CCI and TRAI on Predatory Pricing – by Anjana Avva 1

When Reliance Industries commercially launched Reliance Jio Infocomm Limited (popularly known as “Jio”) in September 2016, the network operator took the country by storm. With attractive offers available for a steal, people lined up to purchase a Jio SIM and needless to say, there was an exponential rise in Jio’s user base and soon posed as a strong threat to market veterans.

As a launching offer, Jio offered free 4GB data at 4G speed per day, unlimited calls, and 100 SMSs per day from its launch date of 5 September 2016 through 31 December 2 that year and continued to provide services at highly discounted rates even after the offer was over, much to the wrath of its competitors. Soon after, Bharti Airtel filed a case against Jio alleging, “Predatory pricing”. Airtel claimed that free services offered by Jio were made with the view of eliminating competitors from the telecom market.3

Predatory pricing refers to the act of setting low prices in a bid to eliminate competition. In the short run, it is risky for the company but in the long run, it pays off with great profits and effectively puts its competitors out of work. Predatory pricing is illegal under anti- trust laws as it can lead to the formation of a monopoly and creates barriers to entry. 4

The Competition Commission of India (CCI), however, ruled that short-term strategies of new entrants to create an identity and gain access to the market would not be considered anti-competitive.5

This issue further led to a turf war between the Competition Commission of India and the Telecom Regulatory Authority of India (TRAI) over who had the final say in matters regarding predatory pricing in the telecom industry. CCI chairman DevenderSikri wrote to the TRAI stating that market dominance and predatory pricing comes under the ambit of the CCI and that the former should be consulted in related matters.6

The TRAI being a specialized regulator and the CCI being a central regulator are now at a jurisdictional intersection where affinity between the two regulators is the need of the hour for the sake of consumer interest and industry functioning.

References

1. III Year B.L.S LL.B, Rizvi Law College, University of Mumbai

2. “Reliance Jio Offers: A Timeline of Free Jio Services Since Launch, and Their Impact”, NDTV (Apr 13, 2017) https://gadgets.ndtv.com/telecom/features/reliance-jio-prime-dhan-dhana-dhan-offer-a-timeline-free-jio-4g-data-since-launch-impact-1680629

3. “CCI rejects Airtel’s predatory pricing case against Reliance Jio”, BUSINESS STANDARD (June 10, 2017) http://www.business-standard.com/article/companies/cci-rejects-airtel-s-predatory-pricing-case-against-reliance-jio-117061000051_1.html

4. https://www.investopedia.com/terms/p/predatory-pricing.asp

5. “CCI rejects Airtel’s predatory pricing case against Reliance Jio”, BUSINESS STANDARD (June 10, 2017) http://www.business-standard.com/article/companies/cci-rejects-airtel-s-predatory-pricing-case-against-reliance-jio-117061000051_1.html

6. “CCI to TRAI: Consult us on predatory pricing
http://www.livemint.com/Industry/uzSqE22Uk4Lgt1jX8PjCOJ/CCI-to- Trai-Consult- us-on- predatory-
pricing-issues.html

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