India’s antitrust probe into the alleged collusion over fees charged by debt trustees of the State Bank of India, Axis Bank and IDBI Bank took a back seat following an intervention by the Bombay High Court after the banks challenged the jurisdiction of the Competition Commission of India (CCI) in April this year.

The high court reprimanded the antitrust authority and directed the securities market watchdog, the Securities and Exchange Board of India (SEBI), to undertake the initial investigation into the alleged bank cartel case. The court spoke of a distinct possibility of conflicting orders if parallel investigations were being conducted by the two authorities, relying on the Supreme Court judgment in the Bharti Airtel case.

Senior advocate Somashekhar Sundaresan, representing the antitrust authority, argued that “irregularities happening with regards to cartelisation come directly under competition law”. But the high court hit the gavel and barred the CCI from undertaking further investigations into the matter for 60 days until the SEBI concluded its findings.

It has never been smooth sailing for the competition watchdog ever since the law came into force in May 2009, especially as its jurisdiction continues to be challenged in courts of law.

The Supreme Court verdict of 2019, in an attempt to settle a turf war between the telecom and antitrust authorities in the famous CCI v Bharti Airtel case, has impacted investigations of the antitrust watchdog. The infamous judgment, repeatedly referred to by various high courts as parties challenge CCI’s jurisdiction, continues to be a thorn for the competition authority.

But Deeksha Manchanda, a New Delhi-based partner at Chandhiok & Mahajan, cautions that the Supreme Court judgment should not be seen “as a holy grail”, and that “its applicability has to be determined on a case-by-case basis”.

DEEKSHA MANCHANDAAnisha Chand, a Mumbai-based partner at Khaitan & Co, agrees that a case-by-case assessment is required. “The thrust ought to be on comity of courts and harmonisation of laws to avert regulatory overreach or jurisdictional conflict,” she says.

The Supreme Court’s reasoning in Bharti Airtel was driven from the facts of the case and pendency of “jurisdictional issues” before the Telecom Regulatory Authority of India (TRAI). “Absent a similar pendency of ‘jurisdictional issues’, Bharti Airtel cannot be read as granting a carte blanche from CCI investigations,” Manchanda tells India Business Law Journal. Doing so could have a significant negative impact on enforcement of competition law, she adds.

The bottom line is to preserve the integrity of the judicial process, says Chand. Even though the CCI looks at different aspects, the interplay between competition law and sector-specific legislation cannot be discounted, she notes. Sections 21 and 21A of the Competition Act encourage inter-regulatory dialogue for achieving effective enforcement of all applicable laws, despite the CCI having the exclusive right to adjudicate competition law violations, she points out.

Often, the courts do not grant a stay on the investigation, as in the recent case of the CCI investigation into Walt Disney-owned broadcasters – Star India, Asianet Star Communications and Disney Broadcasting – for allegedly abusing their dominant position. Here the Bombay High Court restrained the antitrust watchdog from passing any orders, but asked the parties to co-operate in the CCI’s ongoing investigation.

Kanika Chaudhary Nayar, a New Delhi-based partner at L&L Partners, tells IBLJ that there could be times when certain technical facts need to be established by a sectoral regulator, which has specific sectoral expertise, and that such facts could form the premise of regulatory action before the CCI.

“The establishment of such technical facts by sectoral regulators benefits all parties involved on account of efficiencies introduced in regulatory processes and reduced litigation costs, considering an absence of dispute over jurisdiction,” says Nayar, citing Reliance Jio’s complaint against other telecom players for cartelisation.

KANIKA CHAUDHARY NAYARThe telecom authority, TRAI, was the competent body to assess whether sufficient points of interconnection were provided by others to Jio. Had the TRAI been of the opinion that sufficient points of interconnection were not provided to Jio, the CCI may have undertaken an investigation to determine whether this was a co-ordinated action. Nayar, however, adds that, “Sectoral regulators should not undertake the role of the CCI, which is a specialised body to look at competition issues.”

Nayar says that the sectoral regulator would be involved only to the extent of establishing technical facts, as far as cases before the CCI are concerned. The CCI would then have to consider the relevance of the technical facts in so far as competition law violations are concerned, and proceed accordingly.

Citing the Bombay High Court decision in the alleged cartel of the three trusteeships, Manchanda says that a more cohesive framework of regulatory co-operation could have been the better way out. Regulatory co-operation may be appropriate in some cases rather than resorting to jurisdiction, although such an assessment would need to be done on a case-by-case basis, she points out.

Nayar agrees, and says that in the age of multifaceted regulation involving multiple regulators looking at the same subject from different lenses, “regulatory harmony needs to be established to ensure ease of doing business”.

Chand points out that an issue interfacing with several legislations, if not reconciled properly, can result in proceedings before one of the regulators/courts being rendered unnecessary. Such an outcome should be avoided.


The Briefing is written by Freny Patel

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