Telecom Tribunal Strikes Down TRAI’s Predatory Pricing Rule

The TDSAT’s order spells relief for Bharti Airtel Ltd and Vodafone Idea Ltd.

The telecom appellate tribunal set aside the sectoral regulator’s predatory pricing guidelines that placed restrictions on large older carriers but excluded Mukesh Ambani’s Reliance Jio Infocomm Ltd.

The Telecom Dispute Settlement Appellate Tribunal ordered the regulator to reconsider the provisions within six months and barred it from levying any penalty based on the February 2018 guidelines, according to an order uploaded to its website.

This spells relief for Bharti Airtel Ltd. and  Vodafone Idea Ltd.— earlier Vodafone India and Idea Cellular. That’s because the Telecom Regulatory Authority of India had changed the definition of significant market player while determining predatory pricing.

According to the new norms, service providers holding a share of at least 30 percent of total activity in a relevant market qualified for it.

Of the four parameters to identify significant market player, TRAI retained subscriber base and gross revenue, but dropped capacity and traffic share.

Which meant, while restrictions remained on Bharti Airtel and Vodafone India, Reliance Jio despite having the highest monthly data consumption was excluded. The incumbents then challenged the order.

The tribunal said it found the new definition of significant market player used by TRAI lacked “required transparency in arriving at the concept” and called them “extreme”.

“If a new entrant needs to be protected from the rigours of non-predation, it can be done through the provisions like ‘Welcome Offer’ and promotional schemes as availed by Reliance Jio,” according to the tribunal’s judgment.

“These can be formalised as exceptions but to allow freedom from requirements of non-predation till acquisition of 30 percent of total activity in a given market prima facie appears to be an extreme step and unnecessary abdication of its regulatory powers by TRAI in the context of tariff conditions and their enforcement.”

Telecom Dispute Settlement Appellate Tribunal Judgment

Bharti Airtel and Idea Cellular had moved the tribunal against TRAI’s order that asked them to report discounts as separate tariff plans and also provided for a penalty of up to Rs 50 lakh per circle on operators if their service rates are found to be predatory in nature.

The telecom tribunal called for more objective provisions. “We would be failing in our duty if we do not communicate our concern in respect of definition of SMP (significant market player) in so far as it introduces subjective yardsticks,” its judgment read.

“The yardsticks must be objective and known to all the TSPs (Telecom Service Providers) or else the task must be left to be dealt with by a complete code such as under the Competition Laws so that the competent authority can decide on a complaint alleging predation.”

TDSAT Judgment

The tribunal said the consultation process introduced before the TRAI order was passed wasn’t effective and called it “incomplete”. It said the TRAI also didn’t publish reasons for not accepting contrary suggestions and what led to the final views/decisions incorporated in the tariff order.