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Vodafone is not in Dominant Position in the Relevant Market

Dr. Rajeev Babel*

The case study is based on the question whether, Vodafone was in a dominantposition in the relevant market or not. CCI opined that the relevant market inthe case would be the ‘market for provisions of international mobile data servicesin Mumbai and no evidence was produced to show that market share of Vodafonewas largest among other telecom service providers in the relevant market, henceit declined to make investigations into allegations of abuse of dominant position.

* FCS, MBA, Ph.D, LLB, AIIB, M.COM, Dip in Corporate Governance, Dip in Training &Development. Dip in Bank Management, Dip in Financial Services, Company Secretary inPractice

1 Arising out of order of CCI in Vishwambhar M. Doiphode v. Vodafone India Ltd. [Case No. 4 of2016, dated 5-5-2016].

1. Introduction:

1.1. Keeping in view of the economicdevelopment of the country, theCompetition Act, 2002 (the Act) wasenacted to prevent practices havingadverse effect on competition, to promoteand sustain competition in markets, toprotect the interest of the consumers andto ensures freedom of trade carried on byother participants in markets, in India,and for matters connected therewith orincidental there. Thus, the primarypurpose of the Act was to promote thecompetition in the market andsimultaneously to protect the interest ofthe consumers and to ensure the freedomof trade.

1.2. Section 4(1) of the Act provides thatno enterprise or group shall abuse itsdominant position. ‘Dominant Position’has been defined under Explanation tothis Section, which means, a position ofstrength, enjoyed by an enterprise, in therelevant market, in India, which enablesit to (i) operate independently ofcompetitive forces prevailing in the

relevant market; or (ii) affect itscompetitors or consumers or the relevantmarket in its favour. Whether a particularenterprise or group is in dominantposition or not, depends upon the factsof the individual case. Section 19 dealswith the cases of inquiry into certainagreements and dominant position ofenterprise.

1.3. Recently the, Competition AppellateTribunal, New Delhi, (CAT) decided acase on 16 th August, 2016, titled asVishwambhar Marutirao Doiphode v.Vodafone India Ltd., I.A No. 104 of 20161,in which the CAT opined that where noany prima facie evidence exist to showthat market share of Vodafone was largestamong telecom service providers in therelevant market for the provisions ofinternational mobile data services inMumbai, the Competition Commissionof India (CCI) rightly declined to orderan investigation into allegations of abuseof dominant position levelled byappellant against respondent ininformation filed under section 19(1)(a).The facts of the case are as under:

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2. Facts of the case:

2.1. This is an appeal for setting asideorder dated 05.05.2016 passed by theCompetition Commission of India (CCI),whereby it declined to order aninvestigation into the allegations of abuseof dominant position levelled byVishwambhar against Vodafone andclosed the matter under Section 26(2) ofthe Competition Act, 2002 (Act).

2.2. Vodafone India Ltd. (Vodafone) is a100% subsidiary of Vodafone Group. OneMr. Vishwambhar Marutirao Doiphode(Vishwambhar), the appellant, in thecase, claims to be a consumer of theservices provided by Vodafone and itspredecessor Hutchison Telecom for thelast 19 years.

2.3. On 03.08.2015, Vishwambharrequested Vodafone to activateinternational roaming services in respectof his post-paid cellular mobileconnection thereafter, he went to Canada.Vishwambhar received bill dated28.08.2015 for a sum of Rs. 68,607/- forusage of data apart from the service tax@ 14%. The period of bill was from28.07.2015 to 27.08.2015.

2.4. Soon after receiving the bill,Vishwambhar filed a complaint underthe Consumer Protection Act, 1986 (CPAct) highlighting his grievance againstthe bill raised by Vodafone.

2.5. After sometime, he filed aninformation under Section 19(1) (a) of theCompetition Act, alleging that Vodafonewas in a dominant position vis-à-vis theconsumer and by taking advantage ofthat position, it has levied exorbitantcharges @ Rs. 564/- per MB as againstRs. 30/- per MB payable for internationalroaming plan having packages of 10days or 30 days. Vishwambhar furtheraverred that in India the data usagecharges are 0.04 per 10 KB, which comesto approximately Rs. 4/- per MB, butVodafone had charged Rs. 564/- per MBand, thereby, acted in contravention of

Section 4(2)(a)(i), 4(2)(c) and 4(2)(e) of theCompetition Act.

2.6. CCI invited Vishwambhar andVodafone for preliminary conference,which was held on 17.03.2016. Vodafonedid not attend the conference but filedwritten submissions dated 16.03.2016and disclosed that Vishwambhar hadalready filed a complaint under the CPAct. During the conference,Vishwambhar admitted that othertelecom service provider operating inMumbai are also providing internationalroaming services.

3. Relevant legal provisions under theCompetition Act:

3.1. Abuse of dominant position:

• Section 4(2)(a)(i): There shall be anabuse of dominant position undersub-section (1), if an enterprise or agroup, directly or indirectly,imposes unfair or discriminatorycondition in purchase of sale ofgoods or service;

• Section 4(2)(c): There shall be anabuse of dominant position undersub-section (1), if an enterprise or agroup indulges in practice ofpractices resulting in denial ofmarket access in manner;

• Section 4(2)(e): There shall be anabuse of dominant position undersub-section (1), if an enterprise or agroup uses its dominant positionin one relevant market to enter into,or protect, other relevant market.

3.2. Inquiry into certain agreements anddominant position of enterprise:

• Section 19 (1)(a) states that theCommission may inquire into anyalleged contravention of theprovisions contained in sub-section (1) of section 3 or sub-section (1) of section 4 either on itsown motion or on receipt of anyinformation, in such manner andaccompanied by such fee as may

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be determined by regulations, fromany person, consumer or theirassociation or trade association;

3.3. Procedure of inquiry under Section 19:

• Section 26(2) states that where onreceipt of a reference from the CentralGovernment or a State Governmentor a Statutory authority orinformation received under section19, the Commission is of the opinionthat there exists no prima facie case,it shall close the matter forthwithand pass such orders as it deems fitand send a copy of its order to theCentral Government or the StateGovernment or the statutoryauthority or the parties concerned,as the case may be.

4. Findings of the CCI:

• CCI considered the allegationscontained in the information anddetermined the relevant market asthe ‘marked for provisions ofinternational mobile data services’.For this purpose, the CCI noted thatalthough the consumer can accessweb world through land lineconnection as also a cellularconnection, the characteristics oftwo types of services are entirelydifferent and the same cannot beregarded as substitute of each other.

• The CCI then noted that thesubscriber travelling abroad canremain connected with the webworld either by activatinginternational roaming services orby opting mobile data packagefrom the concerned telecom serviceprovider or by availing the servicesof specialized data provider likeMatrix and opined that relevantproduct market can be consideredas the ‘market for provision ofinternational mobile data services’.

• The CCI also noted that there are22 telecom circles in India andseparate auction has been

conducted for each circle forallocation of spectrum and there areseveral service providers inMumbai circle including Vodafone,Airtel, and Idea etc. On thatpremise, the Commission treatedMumbai as the relevant geographicmarket and held that the relevantmarket would be the ‘market forprovisions of international mobiledata services in Mumbai.

• The CCI then took cognizance of thefact that besides Vodafone, Airtel,Idea Reliance, Tata, Ariel andMTNL are providing wirelesstelecommunication services andthey also offer international mobiledata services.

• The CCI also noted that theInformant had not provided anystatistics to show that Vodafonehad the largest share in therelevant market and held that inthe absence of such material,Vodafone cannot be said to be in adominant position in the relevantmarket.

• On the basis of the above finding,the CCI held that no prima-faciecase was made out for directingan investigation into the allegationof abuse of dominant position byVodafone.

5. Appeal against the decision of CCI:

Aggrieved from the decision of the CCI,Vishwambhar made appeal before theCAT and also filed an application forexemption from payment of fee under theCompetition Appellate Tribunal (Formand Fee for Filing an Appeal and Fee forFiling Compensation Applications)Rules, 2009 (the Rules) for the reasons ofthe so-called larger public interestsought to be protected by Vishwambharagainst the levy of exorbitant charges byVodafone for international mobile dataservices.

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6. Issue involved in the case:

• Whether Vodafone was in adominant position in the relevantmarket?

• Whether on the ground of PublicInterest, levying of heavy chargesby Vodafone, the exemption fordeposition of appellate fee can beexempted?

7. Observations made the CAT:

• CAT opined that the reason putforwarded by Vishwambhar forseeking exemption from paymentof fees under Rule 4 of the Rules,namely, espousing of larger publicinterest is quite vague and does notjustify exercise of power by theTribunal under proviso to Rule 4 ofthe Rules for waiver of the fees.

• CAT also opined that Vishwambharis not entitled to any relief becausewhile filing information underSection 19(1) (a), he concealed a vitalfact that he had already filed acomplaint under the CP Act. Nodoubt in the application filed forgrant of exemption from paymentof fees under Rule 4 of the Rules,Vishwambhar has averred that hehas separately filed complaintbefore the District ConsumerDispute Redressal Forum, Mumbaifor compensation, but he hasconveniently omitted to place onrecord copy of the complaint. Thishas been done by Vishwambhar toprevent the CAT from ascertainingwhether the cause of twocomplaints/applications areidentical. If Vishwambhar hasalready availed remedy under thelaw enacted by the Parliament forprotecting the consumers, the CCIwould have loath to entertain theinformation filed under Section19(1)(a) on the same cause.

• The CAT further opined that theCCI did not committed any error bydeclining to order investigationinto the allegation of abuse ofdominant position levelled byVishwambhar because he did notproduce any evidence to primafacie show that market share ofVodafone is largest among thetelecom service providers in therelevant market.

• Held:

� In the absence of anaffirmative finding thatVodafone was in a dominantposition in the relevantmarket, there was no warrantfor ordering an investigationinto the allegation of abuse ofdominant position by the saidrespondent and the CCIrightly declined to entertainthe prayer made in theinformation.

� As a result, the application forexemption from payment offees under Rule 4 of the Rulesis rejected. The appeal isdismissed being without anymerit.

8. Summing up:

The case study is based on the questionwhether, Vodafone was in a dominantposition in the relevant market or not.CCI opined that the relevant market inthe case would be the ‘market forprovisions of international mobile dataservices in Mumbai and no evidence wasproduced to show that market share ofVodafone was largest among othertelecom service providers in the relevantmarket, hence it declined to makeinvestigations into allegations of abuseof dominant position.

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