regulator and its power are somewhat in ambiguity with
regard to sectoral regulators. The mandate itself provides that sectoral regulators to
play a role in competition issues, which may create a risk of creating overlapping of
powers and also creating gaps in functioning
Table 1.1 shows the position of the regulators competition clause in the legislative
36
Section 173 of the electricity act which says “the provisions of this Act shall have effect
notwithstanding anything inconsistent therewith contained in any other law for the time being in forceor
in any instrument having effect by virtue of any law other than this Act”. 37
Section 60, Electricity act (no. 36 of 2003)
21
TABLE 1.1: NON OBSTANT POWER, DUTY TO AID, COMPETITION CLAUSES
“REGULATOR”
“NON
OBSTANTE
CLAUSE”
“AFFIRMATIVE
DUTY TO AID”
“COMPETETION
CLAUSE”
“Petroleum” “No” “No” “Yes”
“Electricity” “Yes” “Yes” “Yes”
“Insurance” “No” “No” “No”
“Telecom” “No” “Limited” “Yes”
“Securities” “No” “Yes” “No”
22
CHAPTER 3
EXPERIENCES OF REGULATORY OVERLAP IN INDIA
3.1 INTRODUCTION
The competition Act of 2002 replaced MRPT38
Act in India after the MRPT failed to
resolve the competition related issues following liberalisation in India. The preamble39
of the competition act 2002 as well as section 60 of the act mentions that, “an
overriding effect on the provisions of the act in times of conflict clearly give powers
to the competition agency appointed under the Act to prevent having appreciable
adverse effects on the competition”, and also to “promote competition in markets, to
protect interest of consumers and to ensure freedom of trade in India40
”
Section 18 of the Competition Act, 2002 states that: -
“It shall be the duty of the Competition Commission of India to eliminate practices
having adverse effect on competition, promote and sustain competition41
, protect the
interests of consumers and ensure freedom of trade carried on by other participants,
in markets in India”.
The essence of conflict between the regulators and competition authorities in India lies
on four sections, i.e. Section 18, 21, 21A, 60, 62 of the act. Section 62 declares that
competition legislation should work along with other enactments. And section 21 of
the act talks about a suggestion that the authority may on its discretion make a
reference to competition authority for any matter, but the problem exists is that the
same is not binding in nature. Under section 21A it goes the other way around where
the reference is made by the commission to the regulators for an issue that is raised by
a party that decision made by the commission is contrary to any provision of the
competition act whose implementation his entrusted to a statutory authority.
38
The Monopolies and restrictive Trade Practices Act, 1969 39
The preamble of Competition Act, 2002 read “An Act to provide keeping in view of the economic
development, for establishment of commission to prevent practices having adverse effect on
competition, to prevent practices having adverse effect on competition in market, to protect the interest
of consumer to ensure freedom of trade carried by other participants” 40
Pradeep S. Mehta and Natasha Nayak, Harmonising Regulatory Conflicts, available at
http://oldwebsite.iica.in/images/Harmonising%20Regulatory%20Conflicts.pdf, (visited May 2017) 41
Section 18, Competition Act (12 Of 2003)
23
TA
BL
E
1.2
3.2
AR
EA
S
OF
OV
ER
LA
PP
IN
G
CO
NF
LI
CT
Net
wor
k industries, basically which involves network farcicalities, are sometimes reviewed as
essential facilities, and are the most common industries where both sectoral regulator
and competition authority interact.42
Issues related to abuse or misuse of dominant
position by an enterprise brings on added responsibility on the competition authorities 42
Supra at 40
“SPECIFIC REGULATOR” “COMPETITION AUTHORITY”
Tells business “what to do” and
“how to price products”
“It Tells business “what not to do”
““Focuses upon specific sectors of
the economy.””
“Focuses upon the entire economy
and functioning of the market.”
“Ex ante- addresses behavioural
issues before problem arises”
“Ex post- address behavioural issues
after problem arises. Except in
mergers”
“Focus upon orderly development of
a sector that would presumably
trickle down in a sector ensuring
consumer welfare.”
Focus upon consumer welfare and
unfair transfer of wealth from
consumers to firms with the market
power.
“Sectoral regulations are usually
more appropriate for access and
price issues such as changing the
structure of the market, reducing
barriers to entry and opening up the
market to effective competition.”
“Competition legislation is usually
more appropriate for affecting
conduct and maintaining
competition.”
24
in relation to access to facilities that are termed as essential in network industries. In
case of telecom, electricity and railways sectors there still remains natural monopoly
hence a case of “access” which is non-discriminatory and which encourages new
entrant, that becomes an important issue if there has to be competition in these sectors.
FRAND terms which were formed to provide a competitor, a networking system on a
fair and non-discriminatory terms which are reasonable, where refusal of these terms
could also be an unlawful activity. This could lead to a potential overlapping of
regulators
Overlapping issues and jurisdictions concerns basically arise in the following areas:
Conditions on Licensing- Conditions set on the licenses and the figures of licences
issues will have an increasing impact which may intensify the competition.
Dominance in Market- The assessment of dominance by an enterprise and the
market defined by the sectoral regulator in a particular issue as to ascertain which
operators should be offering interconnection services and the competition
authorities that help in establishing the abuse of dominant position.43
Pricing- Matters relating to pricing by some competition authorities around the
world could also interfere with the working of the regulators as they are also
enhanced with the power to determine the pricing policy or monopoly pricing by
an enterprise.
Business Practices Restricting Competition- A monopoly enterprise that is
vertically integrated does not have competitors cannot enter into any agreements
with others and would also behave in a manner that may stifle competition in the
market for the services44
.
Merger Control- Certain industry specific regulators have provided for restrictions
on mergers between firms, and have put certain restriction on reintegration. A new
system where common ownership of transmission or generation with distribution
of electricity is restricted under new unbundled regulations of sectoral regulators.
43
Id. 44
Supra at 36
25
3.3 CASES OF OVERLAPPING IN INDIA
ERICSSON CASE 45
Ericsson a sole licensor in mobile technology that concerns the GSM module, was
alleged to have been demanding of unfair and exuberant royalty relating to standard
essential patents (SEPs). The main argument put upon by the company was that the
matter at no scenarios relates to CCI and its governance but the IP Authority Board
which could lead to a conflicting decision on similar issues between the CCI and IP
Board.
JCB v. CCI46
The JCB/ Bull Machines case relates to a civil matter which was filed by a
construction equipment manufacturer JCB against another construction equipment
manufacturer Bull machines where JCB alleged Bull machines for infringing its
Intellectual Property Rights. The proceedings were carried out by the Delhi High
Court but on the other hand JCB filled an information before CCI that JCB denied
market access.
DLF Case47
In 2006, DLF launched a project “Belaire”, a premium development project in
Gurgaon. The developer was to deliver the possession in three years i.e. in 2009,
however it did not happen and the project got delayed. The developer meanwhile,
arbitrarily increased the number of floors from 19 to 29. Further the agreement had
several clauses that empowered DLF to make changes without taking buyers consent.
The company also accepted bookings without getting all approvals in place48
.
CCI slapped a penalty of Rs. 630cr for its abuse of dominant position and imposing
unfair conditions on the flat buyers
45
Ericsson v. CCI Case 04 of 2015 46
JCB v. CCI W.P. (c)No. 2244/2014 47
Belaire Owner’s Association v. DLF Limited Case 19 of 2010 48
Cuts Case Study 08, September 2013(available at http://circ.in/pdf/Case_Study_08.pdf) (Revisited on 11-12-2016)
26
DLF in its defence mentioned that the concerned dispute is contractual in nature and
CCI is not the concerned authority for such disputes, DLF also mentioned that State
and National Consumer Courts are the appropriate forums for such disputes and there
is no competition concern in the case.
DDA v CCI49
The DG in this case was directed by CCI to look into the practise of DDA which were
alleged to be infringing competition law, DDA on this approached Delhi High court
mentioning that CCI must decide jurisdiction before proceeding on with the case.
Neeraj Malhotra Case50
The Electricity Distribution companies were alleged to be indulging in anti-
competitive behaviour and there was a confusion regarding the jurisdiction relating to
competition issues. The companies in this case argued before the Competition
Commission that Delhi Electricity Regulatory Commission (DERC) under the
Electricity Act has the authority to deal with competition related issues in this specific
sector. However, DISCOMS stated that CCI has taken competition related issues
exclusively in its hands, but DERC stated in its communication that matters must be
decided according to the provisions of the electricity act and DERC regulations and
matters concerning the anti-competitive behaviour falls within the ambit of CCI.
TATA SKY CASE51
One of the parties to this case “DISH TV” submitted before the commission that the
CCI is not the appropriate body that has the jurisdiction related to this matter ad TRAI
and TDSAT were already vested with the powers where “jurisdiction and
responsibility to govern and regulate the telecom industry covering telecom,
broadcasting and cable TV services” but CCI held that the case falls under the
purview of competition act of 2002 which enables the commission to have the
jurisdiction the case.
MERGER CONTROL.
49
Delhi Development Authority v. Competition Commission of India W.P (c) No 6892/2014 50
Neeraj Malhotra v. North delhi Power Limited, BSES Yamina, Rajdhani Power, Case No 6 of 2009 51
Consumer Online Foundation v. TATA Sky Limited & Ors. Case No 2 of 2009
27
In the case of banking sector, its regulator RBI has stated that the sector should be
exempted from the jurisdiction of CCI, in the case of merger and acquisition matter as
the interference would only cause delay in the process. RBI in its defence stated that it
has the expertise to deal with the matters related to this. To this parliament passed
amendment bill to exclude CCI from playing role in merger in banking sector
RESTRICTIVE BUSINESS PRACTICES
Reliance Industries in a case filed an information before the CCI and alleged oil
companies like Indian Oil, Bharat Petroleum and Hindustan Petroleum engaging in a
cartel for the supply of aviation fuel for Air India after losing a bid from its rivals.
The three companies went to Delhi High Court and challenged the jurisdiction of CCI
to hear the case and claimed that the matter concerns the Petroleum and Natural Gas
Regulatory Board. The high court passed and interim order that CCI did not have any
jurisdiction.
CHAPTER 4
COMPETITION ISSUES IN INFRASTRUCTURE
SECTOR
28
4.1 TELECOM SECTOR VIS-À-VIS COMPETITION LAW
4.1.1 INTRODUCTION
Telecommunication industry and its growth in India has been tremendous with
evolving competition regime52
. Cheaper technologies which are being adopted here
could be a major factor to this achievement and ever-growing consumer base in India
with increasing number of population in the country. With 17 million subscriber’s
additions, every year and its contribution being at least 2% of the GDP in India, this
industry is considered one of the largest telecom markets in the world. The
telecommunication industry is basically driven by wireless communication, which is
considered a key element for socio economic development of the country.
There lies a difference in approach by TRAI and CCI for regulation, CCI on one hand
tells the enterprises as “what not to do” for a fair competition in the market where as
on the other hand TRAI informs the service providers as “what all to do “both the
regulators thus work in tandem as their main objective is consumer welfare53
As mentioned in the above chapters, Section 18 of the competition act talks about
eliminating practices having adverse effect on the competition. TRAI Act also has the
power under the act54
to promote efficiency and help create an environment where
there is fair competition, which is also the object of the act
OVERVIEW OF THE INDUSTRY
Telecom sector is considered as 2nd
largest wireless network in the world only after
China. In early 1990s this sector was dominated by Department of
Telecommunications, the government operator. As for the current situation in the
country there are many private players in the market with some government players
that compete in a very competitive manner. The overall Tele-density in India
52
Rahul Singh, “The Teeter- Totter of Regulation and Competition”, Washington Global Studies Law Review. (71.2009). available at http://openscholarship.wustl.edu/law_globalstudies/vol8/iss1/3/ (visited May 2017) 53
Samir R Gandhi- “CCI and TRAI regulating harmony”, available at https://nujssitc.wordpress.com/2013/11/06/interface-between-the-jurisdiction-of-the-competition-commission-of-india-cci-and-the-telecom-regulatory-authority-of-india-trai/ (visited May 2017) 54
Section 11(1) of TRAI Act (24 of 1997)
29
increased from 82.54 at the end of Aug-16 to 84.09 at the end of Sep-16.55
According
to TRAI, India had 19 million active mobile connection in December 201656
. Overall
at least 7 million subscribers have been added per month for past six months after the
launch of Reliance Jio network in India57
. This has helped a lot of foreign direct
investments being made in this sector.
The fundamental Approach by TRAI and CCI may become a problem sometimes
where for example tariffs fixation is done by TRAI among the competitors and may
also reject or accept merger between the competitors, this can be viewed differently by
the competition authorities.58
Competition authority and regulators roles could also be complimentary at times
however there may be interference between the two and could be an origin of
problematic tension. While ex ante problems are dealt with the specific regulator
where it creates a system to address the issues before the problem arises, while on the
other hand competition authority and law deals with ex post problems in case of abuse
of dominance and anti-competitive agreements.
Before 1984, Telecom sector in India was ruled by monopoly regime I.e. one single
player until there was a massive structural change after the establishment of regulatory
mechanism. By 1980 there was privatisation in this sector and corporatization in two
metro cities- Delhi and Mumbai with full government powers. The initiatives after
1990 gave the major transformation change from monopoly to competition where de-
regulation of sub sector in 1992 and National Telecom Policy 1994 (NTP94),
1999(NTP99)59
. The Telecom Regulatory Authority of India (TRAI) was established
by the act of Telecom Regulatory Authority of India Act 1997 to regulate services
relating to telecom sector and price fixation of telecom services which were earlier
with Government of India. In the year 2000 the adjudicatory and disputes functions of
TRAI was taken over by Telecommunication Dispute Settlement and Appellate
Tribunal (TDSAT)
55
TRAI Press Note on Telecom Subscription in India (117/2016) (http://www.trai.gov.in/sites/default/files/PR_No_117_Eng_09_Dec_2016_0.pdf 56
Active mobile connections in India up by 19M in December 2016: TRAI By MediaNama on February 21, 2017 57
Id. 58
Supra note 53 59
Subhashish gupta “competition policy in telecommunication in India”2007, Unpublished Work for CCI
30
4.1.2 FRAMEWORK
Department of Telecom which has the power to provide licenses. TRAI, which is the
regulator and TDSAT which works as the judicial body to this sector. Ministry of
Communication and Information Technology under whom Department of Telecom
works.
The DOT formulates the policies related to development of telecom services in India
and is also responsible for granting of licenses for services including VSAT and UAS
services. The DOT has the following divisions that carry out these task
Wireless Planning Coordination Wing(WPC)- this authority is responsible for
frequency spectrum management which includes licensing’s needs of the users in
the country
Telecom Engineering Centre (TEC)- this body has the authority and responsibility
to set standard in regards to equipment, services and also provide technical support
to these authorities.
Centre For Development of Telematics (C-DoT)- is a body which works under
DoT and performs Research and Development Process
PSUs- BSNL, MTNL and TCIL are controlled by DoT
Telecom Enforcement Resource and Monitoring Cells (TERM)- is the vigilance
department which manages any illegal operations in the country. This also
performs verifications and also is the grievance redressal of subscribers.
In 1989, The telecom commission was set up by Government of India with
administrative powers and financial powers to deal with various issues of Telecom
Sector. This commission is mainly concerned with issues related to policy structuring,
licencing, spectrum, monitoring with research and development. TRAI was set up in
1997 as one of the regulator which was independent regulating the telecom sector in
India. Its main mandate is to provide an effective regulatory framework and
safeguards to ensure fair competition and protection of consumer.60
The other motive
of TRAI is to ensure conditions for growth of communication sector in India so that it
60
Preamble to TRAI Act (24 of 1997)
31
can play important role in the GDP and world telecom society. Another important
function of TRAI is to provide fair policy environment that would encourage
competition that is fair. Other powers and functions of TRAI includes dispute
settlement between service providers and giving advice to government at the centre
relating to important issues in telecom sector.61
TDSAT was set up in year 2000, by Government of India to adjudicate disputes that
arise in the telecom sector with a view to protect consumer interest and service
providers, also to encourage the growth of the sector. It can adjudicate disputes that
arise between two or more service providers, consumers and service providers etc.
4.1.3 IMPACT OF REGULATION ON TELECOM SECTOR
The regulatory framework of this industry has provided stability and strength to
telecom sector, it might be too early to access the full impact as these regulators have
some experiences. Few impacts on telecom industry are:
Affordable rates were recognised as a medium for growth in this industry as there
is immense competition in the market. It has also allowed a flexibility in the tariff
module of the service providers and transparency to various services by setting up
of Telecommunication Tariff order (TTO).62
Telecom regulators have also issued certain guidelines on Quality of services
(QOS)63
provided by the service providers with different parameters that are being
set for both wireless and wired network in the country. This is divided into 4 major
categories, network performance of the service providers, customer helplines, any
issues relating to bill.64
It has also taken up steps in consumer welfare as service provider have to furnish
details of tariff plans they are offering to the customers when they enrol, with a
credit limit set for post-paid customer
61
Shruti Jane Eusebius,Seminar on role of Courts and Regulators, 4 Feb 2016, National Judicial Academy, retrieved from http://www.nja.nic.in/Concluded_Programes_2015-16/P-969%20Programme%20Report.pdf, (visited May 2017) 62
Payal Malik & Avirup Bose, “So many Regulators”, Indian Express, July 30 2014 63
Sarthak behera, Competition law and telecom sector, NUALS, ACADEMIKE (ISSN: 2349-9796) 64
Supra note 61
32
Another step involves licensing of the services. The act has empowered TRAI to
recommend and Suo moto after introduction of services65
. These have been pro-
competitive in nature thus have bought a positive impact on the VSAT operations,
ISP licensing, Infrastructure share ring policy and modules.
TDSAT has also impacted the sector in a positive way and it has brought a stability in
the market by resolving issues relating to telecom sector effectively66
. It has also
provided consumers a chance of fair dealing, with also helping in decision of the
regulator that enable a character of corporate governance in this sector. Already
TDSAT has resolved issues related to jurisdiction, licensing, competition, consumer
interest and spectrum allocation which have helped in growth and stability of the
telecom sector67
.
MARKET SHARE IN TELECOM SECTOR
With the entry of new players like Reliance Jio and Merger of Few service providers
like Vodafone and Idea, market has matured a bit as compared to 5 years back, but
also has become very competitive these days. According to TRAI report68
Bharti
Airtel had the largest share in wireless subscriber base with 23.95%, followed by
Vodafone 18.44%, Idea 17.07%, BSNL 8.71 % and Reliance JIo with 4.27% thus
giving a figure where Private players hold 90.96% and PSU with 9.04%
respectively69
.
65
Id. 66
Supra note 25 67
Hemant Singh and Radha naruka, Telecom regulatory authority of India and competition commission of India, Unpublished Thesis, National Law University, Jodhpur 68
TRAI, Press Release NO. 9/2017 Dated 1st
Feb 2017, available at http://www.trai.gov.in/sites/default/files/PR_No.9of2017.pdf (visited May 2017) 69
Supra note 68
33
(TABLE 1.3 MARKET SHARE WIRELESS)
(TRAI REPORT 9/2017)
When it Comes to wireline subscriber’s, things changed drastically where both PSU,
BSNL and MTNL holds a joint share of 70.66% followed by Bharti Airtel 15.64%.
where we see, private players have only 29.34% market share70
. We can clearly see
lack of competition in this market.
The wireless segment includes GSM and CDMA networks in the country, which is
much more as compared to the wireline connection in India
70
Trai press report 9/2017
34
(TABLE 1.4 MARKET SHARE IN WIRED CONNECTION)
(TRAI PRESS RELEASE 2017)
4.1.4 MARKET STRUCTURE AND COMPETITON IN TELECOM
INDUSTRY
Market structure in Telecom industry basically revolves around tele density, wireless
network, wireline network and internet services
Tele density refers to number of telephones connected per hundred people in an area.
According to press release by TRAI in February 201771
the overall tele-density in the
country is 85.90 when it comes to wireless networks with a share of 58.01% of urban
subscribers and 41.93% share of rural subscribers. Things change in wireline network
which has 1.91 overall tele-density thus giving us a figure of total density of about
87.81%
71
Supra Note 32
35
(TABLE 1.5 TELE DENISTY)
Wireless
The wireless network in India is dominated by private players with a market share of
90.09% and PSU with 9.04%72
. however, this has changed only after 1999 after India
accepted a new telecom policy before which was dominated by PSU players like
MTNL and BSNL73
. Currently the biggest players are Airtel, Vodafone and Idea.
However, things may change after induction of reliance jio in the market and merger
of Vodafone – Idea and bharti airtel acquiring tikona and Telenor.
Wireline
BSNL holds the majority market share in wireline market in India with a share of
about 56.42% this is due to the infrastructure available to the company which is able
to provide services in rural and urban sector of the country74
. The private players do
not have that capital investments and are mainly focused towards urban sector where
they are able to generate more revenue.
4.1.5 FACTORS THAT INVOLVE MARKET SHARE IN
TELECOM SECTOR
72
Id. 73
Supra Note 29 74
Supra Note 30
36
Supply and Demand- there has always been a tense competition in telecom sector
since 1999 which has resulted in prompt and efficient services by the suppliers75
.
And with the low tariff war and new trend in free voice call and chargers only for
data, demand will continue to remain high in both rural and urban levels.
Barriers to entry: Investments in telecom sectors are very high thus well
established players are only able to penetrate the market and survive other factors
include license fee and ever evolving Research and development and its costs
Bargaining powers of customers and suppliers: high variety of plans and
availability of many service providers has led to a situation where customers are in
a position to bargain, whereas increasing competition in telecom sector has
reduced the bargaining powers of the suppliers76
.
Increasing Competition: reduction of tariff has somewhat hurtled the market
players after introduction of Reliance Jio, some players have moved out of the
market as they were unable to survive and some have merged to give a good
competition. Despite the liberalisation of market structure in telecom industry,
certain elements have favoured market concentration by few players like strong
network effects which has harmed consumers to choose large network companies
as compared to smaller ones. Other issues involve
i) Cost involved in creating facilities of local connection77
ii) Economies of scale and its scope with benefits of established market subscribers78
4.1.6 COMPETITION ISSUES IN TELECOM SECTOR
75
Mahesh Uppal, Towards A Functional Competition Policy for India, Competition issues in telecom sector, pg. 182 (Acedmic Foundation, 2009) 76
TRAI, Press Release NO. 9/2017 Dated 1st Feb 2017, available at http://www.trai.gov.in/sites/default/files/PR_No.9of2017.pdf 77
Id. 78
Supra Note 74
37
Copper local loop and Unbundling- BSNL and MTNL enjoys a dominant position
in wireline network with a market share of around 70% where MTNL operates in
Delhi and Mumbai, BSNL operates in rest of the country79
. These organisation use
copper local loop technology which has a wide reach in urban as well as rural
sectors. For a fair competition regime in India it becomes necessary that copper
loop must be unbundled and other telecom operates at fair prices80
.
Fibre Network Access- BSNL has laid down the largest fibre network cable
network in India in both rural and urban areas, where as private operates like
Bharti and Reliance also have constructed their fibre network but has only reached
urban area. BSNL enjoys this dominant position with respect of kilometres of fibre
cable laid down but also the areas reach, and must provide its network to other
companies at fair rates for bringing competition in high speed internet cable81
.
Carrier Selection- Till date there is facility for selecting carrier for making any
international calls82
. This may help in removing the present system where there is
product tying of local assess, this will help increase competition and help
customer’s choice by providing transparency.
Number Portability in Fixed line- there are no guild lines for implantation of
number portability system in fixed landline as compared to wireless network
which was implemented 3 years back in India and is a high success, this system
will bring a good competition in telecom sector.
VOIP in domestic segment- Voice over Internet is the latest technology in the
world, where in India regulations do not permit this IP calls in domestic market
although its allowed in international market83
. This is creating a system where
there is hindrance of competition in this market.
Conflict between regulator and CCI- this is one of the major concern of today
where and overlapping role between Competition law and sectoral regulators like
TRAI. Differences arise due to prioritisation of their respective goals by the CCI
79
Trai Press report 7/2017 80
Mahesh Uppal, Competition Issues in Telecommunication Sector, pg 184,(Academic foundation,2009) 81
Id. 82
Id. 83
Supra note 37
38
and sectoral regulators84
. Both the laws deal with competition related issues thus
might create a situation of overlapping jurisdiction
Licensing and spectrum issues- A 74% cap on FDI in telecom sector has
somewhat made industry a bit more unattractive to new entrant and investing
companies.
Predatory Pricing- “Predatory Pricing” in general term means, abuse of dominate
position by an enterprise, that sell goods or services below the cost with a view to
eliminate competitors from the market. With a view that when the competitors are
thrown out of the market the dominant player shall increase prices in order to
recoup losses.
Recently many telecom operators have made allegations against Reliance Jio for
prefatory pricing in telecom sector and TRAI has been asked to look into this matter,
on the other hand CCI has also started its investigation on this matter which does not
involve a dominant player but a new entrant in the market.
In order to establish predatory pricing, it should be proved that price is less than the
average variable cost, or average total cost is more than price and average variable
cost
Further, the dominant player must have excess capacity for this predation, there
should be barriers to entry and exit as well.
84
Hemant Sing & Rasha Naruka, Telecom Regulatory Authority of India and Competition Commission of India, Unpublished work, LLM National Law University, Jodhpur
39
4.1.7 REGULATORY CONFLICT.
“Divergence in analysis between two market regulators will, if not addressed, lead to
uncertainty and policy incoherence. TRAI and the CCI must tackle such issues head
on and leave no room for ambiguity. The use of the reference mechanism will lead to
more coherent decision-making by the regulators and fulfil the shared objective of
protecting the consumer’s interest.”85
The biggest threat to competition in telecommunication market today, is the
distortions in the market caused by the government policy, rules and regulations, set
by different government agencies86
. There are basically two level at which there is
coordination required. One is between TRAI and CCI87
. The other being between
TRAI and Wireless Planning Co-ordination Wing (WPC). The coordination between
TRAI and WPC is also critical in the new environment, where wireless
communication is increasingly the most convenient and inexpensive method of
connecting people and places
In the context of dealing with competition issues, there may be forum shopping and its
risk involved between the two agencies CCI and TRAI with an overlapping mandate,
since it might be an incentive for people to approach agencies, which seem to them to
likely promise their kind of relief. This requires a coordination between the two
agencies.
Both Competition Commission of India and TRAI are subject to Telecom industry.
The control over and legislation has been challenged by, P. Nihoul in his article on
Convergence in European Communications: “Regulation is seen as sector-specific
whereas Competition (law) would be more general. That feature – it is said – implies
that Competition (law) would probably offer the best tool to govern the markets, as a
85
Samir R Gandhi, Rahul Rai- Regulating In Harmony, The Hindu, April 24, 2009 86
Id. 87
Supra Note 82
40
general intervention is apparently better designed to cope with a converging world
where specificities should be removed.”88
In Deutsche Telecom Case89
the issue was brought before the court of law in spite the
issue related to pricing policy which was dealt with German Telecom Regulator. The
applicant in this case had mentioned about the charges, i.e. charges cannot be a part of
abuse of dominance90
. It was also mentioned that the national regulator may not be
concerned with competition issue that both have different objectives.
The case of South Africa is interesting: the competition commission of South Africa
and the independent communication authority of south Africa (ICASA) have entered
into a memorandum of agreement, under which both bodies act, pursuant to their
authorising statutes, while allocating a lead role to one or the other in a particular case.
Finally, the issue of the communications convergence bill is pending before the
parliament. The communication bill seeks to bring all communication services under
one regulatory framework. For example, broadcasting, cable TV, media etc. Federal
Communication commission, which deals with all such services under one framework.
In Consumer Online Foundation v Tata Sky Ltd & ors parties 91
the information under
section 19 (1)(a) was filed by consumer online foundation against Tata Sky, Dish tv,
Reliance Big Tv and sun Direct alleging the contraventions of section 3 and 4 of the
competition act. Dish Tv in this case maintained that CCI does not have any
jurisdiction over this matter as TRAI and TDSAT were already vested with the
jurisdiction. It was held that CCI had the jurisdiction where competition issues fall
under the preview of the competition act of 200292
Until now there has been no such fight between the telecom operators but the tussle
between Reliance Jio and other telecom operators Airtel, Vodafone, Idea has come to
the fore. RJIo has complained to TRAI that operators like Airtel and Vodafone were
using their dominant position to deny it points of interconnection(POIs)- if its
88
Nihoul paul, International Journal of Communications Law and Policy" , pg 149, Oxford
Publications, November 15, 2011
89 Deutsche Telekom AG v Commission of the European Communities, Case T-271/03, OJ C
128 from 24.05.2008, p.29 90
Id. 91
Consumer Online Foundation v Tata Sky Ltd & ors (Case 2 of 2009 CCI) 92
Id.
41
subscribers were to call people to other networks, RJio filed a similar information to
CCI. On the other hand, the incumbents complained to TRAI stating that RJio pricing
was predatory in nature and as a result, its traffic asymmetric and huge. Bharti Airtel
as plead before CCI of RJio pricing being predatory, which was rejected by the
commission stating that for predatory pricing the enterprise should be In a dominant
position but in this case RJio was a new entrant in telecom sector.
CCI will order a probe against RJio complaint, but TRAI imposed a penalty of Rs
3050 on Airtel, Vodafone and Idea for denying RJio POIs, but when the matter went
to India’s highest telecom policy body, the Telecom Commission, “it asked Trai for
many clarifications, including a justification for imposing the penalty when, under the
law, telcos were allowed up to 90 days to provide the PoI and had not breached this
limit”93
TRAI also came out with few consultation papers among others and asked if
90 days period for POI was too long.
TRAI also rejected the predatory pricing plea by the incumbent telecom operator and
RJio offer that lasted more than 90 days (allowed by the law) after which Airtel Idea
went to TDSA while Vodafone went to Delhi High Court.
The matter is complicated more than ever now, If there is prima facia abuse of
dominance it has not acted upon the same and if regulator decides to hold hearings,
the question here arises is that will this be binding upon TRAI and if RJios pricing is
not predatory then the issues raised by other operators becomes irrelevant. The cases
before CCI and TDSAT are thus closely related and there could arise an issue where
there is regulatory overlap between the regulators which should have been addressed
by the government previously
93
Reliance Jio complaint: Why Competition Commission can’t start separate probe, The Financial Express, May 15, 2017
42
4.1.8 MERGER AND ACQUISITION IN TELECOM INDUSTRY
In 2017, growing competition and reduction of prices has become very difficult for the
companies to survive in this sector. This mergers and acquisition of companies
becomes a good option which reduces competition in legal manner, mergers are
basically ex ante, thus are analysed before it actually takes places. There are basically
2 types of mergers Horizontal which takes places in same level of market and vertical
merger that takes place between different level of market. Introduction of Reliance Jio
in the market in 2016 has led to a major structural change
The merger of Idea and Vodafone, and acquisition of Telenor by Bharti Airtel are few
examples. It was only in 1998 when first merger in telecom industry took place
between (Max group and Hutchison Group of Honk Kong). Nearly 50 % stakes were
acquired by Hutch from Max group for nearly 500 million dollars. Other important
mergers that took place include:
Hutch acquiring CCC (command Cellular Services) working in Kolkata in the year
2000 from Usha Martin, a company registered in Kolkata.
Aircel acquiring 80% stakes in RPG group in 2003 for over 200cr..
Idea Cellular acquiring 50%stakes from Tata in 2005-06
Vodafone acquiring Hutch in 2006.
Idea Cellular completely took over Spice Telecom
Airtel and Tikona merger
MERGER IN TELECOM INDUSTRY: CONFLICTING ISSUES
WITH TRAI AND COMPETITION RULES
One of the major areas where conflict usually arises is the merger and acquisition,
whereby competition commission have different parameters to assess mergers and
TRAI have different rules to permit it. Whereas, the competition Act provides certain
threshold and specific parameters to determine whether combination may be anti-
competitive or not, on the other hand TRAI allows the combination if total market
share of the merged entity is less than 35 percent and it would allow it if market share
43
is more than 60 percent. The CCI does not have any fixed percentage formula to
assess the combination, it looks into the possibility of abuse of dominance or anti-
competitive conducts follows with the merger. This conflicting regulation may result
in a situation whereby CCI would allow the combination which is against the
threshold set by TRAI.
For the efficient development of any sector it is required to reduce overlapping and
uncertainty among the regulators.
Conflict among the regulators came in public when CCI wrote letter to the ministry of
corporate affairs to prevent TRAI from formulating guidelines on cross-media
ownership, cable monopoly and cartelisation by content aggregators94
. This
strengthened the argument made by various stake holders that such issues are not
within the scope and ambit of TRAI only CCI is vested with the power to look into
these issues. The CCI in the letter said that implementation of such guidelines may
result into divergent view on the same issue. CCI rightly pointed out in that letter, that
there is no settlement mechanism in case of conflict of opinions among the regulators
only they can reference to one another that too is not binding upon them.
Recently, Idea and Vodafone operating in the telecom ministry has proposed merger
(already merged as of May 2017). Vodafone and Idea is the second largest and third
largest player in the telecom industry with 23 and 19 percent market share
respectively. It would be interesting to know that sector regulator of telecom industry
only allows merger with less than 35 percent of the market share. However, in this
merger collective market share of both the enterprise is 42 percent. In this
Competition Commission of India and TRAI were required to coordinate with each
other find overlapping issues and collectively resolve them. They were also to, ensure
appropriate channelization of various concerns to the appropriate forum and obtaining
corrective action at the earliest and to establish a framework to avoid duplication in
future.
94
TRAI and Competition Jurisdiction, TELEVISON POST, JAN 24,2016
44
MERGERS IN U.S IN COORDINATION WITH REGULATORS
In U.S Federal Trade Commission (FTC) is vested with power to regulate the mergers,
it clears mergers in five step processes, after completing all the five steps commission
at the last step may either close the investigation and allow the deal or enter into
agreement with companies and impose conditions such as divesture to restore
competition or seek to stop the merger by filing injunction application in federal
court.95
It is noteworthy that FTC is not empowered to block the merger transaction only it can
apply to federal court to stop the merger transactions, thereby court will look into the
merits and adjudicate upon the merger transaction. Even on divergence of opinions
upon merger transaction this process leads to certainty whereby one authority is
empowered to block merger transaction and specific sector can express their opinion
on the merger.
In EchoStar/Hughes Electronics Merger two largest companies were dealing with
direct broadcast satellites (DBS) entered into proposed merger, they were required to
take approval from Federal Communication Commission (FCC) as well as from
department of Justice (DOJ), both the departments had several meetings about the
concern relating to the transaction. In this case, final authority to challenge the merger
was with DOJ since both the regulators were in agreement to do so.96
However,
merger was challenged by the DOJ, in court, parties decided to abandon their merger
and to compete in the market.
Federal Trade Commission (FTC) is also empowered to authorise staff to file
injunction application in the court in Vlasic Pickle Company/Clauseen pickle merger,
95
Premerger Notification and Merger Review, Steps in Merger Review FTC, available at
https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/mergers/premerger-
notification-and-merger , (visited May 2017) 96
Gartner Dataquest Alert, ECHOSTAR/ Hughes Merger, available at
http://www.bus.umich.edu/KresgePublic/Journals/Gartner/research/110700/110706/110706.pdf
(visited May 2017)
45
FTC authorised staff to file injunction application in the court to disallow the mergers
between the two companies to maintain healthy competition in the relevant market. It
was contended by staff that if the merger proceeded as proposed it would create
monopoly in the pickle market. When staff approached the federal court against the
merger both the companies decided to abandon their transaction.
It is pertinent to mention here that most of the time when merger is challenged either
by staff or by commission in Federal Courts companies generally restrains themselves
from proceeding in the transaction since in courts proceedings increases uncertainty
and delay in the transaction. Thus, companies refrain themselves in entering into
merger.
46
4.2 COMPETITION ISSUES IN ELECTRICITY SECTOR
4.2.1 INTRODUCTION
The development of electricity sector in India primarily belongs to a system of
vertically integrated geographic monopolies in the country97
which were basically
owned and run by state and private enterprises with entry regulation belonging to
natural monopolies. The 1990’s liberalisation process opened the gates and programs
were introduced with renew concept of electricity generation and retail supply
separation and privatisation of state owned enterprises from natural monopoly relating
to distribution and transmission of electricity, the formation of wholesale and retail
market that were competitive in nature.
The structural aspect of electricity industry in India, such as unbundling98
was started
from Orissa legislation 1995. Open Access system was introduced in the power
sector99
. The competition Act of 2002 also introduced competition in the electricity
sector that envisaged Competition Commission of India to deal with competition
issues in this sector100
Electricity Consumption has been constantly increasing in India with the development
rate and increasing population, where consumption increased from 734kWh during
97
Fereidoon P. SIoshansi, WolfgangPfaffenberg, Electricity Market Reform: Internationational Scenario, pg 206, April 13 2006 98
Section 26,27 of the Electricity Act (no 36 of 2013) 99
Section 2(47) of the Act Defines Market Access, which is the non-discriminatory provision for use of transmission lines and distribution system 100
Pradeep S Mehta, Competition In electricity sector, p.no 148,Book,XXXII+220, (Jaipur Printers, 2007)
47
2008 to 1075kWh in 2016 which turns out, an increase of 46% in nearly 8 years101
.
There has been an increase of 6% every year when it comes to per capita consumption
of electricity in India. It was only in 2014-2015 that per capita consumption of
electricity crossed a mark of 100kWh. Year 2011-2012 sa the highest increase in
consumption which grew at 8%.102
(TABLE 1.6 PER CAPITA ELECTRICITY CONSUMPTION IN INDIA)
4.2.2 ISSUES IN ELECTRICITY SECTOR
Competition in India
India is on a path of massive changes relating to industrialisation, a country that is
developing at the fastest rate across the globe requires high energy consumption for
this development process. The gap/shortfall between demand and supply of energy
101
Rakesh Dubbudu, India’s Percapita Electricty consumption of india lowest among BRICS nation, available at https://factly.in/indias-per-capita-electricity-consumption-lowest-among-brics-nations/ , (visited May 2017) 102
Id.
48
inputs is a big cause of concern for achieving development targets thereby it may
impact overall growth of the country. The electricity act, 2003 clearly mentions that if
a utility has been buying power through the competitive bidding process then the
regulator shall accept the price. This method clearly shows a competitive bidding
process between the enterprises in order to avoid any cartel between them103
“Electricity” comes under SI. No 38 of List III and is a Concurrent subject, which
means Parliament and State Legislative Bodies can make laws on the subject104
The electricity system in our country has been divided into four segments which
includes generation, transmission, distribution and retail supply 105
, out of which retail
supply is considered as highly competitive while transmission and distribution is
considered monopolistic in nature thus it becomes very difficult to liberalize these
segments of market. One of the major problem with competitive nature market is the
issue of subsidies in distribution market and generation. The objective of electricity
act is to provide open access in transmission distribution stages of electricity106
and
also to promote competition in the market107
The electricity supply network may also be viewed as vertical activities where
generation, transmission, supply, distribution is to bulk buyers and to low demand
customers.108
In 90’s there went a change in the electricity industry as well, where demand and
supply of energy to private investment was allowed in the electricity generation. There
are basically two agencies responsible for electricity supply in India, Central
Electricity Authority (CEA) and State Electricity Board (SEB’s). With the
103
Surinderpal, S.K. Sarkar (Author), Veena Aggarwal (Author), Sumit Malik (Author),
Ruchika Chawla (Author) AP electricity board, Regulatory Performance in India:achievement,
contraints and future,Best Practices and Innovation in tariff regulation in India, (TERI Press,
2008) 104
L.Bajaj and Deepak Sharma. Power Sector Reforms In India, Conference Paper, January 2007 105
Section 2(25) of Electricity Act (36 of 2003) which defines electricity system 106
K. Vaishali, Competition Issues in Infrastructure sector , report submitted to Competition Commission of India, available at https://www.scribd.com/document/119642277/Competition-Issues-in-the-Infrastructure-Sector-With-Special-Reference-to-the-Indian-Electricity-Sector , (visited May 2017) 107
Devendra Kodwani, Competition and Regulation in Energy Sector, pg 193, (Jaipur Printers, 2009) 108
L. Rao, Legal Summit “Power Sector and Competition Law”, Unpublished
49
introduction of Independent Power Producers (IPP) in the first phase of reform the
Government initiated this process due to the following reasons
(a) Gap/Shortfall of demand and supply of electricity
(b) Performances of SEB’s
(c) Third party investment in power sector imperative
After the introduction of Electricity act, electricity in India remained that product
which could be sold to state owned monopolies system.109
Current situation is such
that availability of fuel and raw materials is causing a hindrance or obstruction for an
entrant to enter into this sector thereby restricting the competition in the market. There
is still a long list of clearances required to set up a plant even after introduction of de
licensing in generation of electricity. The major bottleneck was in terms of the highly-
controlled input market with regard to price and availability, particularly in the case of
coal and gas110
. Pricing system is far from being transparent in coal sector with coal
scam in past helping in reducing the stability in the sector. While for electricity
generation, coal and gas cannot be considered as the only means to serve the
electricity purpose as it involves non-renewable energy at high cost and less output.111
Another issue where local distributors force the captive power plants that they should
sell electricity to high profile companies only, thus denying access outside the state
which may result in low pricing for the electricity generating company because of the
monopoly.112
Excusive Power Purchase Agreements (PPAs) that may limit sales by generating and
distribution to concerned state could also pose a barrier to the competition in this
section 113
.Principles of competitive neutrality114
are also being violated regularly as
government assistance is provided only to public sector distribution companies
Other competition concerns in distribution segment are:
109
Supra note 108 110
Energy Demand in2011-2012- 254.9 Mt and coal and mining sector faced biggest hurdle in
competition 111
Priyanka Verma, Scope of Competition in Renewable energy, available at
http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.645.7251&rep=rep1&type=pdf 112
Jeffery Church, Monopsony and Buyer Power, Competition law & policy, OECD 2008, available at
https://www.oecd.org/daf/competition/44445750.pdf, visited May 2017) 113
section 2(23) Electricity Act (36 of 2003) defines electrical energy as- generated, transmitted,
supplied or used for any purpose 114
Section 38(2), 40(c) of the Electricity act 2003(36 of 2003)
50
(a) Tariff Regulation
(b) Distribution companies and its Privatization
(c) Scope of Competition for retail investor
In regional areas, the distribution companies would be local monopolies, and it
becomes difficult what should be the size of these companies. The main concern here
is these companies should be exposed to pressures of markets, i.e. a good competition
should prevail.115
Where by the SEB’s should be restructured and privatized to
increase the competition and SERC should implement open access system, mentioned
under the Act of 2003. The CCI may only then force the circumstances and deal with
the competition issues.
Kerala was the first state to implement open access system.116
A report by CCI
confirms that West Bengal Electricity Regulatory Commission (WBERC) gave open
access to three companies but have yet to start the same117
. The Jharkhand Board
(JSERC) has allowed one company open access in electricity sector but the same was
challenged by JSEB and thus is still in a stagnant stage. In Punjab, there were 2
applicants and both were granted open access.
However, despite facing acute shortage of power, open access has been allowed to sell
outside the state in open market, still there lies a scope where the SERC’s regulate the
prices to consumer to foster competition. State owned entities are regulated and an
effective regulation has not been found.
The regulators have also focused more on tariff determination, but have accepted the
price in the matter of agricultural sector. The distribution sector and its privatisation
has had a very less application, and therefore assessment of regulatory process in
states on enabling competition is not yet possible.118
Thus it becomes too early and
regulator being in a very niche stage to determine the effectiveness.
Subsidies does poses a great threat in order to reduce competition in distribution
system, it becomes an important step, to free from Bering burden of subsidies of
115
Section 2, Competition Act (12 of 2003) 116
Supra note 114 117
Suchismita Pati & Ipsita Pati, Competition issues in the Indian Electricity Sector, Unpublished work LLM, WB National University of Judicial Sciences, Kolkata 118
Shailaja Sharma, Power Transmission sector sees growing interest from Investors, LIVE MINT, Jul 04 2016
51
public as well as private distribution companies and it also becomes very hard as
privatisation of these entities is possible. If this is implemented it becomes a practical
approach to introduce competition in the distribution segment.
In Indian situation, the right to ownership of the infrastructure facilities that is
developed by a private entity is restricted to the very particular function and thereafter
transfers of the facility to the Government. Basically, the structure adopted under most
of the Indian concession arrangements is that of Build Operate Transfer119
(BOT)
INTERFACE BETWEEN REGULATOR AND CCI
Role of CCI
In order to improve the competition in electricity sector in India, CCI may carry out
the following functions to enhance the competition in market.
(a) Electricity Generation- CCI may recommend few suggestions with regard to issues
relating to electricity generation
(b) Electricity Transmission- In order to promote open access in transmission sector
cost of this access and its usage should be determined in an effective way. CCI
may advise the Regulator and take action against discriminatory pricing or
predatory pricing by an enterprise.120
(c) Distribution and Retail Supply of Electricity- any practices which deny market
access to consumers by ERCs shall be looked upon very closely
In Shri Neeraj Malhotra Advocate V North Delhi Power Ltd & ors121
The Electricity
Distribution companies were alleged to be indulging in anti-competitive behaviour
and there was a confusion regarding the jurisdiction relating to competition issues.
119
Power transmission sector sees growing interest, Shaialja Sharma, available at http://www.livemint.com/Industry/KJcUp4y0ioKWxdTNDrAT9L/Power-transmission-sector-sees-growing-interest-from-investo.html 120
Section 42 of the Electricity Act (36 of 2003) “mentions that states shall allow open access to all consumers above one megawatt load” 121
Shri Neeraj Malhotra Advocate V North Delhi Power Ltd (CCI,Case 6/2009)
52
The companies in this case argued before the Competition Commission that Delhi
Electricity Regulatory Commission (DERC) under the Electricity Act has the
authority to deal with competition related issues in this specific sector122
. However,
DISCOMS stated that CCI has taken competition related issues exclusively in its
hands, but DERC stated in its communication that matters must be decided according
to the provisions of the electricity act and DERC regulations and matters concerning
the anti-competitive behaviour falls within the ambit of CCI123
.
Regulatory Body and CCI working
The overlapping jurisdiction between Competition Commission of India and Sectoral
Regulator has always been like a paradox.124
The electricity regulation is governed by
the Electricity Act of 2003. The act describes and creates regulators at both state level
and central level where State Electricity Regulatory Commission (SERC)125
which
mainly deals with interstate affairs and the Central Electricity Regulatory Commission
(CERC).126
SERC basic functions includes tariff setting, licensing, service standards and
enhancing competition in their sector. The CERC on the other hand with the work of
regulating tariffs for central, power generating units, inter-state transmission tariffs as
well as issuing licenses to private investors for inter-state transmission. Both
regulators have the basic task to ensure fair competition.
Competition in the electricity sectors which raises potential conflicts with the
competition authority127
Section 60128
of the Electricity Act has some ambiguity
which may lead to conflicts between the Regulators and CCI if not properly controlled
and managed. This section gives both CERC and SERC power to take action against
any anti-competitive, abuse of dominant position activities by the entities, however it
122
Mukul Sharma & Abinas Agrawal, The See Saw Between Competition Authority & Different Sectoral Regulators- The Reason Behind Enigma For the Traders,KIIT ,Student Law Review, V-II, Issue 1, 2015 123
Supra note 122 124
Dr. S.K. Sarkar,TERI report, Competition and Regulation in Energy Sector in India, March 15,2007,
available at http://www.competition-commission-india.nic.in/work_Shop/March14-
15_2007/3.%20TERI%20Presentation%20-%20March%2015,%202007.pdf , (visited May 2017) 125
Section 2(64) of Electricity Act (36 of 2003) 126
Established Under Section 3 Of the Electricity Regulatory Commissions act 1998 127
Id. 128
Market Domination mentioned under the Electricity Act (36 of 2003)
53
remains limited as there are limited numbers of players in electricity sector who are
mostly public-sector players with private investment and participation still remaining
insignificant.
According to the act the private players are somewhat allowed to invest in power
generation process but have (this sector) not received any players to increase the
competition in the market129
. Thus, the role of CCI in this sector is yet to kick off in a
positive manner in reference to anticompetitive practices. Section 174 of the
Electricity Act has also given overriding powers without any refence to competition
act and supreme power has been conferred to competition act under section 60 of the
2002 act to put in simple words there exist a possibility where there is lack of
consistency in competition issues as several regulators have failed to gather any
knowledge of different regulators in the market or without any view of economy and
apply different yardsticks that vary from others.130
And CCI has been empowered with
penalty provision and enforcement provision under the act.
There is a natural monopoly in the Transmission sector and there is less possibility
that any sought of competition might develop thus creating a scope of securing
economic efficiency in this sector. However there lies a scope where market pressure
can be applied on these entities if such entities are privately held as a licensee.131
There are certain obligations as well in order to maintain supply and continuity in this
sector but there would be incentive for the holding companies to specifically ensure
that the transmission companies operate efficiently as incompetency in the
transmission would be borne by the competing distribution companies.132
Thus, the issues related to competition between the companies and any anti-
competitive behaviour that impacts the working mainly exist due to overlapping of
duties between both the regulators. The introduction of electricity act of 2003 has
brought some significant changes and improvements in the last decade that has
brought in open access system and the concept of PPP (public private partnership).
129
Working paper on Competition and Regulatory Overlaps: the case of India (CUTS), available at
http://www.cuts-ccier.org/IICA/pdf/Country_Paper_India.pdf 130
Id. 131
L. Rao, Legal Summit: Issues In power sector 132
L. Bajaj and Deepak sharma Power sector reforms in India, 2008, available at,
http://shodhganga.inflibnet.ac.in/bitstream/10603/63221/11/11_chapter%201.pdf
54
CHAPTER 5
INTERNATIONAL EXPERIENCES
5.1 INTORDUCTION
An overview of different jurisdictions would help in a manner as to how they have
adopted different strategies in order to resolve the conflict between the Competition
Authorities and Sectoral regulator. There are two basic approach that have been
adopted which include exclusive jurisdictional approach, in this the legislation in itself
mentions that either the competition authority or the sectoral regulator shall have the
mandate and not both of them. However, it might be possible where exclusive
jurisdiction might pose some testing situation where there might be an overlap
between the regulators. For instance, competition authority under mergers may have
the power to warrant structural remedies, which may obtrude the powers and functions
of the sectoral regulators as well. The sectoral regulators may also be bound by the
standards which also results in exclusive marketing and licensing, which the enterprise
may also abuse. Some jurisdictions having noted the problems of concurrent
jurisdiction have opted for concurrent approach. Different approaches are explained
below
Concurrent Approach Jurisdiction- under this approach competition authorities
and sectoral regulators both have the authority to go ahead with the matter
concerned, such an approach is based on creating a working framework between
the two regulators.
Cooperation and Coordination – A framework which can create coordination and
cooperation between the two regulators can be called in, for which there can be an
informal or formal working arrangements being established, in order to resolve the
issues between the two. Although the competition authorities will have a final say
when it comes to competition issues. Many countries have adopted this approach
55
in order to resolve issues while dealing with common interest cases between the
two regulators and laws. Other countries which have adopted the exclusive
jurisdiction giving an exclusive authority to competition law or sectoral laws have
left some grey areas where the conflict may arise.
Exclusive Jurisdiction- As discussed above this type of jurisdiction gives mandate
to either the competition authority or the sectoral regulator by the law itself and
cannot be encroached by either of them. This system has left some grey areas
where more conflict may arise between the two.
5.2 APPROACH AS GUIDED BY OECD REGULATIONS.
(a) The combination of technical and economic regulation in a sectoral regulator and
while leaving the competition issues powers with the competition authority that is
exclusive to it.
(b) Combination of technical and economic regulations to the regulator and give
some or all the powers for competition enforcement.
(c) Technical and Economic regulations to be given to the sectoral regulators which
also deals with competition law issues which should be performed with the
competition authorities in coordination.
(d) Giving technical regulation to the sectoral regulator as a standalone function while
giving economic powers to the competition regulators around the world.
(e) Another method that could be adopted is that where the competition authority be
given all aspects of regulation.
These approach (a) to (e) can be explained with the help of a table which explains as
to which country has adopted, different approach as explained above.
56
(Table 1.7 Approach Adopted by Different Countries)
COUNTRY APPROACH ADOPTED
AUSTRALIA (d) And (e)
BRAZIL (a)
CANADA (b) and (c)
FRANCE (b) and (c)
MALAWI (c)
NEW ZEALAND (e)
MAURITIUS (b)
PORTUGAL
(C)
SOUTH KOREA
(a), (c) and (d)
SOUTH AFRICA
(c)
57
5.3 SOUTH AFRICA
A Period after the Apartheid, where the sole objective was to isolate whites from the
non-whites, which was ended by the dramatic election of 1994 where President
Nelson Mandela ended this inequality among the individuals. It was only in 1998
when South Africa saw introduction of Competition Act. This competition act gave
independent powers to the competition commission to investigate and prosecutorial
responsibilities to CAT with adjudicative powers over matters referred to it from the
Competition Commission and a Competition Appeals Court which is a dedicated
bench of five judges in the High Court of South Africa, where cases from the Tribunal
may be appealed.133
Providing consumers with competitive market so that prices are also competitive and
that there is a variety of choices and to facilitate the economic development of the
country are the few aims of the act, the major management control of Commission
focus on dealing with issues relating to the anti-competitive matters of an enterprise
Competition Commission has been given the authority and control in order to enforce
this competition law under section 2(1) of the Act (1998) the proviso of this section
also mentions that the act applies to all activities (economic) expect those which are
authorised by the regulations.
South Africa is a country which has being using both concurrent and cooperation
approach at times, Section 82134
talks about the coordination and cooperation between
the two regulators.
Also, Section 3(3)135
mentions of concurrent jurisdiction between the two regulators
133
Competition Act of 1998 South Africa 134
Id. 135
Id.
58
Following are few issues between the regulators in South Africa
1) Business Practices that are restrictive in nature- the amendment to the Act136
has
created more legal issues with the competition authority vis a vis telecom sector.
Till 1996 the Electronic Comm Act, the telecom Regulator was governed by the
1996 Act137
which was enacted way before, the Competition act was enacted. The
act gave powers to the telecom regulator to regulate competition law issues in this
sector. The ICASA138
signed a memorandum of understanding after its
establishment, with the Competition Commission a took a coordination and
cooperative approach.
But issues arose as firms (enterprises) filled their complaint with both ICASA and the
Competition commission at the same time trying to take advantage of this ambiguity
in legal framework resulting in forum shopping. Telkom in another case tried to
challenge jurisdiction of commission where the commission had been investigation on
issues relating to price discrimination and open access to another operator. Before the
commission could move ahead in this case the telecom operator TELKOM
approached the High Court and pleaded before the court to set aside the
recommendations made by the Competition Commission and also challenged the
power of commission to refer the case to appellate tribunal. The case was brought
before the Supreme Court to try and resolve the conflicting issue which concluded that
competition commission has the power and jurisdictional authority in the present case
and at the same time had flowed the proper procedure.139
ICASA was given more powers in order to regulate competition issues where in 2006
after ECA140
was introduced section 67(9) has given powers of competition issues in
relation to telecom sector to the regulator.
136
Section 3(1) Act of 1998 137
Telecom Act 1996 138
Independent Communication Authority of SA 139
Competition Commission of SA v. Telkom SA C-623/2008 140
Electronic Communication Act 2006
59
2) Merger control- in a case between Nedcor and Stanbic141
, the Supreme court on
appeal, the court held that competition authorities have powers to exercise their
jurisdiction on another regulated sector
Further in the year 2000 when government brought about legislative amendments to
the Act and removed concurrency issues that tried to remove any conflict between the
two regulators also failed.
5.4 AUSTRALIA
Trade Practices Act142
, competition law in Australia which is applicable to all the
industries and is administered by ACCC143
, where the appellate authority to ACCC is
Australian Competition Tribunal which has the authority to review the decisions made
by the ACCC.
Responsibilities, relating to infrastructure facilities which are considered essentials
and other sectors relating to telecom, gas, electricity are on the ACCC, to monitor
where the competition is weak, while keeping a check on quality of services provided
on the airports. This could bring in advantageous prospects where economic functions
are left with the competition authorities.
Few steps have been taking in order to reduce the overlapping conflict between the
competition regulator (ACCC) including information exchange between the two on a
regular basis, exchange of publications between the two including other information
that is concerned as relevant to both the regulators. ACCC has also played an
important role in the education and public awareness which helps reducing the gap
between the two. Also, few members of the Competition Regulator (ACCC) are
appointed as members of other regulator to bridge the knowledge gap.
141
SB Investment Corporation v. Competition Commission, 797 (SAS) 142
Act of 1974 143
Australian Competition and Consumer Commission
60
Public Utility Regulator Forum was Established in regard to provide cooperation
among the regulators, a newsletter that is published quarterly has helped the cause.
The focus of this newsletter is to understand the basic issues and concepts between the
two regulators and try to reduce the overlapping.
Certain exemptions are also provided by the competition law of Australia like anti-
competitive practices concerned with Trade Practices Act are exempted from anti-
competitive practices. The Trade Practices Act authorises certain anti-competitive
behaviour which helps public benefits. Parties gaining authorisation from the ACCC
are granted immunity from legal proceedings under the TP Act in relation to the
authorised conduct144
Legislation’s that restricts competition in their sectors are to be reviewed once in ten
years of time frame, which is then published.
5.4.1 Telecommunication Sector in Australia
The Australian Government in 1997 opened competition in the telecom sector by
introduction of new legislative reform which increased the competition commission
role. TELECOM Operator, Telstra which was wholly government owned untill 1992.
While in 1991 the government introduced second telecom operator to create a duopoly
in the market by the name of Optus. Soon after a company named Optus was formed
as second operator, a third operator by the name of Vodafone commenced its services
in 1993. The complete operations of competition in telecom sector began in 1997
which was brought within the ambit of the TP Act.145
The technical regulation in
telecom sector was transferred to a regulator ACA (Australian Communication
Authority) from Austel, which also will handle licensing, carriers, rules of the telecom
sector.
There has been overlapping issues between the two regulator ACA and ACCC where
one regulator has overlapping responsibilities for an issue that might be available with
144
Gary Hewitt, Relationship between Regulators and Competition Authorities, OECD 1999, available
at https://www.oecd.org/competition/sectors/1920556.pdf , (visited May 2017) 145
Trade Practices Act
61
the other regulator. The responsibility to specify technical standards which relates to
competition within the market in telecom sector, is with the ACA where ACCC might
also assume its responsibility for issue that arise. Moreover, this sector requiring
technical field ACCC must consult ACA on issues that concerns the telecom sector.
Further the chairperson of the telecom regulator is a member to ACCC which help
create an environment where technical advice will be called upon issues relating to
telecom sector in ACCC. And the member of ACCC works as a member to ACA
which reduces possibilities of conflict between the two.
5.5 SOUTH KOREA
In South Korea, the competition commission known as Fair Trade Commission and
Sectoral Regulators have exclusive jurisdiction in their sectors where competition
issues are handled by the competition authority and other regulators have their
exclusivity in their respected areas. Another aspect about south Korea is that every
ministry in the government has been given authority to enforce regulation in their own
sectors.
The KFTC146
does play as a partial regulator as well, as for certain areas it acts as a
principle enforcer corning economic regulations. For example, the KFTC regulates
Chaebols in order to curb economic concentration.
Issues in Korea:
1) Business Practices- the overlapping issues emerged in the early 1990’s after
amendment to Telecom Business Act and Introduction of natural monopoly. The
act disallows or prohibits activities that restricts competition in the market.
However, Article 54147
provides that the act148
shall not be applicable when it
comes to telecom sector. Another issue where overlapping exist is the Price
fixation, as Telecom Business act as it states that a telecom networking company
146
Korean Fair-Trade Commission 147
Telecom Business Act 148
MRFTA (Monopoly Regulation and Fair-Trade Act)
62
must notify KCC149
and obtain proper authorisations which is directly conflicting
the abusive pricing and unfair discounts mentioned under the MRFTA.150
In another case which relates to Service Rates, where Ministry of Information and
Communication in 2006 directed that telecom rates to be modified as LG Telecom
rates could exclude landline pricing. On the other hand, KFTC concluded that fares
were not low enough that competing landline carriers to be excluded. In 2005, MIC
and KFTC simultaneously investigated the three mobile telecommunication operators
in connection with the opening of wireless networks, this was preceded in 2004 by
simultaneous investigation by both authorities in connection with false and misleading
advertising by three carriers.151
2) Merger Control- In 2008 the first case of overlapping of regulatory order occurred,
in this case the MIC approved combination in telecom industry on
recommendations of KCC but KFTC issued its own order that were corrective in
nature.
Steps taken to reduce friction are that, certain sectors in Korea have been excluded
from Competition Act (Fair Trade Act), just to remove any confusion within the
industry. But these are very less in number sectors like insurance and finance are
already covered by the Act. A Deregulation Task Force has also been assigned and
operated by KFTC and works in sectors that have restrictive competition. This task
force comprises of civilian and experts from different sectors and industries.
Certain regulations in Korea have been abolished where competition has reached to a
certain level that it was felt these regulations could pose a high burden on consumers.
These include:
1) Freight transport industry- this industry was heavily regulated one and was hard to
enter, but now the entry has been eased out such that new entrants in this sector do
not require license for operation. Mere registration would do in this industry.
Consumers have benefited from this as price have been slashed where competitor
149
Korean Communication Commission 150
Supra at 132 151
Harmonising Regulatory Conflicts- CUTS International, November 2012
63
would compete in free market, they are allowed to charge as much as they want
provided the rice is reported to the Commission (KFTC)
2) Period of Discount sales, at a departmental store in Korea discounted sale days
were regulated which stated that not more than 60 days and only 4 such sales in a
year were permissible. In 1998, these restrictions were abolished as they favour
consumer protection rather than harming, it was previously mentioned that these
regulations protect consumers from false advertisement of prices within these
discount sales.
5.6 MATURED JURISDICTION- UK AND USA
5.6.1 UK
United Kingdom is no more a part of European Union after BRXIT152
The Act of
1998153
gives Office of Fair Trading now known as Competition and Market
Authority154
, power to deal with issues regarding abuse of dominance and anti-
competitive behaviour. The powers are provided under chapter I and II of the Act.
Other regulators which are given powers for competition act and its enforcement are
1). OFGEM155
- Energy Market
2) OFWAT156
- Water Industry
3). OFCOM157
- Communication Sector
4). ORR158
- Railway services
5). CAA159
- Air Traffic Services
6). OFREG- Gas and Electricity in Ireland
152
2015- 2016 EU referendum Act 153
Competition Act 1998 154
Operational on 1st
April 2014 155
Office of Gas and Electricity Markets 156
The Water Services Regulation Authority 157
The Office of Communications 158
The Office of Rail and Road 159
The Civil Aviation Authority
64
These regulators are free to decide as to use anti-competitive powers as provided in
the competition act or to use specific provisions of the sectoral regulations. Under
section 54 and schedule 10160
tools are provided in for competition commission to
cooperate with the sector regulators. In addition to this, Concurrency Regulation161
mentions concurrency guidelines which are:
1) The CMA and Sector Regulator both are competent for handling competition
issues.
2) Both the regulators have to adjudicate the matter as to, which is the more
competent authority to handle the issue by using these regulations.
3) The information would be circulated by CMA and the regulators which may be
used to determine, as to which authority is capable to handle the issues. This
information exchange is relied on factors like knowledge, scope and experiences
of the regulator.162
4) If the agreement is reached within one month from the receipt but if the same not
reached to its conclusions among the parties or in case of jurisdiction dispute the
matter shall be sorted by secretary of state for arbitration.163
The electricity act has given powers to the regulator to try and deal with issues related
to anti-competitive behaviour of the enterprise. These regulators have similar powers
as compared to CMA when it comes to anti-competitive but power to issue penal
guidelines lies with the CMA itself.
5.6.2 UNITED STATES
The oldest antitrust law belongs to United States known as the “Sherman Act” passed
in the year 1980 which makes any agreement anti-competitive, between the parties or
enterprise that would try to limit competition in the market.
Enforcement Agencies of U.S Antitrust laws are
FTC’s bureau of competition
160
Competition Act of 1998 161
Competition Act, Concurrency Regulation 2004 162
Competition and Regulation: Interface Issues, SK Sarkar, TERI 163
Id.
65
Department of Justice (Anti-Trust Division)
In 1914, Clayton Act was passed thus regulations in America were changing a
Sherman Act was already in place but merger was a way forward where companies
found a way to control prices and production in the market instead of doing any anti-
competitive practices which were restrictive under the Sherman Act. Thus, Clayton
act try to protect consumer interest while restricting or prohibiting any kind of merger
or amalgamation that would stifle competition.
FTC created by the act of 1914 to watch out for trade practices that hamper
competition in the market
5.7 EUROPEAN UNION (Other Countries)
The responsibility of enforcing competition law in EU is with the European
commission. Article 101 and 102 are applicable to the European community which is
provided under the 2003 regulation
5.7.1 SPAIN
Law 32 of 2003 governs telecom regulator (CMT) which was established in the year
1996. Pricing in this sector has always been a talk of the point which involves
predatory, excessive pricing and discriminatory pricing, which are prohibited by the
competition law.
Telefonica164
in a case indulged in aggressive promotion and this case is one of the
examples of overlapping jurisdiction between the competition authority and CMT.165
CMT took the view that advertising campaign by the operator was not contrary to the
competition law and principles. Whereas competition authority took a completely
different view and banned the advertising campaign, while heavily penalising
Telefonica. An appeal was made to the Supreme court, the company pleaded before
the court that Competition Authority didn’t had jurisdiction to try the case as telecom
regulator had the powers already to try the suit. In 2006 the supreme court concluded
164
Spanish Telecom Company 165
Telefonica case (C-295/12P)
66
that the case relates to anti-competitive practices and the Competition Authority has
full authority to try the matter, thus having competent jurisdiction in the case.166
In the above mentioned case the supreme court also recognised there was an
overlapping jurisdiction conflict between the regulator but at the same time overturned
the CMT decision stating that CMT was encroaching power of the competition
regulator. Another case in Gas and Oil industry where competition authority faced
issues relating to its authority that its power and authority over other sectors is
different
In another case in 2012 relating to electricity sector where the competition
commission agreed to the fact that there existed abuse of dominance by the company
for refusing access (access to electricity grid) and this was a matter where both
electricity and competition regulators had jurisdiction on.167
The supreme court in this
case as well adjudicated that even though the electricity regulator (National electricity
Commission) and Ministry of Industry have ruled their position in this case but this
shall not amount to the fact that Competition Authority have power to try this suit. It
thus depicts that decisions made by the competition regulator does not hinder any
decision made by the sector regulator.
5.7.2 NETHERLANDS
Netherlands is another country that has adopted a system of cooperation protocol
between the competition regulator and other sectoral regulator for example between
the Netherlands Competition Authority (NMa) and the Authority for Consumer and
Market (ACM). There are a series of agreements between the two for cooperation in
order to strengthen enforcement. Following are the functions:
Concurrent powers to be coordinated between the two to prevent forum shopping
by the enterprises.
Polices must be consistent and thus must be established for the cases.
166
Pradeep S. Mehta and Natasha Nayak, Harmonising Regulatory Conflict, CUTS International, November 2012, available at http://oldwebsite.iica.in/images/Harmonising%20Regulatory%20Conflicts.pdf , (visited May 2017) 167
Supra at 166
67
Terms used and its applicability should be same when it comes to competition law,
post and telecom.
The Dutch Telecom Act came into force in 1998 and Article 18.3168
with Article 15 of
the Postal Act talks about an agreement for cooperation and coordination between the
ACM and the NMa while handling matters that concerns both the regulators. Also
exchange of information between the two regulators has also been emphasised upon in
Netherlands Article 91 and 24 of Telecom and Post Act call for exchange of
information between the two and create a working framework between the two.
168
With a view to effective and efficient decision-making, the Board and the Board of the Competition Authority shall make mutual agreements regarding the manner of dealing with matters of mutual interest. To that end, they shall draw up a cooperation protocol. Said cooperation protocol shall be published in the Government Gazette”. Available at https://www.government.nl/binaries/...notes/.../dutch...act/telecommunications-act.pdf
68
CHAPTER 6
A LESSON FOR INDIA- THE WAY FORWARD
6.1 INTRODUCTION
Framework in India Currently provides for cooperation and consultations between the
two authorities, but these cannot be considered as adequate as opinions are not binding
on either of them. Moreover, there is high inconsistency between the sectoral laws
where some have defined clear roles to be played by the authorities, on the other hand
many have tried to confer powers directly to the regulator to deal with competition
issues.169
The 2007 amendment brought about few changes where regulators shall
record reasons for disagreeing with the CCI and the reference to CCI by a regulator
can me made Suo moto. Further Section 21A was also inserted like a mirror image of
section 21 although are not binding which could be a loop hole, the consultations were
made mandatory in the 2012 amendment which has lapsed in the parliament
As discussed in the above chapters, the immensity of cooks in a particular regulation
and in its kitchen, have increased drastically which perhaps reduces the business
regulation in this modern era. Even the drafters of legislation and government has
sneaked into ways where the they did not wish to omit any area of concern. Business
industries have always been very scared of the competition laws across the globe even
Adam Smith in his book “Wealth of nations” which had warned about the conduct of
business enterprise being anti-competitive in nature.170
Having witness around the globe the issues and resolution to this problem which are
different in many jurisdiction, the Indian policy makers have been puzzled and have
face the problem of deciding what is the best framework between the sectoral
169
Pradeep S. Mehta and Natasha Nayak, Harmonising Regulatory Conflict, CUTS International, November 2012, available at http://oldwebsite.iica.in/images/Harmonising%20Regulatory%20Conflicts.pdf , (visited May 2017) 170
Rahul Singh, “The Teeter- Totter of Regulation and Competition”, Washington Global Studies Law Review. (71.2009). available at http://openscholarship.wustl.edu/law_globalstudies/vol8/iss1/3/ (visited May 2017)
69
regulators and the competition commission of India. There are basically three options
available to choose from
The Sectoral Regulator Replaces or Supplant the Competition Commission
The Competition Commission substitutes the Sectoral Regulator
Synchronise Framework between the Competition Commission and Sectoral
Regulator
6.2 REPLACEMENT BY SECTORAL REGULATOR
A concept where sector regulator in its specific area replaces the competition authority
appears to be very attractive at first sight as it is closest to that particular industry and
would naturally be a storehouse of information concerning that particular sector.171
In
other words, it would be more appropriate for the business enterprises as well within
this particular sector.
However, there may be cases of conflicting issues between the two, on the objectives
and other goals concerning competition issues, where the sectoral regulator has been
grated leverage over the competition authority by the institutional setup and where for
example development of a specific market is the concern172
. Besides this sectoral
regulator might be hesitant to enforce competition law to reduce any chances for
conflict with the other entities.
6.3 REPLACEMENT BY COMPETITION COMMISSION
Second option is where Competition Commission is given power for both the sector
regulation as well as competition enforcement. This could be a trump card, as it might
reduce multiplicity of regulators and gather the expertise in sectoral regulation.
Australia has used this approach which has integrated both technical and competition
regulation.
171
Supra at 148 172
Id.
70
New Zealand’s approach has been similar to this and it involves competition authority
to administration for the sectoral rules.
Despite its positives there are some serious flaw with this approach as experts have
expressed their concerns. A complex bureaucrat structure is a possible outcome of this
approach. Another danger to this approach lies in the fact where regulator might use
its direct regulatory powers over the competition powers which are indirect to it.
Another example from Netherlands where, Chambers are created within the
competition authority, this concept from Netherlands where energy sector is placed
under the NMa, Transport office is also placed under the preview of NMa. The DTe173
has responsibility of supervision of the electricity act and Gas Act. This chamber
model allows special knowledge related to different sectors which exist within the
competition authority and focus on different aspect in order to improve competition in
that particular sector.
6.4 PARALLEL COEXISTENCE
It would be impossible to demolish a structure that are already in place, as institution
building is a cumbersome and tedious process which is very complex and time
consuming. A parallel coexistence of both competition commission and sectoral
regulator could be a possible solution. On one hand Australia gives privileges to
competition authorities but Until 2015 there has been no infringements In UK despite
a concurrent jurisdiction among the regulators. There is no empirical evidence to
prove that which body should be given powers.
A sui generis model that is effective and efficient must be planted in the legal context.
Both the regulators have their capabilities to offer an economy. Unlike the sector
specific regulator, the commission has powers to that grants private rights and also has
powers to provide damages, these two ensures consumers welfare which might not be
available with any sector regulations and its regulators in India.
173
Office of Energy Regulation, Netherlands
71
Competition Commission being specialised in enforcement of competition law is in a
better position to deal with the matters concerning competition law and thus would
reduce any kind of costs while also enhancing the efficiency.
It is often felt that individuals have better understanding and information legislative
provisions and its violations, and no matter how useful the working of a regulator is it
impossible to reproduce the information accessible to the individuals. The role played
by private enforcement would create a deterrence effect among the enterprises as they
would be more willing to comply with the norms. It would also bring people much
closer to the competition law and creating competitiveness among them. In U.S
antitrust laws as well there has been approximately ninety percent of case being
private actions.
The Indian competition law as well clears the door for private enforcement that
commission may act upon a complaint by an individual. This is in contrast to the
MRTP act which gave right only to the “consumer”. It does grants a “locus standi” to
the person and granting right to approach the Competition Commission.
Compensating a victim is considered a crucial factor for the loss he has suffered.
Competition law is one of the laws which moves ahead in this regard as compared to
other sectoral regulations. Competition law violators must be punished in a manner
that deter the activities of anti-competitive agreements and certain jurisdiction have
worked a manner where they allow recovery of illegal gains or punitive damages. One
such example is of England where “the defendant’s conduct has been calculated by
him to make a profit for himself which may well exceed the compensation payable to
the plaintiff.”174
The Indian competition law also works in a manner which award compensation for the
loss suffered or damage suffered by the victim.175
In addition to this the act also
provides for “representative actions” which ensures victims would be able to file
compensation claims.
174
Rookes v. Bernard ER 367 175
Section 42A of the Competition Act 2002 (12 of 2003)
72
(Table 1.8) Here shows the remedies available from sectoral regulators
ACT PRIVATE ACTION DAMAGES
Telecom Regulatory Authority of
India Act of 1997
No176
No
Electricity Act 2003 No Less177
Monopolies and Restrictive Trade
Practices Act 1969
Less178
Yes179
Competition Act 2002 Yes180
Yes181
Petroleum And Natural Gas Act 2006 Unsure182
No
IRDA 1999 Act No No
176
Complaint either suo moto or on licensors request 177
Section 62(2) which talks about excess charge 178
Section 10 of MRTP Act 179
Section 12B of MRTP Act 180
Section 19 (1) (a) Competition Act 2002 (13 of 2003) 181
Section 42 Competition Act (13 of 2003) 182
Section 12(a,b) of the PNGRB (19 of 2006)
73
The above table clearly shows that sector regulators are protectors of the consumer’s
interest, i.e. they work in a manner “parens patriate” besides this the electricity act
2003 via CERC is the only regulator which has power of imposing damages. These
damages relate to excess traffic charged, there is no concept of recovery of damages
for an act that cause appreciable adverse effect on the Competition in electricity
sector.183
Private action and theirs rights conferred under the PNGRB Act is very unclear. The
regulator can also receive “complaint from any person”184
and has jurisdiction over
any issue between enterprise or person185
, another aspect of the PNGRB act is that it
does not define “person”.
Competition law and its enforcements is a complex and specialised field. Which
requires effort, time and resources like any other specialised field of law. Economic
analysis is now heavily relied upon in order to determine the competition issues, both
EU and US antitrust models have been working on this module. The advanced
Jurisdiction have heavily depended on years of experiences to be in this position in
order to enforce competition law.
When it comes to economic regulations, sectoral regulators are still considered as
important and crucial elements in modern era, but are unable to enforce competition
law in an efficient and effective manner. Thus, solely relaying on competition
authority for competition issues reduces transaction cost and enforcement through
competition authority also creates a sense of certainty, predictability for business
enterprises. If regulatory authorities are in a position to agree on without any cost it
wold only favour the competition commission. Also, Competition legislation i.e.
Competition Act of 2002 also provides for protection of confidential information186
as
well as unlike the sectoral regulation, thus creates an incentive for business enterprise
to prefer competition commission instead of the sectoral regulator.
183
Electricity act 2003 Section 60, THE ELECTRICITY (AMENDMENT) BILL, 2014 184
Section 12(1) of the PNGRB Act (19 of 2006) 185
Id. 186
Section 57 of the Competition Act (12 of 2003)
74
6.4.1 COLLABORATIVE MEANS
One of the country that has adopted this collaborative approach is Mexico. The
competition agency in Mexico has been given responsibility to determine the
conditions for effective competition whether they exist or are absent and to justify
their regulation of prices. Thus, administration of price control has been provided to
sectoral regulators where effective competition does not exist and such conditions are
justified.187
6.4.2 AGREEMENTS
Competition Act of Ireland provides a mandate where cooperation can be brought
about by an agreement between the Competition Authority and Sectoral Regulators,
where Section 34 of the act deals with this. Information Sharing, authorisation of
forbearance van be made under this agreement in case there is an issue where already
one agency is dealing with competition related issues. As discussed in the above
chapters, South Africa is a country where memorandum of agreement is signed
between Competition Regulator and Telecom Regulator which mentions a
responsibility upon the commission to regulate and negotiate agreements with the
regulatory authority.
Another Case of Brazil, which may depict a fragmented structure of institution
involved in competition law. But have tried to resolve the issues through agreements
between the authorities such as Aneel188
, ANTT189
and Anatel190
. These bodies try and
cooperate on issues relating to merger and other important competition issues.
187
Pradeep S. Mehta and Natasha Nayak, Harmonising Regulatory Conflict, CUTS International, November 2012, available at http://oldwebsite.iica.in/images/Harmonising%20Regulatory%20Conflicts.pdf , (visited May 2017) 188
National Agency of energy 189
National Agency of Terrestrial Transportation 190
National Agency of telecommunication
75
6.4.3 CONSULTATIONS (MANDATORY IN NATURE)
Argentina is one of the county which has made consultation mandatory between the
authorities but this is mandatory for the competition agency and not for the sectoral
regulators. Sectors such as telecom, transport, electricity, Gas, opinion of that
regulatory body must be sought.
In turkey as well, the competition authority has the duty to receive information and
opinion from the relevant regulatory authority under Law 5809, communication law.
Moreover, during consultation process the competition authority sends its opinion to
the regulatory authority regarding regulations.
Similarly, in France, French postal and electronic communication law talks about the
consultations process and publication of the opinion which it wishes to impose.
6.4.4 INTERPRETATION BY COURTS
In cases where regulatory framework is not defined clearly by the legislations, it is left
to the courts to interpret the legislation and its language to determine as to what will
be appropriate responsibilities. The downside of this is, it could be a very costly and
time-consuming affair. Thus, the preferred course could be to clearly determine the
roles of the regulators by a new legislative structure.191
Competition Appeals Tribunal of UK is an example where interpretation of courts
could be useful. The tribunal is commo appellate body for decision made by the
Competition Commission and sectoral regulators with regard to competition issues.192
Another case of Poland, where the competition authority193
acts over competition and
regulatory cases such as telecom, electricity and railway. Similarly, in France Cour
191
Supra at 165 192
Id. 193
Anti-Monopoly Court, Poland (Current Name the Court of Competition and Consumer Protection)
76
D’appel de Paris acts as a common court for both telecom and energy related issues.
The decisions delivered by conseil de la concurrence lies with the common court.
77
CHAPTER 7
CONCULSION AND SUGGESTIONS
As far as competition issues are concerned there are various regulatory authorities in
India that conflict with CCI. These include TRAI, CERC, SEBI, RBI and SERC,
while nature of overlapping concern may not be similar among them, it might be best
to have a cooperative or general framework to over overlapping issue.
A look at the international experience would help the cause and deciding on a better
frame working solution between the regulators. In addition, Section 21 and 21A of the
competition Act provides with some relief and talks about consultations but on the flip
side such consultations are not mandatory. This current approach cannot be regarded
as adequate by any means. In addition, the wordings of these sections decision to seek
opinion cannot be forced upon he either of them which may bring out ambiguity or
inadequacy in the system. Although legislative amendment of 2012 which was to
bring about the change, has lapsed in Parliament.
South Africa provides concurrent jurisdiction example for an agreement between the
two regulators that can be reached out to, and in Singapore where formal guidelines
have been established for regulators dealing in competition issues are yet to be
established in India.
Recently observed problems in the past has pointed out to the fact that a framework
which governs coexistence between the two regulators must be mapped out soon.
Cooperation appears to be the best possible solution between the two regulators while
being an easier process as it does not entitle any changes to the legislation which
could be a time-consuming process.
Another thing to be noted is that this cooperation framework will not be successful if
CCI and sectoral regulators prefer exclusive jurisdiction. Implementation of
Memoranda of understanding (MOU) and other agreements could pose an issue if
regulators do not fully subscribe to such a framework.
78
Delhi High Court in its judgement trying to prohibit CCI from excessing its
jurisdiction over Oil gas sector regulator is enough to suggest that difficulties can be
confronted by trying to enforce without being backed by legislation. As a result,
anything backed by legislation would give better results and would also force
regulators to control expertise.
Concurrent approach is the way forward in India and is likely to work. But such an
approach would call for changes in competition act 2002, (lapsed bill 2012) as well as
changes in specific regulations for better cooperation and such cooperation becomes
binding. The amendment would also give powers to sectoral regulators as well to
enforce competition law in their own sectors, only with collaboration with CCI.
However, it must be kept in mind that CCI is the only regulatory authority to deal with
the issues related to abuse of dominance and anti-competitive agreements and how
merger could lead to anticompetitive behaviour, while on the other hand sectoral
regulators are also important and deal with the issues related to licenses, standards etc.
in their specific sphere.
In cases where either of the regulator refuses to acknowledge the inputs given, the
same shall be recorded and reasons for the same should be made public in order to
generate a transparent and meaningful procedure.
Telecom and Electricity has now become an integral part of our lifestyle. The interest
of the customers has to be kept in mind with the growing pace of these industries.
Therefore, competition must sustain in these sectors. Unlike the sectoral regulators,
the competition authority has the power of private enforcement and right to claim
damages. In the absence of these two, sectoral regulator cannot serve as effective
instrument for effective functioning of competition law framework in their respective
sector.
This certainly does not mean sectoral regulators should be shut down completely as
they have experiences of their own, in their respective sectors. Although there must
be a clarity in jurisdiction between the regulators. The regulators must realise and
appreciate the differences between those that are of technical nature and other being
competition issues. Sectoral authorities should be given a leading role in technical and
79
other issues relating to licensing etc. that are structural issues which in most scenarios
are ex ante. But for competition issues mandate must be given to competition
authority which largely relates to behavioural issues and are ex post (except merger).
In electricity sector issues which are related to competition between the generating
companies and other behaviours concerning competition law directly impacts the
working of the companies which clearly exist due to overlapping structure of the
regulators. Certain significant changes have been brought about under Electricity Act
of 2003 relating to open access system and also the concept of PPP was introduced
In the end, we see that if the competition authority is to be successful, it has to face
interfacing challenges from the sectoral regulator. Till this can be done statutorily, it
should be pointed out that it could, and may should, use its suo moto and advocacy
powers and represent, before sectoral regulators, on matters relating to competition
concerns. Since typically all regulatory proposals are put up for the public discussions,
it would be useful for the competition authority to provide its input on them. CERC
has issued consultation paper on competition law in past and the competition authority
has been providing official feedback using its powers of promoting competition and
advocacy. TRAI also on regular basis publishes discussion papers on various issues
and many of them relates to competition issues and on this CCI may send its input.
80
RECOMMENDATIONS
Sectoral Regulators and competition authorities cannot replace each other as they
have their own experiences. As for the overlapping of jurisdiction is concerned,
there should be cooperation between the two as objectives of both the authorities
are complementary to each other.
Previously, CCI has asked TRAI to consult on a regular basis before finalizing
merger and acquisition which would reduce jurisdictional conflict between the
two.
The fact that competition is required in each and every industry cannot be denied
at any stage as it benefits the consumers and efficiencies of companies. But at the
same time certain temporary exceptions can be acceptable as these sectors might
not be ready to face open competition. But a clear demarcation or exclusion of
CCI jurisdiction would only amount to defrauding the Indian customers of certain
benefits.
The interference of power between these authorities has always been a
controversial issue, which must be resolved on urgent basis. Some have suggested
that if these sectoral regulator report to CCI on every issue, but it will not give a
workable solution. Most issues with TRAI are of competition related, so the
interference must be reduced
A formal mechanism of cooperation between the two can be created and would be
of key importance. As it will provide following benefits:
Identification of concerned issues
Channelization to appropriate forum with securing corrective actions
Framework that reduces identical efforts to be adopted
Competition commission is merely a decade old regulator and its resources must
be preserved and limit to matters relating to competition
Both sectoral regulator and sectoral regulator must focus on capacity building and
evolving expertise in their spheres.
81
Formal cooperation as applied in various countries can be looked upon like
Referrals that are formal
Establishment of common authority and appeal being made to it
Non-Interference in another sector jurisdiction
Delineation of Jurisdiction
Presence of competition authority on sectoral regulatory agencies
Formal and Informal cooperation between the two sects of regulators should be
encouraged. This consultation should be based on two level, at first level based on
policy level and second based on individual cases. Establishment of a forum where
both the regulators could meet and discuss issues on regular basis. This could help
in evolving principles for sharing crucial information and reducing the conflict
between the two.
Establishment of a concurrency party by the government between the CCI and
sectoral regulator, to ensure better coordination among them and also to make sure
competition issues are addressed properly.
Lapsed bill of 2012 (competition act 2002), which was to bring changes to
competition act should be reintroduced on urgent basis, else there would be no
mandatory consultations between the authorities through legislation itself
Other mechanisms
Experts from both regulators helping in enquiry and investigations.
Interchanging personnel on deputation basis.
Participation in training programmes, workshops, seminars etc., in each other’s
events
Regular training programmes for CCI being conducted by the sectoral regulator
and vice versa
xiii
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xiv
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xviii
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