Liberalization, globalization bought a wave of awareness that was a gap in India, a developing country.
There has always been a standoff between the Competition Commission of India (hereafter ICC) and industry regulators. The latter lived to promote healthy competition in the market, the interests of consumers, to prevent anticipated market failures and to establish a benchmark in their respective sectors. In addition, the ICC’s mandate was to regulate the entire economy and ensure market power and if it was misused. In simpler terms, the CCI acts ex-post and sectoral regulators ex-ante. For example, a sector-specific regulation marks a problem as ex-ante, talks about the problem, and builds a safeguard and piece of administrative machinery to keep it from getting worse. The same problem as ex-post would be with competition policies examining it in all market conditions and more. So, they work in correlation.
However, the cause of this brawl or the “turf war” between the two is mainly due,
- The two have very different mandates
- Interference by competent authority.1
In the draft law amending the 2002 law on competition (hereinafter the law), it was proposed a “mandatory consultation“For regulators with the Competition Authority as opposed to the previous provision of”can“consult. A welcome gesture would certainly have been a”unambiguous coverage of behavioral issues in the field of competition authority. “2
- The law in brief
To deepen the legal part, in India, the competition law framework is such that through law, the ICC is an established competition authority. Article 18 of the law states: “it is the duty of the Competition Commission of India to eliminate practices prejudicial to a competitor, to promote and maintain competition, to protect the interests of consumers and to ensure the free trade exercised by other participants, in the Indian market”.3 Article 18 of the law also contains a declaration for similar reasons. The role of the competition authority and the sector regulator is generally seen as complementary to each other
Apart from § 18, 60 and 62, § 21 of the law provides that, in the event that the statutory authority must refer the matter to the competition authority, it may do so. The competition authority is required to deliver its opinion within two months. However, it does not bind the statutory authority after reference.
In India, the interface between the ICC and sector regulators is mainly based on § 18, 21, 60 and 62 of the law.
The case, Competition Commission of India v. Bharti Airtel Limited4, the Supreme Court has for the first time delimited the jurisdiction of the ICC and the Telecommunications Regulatory Authority of India (hereinafter TRAI). The judgment stated: ” .. The ICC could only exercise its jurisdiction once the proceedings under the TRAI law had ended or had become final …” 5 which means that TRAI obtains preferences for examining telecom cases. The Court observed that the order under section 26 (1) of the Act is administrative and went on to answer questions regarding an issue of overlap between two regulators.
In the background, Airtel, Vodafone, Idea have filed complaints for anti-competitive conduct on Reliance Jio with the ICC. The Bombay High Court ruled that the Telegraph Act and the TRAI Act governed the telecommunications sector. Thus, the concerns raised must be addressed by the authorities established under the law, and not by the ICC. The latter appealed to the Supreme Court to challenge the High Court’s order.
Likewise, when the dispute arose between Indian Oil Corporation Limited (hereinafter IOCL), Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited regarding the supply of aviation fuel to Air India. The IOCL has filed a brief petition with the Delhi High Court.6 It suspended the ICC investigation based on information filed by Reliance Industries Limited. Disputes of this nature generally fell under the supervision of the ICC, but the High Court favors the jurisdiction of the PNGRBseven. The said law reads as follows:protect the interests of consumers by promoting fair trade and competition against entities“8; the application is pending before the Court of Justice.
In Competition Commission of India v. Steel Authority of India9, the Supreme Court had declared that the ICC was a quasi-judicial body having only judicial functions to exercise.
§26 of the Law, suggests that CCI rely on the observations of informants and opposing parties. On closer examination, §26 coupled with §21 of the law establishes that the ICC should only focus on business after sectoral regulators have provided its empirical point of view. In the absence of a regulator, CCI is free to investigate this matter. ten
D. To analyse
The turf war between sectoral regulators and the CCI is due to the following factors,
- The sectoral laws in their object clause promote competition; both sectoral regulatory statutes and competition law form part of the “competition section” which promotes orderly markets.
- The two agencies fall under two different branches; the competition agency reports to the Ministry of Enterprise Affairs and sector regulators report to several specific ministries. It is therefore not at all surprising that there is friction between departments and that there are obstacles to the application of competition principles. If, for example, the ICC brings an action against Vodafone for anti-competitive conduct, the Minister of Communication will want the TRAI (the respective sector regulator) to take up the case in its jurisdiction.
As in countries around the world, there is an overlap between the two regulatory institutions. There are three models – the exclusivity model, the competition model, and the advisory model. Governments have used the right brain or the adapted brain, taking appropriate action. To bridge the gap between the two agencies, Indian policymakers have come up with three main options:
- A clear separation of competition enforcement functions between technical functions:
There must be a fixed division with a sector regulator vested with ex ante control powers and the competition authority will be vested with ex post control.
- The competition authority replaces the sectoral regulators:
The competition authority may be responsible for sectoral regulation as well as competition enforcement. Australia has adopted this approach to settle for an economic regulator. At first glance, of course, the approach is advantageous as it decreases the number of regulators and accumulates sector expertise.
- Competition from competition and sector regulator:
Institutional strengthening being heavy, sectoral regulators would make it difficult to ban pre-existing authorities.11
Country experience is not very important as they have a wide range of models; they also have privileges. UK12 or in the Netherlands, the competing model with oscillating degrees of cooperation is followed. However, in India it would not be easy to implement due to the entrenched hierarchical structures. Regimes such as the right to participate or observe the proceedings before the other, appeal to a joint authority, non-interference in the jurisdiction of others may also be followed in India.
There’s this TV show, Sherlock Holmes with Benedict Cumberbatch and Martin Freeman, the latter playing Dr Watson was amazed when he came across that Sherlock was unaware of how the solar system works. Sherlock joked that the information is irrelevant to his job. As the series progressed, it became apparent that while Sherlock claimed to be the mastermind in solving impossible cases, it was Watson’s “ordinary / layman” perspective that moved the case forward. It is therefore pleasant, without this collaboration between the general and the specific would have taken an undesirable tangent.
By applying correlation, such teamwork between sector regulators and the ICC has value. Thus, a forum should be created where ICC and sector regulators meet regularly to discuss policies and coordination and ensure that sector regulation is as competitive as possible. It will be a problem; one only moves the hornet’s nest; the change will be gradual but constant.
The application of competition is a complex but integral process. The law came into force in 2002, and around that time very specific bodies were put in place to focus on sector governance in India. The clash between the two agencies over the question of jurisdiction was inevitable.13 In the absence of one of the agencies, the welfare of consumers and market regulation will suffer.
In order to effectively manage legal certainty, competition law must be left in the hands of the competent competition authority. This does not mean less importance for sector regulators but that the two should coexist in harmony.