CCI tells Trai to consult it on predatory pricing, market dominance issues

The Competition Commission of India (CCI), the fair trade watchdog, has said it has the technical capacity and statutory framework to find out if a company is misusing its ‘dominant position’ and offering ‘predatory pricing’ whereas the Telecom Regulatory Authority of India (Trai), a sectoral regulator, may not have the means to decide these issues.

In a letter to Trai Chairman Sharma, CCI Chairperson Devender K Sikri said the Competition Act defined ‘predatory price’ and ‘dominant position’ while providing the factors that should guide the determination of dominance. The letter came in the backdrop of Trai coming up with a consultation paper in February on “Regulatory principles of tariff assessment”. The paper has a chapter on “anti-competitive behaviour in tariff orders”, with questions on delineating relevant markets, assessing dominance, and predatory pricing. The CCI said in accordance with the Act, these were the issues for it to determine.

The Competition Act defines relevant markets and lists the factors that need to be considered for their correct identification. “This exercise, regardless of the sector, is the exclusive remit of the competition authority, which has the technical capacity and the supporting statutory framework to carry it out. Further, the Act defines ‘predatory pricing’ and ‘dominant position’ while also providing the factors that should guide the determination of dominance,” the letter said. The fair trade watchdog said over the past eight years, it had been applying the framework in determining dominance and predatory pricing across sectors, including the telecom sector.

In the consultation paper, the CCI said the discussion pertained to an analytical framework applicable in the case of an ex post evaluation of predatory pricing. And in drawing up this framework, the paper rested upon the definition and concepts of the Competition Act and also on international antitrust jurisdictions’ decisional practices, which may blur the lines between the sectoral regulator and competition regulator.

“We apprehend that apart from affording the stakeholders the opportunity of forum-shopping, divergence in definition or interpretation of issues/principles/concepts which are integral to competition assessment will create unnecessary confusion amongst the stakeholders and add to their compliance cost,” the CCI said.

It further added: “We do believe that the regulator may not have the wherewithal for the determination of these issues, as such issues do not afford themselves to blanket prescriptions and blunt instrument of regulation.” The fair trade watchdog said nuanced positions, accounting of subtle market interactions, were required while assessing dominance and eventually for giving remedies.

“Our understanding is that such market interactions would need to be assessed on a case-by-case basis without any presumptions based on a formulaic framework,” the letter said. The CCI said the appropriate legal-economic instrument and the framework for such an analysis to conclusively establish abuse, including predatory pricing, was the competition law of the country. “Going forward, we hope this instrumentality is preserved for an effectual regulatory architecture,” the CCI added. The watchdog added that the Competition Act allowed for mutual consultation between the competition authority and a sector regulator on issues that may be at the intersection of regulation and competition. Recently CCI had rejected the case of alleged “predatory pricing” against Reliance Jio filed by Bharti Airtel. According to CCI, just giving access for free itself is not anti-competitive. “We shall be happy to have a consultation meeting with you at your convenience on the aforementioned issues which are central to the enforcement of the provisions of the Act relating to abuse of dominance,” the CCI said.