TDSAT quashes TRAI’s tariff order on predatory pricing, discounted tariffs

In a relief to telecom operators Airtel, Idea, and Vodafone, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) has quashed Telecom Regulatory Authority of India (TRAI’s) tariff order of February 2018 with respect to provisions on predatory pricing, Significant Market Player, and discounted tariffs..The order passed by TRAI in February this year mandated telecom operators to publish their segmented offers on their websites. The order had also imposed a penalty on defaulting operators should they fail to disclose their offers..TDSAT today held that the operators are not required to disclose their segmented tariffs and discounted offers. It also held that the TRAI cannot impose any penalty on operators..TRAI had passed the order of penalty under Section 11(2) of the TRAI Act, which led to the TDSAT quashing this provision, noting that the TRAI is not empowered to impose a penalty under the said section. The verdict states:.“The Act does not empower TRAI to levy any penalty or compensation under Section 11(2) of the Act whereunder the impugned order has been issued… The penalty provision was not even made a subject matter of consultation and hence it is bad in law,”.As regards predatory pricing, TRAI had entrusted itself with the authority to examine tariffs of Significant Market Players (SMP) in the relevant market. An SMP is an operator holding a minimum of 30 per cent of the total activity in the market, and these players can be checked for predatory pricing..“Total activity” was determined based on subscriber base and gross revenue. As per the tariff order, an operator would be liable to pay a penalty of Rs 50 lakh for each tariff plan that was found to be amounting to predatory pricing..Players like Airtel, Idea, and Vodafone approached the TDSAT against this tariff order, claiming that disclosure of their segmented tariffs would amount to seeking disclosure of trade secrets. Additionally, it was also contended that the new definition of SMP gives the new entrant in the market, Reliance Jio, an unfair advantage. On the question of Jio as a new entrant, the Tribunal said,.“If a new entrant needs to be protected from the rigours of non-predation, it can be done through provisions like `Welcome Offer’ and `Promotional Offer’ as availed by Reliance Jio, but to allow freedom from requirements of non-predation till acquisition of 30% of total activity in a given market, prima facie appears an extreme step by TRAI.”.It was found by TDSAT that the process of arriving at the definition of SMP and non-predation “lacked required transparency”. It expressed concern over the “subjective yardsticks” introduced by TRAI to define SMP..“The yardsticks must be objective and known to all the TSPs 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 a complaint alleging predation.”.The TDSAT set aside the impugned tariff order to the extent to which it alters the concept of SMP, non-predation and related provisions. The Tribunal has directed TRAI to reconsider the impugned provisions at the earliest, “preferably within six weeks.”.The judgment was rendered by a Bench of Justice Shiva Kirti Singh and Justice AK Bhargava. .Airtel was represented by Senior Counsel Aspi Chinoy and Gopal Jain along with Advocates Harsh Kaushik and Abhay Chattopadhyay. Idea Cellular was represented by Senior Advocate Soli Cooper, while Senior Advocate Meet Malhotra argued for Vodafone..Solicitor General Tushar Mehta argued for TRAI and Reliance Jio was represented by Senior Counsel Ramji Srinivasan and N Venkat Raman.