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TDSAT Set Asides TRAI’s Predatory Pricing Norms

New Delhi, December 14: In a major relief to Bharti Airtel Ltd and Vodafone Idea Ltd, Telecom Disputes Settlement and Appellate Tribunal (TDSAT) today set aside telecom regulator TRAI’s rule on predatory pricing for lack of transparency in the guidelines over determining market share and rates of services.

Bharti Airtel Ltd and Vodafone Idea Ltd had complained that the rules benefit rival Reliance Jio Infocomm Ltd.

TDSAT has also ruled that the Telecom Regulatory Authority of India (TRAI) had issued the new rules arbitrarily and without deliberation or effective consultation and had changed the definition of ‘significant market power’ (SMP) to identify predatory pricing.

Another issue that was raised by old telecom companies during the hearing was that the disclosure of confidential information on segmented offers was a trade secret and, hence, can not be asked to be disclosed. On this, TDSAT said that instead of reporting all segmented offers/discounts, TRAI may call for details of any segmented offer about which it receives complaints.

BACKGROUND
Predatory pricing has always been the center of a bitter tussle between the older telecom companies and TRAI and Jio. On February 16, TRAI changed the definition of SMP (significant market player) to identify predatory pricing, a strategy aimed at driving competitors out of the market or creating entry barriers for potential new competitors. Under the new rules,  a tariff would be considered predatory if a telecom operator with over 30 percent market share offers services at a price below the average cost. On violation, up to Rs 50 lakh fine would be levied on the operators. It framed out four parameters to identify a significant market player. While it retained subscriber base and gross revenue, it dropped capacity and traffic share which gave an undue advantage to Reliance Jio which has the highest monthly data consumption and traffic.

Moreover, it asked telecom companies to disclose offers within seven days from the date of implementation to ensure the tariffs are transparent, non-discriminatory and non-predatory.

Citing an unfair advantage to Jio, Bharti Airtel and Vodafone Idea moved TDSAT in March.

Keeping this in mind, the TDSAT Bench comprising Justice SK Singh and member AK Bhargava said in an order,

“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.”

It also added that TRAI had exceeded its role and powers by developing a complex concept of SMP and has asked the TRAI to rework the predatory pricing rule within six months.

 

 

 

 

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