CCI rejects Airtel’s complaint – Reliance Jio winning

In a setback to Bharti Airtel, the Competition Commission of India (CCI) has rejected its application filed against Reliance Jio (Jio) and Reliance Industries Limited (RIL) under provisions of the Competition Act, 2002 (Act)..The battle between Airtel (along with other incumbents) against Jio has been the subject of litigation for the past several months across multiple fora, including at the Telecom Disputes Settlement and Appellate Tribunal as well as the Delhi High Court..In February of this year, Airtel had filed ‘information’ with the CCI, against Jio under section 19(1)(a) of the Act alleging contravention of Sections 3 & 4 of the Act..While Section 3 of the Act prohibits entering into anti -competitive agreements which are likely to cause an appreciable adverse effect on the competition within India, Section 4 prohibits abuse of dominant position..The dispute with Jio, from the very beginning, has been about the advancement of (prolonged) free services, which are also (allegedly) in contravention of various TRAI notifications and circulars..As the CCI notes in its order,.“The gravamen of the allegations of the Informant concerns free services provided by OP-2 (Jio) since the inception of its business i.e. from 5th September 2016 under one offer or the other”.In the information submitted to the CCI, Airtel alleged that the provisions of these free services by Jio amounts to ‘predatory pricing’..Airtel had submitted that Jio’s position of ‘dominance’ stems from its large share in spectrums viz. 50% in 2300 MHz band, 56% in 800 MHz band (shared with RCOM) and 28% in 1800 MHz band..However, this point was shunned by the CCI owing to the caps imposed by the Department of Telecommunications in band-wise spectrum, which to a large extent take care of undesirable concentration of spectrum in the hands of few operators..In this context, CCI also pointed out that “in none of the 22 telecommunication circles, the Opposite Party (Jio) has a market share higher than 7%”, indicating that Airtel itself holds the maximum market share of 23.5% with 5 other operators falling in line before Jio’s national 6.4% market share..And therefore, the CCI found it difficult to construe the dominant position possessed by Jio, which presupposes an ability to operate independently of the market forces to affect its consumers or competitors..However, as alleged by Airtel, Jio’s ability to penetrate the market by providing free services, has been possible due to the financial strength of its parent entity, RIL, which holds 99.44 % of Jio. But according to CCI’s order,.“Mere investments cannot be regarded as leverage of dominant position, particularly when OP-1 (RIL) cannot be engaged in business of providing telecom services or any activities incidental thereto”.“If one were to construe such investment as anti-competitive, the same would deter entry and/or expansion and limit the growth of markets.”.In the given background, CCI was of the opinion that no agreement of the nature prohibited under section 3 of the Act is discernible from the facts and allegations and neither has there been any prima facie case of contravention of Section 4 of the Act..Senior Counsels Gopal Jain and Darius J Khambatta appeared for Airtel, Senior Counsel Amit Sibal appeared for RIL and Senior Counsel Ramji Srinivasan appeared for Jio.. (Read the order)