On charges that RIL, which is a market leader in its area, has invested huge sums in Jio with the aim of eliminating competition, the CCI has said that financial strength is relevant but not the sole factor to determine dominant position of an enterprise. (Reuters)
The Competition Commission of India (CCI) has unanimously rejected Bharti Airtel’s complaint of predatory pricing and anti-competitive behaviour against Reliance Jio Infocomm, filed by the former in February. The grounds on which Bharti’s complaint was rejected were that the relevant market has to be telecommunication services and not 4G services; geographic market cannot be all-India but each of the 22 circles; free services does not mean elimination of competition if player not dominant; and huge investments by parent Reliance Industries in Jio has not established a dominant position of the latter. Accordingly, in its 17-page order, the anti-monopoly body noted no prima facie case of contravention of the provisions of Section 3 or 4 of the Competition Act is made out against Jio and the matter is closed in terms of the provisions of Section 26(2) of the Act. The dismissal of the complaint comes as a huge setback for Bharti Airtel as the CCI last month by a majority order admitted a Jio petition to investigate its allegations of cartelisation against Bharti, Vodafone and Idea Cellular as it found prima facie evidence the three abused their dominant market power by forming a cartel of sorts and denying it the requisite number of points of interconnect. While Jio had filed its initial complaint with the CCI in November 2016, Bharti had moved its petition in February this year. Bharti had alleged in its petition that 4G services should be seen as the relevant market for determining the charges of predatory pricing since Jio had the largest spectrum in this band, but the CCI rejected the contention. The CCI has said that the licences are provided for unified services, 3G and 4G tariffs are similar, 3G services can run on 4G devices, technology upgradation is key to telecom services, and every operator is in a position to offer a bouquet of services. Hence, if telecommunication services is seen as the relevant market, Jio is not in a dominant position. Similarly, it dismissed Bharti’s charges that the geographic market should be pan-India. According to the CCI, since licences, spectrum and auctions are circle-specific, the geographic market has to be each of the 22 telecommunication circles in the country. Judged on this parameter, Jio’s market share does not exceed 7% in any of the circles, hence it is not in a dominant position.
On charges that RIL, which is a market leader in its area, has invested huge sums in Jio with the aim of eliminating competition, the CCI has said that financial strength is relevant but not the sole factor to determine dominant position of an enterprise. It said that even incumbent operators have made comparable investments and, therefore, Jio’s success in managing large-scale investment does not suggest any dominant position enjoyed by it.
On free services by Jio which led it to amass 72 million subscribers in a span of just four months, the CCI observed that Bharti has not demonstrated reduction or elimination of competition. It has said that free services cannot by itself raise competition concerns unless the same is offered by a dominant enterprise and shown to be tainted with anti-competitive objective of excluding competition/competitors, which does not seem to be the case in the instant matter as the relevant market is characterised by the presence of entrenched players with sustained business presence and financial strength.
“In a competitive market scenario, where there are already big players operating in the market, it would not be anti-competitive for an entrant to incentivise customers towards its own services by giving attractive offers and schemes. Such short-term business strategy of an entrant to penetrate the market and establish its identity cannot be considered to anti-competitive in nature and as such cannot be a subject matter of investigation under the Act,” the CCI observed.