Analysis on the overlapping jurisdiction of Sectoral Regulators and Competition Commission of India


Kavya.K

Student of LLM at Christ deemed to be university, Bangalore.

Phone number: +91-9600052588

Email ID: kavyakrishnamoorthy96@gmail.com


Competition is an essential element of the free market. Healthy competition promotes innovation. It encourages business to keep low prices and come up with innovative methods to operate. It also ensures that consumers get the best deals and there are new products in the market form various brands at cheapest prices and efficient services therefore giving the consumers a large variety of goods and services to choose from.

The Competition Act 2002 was enacted by the parliament under the Vajpayee government, replacing the Monopolies and Trade Restrictive Practices Act, 1969 on recommendation of the Raghavan Committee. This committee was headed by retired Senior Central Government officer Mr. S V S Raghavan to advise a new and effective competition law to cope with the international economic developments and to recommend a suitable legislative framework.

The main aim of Competition law is to promote competition in the market and to reduce the monopolistic behaviour of businesses and at the same time to also curb anti-competitive and unfair trade practices in the market. Competition Law has proven to be an extremely efficient mechanism in preventing businesses from entering into anti-competitive agreements, prohibiting abuse of dominant position, controlling mergers, acquisitions and combinations and ensuring efficient distribution of resources to eventually benefit the consumers by providing them with wider choices and better quality products at a reasonable price. It helps in maintaining healthy competition and promoting innovation. Its main aim is to protect the interest of the consumers and to ensure that the consumers have a large variety of goods and services to choose from.

Competition in India is dealt under the provisions of the Competition Act 2002 (Act). The Act has three substantial provisions: (a) section 3 of the Act that provides that no person shall enter into any agreement that causes or is likely to cause an appreciable adverse effect on competition (AAEC) within India; (b) section 4 of the Act, which deals with abuse of dominant position; and (c) sections 5 and 6 of the Act, which deal with merger control. The Act aims to achieve its objectives through establishment of the Competition Commission of India

Under the competition Act, 2002 the Competition Commission of India and the Competition Appellate Tribunal were established. The Competition Commission of India was formed with the aim to help in achieving the objectives of the Competition Act, 2002 by ensuring healthy competition in the market, preventing businesses from engaging in anti-competitive practices, effective implementation of competition policies, developing effective relations with sectorial regulators to ensure harmony between sectorial regulatory laws and competition law and advocating healthy competition and its benefits.

The parliament established various special sectorial regulators to correct the imperfections in the market and to better regulate market sectors. Most of these sectorial regulations aim at protecting competition in their sector as well, for example Telecom Regulatory Authority of India (TRAI) mandates Facilitation of Competition and promoting efficiency in operation of the telecom sector[1]. The Petroleum and Natural Gas Regulatory Board Act, 2006 aims at “Fostering trade and Competition’[2]. Electricity Act, 2003 vests powers in the Central Electricity Regulatory Commission to prevent licensees from entering into agreement abusing their dominant position and from engaging in any activities that are likely to have an adverse effect on competition[3]. Such legislations have blurred the distinction between such regulators and CCI causing a conflict between the two.

The Competition Act is not designed to resolve conflict between various statutes. Section 60[4] of the Act is a non-obstante clause giving the act an overriding effect, while section 62[5] says that the Act should be read in accordance with other statutes. The Act tries to partially address the issue by incorporating a mechanism for consultations between the CCI and other sectorial authorities through sections 21 and 21A. However, consultations are not binding in nature. This voluntary mechanism has, however, proved to be ineffective in solving conflicts that prevail between these statutory authorities. The overlap between the jurisdiction of the CCI and the sectorial regulators necessitates legislative intervention.

IPR and Competition law:

The intellectual property law applies to the acquisition, protection, exercise and transfer of intellectual property rights (IPR) in India. IPR not only aims at preventing exploitation of the rights of Intellectual property owners by others but also prevents the IP owners from engaging in unfair practices.

The Competition Act 2002 was enacted to facilitate economic efficiency and liberalization. Section 3 of the Indian Competition Act, 2002 states: “No enterprise or association of enterprises or person or association of persons shall enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India.”[6] Section 3(5)[7] of the Act confers blanket immunity to Intellectual Property Rights which shows that competition law does not interfere with IPR. Section 3(5) of the Act provides for a very limited exemption, which states that the provisions with respect to anticompetitive agreement (section 3) will not be applicable to agreement entered into by any person for restraining any infringement of, or to impose reasonable conditions, as may be necessary for protecting any of his or her rights guaranteed under the IPR statutes in India. It is established that the jurisdiction of Competition Commission of India (CCI) is not simply oust under section 3(5) of the Competition Act in IPR-related cases. Section 3(5) is contradicted by Section 4 of the Act which talks about abuse of dominant position therefore interfering with IPR. Further, the CCI has set very strict standard for protection of IPR under section 3(5) of the Competition Act.

In Super Cassettes Industries Ltd. vs. UOI & Ors[8] where the conflict arouse between T-series cassette company and Radio 104.4 FM with respect to licencing. The petitioners accused the cassette company of abuse of dominant position. Both the Copyright Act and sec 4 of Competition Act were in conflict. The court held that the issue falls within the purview of competition law and therefore to be decided as per the Competition Act. In Telefonaktiebolaget LM Ericsson v. Competition Commission of India[9], the Delhi high court decided the case in favour of Competition Commission of India where the question was relating to jurisdiction and held that just because few aspects of the case fall within the patents act does not mean that the case does not fall under the jurisdiction of the Competition Commission. Both patent laws and Competition law have remedies in their respective statutes however both are not mutual therefore where a consciences cannot be reached the jurisdiction of both authorities cannot be ousted. The scope of jurisdiction of Competition Commission of India over the case will however be limited to the extent of determining whether there has been abuse of dominance. In FICCI- Multiplex association of India v. United Producers/ Distributors forum[10] The Competition Commission of India held that a case can be brought in front of the Competition Commission where an IP holder has participated in anti-competitive practices. The Commission said “the intellectual property laws do not have any absolute overriding effect on the competition law. The extent of the non obstante clause in section 3(5) of the act is not absolute.” The rights of copyright owner are exempted under sec 3(5) of competition act only to the extent of protecting his individual rights. The competition act was enacted to protect the market from acts that affected competition, and to protect the interests of the consumers and any act which affected the rights of consumers would be considered to violate the laws under competition act. The commission further adds that collective bargaining is acceptable by law only to the extent that it does not have an adverse effect on the market. In Aamir Khan Production v Union of India[11] the Bombay High court held that exhaustive provisions under the Copyright act with respect to cartels formed by copyright owners does not oust the jurisdiction of the Competition commission. Nothing in the act indicates that its jurisdiction is ousted in the presence of exhaustive clauses in other acts. The Competition Commission has the Jurisdiction to decide whether or not the facts of a case fall within its jurisdiction. 

Electricity Act and Competition Act:

Electricity act of 2003 was passed by the Government to deal with issues relating to generation, distribution, transmission and trading of power and all other matters relating to electricity. Section 60 of the act gives the Central Regulatory Commission the power to issue such directions to licensees or a generating company if they enter into any anti-competitive agreement or abuses their dominant position or enter into a combination which is likely to cause an adverse effect on competition, therefore creating a conflict between Electricity Act and Competition Act.

The first case addressing such issue of conflict between the Competition Act and the Electricity Act (2003) arose in the case of Anand Prakash Agrawal v Dakshin Haryana Bijli Vitram Nigam and Ors[12] the issue was filed before the CCI by a consumer of DHBVN. He held that DHBVN which was the sole electricity supplier that area, was discriminating between its consumers by charging higher Fuel and Power Purchase Cost Surcharge Adjustment charge from the consumers whose electricity consumption rate was higher. CCI did not agree with the contentions of the petitioner and held that even though DHBVN held a dominant position in the market it was responsible for the differential pricing as it did not fix the electricity prices. The prices were fixed by the Electricity Distribution Company and the State Electricity Regulatory Commission and therefore there was no abuse of dominant position by DHBVN. An appeal was filed before the Competition Appellate Tribunal (COMPAT). COMPAT held that notwithstanding the “non-obstante clause” given under section 60 of the Competition Act, the Electricity Act will prevail as it is a special sectorial statute and has its own mechanism to check abuse of dominance. It also has a list of acts that have an overriding effect on it which does not include the competition Act.

TRAI and CCI:

Telecom Regulatory Authority of India (TRAI) is a sectorial authority for the purpose of regulating telecom and related services and ensuring fair business practices by telecom providers and orderly growth of the telecom sector. The purpose of this act, to an extent, is similar to that of the Competition law in India. The only difference between the two being that Competition Commission of India (CCI) is a sector-agnostic regulator whereas TRAI is a sectorial regulator for telecom services.

The issue of conflict between the jurisdiction of CCI and TRAI first came up in the case of Competition commission of India v Bharati Airtel and Others[13] where jio filed a case with the CCI alleging Bharati Airtel, Vodafone India, Idea Cellular, and Cellular Operator Association of India of forming a cartel against jio and restricting its entry into the market by refusing to provide it with adequate points of interconnection. This caused failure to make calls from jio to various other networks therefore affecting jio’s business. Jio also filed various letters, reporting the conduct of the other network providers, with the TRAI. CCI based on the reports received form jio ordered the Director General to conduct an enquiry into the matter against the alleged cartelization. The Bombay High Court set aside the order of the CCI and held that CCI has no jurisdiction in this matter. Telecom sector is governed and controlled by the Telecom Regulatory Authority of India and therefore CCI has no jurisdiction to rule on or clarify or interpret any matters falling within the jurisdiction of TRAI. Jio and CCI both aggrieved by this decision filed an appeal in the Supreme Court. The SC held that TRAI is a special sectorial regulator and is best suited to decide the case. Functions such as ensuring technical compatibility, inter-relationship between different service providers, ensuring conditions for license compliance, settlement of dispute between service providers etc. fall within the jurisdiction of TRAI and also jio itself had approached TRAI to settle the issue. SC also held that CCI is a higher and more experienced body and has its own specific role. CCI’s role is not completely ousted in cases falling under the TRAI but only pushed to a later stage after TRAI has reached a conclusion. The SC held that in sector specific issues the CCI should take the opinion of the Sectorial regulators.

SEBI and CCI:

The securities exchange board of India (SEBI) is a statutory regulatory body established by the Parliament, to protect the interests of investors in securities, to promote the development of, to regulate and encourage healthy competition in the security markets.

In conflict between the jurisdiction of CCI and SEBI in the case Advocate Jitesh Maheshwari vs National Stock Exchange of India[14], CCI ceded to the jurisdiction of SEBI. The case was filed against the National Securities Exchange (NSE) alleging it to have engaged in unfair trading practices and differential treatment by giving market access to few security trading members in India. The CCI acknowledged the grievance of the informant and held that the NSE had given preferential treatment to few members of its co-location services thus denying market access to other co-location services, however the CCI did not go into the merits of the case as the case was already under investigation by the SEBI. SEBI was informed of the issue through a letter sent by a whistle-blower and was conducting investigations on various similarly alleged issues. The commission however observed that the act of the NSE did fall under the purview of the competition act and CCI can conduct investigation on the same once the on-going investigation by SEBI is concluded.

Petroleum and Natural Gas Regulatory Board and CCI:

The Petroleum and Natural Gas Regulatory Board Act, 2006 established the Petroleum and Natural Gas Regulatory Board (PNGRB) to regulate the refining, processing, storage, transportation, distribution, marketing and sale of petroleum products and natural gas along with regulating access to common carriers or access to common gas distribution networks  while fostering fair trade and competition among the entities. There have been increasing conflicts with respect to jurisdiction of the Competition Commission in the cases where the complaints are regarding entities in the petroleum, oil and natural gas sector based on anti-competitive practices.

In Shri Awadh Singh v. Petroleum and Natural Gas Regulatory Board[15] it was alleged that the 2013 amendment regulations of the Petroleum and Natural Gas Regulatory Board encouraged anti-competitive practices. The CCI held that it had no jurisdiction in the matter as the power to issue the said regulations was given to the Petroleum and Natural Gas Regulatory Board by the Petroleum and Natural Gas Regulatory Board Act, 2006.

In Faridabad Industries Association v. Adani Gas [16] the CCI held that that the issue of whether the regulations framed by the PNGRB were being complied was beyond its scope. However, the CCI did go into the allegation and held that the gas prices fixed under the Gas Supply Agreement were not arbitrary. Through this case, the CCI distinguished the Competition issues form other oil and gas sector related issues, however precise demarcation is not possible.

Conflict of jurisdiction in other countries

Other countries have broadly recognized two models to solve conflicts relating overlapping jurisdiction between Sectorial Regulators and Competition Agencies. First model gives one authority an overriding power in matters relating to overlapping jurisdiction. This model is called the “Exclusive Jurisdiction Model”. Australia is an excellent example of this model. The advantage of this model is that it prevents the sectorial regulator form acting solely in the interest of the sector and the disadvantage is that the Competition agency lacks special sectorial knowledge relating to the sectors and will also overburden the Competition Agency with issues. The second model says that the two authorities should work together concurrently in matters relating to conflicting jurisdiction. This model is called the “Concurrency Model”. Some countries which follow this model include UK, US, Netherlands South Korea, Brazil, Turkey, Argentina, Mexico, Zambia, Finland, South Africa and Ireland. This model also has its shortcomings as in cases of overlapping jurisdiction arises a conflict between the two bodies working concurrently. Most of the countries that follow this model have tried to avoid conflict by clearly defining the structure of cooperation between the two bodies and promoting institutional culture between them.

Conclusion

Even though the policy makers have tried to formulate the law as elaborately and in detail as possible and have also tried to distinguish most overlapping aspects of Competition law and other sectorial regulators, the policy makers still failed to distinguish the jurisdictional conflict between the various Sectorial regulators and Competition Commission of India. The CCI has taken different approaches in different cases. In case of PNGRB it has ceded jurisdiction while in case of TRAI it has retained its jurisdiction. In most cases conflict arises between the authorities and it ultimately it falls upon the courts to decide which law will govern a case where the same issue has remedies under different laws or defence is sought under both laws. The High Courts and Supreme Courts while trying their best to decide such cases have to also keep in mind the intention of the law makers, the purpose the acts and the greater good of the society. India should adopt a combination of these models to resolve this conflict and modify it to suit the Indian scenario. The CCI can seek consultations from the sectorial regulators and vice versa which will help reduce friction among the authorities and reach better decisions. By bringing a few legislative changes the law makers can facilitate better market conditions which will in turn enable a better business environment in India.


[1] Section 11(1) of The Telecom Regulatory Authority of India Act, 1997

  • Notwithstanding anything contained in the Indian Telegraph Act, 1885 (13 of 1885), the functions of the Authority shall be to——

(a) make recommendations, either Suo moto or on a request from the licensor, on the following matters, namely:

(iv) measures to facilitate competition and promote efficiency in the operation of telecommunication services so as to facilitate growth in such services;

[2] Section 11 of Petroleum and Natural Gas Regulatory Board Act, 2006  the  Functions of the Board -The Board shall –

                (a) protect the interest of consumers by fostering fair trade and competition amongst the entities;

[3] Section 60 of the Electricity Act, 2003 (Market domination):

The Appropriate Commission may issue such directions as it considers appropriate to a licensee or a generating company if such licensee or generating company enters into any agreement or abuses its dominant position or enters into a combination which is likely to cause or causes an adverse effect on competition in electricity industry.

[4] Section 60 in the Competition Act, 2002

Act to have overriding effect. —The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force.

[5] Section 62 in the Competition Act, 2002

Application of other laws not barred. —The provisions of this Act shall be in addition to, and not in derogation of, the provisions of any other law for the time being in force.

[6] The Indian Competition Act, 2002, section 3

[7] The Indian Competition Act, 2002, section 3(5), Nothing contained in this section shall restrict –

(i) the right of any person to restrain any infringement of, or to impose reasonable conditions, as may be necessary for protecting any of his rights which have been or may be conferred upon him under: the Copyright Act, 1957 (14 of 1957); the Patents Act, 1970 (39 of 1970); the Trade and Merchandise Marks Act, 1958 (43 of 1958) or the Trade Marks Act, 1999 (47 of 1999); the Geographical Indications of Goods (Registration and Protection) Act, 1999 (48 of 1999); the Designs Act, 2000 (16 of 2000); the Semi-conductor Integrated Circuits Layout-Design Act, 2000 (37 of 2000);

(ii) the right of any person to export goods from India to the extent to which the agreement relates exclusively to the production, supply, distribution or control of goods or provision of services for such export.

[8] Super Cassettes Industries Ltd. vs. UOI & Ors, (2012) 4 Bom CR 258

[9] Telefonaktiebolaget LM Ericsson v. Competition Commission of India (2016) 4. Comp LJ, 122

[10] FICCI- Multiplex association of India v. United Producers/ Distributors forum (2011) Comp LR, 79

[11] Aamir Khan Production v Union of India (2010) 112. Bom L R, 3778

[12] Anand Prakash Agrawal v Dakshin Haryana Bijli Vitram Nigam and Ors (2017) COMPLR 203

[13] Competition commission of India v Bharati Airtel and Others (2019) 1 Comp LJ 1

[14] Jitesh Maheshwari vs National Stock Exchange Of India MANU/CO/0003/2019

[15] Shri Awadh Singh v. Petroleum and Natural Gas Regulatory Board MANU/CO/0002/2014

[16] Faridabad Industries Association v. Adani Gas Case No. 71 of 2012.

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